SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive Proxy Statement Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
----------
SILICON LABORATORIES, INC.
(Name of Registrant as Specified in its Charter)
----------
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:
(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](R)
SILICON LABORATORIES
SILICON LABORATORIES INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 21, 2005
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 21, 2005 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 three Class I directors to serve on the Board of Directors until
our 2008 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
registered public accounting firm for the fiscal year ending December 31,
2005; 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 21, 2005
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/ Daniel A. Artusi
Daniel A. Artusi
CHIEF EXECUTIVE OFFICER
PRESIDENT AND DIRECTOR
Austin, Texas
March 14, 2005
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 21, 2005
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 21, 2005 at 9:30 a.m. Central Time at the
Lady Bird Johnson Wildflower Center, 4801 La Crosse Avenue, Austin, Texas 78739,
or at any adjournment thereof. These proxy solicitation materials were mailed on
or about March 14, 2005 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 21, 2005, the record date for
determination of stockholders entitled to notice of and to vote at the Annual
Meeting, there were 52,697,222 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 21,
2005. 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 the Annual
Meeting or at any adjournment thereof. 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 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 registered public accounting firm. You may revoke
or change your Proxy at any time before the Annual Meeting by filing a notice of
revocation or another signed Proxy with a later date with our Corporate
Secretary at our principal executive offices at 4635 Boston Lane, Austin, Texas
78735. 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 in their names shares 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 2006 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 Corporate Secretary, not later than November 14, 2005, the date which is 120
days prior to March 14, 2006. 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. Pursuant to our
bylaws, stockholder proposals received after November 14, 2005 will be
considered untimely. Unless we receive notice in the manner specified in the
previous sentence, the proxy holders shall have discretionary authority to vote
for or against any such proposal presented at our 2006 annual meeting of
stockholders.
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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 I directors,
Navdeep S. Sooch, William P. Wood and Laurence G. Walker, expires at this Annual
Meeting. Messrs. Sooch, Wood, and Walker have been nominated to continue as
Class I Directors. The three directors elected as Class I Directors at the
Annual Meeting will serve for a term of three years expiring at the 2008 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 I DIRECTORS WITH TERMS EXPIRING IN 2008
Navdeep S. Sooch, 42 ........... co-founded Silicon Laboratories in August 1996 and has served as Chairman of the
Board since our inception. Mr. Sooch served as our Chief Executive Officer from
our inception through the end of fiscal 2003. 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, 49 ............ has served as a director of Silicon Laboratories since March 1997. Since 1996,
Mr. Wood has also served as general partner of various funds associated with Silverton
Partners, an investment firm. From 1984 to 2003, Mr. Wood was 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. Mr. Wood holds a B.A. in
history from Brown University and a M.B.A. from Harvard University.
Laurence G. Walker, 56 ......... has served as a director of Silicon Laboratories since June 2003. Previously,
Mr. Walker co-founded and served as Chief Executive Officer of C-Port
Corporation, a pioneer in the network processor industry, which was acquired by
Motorola in 2000. Following the acquisition, Mr. Walker served as Vice President
of Strategy for Motorola's Network and Computing Systems Group and then as
Vice President and General Manager of the Network and Computing Systems
Group until 2002. From August 1996 to May 1997, Mr. Walker served as Chief
Executive Officer of CertCo, a digital certification supplier. Mr. Walker served as
Vice President and General Manager, Network Products Business Unit, of Digital
Equipment Corporation, a computer hardware company, from January 1994 to July
1996. From 1981 to 1994, he held a variety of other management positions at
Digital Equipment Corporation. Mr. Walker currently serves as a director of
McDATA Corporation, an expert provider of multi-capable storage networking
solutions. Mr. Walker holds a B.S. in electrical engineering from Princeton
University and a M.S. and Ph.D. in electrical engineering from the Massachusetts
Institute of Technology.
3
OTHER DIRECTORS
Set forth below is information concerning our other directors whose term of
office continues after this Annual Meeting.
CONTINUING CLASS II DIRECTORS WITH TERMS EXPIRING IN 2006
David R. Welland, 49 ......... co-founded Silicon Laboratories in August 1996 and has served as a Vice President
and director since our inception and was appointed Fellow in March 2004. 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.
Harvey B. Cash, 66 ........... 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: 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; First
Acceptance Corp, a provider of low-cost auto insurance; and Staktek, Inc., a
semiconductor assembly company. Mr. Cash holds a B.S. in electrical engineering
from Texas A&M University and a M.B.A. from Western Michigan University.
CONTINUING CLASS III DIRECTORS WITH TERMS EXPIRING IN 2007
William G. Bock, 54 .......... has served as a director of Silicon Laboratories since March 2000. Since April
2002, Mr. Bock has been a 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, a
provider of electronic information delivery systems, from February 1997 until its
acquisition by the Hewlett-Packard Company in June 1999. 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.
R. Ted Enloe III, 66 ......... has served as a director of Silicon Laboratories since April 2003. Mr. Enloe is
currently the President and Chief Executive Officer of Optisoft, Inc., a provider of
intelligent traffic signal platforms. Mr. Enloe formerly served as Vice Chairman and
member of the office of chief executive of Compaq Computer Corporation. He also
served as President of Lomas Financial Corporation and Liberte Investors for more
than 15 years. Mr. Enloe co-founded a number of other publicly held firms,
including Capstead Mortgage Corp., Tyler Cabot Mortgage Securities Corp., and
Seaman's Corp. Mr. Enloe currently serves on the Board of Directors of Leggett &
Platt, Inc. Mr. Enloe holds a B.S. in engineering from Louisiana Polytechnic
University and a J.D. from Southern Methodist University.
4
Daniel A. Artusi, 50 ......... has served as our Chief Executive Officer and a member of our Board of Directors
since January 2004 and has served as our President since January 2003. He
previously served as our Chief Operating Officer from August 2001 to January
2004. 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, a producer of ultra-linear radio frequency power amplifiers for
wireless communications. Mr. Artusi studied electronics engineering at the Instituto
Tecnologico de Buenos Aires, Argentina from 1972 through 1976.
BOARD COMMITTEES AND MEETINGS
During fiscal 2004, our Board of Directors held ten meetings. Our Board of
Directors has an Audit Committee, Compensation Committee, Special Stock Option
Committee, Special Committee on Non-Employee Director Compensation and a
Nominating and Corporate Governance Committee. During fiscal 2004, 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. The
Board of Directors has determined that Messrs. Bock, Cash, Enloe, Walker and
Wood are each independent as defined in the applicable Marketplace Rules of The
NASDAQ Stock Market, Inc. These independent directors met in executive session
without the chief executive officer and other non-independent directors present
on six separate occasions during fiscal 2004.
