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Leadis Technology DEF 14A 2007 Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ) Filed by the Registrant þ
Filed by a Party other than the Registrant o Check the appropriate box:
Leadis Technology, Inc .
Payment of Filing Fee (Check the appropriate box):
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LEADIS
TECHNOLOGY, INC.
Sunnyvale Business Park 800 W. California Avenue, Suite 200 Sunnyvale, CA 94086 NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Leadis Technology, Inc., a Delaware corporation
(the “Company”). The meeting will be held on
Wednesday, June 6, 2007 at 11:30 a.m. local time at
the Company’s offices located at Sunnyvale Business Park,
800 W. California Avenue, Suite 200, Sunnyvale, CA 94086
for the following purposes:
1. To elect 2 directors to hold office until the 2010
Annual Meeting of Stockholders.
2. To ratify the selection by the Audit Committee of the
Board of Directors of PricewaterhouseCoopers LLP as the
independent registered public accounting firm of the Company for
its fiscal year ending December 31, 2007.
3. To conduct any other business properly brought before
the meeting.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the Annual Meeting is April 18, 2007.
Only stockholders of record at the close of business on that
date may vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
/s/ John K. Allen
John K. Allen
Secretary
Sunnyvale, California
April 30, 2007
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy, as
instructed in these materials, as promptly as possible in order
to ensure your representation at the meeting. A return envelope
(which is postage prepaid if mailed in the United States) is
enclosed for your convenience. Even if you have voted by proxy,
you may still vote in person if you attend the meeting. Please
note, however, that if your shares are held of record by a
broker, bank or other nominee and you wish to vote at the
meeting, you must obtain a proxy issued in your name from that
record holder.
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LEADIS
TECHNOLOGY, INC.
Sunnyvale Business Park 800 W. California Avenue, Suite 200 Sunnyvale, California 94086
FOR THE 2007 ANNUAL MEETING OF
STOCKHOLDERS
June 6, 2007
QUESTIONS
AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
We sent you this proxy statement and the enclosed proxy card
because the Board of Directors (sometimes referred to as the
“Board”) of Leadis Technology, Inc. (sometimes
referred to as the “Company” or “Leadis”) is
soliciting your proxy to vote at the 2007 Annual Meeting of
Stockholders. You are invited to attend the annual meeting to
vote on the proposals described in this proxy statement.
However, you do not need to attend the meeting to vote your
shares. Instead, you may simply complete, sign and return the
enclosed proxy card.
The Company intends to mail this proxy statement and
accompanying proxy card on or about May 2, 2007 to all
stockholders of record as of the record date entitled to vote at
the annual meeting.
Only stockholders of record at the close of business on
April 18, 2007 will be entitled to vote at the annual
meeting. On this record date, there were 29,423,205 shares
of common stock outstanding and entitled to vote.
If on April 18, 2007 your shares were registered directly
in your name with Leadis’ transfer agent, Mellon Investor
Services, then you are a stockholder of record. As a stockholder
of record, you may vote in person at the meeting or vote by
proxy. Whether or not you plan to attend the meeting, we urge
you to fill out and return the enclosed proxy card as instructed
below to ensure your vote is counted.
If on April 18, 2007 your shares were held, not in your
name, but rather in an account at a brokerage firm, bank,
dealer, or other similar organization, then you are the
beneficial owner of shares held in “street name” and
these proxy materials are being forwarded to you by that
organization. The organization holding your account is
considered to be the stockholder of record for purposes of
voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent on how to vote
the shares in your account. You are also invited to attend the
annual meeting. However, since you are not the stockholder of
record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or
other agent.
There are two matters scheduled for a vote at the annual meeting:
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You may either vote “For” all the nominees to the
Board of Directors or you may “Withhold” your vote for
any nominee you specify. For each of the other matters to be
voted on, you may vote “For” or “Against” or
abstain from voting. The procedures for voting are fairly simple:
If you are a stockholder of record, you may vote in person at
the annual meeting or vote by proxy using the enclosed proxy
card. Whether or not you plan to attend the meeting, we urge you
to vote by proxy to ensure your vote is counted. You may still
attend the meeting and vote in person if you have already voted
by proxy.
If you are a beneficial owner of shares registered in the name
of your broker, bank, or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from Leadis. Simply complete
and mail the proxy card to ensure that your vote is counted. To
vote in person at the annual meeting, you must obtain a valid
proxy from your broker, bank, or other agent. Follow the
instructions from your broker or bank included with these proxy
materials, or contact your broker or bank to request a proxy
form.
On each matter to be voted upon, you have one vote for
each share of common stock you owned as of April 18, 2007.
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted “For” the
election of all nominees for director and “For” the
ratification of PricewaterhouseCoopers LLP as the independent
registered public accounting firm of the Company for its fiscal
year ending December 31, 2007. If any other matter is
properly presented at the meeting, your proxy (one of the
individuals named on your proxy card) will vote your shares
using his or her best judgment.
We will bear the entire cost of soliciting proxies. In addition
to these mailed proxy materials, our directors and employees may
also solicit proxies in person, by telephone, or by other means
of communication. Directors and employees will not be paid any
additional compensation for soliciting proxies. We may also
reimburse brokerage firms, banks and other agents for the cost
of forwarding proxy materials to beneficial owners.
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
Yes. You can revoke your proxy at any time before the final vote
at the meeting. If you are the record holder of your shares, you
may revoke your proxy in any one of three ways:
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If your shares are held by your broker or bank as a nominee or
agent, you should follow the instructions provided by your
broker or bank to revoke your proxy.
Votes will be counted by the inspector of election appointed for
the meeting, who will separately count “For” and
“Withhold” and, with respect to proposals other than
the election of directors, “Against” votes,
abstentions and broker non-votes. Abstentions will be counted
towards the vote total for each proposal, and will have the same
effect as “Against” votes. Broker non-votes have no
effect and will not be counted towards the vote total for any
proposal.
If your shares are held by your broker as your nominee (that is,
in “street name”), you will need to obtain a proxy
form from the institution that holds your shares and follow the
instructions included on that form regarding how to instruct
your broker to vote your shares. If you do not give instructions
to your broker, your broker can vote your shares with respect to
“discretionary” items, but not with respect to
“non-discretionary” items. Discretionary items are
proposals considered routine under the rules of the New York
Stock Exchange on which your broker may vote shares held in
street name in the absence of your voting instructions. On
non-discretionary items for which you do not give your broker
instructions, the shares will be treated as broker non-votes.
A quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if at least a majority of the outstanding
shares are represented by stockholders present at the meeting or
by proxy. On the record date, there were 29,423,205 shares
outstanding and entitled to vote.
Your shares will be counted towards the quorum only if you
submit a valid proxy (or one is submitted on your behalf by your
broker, bank or other nominee) or if you vote in person at the
meeting. Abstentions and broker non-votes will be counted
towards the quorum requirement. If there is no quorum, either
the chairman of the meeting or a majority of the votes present
at the meeting may adjourn the meeting to another date.
Preliminary voting results will be announced at the Annual
Meeting. Final voting results will be published in the
Company’s quarterly report on
Form 10-Q
for the second quarter of 2007.
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Proposal 1
Our Board of Directors is divided into three classes:
Class I, Class II and Class III. There are
currently three directors in Class I and Class II and
two directors in Class III, and each class has a three-year
term. Vacancies on the Board may be filled only by persons
elected by a majority of the remaining directors. A director
elected by the Board to fill a vacancy in a class shall serve
for the remainder of the full term of that class, and until the
director’s successor is elected and qualified. The
directors comprising each class are as follows:
There have been several changes in the composition of the Board
since our 2006 annual meeting of stockholders. Sung Tae
(“Steve”) Ahn voluntarily resigned from the Board in
September 2006, and Arati Prabhakar and Lip-Bu Tan each
voluntarily resigned from the Board in November 2006.
Mr. Bynum was appointed to the Board in November 2006 and
Mr. Chauvin was appointed to the Board in March 2007.
Mr. Goldman is currently a director of the Company who was
appointed by the Board prior to our 2004 initial public offering
upon recommendation from a member of our management team.
Mr. McBurnie also is currently a director of the Company
and was originally recommended for election to the Board by the
Nominating and Corporate Governance Committee. If elected at the
upcoming annual meeting, Mr. Goldman and Mr. McBurnie
each would serve until the 2010 annual meeting of stockholders
and until his successor is elected and has qualified, or until
the earlier of his death, resignation or removal. Following are
brief biographies for Mr. Goldman and Mr. McBurnie.
Nominees
for Election for a Three-Year Term Expiring at the 2010 Annual
Meeting
Kenneth Goldman, age 57, has been a member of our
Board of Directors since January 2004. Mr. Goldman has
served as Chief Financial Officer of Dexterra, Inc., a provider
of mobile enterprise software, since January 2007. From February
2006 through March 2006, Mr. Goldman served as Senior Vice
President of Oracle Corporation, an enterprise software company.
From August 2000 through January 2006, Mr. Goldman served
as Senior Vice President, Finance and Administration and Chief
Financial Officer of Siebel Systems, Inc., a supplier of
customer software solutions and series that was acquired by
Oracle Corporation. From July 1996 to July 2000,
Mr. Goldman served as Senior Vice President of Finance and
Chief Financial Officer of Excite@Home, Inc. From 1992 to 1996,
Mr. Goldman served as Senior Vice President of Finance and
Chief Financial Officer of Sybase, Inc., a global enterprise
software company. Mr. Goldman was a member of the Financial
Accounting Standards Advisory Council from December 1999 to
December 2003. Mr. Goldman is a member of the board of
directors of Juniper Networks, Inc. and Bigband Networks, Inc.,
and a member of the board of trustees of Cornell University.
Douglas McBurnie, age 64, has been a member of our
Board of Directors since November 2005. Mr. McBurnie is a
retired executive. Since 1998, Mr. McBurnie has served as a
consultant to and director for several public and private
technology companies. From August 1997 to October 1998,
Mr. McBurnie served as Senior Vice President, Computer,
Consumer & Network Products Group at VLSI. Before
joining VLSI, Mr. McBurnie served in several capacities for
National Semiconductor, a semiconductor company, from June 1994
to August 1997, most recently as Senior Vice President and
General Manager of its Communications and Consumer Group.
Mr. McBurnie holds a B.A. degree from Baldwin Wallace
College.
The Board Of Directors
Recommends
A Vote In Favor Of Each Named Nominee.
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Corporate
Governance
The Nasdaq Global Stock Market (“Nasdaq”) listing
standards require a majority of the members of our Board of
Directors to qualify as “independent,” as
affirmatively determined by the Board. The Board consults with
the Company’s counsel to ensure that the Board’s
determinations are consistent with all relevant securities and
other laws and regulations regarding the definition of
“independent,” including those set forth in pertinent
Nasdaq listing standards, as in effect from time to time.
Consistent with these considerations, the Board affirmatively
has determined that all of the Company’s non-employee
directors are independent directors within the meaning of the
applicable Nasdaq listing standards. Mr. Alvarez and
Dr. Lee do not qualify as independent because they are
employees of the Company.
In March 2004, the Board adopted written corporate governance
guidelines, which are available on the investor relations
portion of our corporate website at www.leadis.com.
1
These guidelines set forth the practices the Board will follow
with respect to board composition and selection, board meetings
and involvement of senior management, Chief Executive Officer
performance evaluation and succession planning, and board
committees and compensation. These guidelines may be reviewed
and modified by the Board from time to time.
The Company has adopted a Code of Conduct that applies to all
officers, directors and employees, including the principal
executive officer, principal financial officer and principal
accounting officer. The Code of Conduct is available on the
investor relations portion of our corporate website at
www.leadis.com. If the Company makes any substantive
amendments to the Code of Conduct or grants any waiver from a
provision of the Code to any executive officer or director, the
Company will promptly disclose the nature of the amendment or
waiver on its website.
The Board met seven times during the 2006 fiscal year. Each
director attended 75% or more of the aggregate of the meetings
of the Board and of the committees on which he or she served,
held during the period for which he or she was a director or
committee member, respectively. In compliance with applicable
Nasdaq listing standards, in the 2006 fiscal year the
Company’s independent directors met four times in regularly
scheduled executive sessions at which only independent directors
were present. Mr. Saltich has been appointed lead
independent director and presides over the executive sessions of
the independent directors.