AUDIT COMMITTEE. The Audit Committee is responsible for matters relating to
the selection of our independent registered public accounting firm, the scope of
the annual audits, the fees to be paid to the independent registered public
accounting firm, the performance of our independent registered public accounting
firm, 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, which is attached as Exhibit A hereto. The members of the Audit
Committee are Messrs. Bock, Enloe and Wood. Mr. Bock serves as Chairman of the
Audit Committee. The Board of Directors has determined that each of the members
of the Audit Committee is independent as defined in the applicable Marketplace
Rules of The NASDAQ Stock Market, Inc. and Rule 10A-3 under the Securities
Exchange Act of 1934. The Board of Directors has determined that Mr. Bock is
qualified as an audit committee financial expert pursuant to Item 401(h) of
Regulation S-K and a financially sophisticated audit committee member under Rule
4350(d)(2)(A) of the Marketplace Rules of The NASDAQ Stock Market, Inc. The
Audit Committee held five meetings during fiscal 2004.
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. Cash, Walker and Wood, and the Board of Directors has
determined that each of the members of the Compensation Committee is independent
as defined in the applicable Marketplace Rules of The NASDAQ Stock Market, Inc.
Mr. Wood serves as Chairman of the Compensation Committee. The Compensation
Committee held four meetings and acted by unanimous written consent one time
during fiscal 2004.
SPECIAL STOCK OPTION COMMITTEE. The Special Stock Option Committee approves
grants of options from our 2000 Stock Incentive Plan to non-executive officers
and employees. Mr. Sooch served as the Special Stock Option Committee until
March 24, 2004. On March 25, 2004, Mr. Artusi replaced Mr. Sooch on the Special
Stock Option Committee. The Board of Directors generally reviews the grants made
by the Special Stock Option Committee at the next meeting of the Board of
Directors.
5
The Special Stock Option Committee acted 26 times by written consent at regular
intervals during fiscal 2004.
SPECIAL COMMITTEE ON NON-EMPLOYEE DIRECTOR COMPENSATION. The Special
Committee on Non-Employee Director Compensation reviews and makes
recommendations to the Board of Directors regarding our compensation of
non-employee directors. The members of the Special Committee on Non-Employee
Director Compensation are Messrs. Artusi, Sooch and Welland. Mr. Sooch serves as
Chairman of the committee. The Special Committee on Non-Employee Director
Compensation held one meeting during fiscal 2004.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and Corporate
Governance Committee focuses on issues related to the composition, practices and
operations of the Board of Directors. In addition, the Nominating and Corporate
Governance Committee has the authority to consider candidates for the Board of
Directors recommended by stockholders and to determine the procedures with
respect to such stockholder recommendations. The Board of Directors has adopted
a written charter for the Nominating and Corporate Governance Committee, a
current copy of which is available on our internet website under the "Investor
Relations" page. Our internet website address is http://www.silabs.com. The
members of the Nominating and Corporate Governance Committee are Messrs. Cash,
Enloe and Walker, and the Board of Directors has determined that each member is
independent as defined in the applicable Marketplace Rules of The NASDAQ Stock
Market, Inc. Mr. Enloe serves as Chairman of the Nominating and Corporate
Governance Committee. The Nominating and Corporate Governance Committee held
five meetings during fiscal 2004. The Nominating and Corporate Governance
Committee recommended, and the Board of Directors approved, the Corporate
Governance Policy which is attached as Exhibit B hereto.
DIRECTOR NOMINATION
In evaluating potential director candidates, the Nominating and Corporate
Governance Committee considers the appropriate balance of experience, skills and
characteristics required of the Board of Directors and seeks to ensure that at
least a majority of the directors are independent under the applicable
Marketplace Rules of The NASDAQ Stock Market, Inc. The Nominating and Corporate
Governance Committee selects director nominees based on their personal and
professional integrity, depth and breadth of experience, ability to make
independent analytical inquiries, understanding of our business, willingness to
devote adequate attention and time to duties of the Board of Directors and such
other criteria as is deemed relevant by the Nominating and Corporate Governance
Committee. Silicon Laboratories believes that the backgrounds and qualifications
of the directors, considered as a group, should provide a diverse mix of
experience, knowledge and skills.
In identifying potential director candidates, the Nominating and Corporate
Governance Committee relies on recommendations made by current directors and
officers. In addition, the Nominating and Corporate Governance Committee may
engage a third party search firm to identify and recommend potential candidates.
Finally, the Nominating and Corporate Governance Committee will consider
candidates recommended by stockholders.
Any stockholder wishing to recommend a director candidate for consideration
by the Nominating and Corporate Governance Committee must provide written notice
not later than November 14, 2005 to the Corporate Secretary at our principal
executive offices located at 4635 Boston Lane, Austin, Texas 78735. Any such
notice should clearly indicate that it is a recommendation of a director
candidate by a stockholder and must set forth (i) the name, age, business
address and residence address of the recommended candidate, (ii) the principal
occupation or employment of such recommended candidate, (iii) the class and
number of shares of the corporation which are beneficially owned by such
recommended candidate, (iv) a description of all understandings or arrangements
between the stockholder and the recommended candidate and any other person or
persons pursuant to which the recommendations are to be made by the stockholder
and (v) any other information relating to such recommended candidate that is
required to be disclosed in solicitations of proxies for the election of
directors. In addition, such notice must contain (i) a representation that the
stockholder is a holder of record of stock of the corporation entitled to vote
at such meeting, (ii) the name and address, as they appear on the corporation's
books, of the stockholder proposing such nomination, (iii) the class and number
of shares of the corporation that are beneficially owned by such stockholder,
(iv) any material interest of the stockholder in such recommendation and (v) any
other information that is required to be provided by the stockholder pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, in such
stockholder's capacity as proponent of a stockholder proposal.
6
Assuming that a stockholder recommendation contains the information required
above, the Nominating and Corporate Governance Committee will evaluate a
candidate recommended by a stockholder by following substantially the same
process, and applying substantially the same criteria, as for candidates
identified through other sources.
ATTENDANCE AT ANNUAL MEETINGS
The Board of Directors encourages all directors to attend our annual
meetings of stockholders if practicable. All directors attended the annual
meeting of stockholders held on April 29, 2004.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors maintains a process for stockholders to communicate
with the Board of Directors or with individual directors. Stockholders who wish
to communicate with the Board of Directors or with individual directors should
direct written correspondence to our Corporate Secretary at our principal
executive offices located at 4635 Boston Lane, Austin, Texas 78735. Any such
communication must contain (i) a representation that the stockholder is a holder
of record of stock of the corporation, (ii) the name and address, as they appear
on the corporation's books, of the stockholder sending such communication and
(iii) the class and number of shares of the corporation that are beneficially
owned by such stockholder. The Corporate Secretary will forward such
communications to the Board of Directors or the specified individual director to
whom the communication is directed unless such communication is deemed unduly
hostile, threatening, illegal or similarly inappropriate, in which case the
Corporate Secretary has the authority to discard the communication or to take
appropriate legal action regarding such communication.
CODE OF ETHICS
Silicon Laboratories Inc. has adopted a Code of Business Conduct and Ethics
that applies to all officers, directors, employees and consultants. Our Code of
Business Conduct and Ethics is posted on our internet website under the
"Investor Relations" page. Our internet website address is
http://www.silabs.com.
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 non-employee director receives an initial
automatic option grant to purchase 30,000 shares of common stock on the date
such individual joins the Board of Directors. The initial automatic option
grants are immediately exercisable, vest in four equal successive annual
installments upon each additional year of service measured from the date of
grant, and have exercise prices equal to the fair market value as of the grant
date. In addition, on the date of each annual stockholders meeting, each
non-employee director who continues to serve as a non-employee director receives
an automatic annual option grant to purchase 5,000 shares of common stock,
provided such individual has served as a non-employee director for at least six
months. The annual automatic option grants are 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. Under this program, on the date of our
2004 annual meeting of stockholders, Messrs. Bock, Cash, Enloe, Walker and Wood
each received an automatic annual option grant to purchase 5,000 shares of
common stock at an exercise price per share of $50.03. In addition, directors
are eligible to receive option grants under the discretionary option grant
program of the 2000 Stock Incentive Plan. During fiscal 2004, Messrs. Bock,
Cash, Enloe, Walker and Wood each received a discretionary option grant to
purchase 5,000 shares of common stock at an exercise price per share of $31.77.
During fiscal 2005, it is anticipated that each non-employee director that has
served for at least six months will receive a discretionary option grant in
December 2005 to purchase 5,000 shares of common stock in addition to any
automatic option grant.
7
During fiscal 2004, cash compensation consisted of (a) $25,000 per year for
each non-employee director, (b) an additional $20,000 per year for the Chairman
of the Audit Committee, and (c) an additional $5,000 per year for Audit
Committee members (excluding the Chairman). Messrs. Bock, Cash, Enloe, Walker
and Wood were each paid $25,000 during fiscal 2004 pursuant to the cash
compensation plan. Additionally, Mr. Bock was paid $20,000 for his service as
Chairman of the Audit Committee and Messrs. Enloe and Wood were each paid $5,000
for their services on the Audit Committee during fiscal 2004.
During fiscal 2005, cash compensation is anticipated to consist of (a)
$25,000 per year for each non-employee director, (b) an additional $1,500 per
regular meeting of the Board of Directors for each non-employee director, (c) an
additional $20,000 per year for the Chairman of the Audit Committee, (d) an
additional $5,000 per year for Audit Committee members (excluding the Chairman),
(e) an additional $10,000 per year for the Chairman of the Compensation
Committee and (f) an additional $5,000 per year for the Chairman of the
Nominating and Corporate Governance Committee.
Payments under the cash compensation plan are generally paid in equal
quarterly installments on the last day of each fiscal quarter. The cash
compensation plan was instituted, based on a review of compensation provided to
directors of similarly-situated companies, to provide incentives to retain and
to attract 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
directors 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 I DIRECTORS LISTED ABOVE.
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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Our Audit Committee has appointed the firm of Ernst & Young LLP to serve as
our independent registered public accounting firm for the fiscal year ending
December 31, 2005. 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.
The following table presents fees for professional services rendered by
Ernst & Young LLP for fiscal years 2004 and 2003:
2004 2003
----------- ---------
Audit fees .................. $991,700 $239,700
Audit-related fees .......... 14,900 135,600
Tax fees .................... 116,300 69,700
All other fees .............. -- --
---------- --------
Total ....................... $1,122,900 $445,000
---------- --------
AUDIT FEES. Audit fees relate to services rendered in connection with the
audits of the annual financial statements and of management's assessment and the
operating effectiveness of internal control over financial reporting included in
our Form 10-K, the quarterly reviews of financial statements included in our
Forms 10-Q filings, Form S-8 consent procedures and statutory audits required
internationally.
AUDIT-RELATED FEES. Audit-related fees include services for assurance and
other related services, such as consultations concerning financial accounting
and reporting matters and due diligence related to mergers and acquisitions.
TAX FEES. Tax fees include services for tax compliance, research, and
technical tax advice.
ALL OTHER FEES. All other fees include the aggregate fees for products and
services provided by Ernst & Young LLP that are not reported under "Audit Fees",
"Audit-Related Fees" or "Tax Fees". There were no other fees in 2004 or 2003.
The Audit Committee is authorized by its charter to pre-approve all
auditing and permitted non-audit services to be performed by the Company's
independent registered public accounting firm. The Audit Committee reviews and
approves the independent registered public accounting firm's retention to audit
our financial statements, including the associated fee. The Audit Committee also
evaluates other known potential engagements of the independent registered public
accounting firm, including the scope of the proposed work and the proposed fees,
and approves or rejects each service, taking into account whether the services
are permissible under applicable law and the possible impact of each non-audit
service on the independent registered public accounting firm's independence from
management. At subsequent meetings, the Committee will receive updates on the
services actually provided by the independent registered public accounting firm,
and management may present additional services for approval. The Committee has
delegated to the Chairman of the Audit Committee the authority to evaluate and
approve engagements on behalf of the Committee in the event that a need arises
for pre-approval between Committee meetings. If the Chairman so approves any
such engagements, he will report that approval to the full Audit Committee at
its next meeting. During fiscal 2004, all such services were pre-approved in
accordance with the procedures described above.
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 registered public accounting firm 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
registered public accounting firm at any time during the year if it determines
9
that such a change would be in the best interests of Silicon Laboratories 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 REGISTERED PUBLIC ACCOUNTING FIRM
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2005.
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.
10
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, 2005 by (i)
all persons who were 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 then 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) ....................................................... 1,645,613 3.1%
Daniel A. Artusi(4) ....................................................... 197,012 *
Russell J. Brennan(5) ..................................................... 62,500 *
David R. Welland .......................................................... 3,985,131 7.6%
Gary R. Gay(6) ............................................................ 159,656 *
David P. Bresemann(7) ..................................................... 56,860 *
Jonathan D. Ivester(8) .................................................... 398,435 *
William G. Bock(9) ........................................................ 72,063 *
Harvey B. Cash(10) ........................................................ 445,067 *
R. Ted Enloe III(11) ...................................................... 40,000 *
Laurence G. Walker(12) .................................................... 40,028 *
William P. Wood(13) ....................................................... 545,776 1.0%
Entities deemed to be affiliated with AXA Financial, Inc.(14) ............. 8,163,613 15.7%
Entities deemed to be affiliated with FMR Corp. ("Fidelity")(15) .......... 7,479,685 14.4%
Entities deemed to be affiliated with Massachusetts Financial Services 4,051,790 7.8%
Company ("MFS")(16) ......................................................