The Board has three committees: an Audit Committee, a
Compensation Committee and a Nominating and Corporate Governance
Committee. The Board has determined that each member of each
committee meets the applicable rules and regulations regarding
“independence” and that each member is free of any
relationship that would interfere with his or her individual
exercise of independent judgment with regard to the Company.
Below is a description of each committee.
The Audit Committee is currently comprised of three directors:
Mr. Goldman (Chair), Mr. McBurnie and
Dr. Plummer. The Audit Committee met twelve times during
the 2006 fiscal year. The Audit Committee oversees
1 Information
contained on our website is not part of this Proxy Statement.
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the Company’s corporate accounting and financial reporting
process. For this purpose, the Audit Committee performs several
functions. The Audit Committee evaluates the performance of and
assesses the qualifications of our independent registered public
accounting firm; determines and approves the engagement of the
independent registered public accounting firm; determines
whether to retain or terminate the existing independent
registered public accounting firm or to appoint and engage a new
independent registered public accounting firm; reviews and
approves the retention of the independent registered public
accounting firm to perform any proposed permissible non-audit
services; monitors the rotation of partners of the independent
registered public accounting firm on the Company’s audit
engagement team as required by law; confers with management and
the independent registered public accounting firm regarding the
effectiveness of internal control over financial reporting;
establishes procedures, as required under applicable law, for
the receipt, retention and treatment of complaints received by
the Company regarding accounting, internal accounting controls
or auditing matters and the confidential and anonymous
submission by employees of concerns regarding questionable
accounting or auditing matters; and meets to review the
Company’s annual audited financial statements and quarterly
financial statements with management and the independent
registered public accounting firm, including reviewing the
Company’s disclosures under “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.” The Audit Committee has adopted a written
Audit Committee Charter that is available on the investor
relations portion of our corporate website at
www.leadis.com.
The Board annually reviews the Nasdaq listing standards
definition of independence for Audit Committee members and has
determined that all members of the Audit Committee are
independent (as independence is currently defined in
Rule 4350(d)(2)(A)(i) and (ii) of the Nasdaq listing
standards) and has sufficient knowledge in reading and
understanding the Company’s financial statements to serve
on the Audit Committee. The Board has determined that
Mr. Goldman qualifies as an “audit committee financial
expert,” as defined in applicable SEC rules. The Board made
a qualitative assessment of Mr. Goldman’s level of
knowledge and experience based on a number of factors, including
his formal education and experience as a chief financial officer
for public reporting companies.
The Compensation Committee is currently comprised of two
directors: Mr. Saltich (Chair) and Mr. Bynum, each of
whom is independent (as independence is currently defined in
Rule 4200(a)(15) of the Nasdaq listing standards). Arati
Prabhakar and Lip-Bu Tan served as members of the Compensation
Committee until their resignation from the Board of Directors in
November 2006. Mr. Bynum joined the Compensation Committee
in November 2006 in connection with his appointment to the
Board. The Compensation Committee met two times and acted by
unanimous written consent one time during the 2006 fiscal year.
The Compensation Committee’s report is set forth below in
the section titled “Report of the Compensation
Committee.” Additional information on the Compensation
Committee’s processes and procedures for consideration of
executive compensation are addressed in the “Compensation
Discussion and Analysis” below. The Company also has a
Non-Officer Stock Option Committee comprised of our Chief
Executive Officer and Chief Financial Officer that may award
stock options to employees who are not executive officers,
subject to guidelines approved by the Compensation Committee.
The charter for our Compensation Committee is available on the
investor relations portion of our corporate website at
www.leadis.com.
The Nominating and Corporate Governance Committee is currently
comprised of two directors: Mr. McBurnie (Chair) and
Mr. Saltich, each of whom is independent (as independence
is currently defined in Rule 4200(a)(15) of the Nasdaq
listing standards). Lip-Bu Tan also served as member and Chair
of the Nominating and Corporate Governance Committee until his
resignation from the Board of Directors in November 2006. The
Nominating and Corporate Governance Committee formally met one
time during the 2006 fiscal year. The Nominating and Corporate
Governance Committee is responsible for identifying, reviewing
and evaluating candidates to serve as directors of the Company
(consistent with criteria approved by the Board), reviewing and
evaluating incumbent directors, recommending to the Board for
selection candidates for election as directors, making
recommendations to the Board regarding the membership of the
committees of the Board, assessing the performance of the Board,
and overseeing all aspects of the Company’s corporate
governance functions on behalf of the Board. The charter for our
Nominating and Corporate Governance Committee can be found on
the investor relations portion of our corporate website at
www.leadis.com.
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The Nominating and Corporate Governance Committee has not
established any specific minimum qualifications that must be
satisfied by a candidate for a position on the Board. The
Nominating and Corporate Governance Committee intends to
consider all of the relevant qualifications of candidates for
director, including such factors as possessing relevant
expertise upon which to be able to offer advice and guidance to
management, having sufficient time to devote to the affairs of
the Company, demonstrated excellence in his or her field, having
the ability to exercise sound business judgment, the ability to
read and understand basic financial statements and having the
commitment to rigorously represent the long-term interests of
the Company’s stockholders. The Nominating and Corporate
Governance Committee, however, retains the right to modify these
qualifications from time to time. Candidates for director
nominees are reviewed in the context of the current composition
of the Board, the operating requirements of the Company and the
long-term interests of stockholders. In conducting this
assessment, the Nominating and Corporate Governance Committee
considers diversity, age, skills, and such other factors as it
deems appropriate given the current needs of the Board and the
Company, to maintain a balance of knowledge, experience and
capability. In the case of incumbent directors whose terms of
office are set to expire, the Nominating and Corporate
Governance Committee reviews such directors’ overall
service to the Company during their term, including the number
of meetings attended, level of participation, quality of
performance, and any other relationships and transactions that
might impair the directors’ independence. The Nominating
and Corporate Governance Committee will conduct any appropriate
and necessary inquiries into the backgrounds and qualifications
of possible candidates after considering the function and needs
of the Board. At this time, the Nominating and Corporate
Governance Committee does not believe that the establishment of
stated, specific minimum qualifications for director candidates
is necessary or appropriate. To date, the Nominating and
Corporate Governance Committee has not paid a fee to any third
party to assist in the process of identifying or evaluating
director candidates.
The Nominating and Corporate Governance Committee will consider
director candidates recommended by stockholders. The Nominating
and Corporate Governance Committee does not intend to alter the
manner in which it evaluates candidates, including the minimum
criteria set forth above, based on whether or not the candidate
was recommended by a stockholder. Stockholders who wish to
recommend individuals for consideration by the Nominating and
Corporate Governance Committee to become nominees for election
to the Board may do so by delivering a written recommendation to
the Nominating and Corporate Governance Committee at the
following address: 800 W. California Avenue, Suite 200,
Sunnyvale, California 94086 at least 120 days prior to the
anniversary date of the mailing of the Company’s proxy
statement for the last annual meeting of stockholders.
Submissions must include the full name of the proposed nominee,
a description of the proposed nominee’s business experience
for at least the previous five years, complete biographical
information, a description of the proposed nominee’s
qualifications as a director and a representation that the
nominating stockholder is a beneficial or record owner of the
Company’s stock. Any such submission must be accompanied by
the written consent of the proposed nominee to be named as a
nominee and to serve as a director if elected.
Leadis has not adopted a formal process for stockholder
communications with the Board. Nevertheless, every effort has
been made to ensure that the views of stockholders are heard by
the Board or individual directors, as applicable, and that
appropriate responses are provided to stockholders in a timely
manner. Persons interested in communicating with the Board or a
particular director, or to the independent directors generally,
should send their communication to: Corporate Secretary, Leadis
Technology, Inc., 800 W. California Avenue, Suite 200,
Sunnyvale, California 94086. Please include your name and
address in the communication and indicate whether you are a
current stockholder of the Company. These communications will be
reviewed by the Company’s counsel or Corporate Secretary,
who will determine whether they should be presented to the
Board. The purpose of this screening is to allow the Board to
avoid having to consider irrelevant or inappropriate
communications (such as advertisements, solicitations and
hostile communications). If no particular director is named,
letters will be forwarded, depending on the subject matter, to
the Chair of the appropriate Board committee.
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The Board does not have a formal policy with respect to
attendance of its members at the annual meeting of stockholders,
but does encourage directors and nominees for director to attend
the meeting. All but two of our directors attended our 2006
annual meeting of stockholders.
The members of the Board are eligible for reimbursement of
expenses incurred in connection with their attendance of Board
meetings in accordance with our policy.
The following table shows compensation information for our
non-employee directors for the fiscal year ended
December 31, 2006.
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Under our cash compensation plan for non-employee directors, we
pay each non-employee director a quarterly retainer of $7,500.
In addition, non-employee directors receive annual payments in
connection with serving on Board committees. The Chairman of the
Audit Committee receives an additional $10,000 and each member
of the Audit Committee is paid an additional $5,000 for serving
on the committee. The Chairman of the Compensation Committee
receives an additional $7,000 and each member of the
Compensation Committee is paid an additional $3,500 for serving
on the committee. The Chairman of the Nominating and Corporate
Governance Committee receives an additional $5,000 and each
member of the Nominating and Corporate Governance Committee is
paid an additional $2,500 for serving on the committee.
Each non-employee director also receives stock option grants
under the Company’s 2004 Non-Employee Directors’ Stock
Option Plan (the “Directors’ Plan”). Only
non-employee directors of the Company or an affiliate (as
defined in the Internal Revenue Code) are eligible to receive
options under the Directors’ Plan. Options granted under
the Directors’ Plan are intended by the Company not to
qualify as incentive stock options under the Internal Revenue
Code of 1986. Prior to the Company’s initial public
offering in June 2004, non-employee directors of the Company
were also granted options under the Company’s 2004 Equity
Incentive Plan and the Company’s 2000 Stock Incentive Plan.
The exercise price of such grants was equal to the fair market
value of our common stock on the date of the option grant.
Option grants under the Directors’ Plan are
non-discretionary. Under the Directors’ Plan, each
non-employee director is automatically granted an option to
purchase 40,000 shares of common stock upon his or her
initial election or appointment to the Board. In addition, on
the day following each annual meeting of stockholders, each
non-employee director is automatically granted an annual grant
to purchase 10,000 shares of Common Stock; provided,
however, that the first annual grant to any non-employee
director shall be increased or decreased to a number calculated
by multiplying (x) a fraction, the numerator of which shall
be the full number of months since the date such non-employee
director became a member of the Board and the denominator of
which shall be 12, by (y) 10,000. No other options may
be granted at any time under the Directors’ Plan. The
exercise price of options granted under the Directors’ Plan
is 100% of the fair market value of the common stock subject to
the option on the date of the option grant (based on the closing
price of our common stock on the Nasdaq Global Market on the
last trading day prior to the date of grant).
As noted above, the Compensation Committee of the Board consists
of Mr. Saltich and Mr. Bynum. No member of our
compensation committee, and none of our executive officers, has
a relationship that would constitute an interlocking
relationship with executive officers and directors of another
entity.
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The following report of the Audit Committee shall not
constitute “soliciting material,” shall not be deemed
“filed” with the SEC and is not to be incorporated by
reference into any other Leadis filing under the Securities Act
or the Exchange Act, except to the extent we specifically
incorporate this report by reference therein.
The ultimate responsibility for good corporate governance rests
with the Board of Directors (the “Board”), whose
primary roles are oversight, counseling and direction to
Leadis’ management in the best long-term interests of the
company and its stockholders. The Board’s Audit Committee
(the “Audit Committee”) has been established for the
purpose of overseeing the accounting and financial reporting
processes of the Company and audits of the Company’s annual
financial statements. The Audit Committee is comprised of
Kenneth Goldman (Chair), Douglas McBurnie and James Plummer,
each of whom satisfies the independence criteria of the Nasdaq
listing standards for serving on an audit committee.
As described more fully in its charter, the purpose of the Audit
Committee is to assist the Board in its general oversight of
Leadis’ financial reporting, internal controls and audit
functions. The Audit Committee members are not professional
accountants or auditors, and their functions are not intended to
duplicate or to certify the activities of management and the
independent auditors. Management has primary responsibility for
the preparation, presentation and integrity of Leadis’
financial statements; accounting and financial reporting
principles; internal controls; and procedures designed to ensure
compliance with accounting standards, applicable laws and
regulations. PricewaterhouseCoopers LLP, Leadis’
independent registered public accounting firm, is responsible
for performing an independent audit of the consolidated
financial statements in accordance with the standards of the
Public Company Accounting Oversight Board.