Entities deemed to be affiliated with Goldman, Sachs & Co.(17) ............ 2,945,974 5.7%
All directors and executive officers as a group (16 persons)(18) .......... 10,250,360 19.1%
----------------
* 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.
11
(2) Percentage of ownership is based on 52,636,839 shares of common stock
outstanding on January 31, 2005. Shares of common stock subject to stock
options which are currently exercisable or will become exercisable within
60 days after January 31, 2005 are deemed outstanding for computing the
percentage for the person or group holding such options, but are not deemed
outstanding for computing the percentage for any other person or group.
(3) Includes 36,423 shares held in trusts for the benefit of Mr. Sooch's
children, 86,923 shares held in a limited partnership, and 107,166 shares
issuable upon exercise of stock options. Mr. Sooch shares voting and
investment power with respect to the 36,423 shares held in trusts for the
benefit of his children and the 86,923 shares held in the limited
partnership.
(4) Includes 110,099 shares issuable upon exercise of stock options.
(5) Includes 62,500 shares issuable upon exercise of stock options.
(6) Includes 106,858 shares issuable upon exercise of stock options.
(7) Includes 44,470 shares issuable upon exercise of stock options.
(8) Includes 110,500 shares held in a family trust and 110,649 shares issuable
upon exercise of stock options. Mr. Ivester has shared voting and
investment power with respect to the 110,500 shares held in the family
trust.
(9) Includes 64,375 shares issuable upon exercise of stock options.
(10) Includes 109,346 shares held in two trusts for the benefit of Mr. Cash's
family members and 35,000 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 40,000 shares issuable upon exercise of stock options.
(12) Includes 40,000 shares issuable upon exercise of stock options.
(13) Includes 480,776 shares held by Silverton Partners, of which Mr. Wood is
the general partner and 65,000 shares issuable upon exercise of stock
options.
(14) Pursuant to a Schedule 13G/A dated February 14, 2005 filed with the
Securities and Exchange Commission, AXA Financial, Inc. reported that as of
December 31, 2004 it and certain related entities had sole voting power
over 5,866,596 shares, shared voting power over 1,323,557 shares and sole
dispositive power over 8,163,613 and that its address is 1290 Avenue of the
Americas, New York, New York 10104.
(15) Pursuant to a Schedule 13G/A dated February 14, 2005 filed with the
Securities and Exchange Commission, Fidelity reported that as of December
31, 2004 it and certain related entities had sole voting power over 290,807
shares and sole dispositive power over 7,479,685 shares and that its
address is 82 Devonshire Street, Boston, Massachusetts 02109.
(16) Pursuant to a Schedule 13G dated February 8, 2005 filed with the Securities
and Exchange Commission, MFS reported that as of December 31, 2004 it and
certain related entities had sole voting power over 4,051,790 shares, sole
dispositive power over 4,051,790 shares and that its address is 500
Boylston Street, Boston, Massachusetts 02116.
(17) Pursuant to a Schedule 13G dated February 8, 2005 filed with the Securities
and Exchange Commission, Goldman, Sachs & Co. reported that as of December
31, 2004 it and certain related entities had shared voting power over
78,946 shares and shared dispositive power over 2,945,974 and that its
address is 85 Broad Street, New York, New York 10004.
(18) Includes an aggregate of 1,119,539 shares issuable upon exercise of stock
options.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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.
12
AUDIT COMMITTEE REPORT
The following is the report of the Audit Committee with respect to the
audit of the fiscal 2004 audited consolidated financial statements of Silicon
Laboratories Inc. (the "Company"):
Management is responsible for the Company's internal controls and the
financial reporting process. The independent registered public accounting firm
is responsible for performing an independent audit of the Company's consolidated
financial statements in accordance with the standards of the Public Accounting
Oversight Board (United States) and for issuing a report thereon. Additionally,
the independent registered public accounting firm is responsible for performing
an independent audit of management's assessment and the operating effectiveness
of internal controls over financial reporting and for issuing 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 registered public accounting firm. 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 registered public accounting firm. The Committee discussed with the
independent registered accounting firm matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Company's independent registered public accounting firm 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 registered public accounting firm that
firm's independence. The Audit Committee reviewed non-audit services provided by
its independent registered public accounting firm for the last fiscal year, and
determined that those services are not incompatible with maintaining the
independent registered public accounting firm's independence.
Based upon the Committee's discussion with management and the independent
registered public accounting firm and the Committee's review of the
representation of management and the reports of the independent registered
public accounting firm 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 January 1, 2005 filed
with the Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:
William G. Bock (Chairman)
R. Ted Enloe III
William P. Wood
13
EXECUTIVE COMPENSATION
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below is information regarding the executive officers and
directors of Silicon Laboratories as of January 31, 2005.
NAME AGE POSITION
----------------------------- ----- ------------------------------------------------
Navdeep S. Sooch ............ 42 Chairman of the Board
Daniel A. Artusi ............ 50 Chief Executive Officer, President and Director
Russell J. Brennan .......... 50 Chief Financial Officer
David R. Welland ............ 49 Vice President and Director
Gary R. Gay ................. 54 Vice President
David P. Bresemann .......... 39 Vice President
Jonathan D. Ivester ......... 49 Vice President
Derrell C. Coker ............ 51 Vice President
Bradley J. Fluke ............ 43 Vice President
Edmund G. Healy ............. 50 Vice President
William G. Bock ............. 54 Director
Harvey B. Cash .............. 66 Director
R. Ted Enloe III ............ 66 Director
Laurence G. Walker .......... 56 Director
William P. Wood ............. 49 Director
Navdeep S. Sooch ......... co-founded Silicon Laboratories in August 1996 and has served as Chairman of the
Board since our inception. Mr. Sooch served as our Chief Executive Officer from
our inception through the end of fiscal 2003. 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 Executive Officer and a member of our Board of Directors
since January 2004 and has served as our President since January 2003. He
previously served as our Chief Operating Officer from August 2001 to January
2004. 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, a producer of ultra-linear radio frequency power amplifiers for
wireless communications. Mr. Artusi studied electronics engineering at the Instituto
Tecnologico de Buenos Aires, Argentina from 1972 through 1976.
14
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.
David R. Welland ............ co-founded Silicon Laboratories in August 1996 and has served as a Vice President
and director since our inception and was appointed Fellow in March 2004. 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.
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 and in other marketing positions 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.
Jonathan D. Ivester ......... joined Silicon Laboratories in September 1997 as Vice President. From May 1984
to September 1997, Mr. Ivester was with Applied Materials, a supplier of
equipment and services to the semiconductor industry, 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.
15
Derrell C. Coker ......... joined Silicon Laboratories in December 2003 in connection with the acquisition of
Cygnal Integrated Products, Inc. and has served as a Vice President since March
2004. From the time he founded Cygnal in March 1999 until the acquisition in
December 2003, Mr. Coker served as Cygnal's President and Chief Executive
Officer. In April 1989, Mr. Coker founded Benchmarq Microelectronics, a
manufacturer of battery management electronics, and served as President and Chief
Executive Officer until May 1997, when he became Chairman of the Board. In
August 1998, Unitrode Corporation, a designer and supplier of power management
components, acquired Benchmarq Microelectronics. Mr. Coker served on the Board
of Directors of Unitrode Corporation until July 1999. From October 1984 to March
1989, Mr. Coker served as Vice President of World Wide Sales for Dallas
Semiconductor, a designer and manufacturer of a broad line of mixed-signal
semiconductors.
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.
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.
16
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
2004 was in excess of $100,000, for services rendered in all capacities to us
and our subsidiaries for the fiscal year ended January 1, 2005.
SUMMARY COMPENSATION TABLE
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------------- -----------------------
OTHER RESTRICTED SECURITIES
NAME AND ANNUAL STOCK UNDERLYING
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) AWARDS ($) OPTIONS
------------------ ----- ---------- --------- ------------------- ---------- ----------
Daniel A. Artusi ............ 2004 $373,173 $466,134 $ 1,500(2) -- 162,500
Chief Executive Officer 2003 280,000 543,790 1,500(2) -- 62,500
and President(1) 2002 280,000 406,500 1,500(2) -- 100,000
Gary R. Gay ................. 2004 189,712 258,460 1,500(2) -- 30,000
Vice President 2003 175,000 248,432 1,500(2) -- 25,000
2002 175,000 210,350 1,500(2) -- 35,000
Russell J. Brennan .......... 2004 229,712 208,418 1,500(2) -- 40,000
Chief Financial Officer 2003 215,000 84,982 72,883(2)(3) -- --
2002 63,673 57,500 3,371(4) -- 250,000
David P. Bresemann .......... 2004 184,519 215,290 1,500(2) -- 25,000
Vice President 2003 160,000 184,370 1,500(2) -- 25,000
2002 151,769 129,553 1,500(2) -- 40,000
Jonathan D. Ivester ......... 2004 184,712 197,760 1,500(2) -- 25,000
Vice President 2003 170,000 180,214 1,500(2) -- 20,000
2002 164,116 176,800 1,500(2) -- 35,000
----------------
(1) As of January 1, 2005, Mr. Artusi held 85,715 shares of restricted stock,
valued at $3,026,588.
(2) Includes a $1,500 contribution made by the company to match the first
$1,500 of contributions made by the named executive officer to his 401(k)
plan.
(3) Includes $71,383 of relocation expenses.
(4) Includes $3,371 of relocation expenses.
17
STOCK OPTIONS
The following table contains information concerning the stock options
granted during the 2004 fiscal year to our executive officers named in the
Summary Compensation Table of the Executive Compensation section of this Proxy
Statement. All the grants were made under our 2000 Stock Incentive Plan. Unless
otherwise indicated, the exercise prices represent the fair market value of the
common stock on the grant date.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS EXERCISE MARKET PRICE APPRECIATION
UNDERLYING GRANTED TO PRICE PRICE ON FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PER SHARE DATE OF EXPIRATION ------------------------
NAME GRANTED FISCAL YEAR(2) ($/SH)(3) GRANT DATE 5%($) 10%($)
---- ---------- -------------- --------- -------- ---------- ---------- ----------
Daniel A. Artusi ........ 100,000(4) 5.27% $45.41 $45.41 01/05/2014 $2,855,811 $7,237,185
62,500(5) 3.29% 33.17 33.17 08/10/2014 1,303,777 3,304,027
Gary R. Gay ............. 30,000(5) 1.58% 33.17 33.17 08/10/2014 625,813 1,585,933
Russell J. Brennan ...... 40,000(5) 2.11% 33.17 33.17 08/10/2014 834,417 2,114,577
David P. Bresemann ...... 25,000(5) 1.32% 33.17 33.17 08/10/2014 521,511 1,321,611
Jonathan D. Ivester ..... 25,000(5) 1.32% 33.17 33.17 08/10/2014 521,511 1,321,611
----------------
(1) The potential realizable value is calculated from the closing price of our
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 with an exercise price equal to the fair market value of the
option shares on the grant date.
(2) Percentage is based on 1,899,300 shares underlying options granted to
employees during the fiscal year ended January 1, 2005 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 and vested 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 January 5, 2004 and become exercisable with respect
to (i) twenty percent (20%) of the option shares upon optionee's completion
of one year of service measured from January 5, 2004 and (ii) the balance
of the option shares in a series of 48 equal successive monthly
installments over the 48 month period measured from the first year
anniversary of January 5, 2004.
(5) Options were granted on August 10, 2004 and become exercisable with respect
to (i) twenty percent (20%) of the option shares upon optionee's completion
of one year of service measured from August 10, 2004 and (ii) the balance
of the option shares in a series of 48 equal successive monthly
installments over the 48 month period measured from the first year
anniversary of August 10, 2004.
18
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
2004 fiscal year and unexercised options held by them as of the end of the 2004
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 ($)(2)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ -------------- ----------- ------------- ----------- -------------
Daniel A. Artusi ............ 33,025 $1,088,460 63,641 441,668 $ 707,913 $3,244,093
Gary R. Gay ................. -- -- 99,442 108,558 1,862,885 879,845
Russell J. Brennan .......... 8,334 249,353 50,000 177,501 683,000 1,963,864
David P. Bresemann .......... 13,000 398,122 40,637 105,363 621,961 866,093
Jonathan D. Ivester ......... 24,350 664,797 103,732 96,918 2,406,347 832,205
----------------
(1) Based on the market price of the purchased shares on the exercise date less
the option exercise price paid for those shares.
(2) Based upon the closing selling price per share of our common stock on the
Nasdaq National Market on the last day of the 2004 fiscal year, which was
$35.31, less the option exercise price payable per share.
19
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of January 1, 2005 with respect
to shares of our common stock that may be issued under our existing equity
compensation plans. The table does not include information with respect to
shares subject to outstanding options assumed by us in connection with the
acquisition of a company which originally granted those options. Footnote (4) to
the table sets forth the total number of shares of our common stock issuable
upon the exercise of those assumed options as of January 1, 2005, and the
weighted average exercise price of those options. No additional options may be
granted under such assumed plan.