The Audit Committee has reviewed and discussed the audited
financial statements with management. In addition, the Audit
Committee discussed with PricewaterhouseCoopers LLP the matters
required to be discussed by Statement of Auditing Standards
No. 61, “Communications with Audit
Committees,” which includes, among other items, matters
related to the conduct of the audit of our financial statements.
The Audit Committee also has received written disclosures and
the letter from PricewaterhouseCoopers LLP required by the
Independence Standards Board Standard No. 1, which relates
to PricewaterhouseCoopers LLP’s independence from Leadis
and its related entities, and has discussed their independence
from Leadis, including whether PricewaterhouseCoopers LLP’s
provision of non-audit services was compatible with that
independence.
In reliance on these reviews and discussions, and the report of
PricewaterhouseCoopers LLP, the Audit Committee recommended to
the Board, and the Board approved, the inclusion of the audited
financial statements in Leadis’ Annual Report on
Form 10-K
for the year ended December 31, 2006 for filing with the
Securities and Exchange Commission.
Kenneth Goldman, Chair
Douglas McBurnie
James Plummer
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Proposal 2
The Audit Committee of the Board has selected
PricewaterhouseCoopers LLP as the Company’s independent
registered public accounting firm for the fiscal year ending
December 31, 2007 and has further directed that management
submit the selection of the independent registered public
accounting firm for ratification by the stockholders at the
Annual Meeting. PricewaterhouseCoopers has audited the
Company’s financial statements since the Company’s
inception in May 2000. Representatives of PricewaterhouseCoopers
are expected to be present at the Annual Meeting. They will have
an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.
Neither the Company’s Bylaws nor other governing documents
or law require stockholder ratification of the selection of
PricewaterhouseCoopers as the Company’s independent
registered public accounting firm. However, the Audit Committee
of the Board is submitting the selection of
PricewaterhouseCoopers to the stockholders for ratification as a
matter of good corporate practice. If the stockholders fail to
ratify the selection, the Audit Committee of the Board will
reconsider whether or not to retain that firm to serve as the
Company’s independent registered public accounting firm for
the 2007 fiscal year. Even if the selection is ratified, the
Audit Committee of the Board in its discretion may direct the
appointment of a different independent registered public
accounting firm at any time during the year if they determine
that such a change would be in the best interests of the Company
and its stockholders.
The affirmative vote of the holders of a majority of the shares
present in person or represented by proxy and entitled to vote
at the annual meeting will be required to ratify the selection
of PricewaterhouseCoopers. Abstentions will be counted toward
the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not
counted for any purpose in determining whether this matter has
been approved.
The following table represents aggregate fees billed to the
Company for fiscal years ended December 31, 2005 and 2006,
by PricewaterhouseCoopers, the Company’s principal
accountant.
The Audit fees were for professional services provided in
connection with the audit of our year-end financial statements,
including fees related to the audit of management’s
assessment of and the effectiveness of our internal control over
financial reporting, and review of our quarterly financial
statements.
Tax fees were for assistance with the preparation of our
tax returns and for tax consulting services.
All Other fees for the year ended December 31, 2006
were provided in connection with our evaluation and response to
a comment letter we received from the Securities and Exchange
Commission.
All fees described above were approved by the Audit Committee.
The Audit Committee has determined that the rendering of the
services other than audit services by PricewaterhouseCoopers is
compatible with maintaining the principal accountant’s
independence.
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The Audit Committee has adopted a policy and procedures for the
pre-approval of audit and permissible non-audit services
rendered by our independent registered public accounting firm,
PricewaterhouseCoopers. The policy generally pre-approves
specified services in the defined categories of audit services,
audit-related services, and tax services up to specified
amounts. Pre-approval may also be given as part of the Audit
Committee’s approval of the scope of the engagement of the
independent auditor or on an individual explicit
case-by-case
basis before the independent registered public accounting firm
is engaged to provide each service. The pre-approval of services
may be delegated to one or more of the Audit Committee’s
members, but the decision must be reported to the full Audit
Committee at its next scheduled meeting.
The
Board Of Directors Recommends
A Vote In Favor Of Proposal 2.
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Information
about our Executive Officers and Directors
Set forth below is certain information regarding our named
executive officers, other members of our management team and our
directors as of April 25, 2007.
Antonio Alvarez joined Leadis in November 2005 as our
President and Chief Executive Officer, and is a member of our
Board of Directors. From 1987 to 2005, Mr. Alvarez held
several positions at Cypress Semiconductor Corporation, a
semiconductor company, most recently as Senior Vice President,
Memory and Imaging Products Division where he was responsible
for Cypress’ SRAM, non-volatile memory and imaging
products. From 1989 to 2001, Mr. Alvarez served as
Cypress’ Senior Vice President of Research and Development.
Prior to joining Cypress Semiconductor, Mr. Alvarez held
various technical engineering positions at Motorola, Inc.
Mr. Alvarez also serves on the board of directors of
ChipMos Technologies, Inc. Mr. Alvarez holds B.S. and
masters degrees in Electrical Engineering from Georgia Institute
of Technology.
Keunmyung (“Ken”) Lee serves as our Executive
Vice President and Chief Technical and Operating Officer, and
has been a member of our board of directors since August 2002.
Dr. Lee joined Leadis in August 2000 as our Chief
Technology Officer and Vice President, and has been our
Executive Vice President since January 2004 and our Chief
Operating Officer since April 2005. From 1985 until joining
Leadis, Dr. Lee held various positions at Hewlett-Packard
Company, a technology, personal computing and service company,
including principal project engineer and manager. Dr. Lee
holds a B.S. degree in Electronics Engineering from Seoul
National University, and an M.S. and a Ph.D. in Electrical
Engineering and Computer Science from the University of
California, Berkeley
Jose Arreola joined Leadis in January 2006 as our
Executive Vice President of Engineering. From 2001 until joining
Leadis, Dr. Arreola served as President and CEO of Kovio,
Inc., a privately-held semiconductor company engaged in the
emerging field of “printed electronics.” From 1983 to
2001, Dr. Arreola served in various capacities at Cypress
Semiconductor, most recently as Vice President of Process
Technology R&D. Dr. Arreola holds a bachelor degree in
Electrical Engineering from Universidad Iberoamericana, and
masters and Ph.D. degrees in Electrical Engineering from the
University of Florida.
Paul Novell joined Leadis in September 2006 as our Vice
President of Sales and Marketing. Prior to joining Leadis,
Mr. Novell served as Vice President of Worldwide Sales and
Marketing for Staccato Communications, a privately held supplier
of wireless communication IC’s. From 1994 to 2006,
Mr. Novell served in various engineering, marketing and
sales positions for Cypress Semiconductor. Most recently, he
held the position of Managing Director for Asia-Pacific Sales
and Operations at Cypress, where he was responsible for a team
consisting of sales, marketing, design and operations personnel.
Prior to his tenure at Cypress, Mr. Novell worked for IBM
as a design engineer. Mr. Novell holds B.S. and masters
degrees in Electrical Engineering from the University of Florida.
John K. Allen has served as our Vice President, Chief
Financial Officer and Corporate Secretary since April 2007.
Mr. Allen joined Leadis as Corporate Controller in January
2004 and was promoted to Vice President, Corporate Controller in
March 2006. From January 2002 to January 2004, Mr. Allen
served as the Corporate
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Controller of Asyst Technologies, Inc., a semiconductor
equipment company. From May 2000 to January 2002, Mr. Allen
was Vice President, Corporate Controller of Arcot Systems, a
privately-held software company. Mr. Allen served in
finance management roles at Xilinx, Inc., a semiconductor
company, from June 1999 to May 2000, and at Advanced Micro
Devices, Inc., a semiconductor company, from May 1996 to June
1999. Mr. Allen holds a B.A. degree in Business Economics
from the University of California, Santa Barbara, and is a
Certified Public Accountant in the state of California.
Byron Bynum has been a member of our Board of Directors
since November 2006. Mr. Bynum is a partner of Integrated
Custom Power LLC, an analog/mixed-signal integrated circuit
design consulting firm he co-founded in 2003. From August 1979
to April 1997, Mr. Bynum served Motorola, Inc. in several
capacities, including as Vice President and director of product
development for the Analog IC Division and director of advanced
design technology development. From 1969 to 1979, Mr. Bynum
served as an IC designer and a director of IC design at Texas
Instruments, Inc. Mr. Bynum began his career with Boeing
Company in 1965. Mr. Bynum is an author of 23 patents in
circuit technology and holds a B.S. degree in Electrical
Engineering from the University of Texas, Austin.
Alden Chauvin, Jr. has been a member of our Board of
Directors since March 2007. Mr. Chauvin is a retired
executive with significant semiconductor experience, primarily
in sales and marketing functions. Prior to his retirement,
Mr. Chauvin served as the Vice President, Worldwide Sales
for Intersil Corporation from May 2002 until October 2006,
following Intersil’s acquisition of Elantec Semiconductor,
Inc. in May 2002. Prior to that, Mr. Chauvin was Vice
President of Worldwide Sales for Elantec from March 1999 to May
2002. From 1986 until 1997, Mr. Chauvin served as Vice
President of North America Sales and later Vice President of
Worldwide Sales for Sierra Semiconductor. Mr. Chauvin
started his career at Texas Instruments, Inc. in various
engineering, operations, marketing, and sales management roles
from 1969 to 1986. Mr. Chauvin received a B.S. degree in
Industrial Technology from Louisiana State University.
Kenneth Goldman has been a member of our Board of
Directors since January 2004. Mr. Goldman has served as
Chief Financial Officer of Dexterra, Inc., a provider of mobile
enterprise software, since January 2007. From February 2006
through March 2006, Mr. Goldman served as Senior Vice
President of Oracle Corporation, an enterprise software company.
From August 2000 through January 2006, Mr. Goldman served
as Senior Vice President, Finance and Administration and Chief
Financial Officer of Siebel Systems, Inc., a supplier of
customer software solutions and series that was acquired by
Oracle Corporation. From July 1996 to July 2000,
Mr. Goldman served as Senior Vice President of Finance and
Chief Financial Officer of Excite@Home, Inc. From 1992 to 1996,
Mr. Goldman served as Senior Vice President of Finance and
Chief Financial Officer of Sybase, Inc., a global enterprise
software company. Mr. Goldman was a member of the Financial
Accounting Standards Advisory Council from December 1999 to
December 2003. Mr. Goldman is a member of the board of
directors of Juniper Networks, Inc. and Bigband Networks, Inc.,
and a member of the board of trustees of Cornell University.
Douglas McBurnie has been a member of our Board of
Directors since November 2005. Since 1998, Mr. McBurnie has
served as a consultant to and director for several public and
private technology companies. From August 1997 to October 1998,
Mr. McBurnie served as Senior Vice President, Computer,
Consumer & Network Products Group at VLSI. Before
joining VLSI, Mr. McBurnie served in several capacities for
National Semiconductor, a semiconductor company, from June 1994
to August 1997, most recently as Senior Vice President and
General Manager of its Communications and Consumer Group.
Mr. McBurnie holds a B.A. degree from Baldwin Wallace
College.
James Plummer has been a member of our Board of Directors
since January 2001. Dr. Plummer has been Dean of the School
of Engineering at Stanford University since September 1999 and a
Professor of Electrical Engineering at Stanford University since
1978. Dr. Plummer is a member of the board of directors of
Intel Corporation and International Rectifier Corporation, each
of which is a semiconductor manufacturer. He also serves on the
technical advisory boards of several semiconductor companies.
Dr. Plummer holds a B.S. in Electrical Engineering from the
University of California, Los Angeles, and an M.S. in Electrical
Engineering and a Ph.D. in Electrical Engineering from Stanford
University.
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Jack Saltich has served as a member of our Board of
Directors since January 2006. Mr. Saltich is currently
serving as the interim Chief Executive Officer of Vitex Systems,
Inc., a private technology company. From July 1999 to August
2005, Mr. Saltich served as the President, Chief Executive
Officer and a Director of Three-Five Systems Inc., manufacturer
of display systems. From 1993 to 1999, Mr. Saltich served
as Vice President with AMD, where his last position was General
Manager of AMD’s European Center in Dresden, Germany. From
1971 to 1988, Mr. Saltich served in a number of capacities
with Motorola, Inc., a wireless and broadband communications
company. Mr. Saltich also serves on the board of directors
of Immersion Corporation, a developer of haptic technology,
Ramtron International Corporation, a semiconductor company, and
Vitex Systems Inc. Mr. Saltich also serves on the Technical
Advisory Board of DuPont Electronic Materials Business.