EQUITY COMPENSATION PLAN INFORMATION
A B C
-------------------- ----------------- ---------------------------
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES WEIGHTED AVERAGE FUTURE ISSUANCE UNDER
TO BE ISSUED UPON EXERCISE PRICE OF EQUITY COMPENSATION
EXERCISE OF OUTSTANDING PLANS (EXCLUDING SECURITIES
PLAN CATEGORY OUTSTANDING OPTIONS OPTIONS REFLECTED IN COLUMN A)
------------- -------------------- ----------------- ---------------------------
Equity Compensation Plans
Approved by Shareholders(1) ......... 9,980,487(2) $ 27.54 3,465,914(3)
Equity Compensation Plans Not
Approved by Shareholders ............ -- -- --
------------ ------- ------------
Total ................................ 9,980,487 $ 27.54 3,465,914
----------------
(1) Consists of our 2000 Stock Incentive Plan and our Employee Stock Purchase
Plan.
(2) Excludes purchase rights accruing under our Employee Stock Purchase Plan.
Under the Employee Stock Purchase Plan, each eligible employee may
contribute up to 15% of his or her base salary to purchase shares of our
common stock at semi-annual intervals on the last U.S. business day of
April and October each year at a purchase price per share equal to 85% of
the lower of (i) the closing selling price per share of our common stock on
the employee's entry date into the two-year offering period in which that
semi-annual purchase date occurs or (ii) the closing selling price per
share on the semi-annual purchase date.
(3) Consists of shares available for future issuance under our Employee Stock
Purchase Plan and our 2000 Stock Incentive Plan. As of January 1, 2005, an
aggregate of 1,008,595 shares of our common stock were available for
issuance under our Employee Stock Purchase Plan and 2,457,319 shares of our
common stock were available for issuance in connection with future awards
under our 2000 Stock Incentive Plan. In addition, the share reserves under
our Employee Stock Purchase Plan and 2000 Stock Incentive Plan increase on
the first trading day of January of each calendar year by 0.5% and 5%,
respectively, of the total number of shares of our common stock outstanding
on the last trading day of the immediately preceding calendar year (subject
to a maximum annual increase of 250,000 and 3,000,000 shares,
respectively). The share reserve under our 2000 Stock Incentive Plan also
increases to the extent we repurchase shares pursuant to our repurchase
rights under our prior plan.
(4) The table does not include information for the equity compensation plan
assumed by the Company in connection with the acquisition of a company,
which originally established such plan. As of January 1, 2005, a total of
655 shares of our common stock were issuable upon exercise of outstanding
options under such assumed plan. The weighted average exercise price of
those outstanding options is $35.40 per share. No additional options may be
granted under such assumed plan.
20
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, 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.
All outstanding restricted stock and stock options issued to our executive
officers named in the Summary Compensation Table of the Executive Compensation
section of this Proxy Statement will become fully exercisable and vested if (i)
a change-in-control occurs and such options and restricted stock are not assumed
or (ii) a change-in-control occurs and the officer is demoted, relocated or
terminated other than for misconduct within 18 months following such
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.
21
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 2004 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.
BASE SALARY. In setting base salaries, the Compensation Committee engaged a
nationally recognized executive compensation consulting firm. The consulting
firm provided compensation data for comparable positions from six nationally
published surveys. The base salary for each officer reflects the salary levels
for comparable positions in the published surveys, 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 performance metrics
and company-wide operating profits as a percent of revenue, which may exclude
certain non-cash charges or otherwise be adjusted at the discretion of the
Compensation Committee. The targeted cash awards are based on the published
survey data for each position. Typically, the Compensation Committee reviews the
variable performance targets in conjunction with the fiscal year operating plan
discussions.
Non-officer employees also participate in the variable cash compensation
plan. Bonuses are typically paid quarterly to eligible individuals according to
a written plan which prescribes a payout percentage of base salary based on the
overall company financial performance. The payout has typically been in the
range of 5 to 1.5% of base salary for most employees.
LONG TERM INCENTIVES. Generally, stock option grants to executive officers
are made at the discretion of the Compensation Committee. Each grant is designed
to align the interests of the executive officer with those of the stockholders
and to 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 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.
Accordingly, the option will provide a return to the executive officer only if
he or she remains employed 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,
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.
22
CEO COMPENSATION. In setting the total compensation payable to the Chief
Executive Officer for the 2004 fiscal year, the Compensation Committee
considered published survey data provided by our compensation consulting firm as
well as the compensation paid to the chief executive officers of seven companies
selected for comparative purposes. The Chief Executive Officer's compensation is
based on the same criteria described above with respect to executive officers
generally. The Chief Executive Officer's variable cash compensation was tied to
the company's revenue and operating profit as a percentage of revenue.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code precludes the company from taking a deduction for
compensation in excess of $1 million for the officers named in the Summary
Compensation Table. Certain performance-based compensation is specifically
excluded from the deduction limit. The company's policy is to qualify, to the
extent reasonable, the compensation of executive officers for deductibility
under applicable tax laws. However, the Compensation Committee believes that
it's primary responsibility is to provide a compensation program that will
attract, retain and reward the executives who will further the Company's success
and that the loss of a tax deduction may be necessary in some circumstances.
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)
Harvey B. Cash
Laurence G. Walker
23
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 Electronic Components Index.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG SILICON LABORATORIES INC.,
THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
[THE FOLLOWING INFORMATION IS REPRESENTED BY A
PERFORMANCE GRAPH IN THE PRINTED DOCUMENT]
BASE INDEXED RETURN
PERIOD YEARS ENDING
COMPANY/INDEX 3/24/00 12/30/00 12/29/01 12/28/02 1/30/04 1/01/05
SILICON LABORATORIES INC. 100 46.37 109.77 64.35 142.90 113.90
NASDAQ ELECTRONIC COMPONENTS 100 49.44 40.00 27.39 40.61 44.10
NASDAQ STOCK MARKET (U.S.) INDEX 100 48.15 33.64 17.97 33.92 26.75
(1) The graph covers the period from March 24, 2000, the commencement of
our initial public offering of shares of our common stock, through
January 1, 2005.
(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.
24
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 2004 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 2004 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, except that Mr. Coker failed to
timely file a Form 4 with respect to one transaction.
ANNUAL REPORT
A copy of the annual report for the 2004 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 February 15, 2005. Stockholders may obtain a copy of our annual
report, without charge, by writing to our Corporate Secretary at our principal
executive offices located at 4635 Boston Lane, Austin, Texas 78735.
THE BOARD OF DIRECTORS OF SILICON LABORATORIES INC.
Dated: March 14, 2005
25
EXHIBIT A
SILICON LABORATORIES INC.
AUDIT COMMITTEE CHARTER
I. MEMBERSHIP:
The Audit Committee of Silicon Laboratories Inc. (the "Corporation") shall be
comprised of at least three members of the Corporation's Board of Directors (the
"Board"). The members of the Audit Committee shall be appointed by the Board and
shall collectively meet the applicable independence, financial literacy and
other requirements of The NASDAQ Stock Market ("Nasdaq") and applicable federal
law. Members of the Audit Committee may be removed at any time, with or without
cause, by the Board.