Mr. Saltich received both B.S. and masters degrees in
electrical engineering from the University of Illinois. In 2002,
he received a distinguished alumni award from the University of
Illinois.
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Security
Ownership Of
Certain Beneficial Owners And Management
The following table sets forth certain information regarding the
ownership of the Company’s common stock as of April 1,
2007 by: (i) each director and nominee for director;
(ii) each of the executive officers named in the Summary
Compensation Table; (iii) all named executive officers and
directors of the Company as a group; and (iv) all those
known by the Company to be beneficial owners of more than five
percent of its common stock.
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Section 16(a) of the Securities Exchange Act of 1934 (the
“1934 Act”) requires the Company’s directors
and executive officers, and persons who own more than ten
percent of a registered class of the Company’s equity
securities, to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other
equity securities of the Company. Officers, directors and
greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all
Section 16(a) forms they file. To the Company’s
knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations
that no other reports were required, during the fiscal year
ended December 31, 2006, all Section 16(a) filing
requirements applicable to its officers, directors and greater
than ten percent beneficial owners were satisfied.
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Executive
Compensation
Compensation
Discussion and Analysis
Since our inception, we have designed, developed and marketed
one line of products: mixed-signal display drivers for small
panel displays. As we announced in the first quarter of 2007, we
are now undergoing a transition to become a supplier of a
broader range of analog and mixed-signal semiconductor products
for mobile consumer applications. The success of this
diversification strategy will be significantly influenced by the
efforts of our employees, including our executive officers, who
will need to develop and grow several new product lines. As a
result, to succeed we will need to continue to attract
highly-qualified employees, while also retaining and motivating
our existing employees. In the short-term, we will also need to
control expenses where possible.
The goals of our executive compensation program are to
(i) enable us to attract, retain and motivate top-notch
employees, (ii) encourage the achievement of strategic
corporate objectives, (iii) reward executive officers for
extraordinary performance, and (iv) align compensation with
our business objectives and the interests of our stockholders.
We pay cash compensation to provide an appropriate and
competitive level of current cash income and to reward, in the
case of any bonus or salary increase, superior performance over
the past year. We also grant long-term incentive awards,
primarily in the form of stock options, designed to motivate and
reward executives for the long-term increase in stockholder
value.
Our compensation program for executive officers is generally the
same as for all of the Company’s employees. As discussed in
further detail below, our compensation program consists of, and
is intended to strike a balance among, the following three
principal components: base salary, cash bonuses based
on performance, and long-term equity awards.
The Compensation Committee acts on behalf of the Board of
Directors in discharging the Board’s responsibilities with
respect to overseeing the Company’s compensation policies,
plans and programs. The Compensation Committee also administers
our 2004 Equity Incentive Plan and our other benefit plans. The
Compensation Committee reviews and determines the compensation
of the Chief Executive Officer and other executive officers,
with its determination with respect to the Chief Executive
Officer being subject to approval by the entire Board. For
executive compensation decisions, the Compensation Committee
typically considers the recommendations of Antonio Alvarez, our
Chief Executive Officer, and Mr. Alvarez typically
participates in the Compensation Committee’s deliberations
about executive officer compensation matters. However,
Mr. Alvarez does not participate in the determination of
his own compensation. Mr. Alvarez, with input from the
management team, also annually develops our corporate goals,
which are reviewed and, subject to their input, approved by the
Compensation Committee and the Board of Directors.
In setting the level of cash and equity compensation for our
executive officers, the Compensation Committee considers various
factors, including the performance of the Company and each
executive officer during the prior year; the uniqueness and
relative importance to us of each executive officer’s skill
set; the value of vested and unvested options held by each
executive officer; the executive officer’s historical cash
and equity compensation; and market benchmarks.
In determining executive compensation the Compensation Committee
believes that it is important to consider the current practices
of comparable, publicly-held companies to insure that our
executive compensation program as a whole is competitive and in
line with industry standards. Accordingly, the Compensation
Committee reviews benchmark data relating to compensation levels
for comparable positions at similarly sized companies in the
semiconductor industry. For 2005 and 2006, the Compensation
Committee also engaged an outside compensation consultant to
assist the Committee on an on-going basis in its evaluation and
determination of executive compensation.
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The list of our peer companies used in 2006 was based on a list
of peer companies that the Company developed in conjunction with
its outside compensation consultant following the Company’s
2004 initial public offering. The Company selected a sample size
of 20 companies for its peer group to help ensure the data
accurately represented the competitive market. The companies
comprising our peer group for 2006 were:
In October 2006, the peer group was updated for the purposes of
determining compensation for 2007. The Compensation Committee
approved the addition of the following four companies to the
peer group: Advanced Analogic Technologies, Ikanos
Communications, Inc., Monolithic Power Systems, Inc., and
PortalPlayer, Inc. At the same time, the following four
companies were removed from the peer group: Integrated Silicon
Solution Inc., Pericom Semiconductor Corp., Power Integrations
Inc., and Zoran Corporation.
Our compensation philosophy is designed to provide an executive
compensation structure that is both competitive in the
marketplace and also internally equitable based upon the weight
and level of responsibilities in the respective executive
positions. We seek to reward outstanding performance through
financial incentives while aligning our financial results and
the compensation paid to our executive officers with the
enhancement of stockholder value. The principal components for
the compensation of our named executive officers are:
The Compensation Committee annually reviews and determines the
base salaries of the Chief Executive Officer and other members
of senior management, with its determination with respect to the
Chief Executive Officer being subject to approval by the entire
Board. Salaries of executive officers are principally based on
the Committee’s evaluation of individual job performance,
an assessment of the Company’s performance, consideration
of salaries paid by the peer group companies to officers holding
similar positions, and expectations about the officer’s
future contributions to the Company. We generally target base
salaries in the middle third percentile of the peer group
companies. The Compensation Committee reviews salaries annually
as part of the Company’s performance review process as well
as upon a promotion or other change in job responsibility.