II. QUORUM:
A majority of the members of the Audit Committee shall constitute a quorum.
III. FREQUENCY:
The Audit Committee shall meet as required either on the dates of regular Board
meetings or in special meetings as appropriate.
IV. PURPOSE:
The purpose of the Audit Committee is to oversee the accounting and financial
reporting processes of the Corporation and the audits of the Corporation's
financial statements.
V. LIMITATIONS:
The Audit Committee shall not have authority to: (1) adopt, amend, or repeal the
Corporation's Bylaws; (2) fill vacancies on the Audit Committee or change its
membership; (3) amend the Corporation's Certificate of Incorporation; (4) act on
matters assigned to other committees of the Board; or (5) take any action
prohibited by the Corporation's Certificate of Incorporation, Bylaws or
applicable law.
VI. MINUTES:
Minutes will be kept of each meeting of the Audit Committee and will be provided
to each member of the Board. Unless otherwise restricted by the Corporation's
Certificate of Incorporation or Bylaws, any action that may be taken at any
meeting of the Audit Committee may be taken without a meeting, if all members of
the Audit Committee consent thereto in writing, and the writing is filed with
the minutes of proceedings of such committee. Any action of the Audit Committee
shall be subject to revision, modification, rescission, or alteration by the
Board, provided that no rights of third parties shall be affected by any such
revision, modification, rescission, or alteration.
VII. POWERS, RESPONSIBILITIES AND DUTIES:
To fulfill its responsibilities and duties, the Audit Committee shall:
o Be directly responsible for the appointment, compensation, retention
and oversight of the work of any registered public accounting firm
engaged for the purpose of preparing or issuing an audit report or
performing other audit, review or attest services for the Corporation,
and each such registered public accounting firm must report directly
to the Audit Committee. Periodically consider the rotation of the
Corporation's independent auditors.
o Resolve any disagreements between management and the Corporation's
independent auditors regarding financial reporting.
A-1
o Review the organization's annual and quarterly financial statements
and quarterly earnings press releases.
o Pre-approve all auditing and permitted non-audit services to be
performed by the Corporation's auditors.
o Obtain, on an annual basis, a formal written statement from the
independent auditor delineating all relationships between the auditor
and the Corporation consistent with Independence Standards Board
Standard 1, and engage in a dialogue with the auditor with respect to
any disclosed relationships or services that may impact the
objectivity and independence of the auditor and take, or recommend
that the Board take, appropriate action to oversee the independence of
the independent auditor.
o Following completion of the annual audit, review separately with the
independent auditor, the internal auditing department, if any, and
management any significant difficulties encountered during the course
of the audit.
o Establish procedures for the receipt, retention and treatment of
complaints received by the Corporation regarding accounting, internal
accounting controls or auditing matters, as well as for the
confidential, anonymous submission by the Corporation's employees of
concerns regarding questionable accounting or auditing matters.
o Retain independent counsel, experts and other advisors as the Audit
Committee determines necessary to carry out its duties.
o Receive appropriate funds, as determined by the Audit Committee, from
the Corporation for payment of (i) compensation to any registered
public accounting firm engaged for the purpose of preparing or issuing
an audit report or performing other audit, review or attest services
for the Corporation, (ii) compensation to any independent counsel,
experts and other advisors employed by the Audit Committee, and (iii)
ordinary administrative expenses of the Audit Committee that are
necessary or appropriate in carrying out its duties.
o Review and approve all "related-party transactions" as such term is
defined in Item 404 of Regulation S-K.
o Prepare the report of the Audit Committee required to be included in
the Corporation's annual proxy statement.
o Review and reassess the adequacy of this Charter at least annually and
recommend any changes to the Board.
o Perform any other activities consistent with this Charter, the
Corporation's Bylaws, Nasdaq rules and governing law, as the Audit
Committee or the Board deems necessary or appropriate, including,
without limitation, the delegation of authority to one or more members
of the Audit Committee of authority to carry out certain activities
set forth hereunder.
A-2
EXHIBIT B
SILICON LABORATORIES INC.
CORPORATE GOVERNANCE POLICY
PURPOSE
The Board of Directors (the "Board") of Silicon Laboratories Inc. (the
"Company") has adopted this Corporate Governance Policy (this "Policy"). This
Policy is subject to requirements of the charters and bylaws of the Company, as
well as applicable law. The Board will review this Policy and other aspects of
the Company's corporate governance as often as it deems necessary and may modify
this Policy or waive any element of this Policy at any time.
ROLE OF DIRECTORS
The fundamental role of the directors is to exercise their business
judgment to act in what they reasonably believe to be the best interests of the
Company and its stockholders. In fulfilling that responsibility, the directors
may reasonably rely on the honesty and integrity of the Company's senior
management and expert legal, accounting, financial and other advisors.
DIRECTOR QUALIFICATIONS
Each director should contribute to the experience, skills and other
characteristics required of a properly functioning Board. Criteria include their
personal and professional integrity, depth and breadth of experience, ability to
make independent analytical inquiries, ability to understand the Company's
business, willingness to devote adequate attention and time to duties of the
Board and such other criteria as is deemed relevant by the Nominating and
Corporate Governance Committee. The backgrounds and qualifications of the
directors, considered as a group, should provide a diverse mix of experience,
knowledge and skills.
DIRECTOR INDEPENDENCE
The Board believes that, as a matter of policy and consistent with
applicable laws, rules and regulations, independent directors should constitute
at least a majority of the Board.
DIRECTOR OUTSIDE ACTIVITIES
Directors must be willing to devote sufficient time to carry out their
duties and responsibilities effectively, and should be committed to serve on the
Board for an extended period of time. Each Board member is expected to ensure
that other existing and future commitments do not conflict with or materially
interfere with the member's service as a director. Directors are expected to
avoid any action, position or interest that conflicts with an interest of the
Company, or gives the appearance of a conflict.
A director who also serves as the Company's Chief Executive Officer should
not serve on more than one board of a public company in addition to the Board
and should not serve on the audit committee of any public company. Other
directors should limit their service on the boards of other public companies so
as not to impair the director's service on the Board. All directors should
inform the Chairman of the Nominating and Corporate Governance Committee prior
to joining the board of another public company to ensure that any potential
conflicts, excessive time demands or other issues are carefully considered.
Directors should offer their resignation to the Board in the event of any
significant change in their personal circumstances, such as a material change in
their principal job responsibilities.
B-1
DIRECTOR NOMINATION PROCESS
The Nominating and Corporate Governance Committee will review the needs of
the Board for various experience, skills and other characteristics in
determining the director candidates to be nominated at the annual meeting. The
Nominating and Corporate Governance Committee will evaluate candidates for
directors proposed by directors, stockholders or management in light of the
Director Qualification standards. The process for stockholder recommendations
will be determined from time to time by the Nominating and Corporate Governance
Committee and shall be in compliance with the Company's Bylaws and all
applicable laws, rules and regulations. If the Nominating Committee believes
that the Board requires additional candidates for nomination, the Committee will
engage, as appropriate, a third party search firm to assist in identifying
qualified candidates. The nominating process may include interviews and
background and reference checks at the discretion of the Nominating and
Corporate Governance Committee.
RETIREMENT AGE
The Board believes that 75 is an appropriate retirement age for all
directors.
TERM LIMITS
The Board does not believe it should establish term limits. While term
limits could help ensure that there are fresh ideas and viewpoints available to
the Board, they hold the disadvantage of losing the contribution of Directors
who have been able to develop, over a period of time, increasing insight into
the Company and its operations and, therefore, provide an increasing
contribution to the Board as a whole.
SIZE OF BOARD
The Board currently has eight members. The Board reviews from time to time
the appropriate size of the Board. The Board will consider changing its size to
accommodate outstanding candidates or to satisfy specific governance needs.
SEPARATION OF CHAIRMAN AND CHIEF EXECUTIVE OFFICER
The Board separates the role of Chairman of the Board from the role of
Chief Executive Officer, believing that this currently provides the most
efficient and effective leadership model for the Company.
STOCK OWNERSHIP
The board believes that directors and officers should generally own stock
in the Company in order to align their interests with the long-term interests of
the Company's stockholders.
EXECUTIVE SESSIONS OF INDEPENDENT DIRECTORS
The independent directors of the Board will generally meet in executive
session at the end of each regularly scheduled Board meeting and at any other
time requested by a majority of the independent directors.
BOARD ACCESS TO MANAGEMENT
The independent members of the Board shall have access to Company employees
in order to obtain any information they deem appropriate to fulfill their
duties. The Board may establish a process for such inquiries. Management is
encouraged to invite Company employees to Board meetings where management
participation will provide the Board with additional insight into the matters
being considered.
B-2
RETENTION OF ADVISORS/CONSULTANTS
The Board and each committee of the Board shall have the authority to
retain outside financial, legal or other advisors as they deem appropriate, and
shall have the authority to obtain advice, reports or opinions from internal and
external counsel and advisors, without consulting with or obtaining approval
from any officer of the Company.
BOARD AND COMMITTEE EVALUATION
The Board and each committee will perform a periodic self-evaluation. Each
director will be requested to participate in an assessment of the effectiveness
of the Board and any committee on which such director serves. The assessment of
each committee will be reported by the chairman of such committee to the full
Board.
COMMUNICATIONS BY STOCKHOLDERS WITH DIRECTORS
Stockholders may communicate with any or all Company directors by
transmitting written correspondence addressed to:
Board of Directors
c/o Corporate Secretary
Silicon Laboratories Inc.
4635 Boston Lane
Austin, TX 78735
Any such communication must contain (i) a representation that the
stockholder is a holder of record of stock of the corporation, (ii) the name and
address, as they appear on the corporation's books, of the stockholder sending
such communication and (iii) the class and number of shares of the corporation
that are beneficially owned by such stockholder. The Corporate Secretary will
forward such communications to the Board or the specified individual director to
whom the communication is directed unless such communication is deemed unduly
hostile, threatening, illegal or similarly inappropriate, in which case the
Corporate Secretary has the authority to discard the communication or to take
appropriate legal action regarding such communication.
ATTENDANCE OF DIRECTORS AT ANNUAL STOCKHOLDER MEETINGS
The Company will make every effort to schedule its annual meeting of
stockholders at a time and date to maximize attendance by directors. All
directors shall make every reasonable effort to attend the Company's annual
meeting of stockholders.
COMMITTEES
The Board shall have an Audit Committee, a Compensation Committee, and a
Nominating and Corporate Governance Committee. The Board may from time to time
establish additional committees as necessary or appropriate. Committee members
will be appointed by the Board upon the recommendation of the Nominating and
Corporate Governance Committee. Consideration should be given to rotating
committee members periodically, but rotation should not be mandated as a policy.
Each committee will generally have its own charter. The charters will set forth
the purposes of the committees as well as qualifications for committee
membership.
The Chairman of each committee, in consultation with the committee members
and senior management, will determine the frequency and length of the committee
meetings consistent with any requirements set forth in the committee's charter.
The Chairman of each committee, in consultation with the appropriate members of
the committee and management, will develop the committee's agenda.
B-3
SUCCESSION PLANNING
The Board (or a committee thereof) shall conduct a periodic review of the
Company's succession planning, including policies and principles for Chief
Executive Officer selection and succession in the event of an emergency or the
retirement of the Chief Executive Officer. If such review is conducted by a
committee, the committee shall report its recommendation to the Board for
approval.
PROHIBITION ON LOANS
The Company shall not make any loan to any director or executive officer.
B-4
ANNUAL MEETING OF STOCKHOLDERS OF
SILICON LABORATORIES INC.
APRIL 21, 2005
Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.
- Please detach along perforated line and mail in the envelope provided. -
--------------------------------------------------------------------------------
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR
VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]
--------------------------------------------------------------------------------
1.The Election of Directors: FOR AGAINST ABSTAIN
2. To ratify the appointment of Ernst & [ ] [ ] [ ]
CLASS I NOMINEES: Young LLP as the independent
[ ] FOR ALL NOMINEES o Navdeep S. Sooch registered public accounting firm of
o William P. Wood Silicon Laboratories Inc. for the
[ ] WITHHOLD AUTHORITY o Laurence G. Walker fiscal year ending December 31,
FOR ALL NOMINEES 2005.
[ ] FOR ALL EXCEPT In accordance with the discretion of the proxy holders, to act upon
(See instructions below) all matters incident to the conduct of the meeting and upon other
matters as may properly come before the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE DIRECTORS
LISTED ABOVE AND IN FAVOR OF THE APPOINTMENT OF ERNST & YOUNG LLP.
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.
INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL
EXCEPT" and fill in the circle next to
each nominee you wish to withhold, as
shown here: o
To change the address on your account, please
check the box at right and indicate your new [ ]
address in the address space above. Please
note that changes to the registered name(s) on
the account may not be submitted via this
method.
Signature of Stockholder ________________________ Date: __________ Signature of Stockholder _______________________ Date: _________
NOTE: Please sign exactly as your name or names appear on this Proxy. When
shares are held jointly, each holder should sign. When signing as
executor, administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full corporate
name by duly authorized officer, giving full title as such. If the signer
is a partnership, please sign in partnership name by authorized person.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
SILICON LABORATORIES INC.
PROXY
ANNUAL MEETING OF STOCKHOLDERS, APRIL 21, 2005
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 Daniel A. Artusi, 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 21, 2005 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 CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
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