As part of its effort to control expenses while implementing its
diversification plan, the Company chose not to raise base
salaries in 2007 for any employees, including executive
officers. In place of increases to base salaries, the
Compensation Committee approved the issuance of restricted stock
units (“RSUs”) to employees, including executive
officers, with a goal of retaining and motivating employees
during the Company’s business transformation and
controlling expenses. These RSUs vest over a two year period,
with 50% of the shares vesting on February 15, 2008 and 50%
vesting on February 15, 2009, provided that the employee
continues to provide services to the Company.
Cash bonuses are used to focus our management on achieving key
corporate objectives, to motivate certain desired individual
behaviors and to reward the substantial achievement of these
corporate objectives and individual goals. Mr. Alvarez,
with input from the management team, annually develops our
corporate goals, which are reviewed and, subject to their input,
approved by the Compensation Committee and the Board of
Directors.
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Individual performance goals vary depending on the
Company’s strategic plan initiatives and the
responsibilities of the positions held by the executive
officers. Under the management bonus plans, bonus payments may
range from 0% (if minimum objectives are not achieved) to a
maximum of 150% (if results exceed objectives) of the target
bonus amount. The target bonus amount for each executive officer
is based on a percentage of his base salary, with the percentage
based on the executive’s unique skill set, historical
contributions and relative importance to the Company. Target
bonus amounts for our executive officers generally range from
40% to 80% of the executive’s base salary.
The target bonus for the Company’s chief executive officer
is based 100% on the Company’s performance relative to the
corporate goals. The target bonuses for all other executive
officers of the Company is split into two separate components,
one of which is based on the Company’s performance relative
to the corporate goals and the second of which is based on
individual performance criteria. The target bonuses for these
executive officers are weighted so that 80% of the target bonus
is based on the Company’s corporate performance and 20% is
based on individual performance criteria. The Company’s
Board of Directors or the Compensation Committee has the right
to modify the objective performance goals, to grant bonuses in
excess of the maximum target amounts, or to grant bonuses to the
participants even if the performance goals are not met.
2006
Management Bonus Plan
Under the 2006 Management Bonus Plan (the “2006 Bonus
Plan”), the corporate goals for each executive officer were
based on the Company’s 2006 revenue, income and gross
margin results, the achievement of new product development and
product quality targets, and improvement of the Company’s
business processes. The 2006 Bonus Plan also contained a
requirement that the Company achieve profitability in the fourth
quarter of the 2006 fiscal year.
As the Company did not substantially achieve its corporate
objectives under the 2006 Bonus Plan, bonuses were not paid to
executive officers for the corporate component of their
respective target bonus amounts. Executive officers other than
the Chief Executive Officer received bonuses for the achievement
of their individual objectives, as determined by the
Compensation Committee with input from Mr. Alvarez.
2007
Management Bonus Plan
The corporate goals for each executive officer will be based on
the following corporate goals: the Company’s 2007 financial
results, creating greater value in the Company’s core
display driver products, and expanding the Company’s
business beyond small panel display drivers, as follows:
The Company’s Board of Directors or the Compensation
Committee has the right to modify the objective performance
goals at any time based on business changes during the year.
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The payout of any bonuses associated with performance to
corporate goals will be deferred, as necessary, until such time
as the Company has achieved two consecutive quarters of
profitability. Following two consecutive quarters of
profitability, the Company will pay out bonuses earned under the
2007 Bonus Plan for achievement of the corporate goals up to a
maximum of 15% of the aggregate non-GAAP operating income before
tax for such two consecutive quarters. If the immediately
succeeding quarter is also profitable, the Company will pay out
any remaining earned bonuses up to a maximum of 15% of the
aggregate non-GAAP operating income before tax for such
immediately succeeding quarter. For purposes of the 2007 Bonus
Plan, non-GAAP operating income excludes stock compensation
expenses and acquisition-related intangibles. Any earned bonuses
not paid out in such immediately succeeding quarter will be
forfeited and not paid by the Company. Any bonuses earned for
meeting individual goals will be paid in 2008 subject to the
Company meeting certain minimum revenue goals in 2007.
Our 2004 Equity Incentive Plan provides for the issuance of
options to employees, including executive officers, to purchase
shares of our common stock at an exercise price equal to the
fair market value of such stock on the date of grant. The
Compensation Committee believes that stock options continue to
be the most effective equity-based tool to motivate our
executive officers to aggressively pursue our long-term
strategic goals because options only have value if our stock
price increases over time.
The Compensation Committee generally approves the grant of stock
options to executive officers at the time of hire and annually
at its regular meeting in the first quarter of the year.
Generally, stock options have vested over a four-year period, to
encourage executive officers to continue their employment, and
typically have a term of six years. In determining the size of
option grants to executive officers, the Compensation Committee
considers the number of shares of our common stock subject to
outstanding options, including exercise prices, already owned by
each executive, the value of the executive to the Company, and
benchmark data for our specific peer group.
The Company also offers employees, including executive officers,
the opportunity to participate in the Company’s Employee
Stock Purchase Program (“ESPP”). Under the
Company’s ESPP, employees may purchase common stock of the
Company through accumulated payroll deductions. The purchase
price of the common stock acquired by employees participating in
the ESPP is 85% of the closing price on either the first day of
the offering period or the last day of the purchase period,
whichever is lower. Offering periods are twelve months, and the
purchase periods are six months. Therefore, each offering period
includes two six-month purchase periods, and the purchase price
for each six-month period is determined by comparing the closing
prices on the first day of the offering period and the last day
of the applicable purchase period. Only one executive officer
participated in the program in 2006.
Our Change of Control Severance Benefit Plan, in which all of
our executive officers participate, was adopted in 2006 in order
to consolidate our prior change in control and severance
benefits with individual executives into a single uniform
double-trigger plan for executive officers, to maintain the
competitiveness of our executive compensation program and to
remove an executive’s potential personal bias against a
takeover attempt. A description of this plan is included below
under the heading “Potential Payments Upon Termination or
Change of Control.”
We have a 401(k) plan in which all of our
U.S.-based
employees are entitled to participate, including executive
officers. Employees contribute their own funds, as salary
deductions, on a pre-tax basis. The Company does not match any
employee contributions into the 401(k) plan. The Company
provides group term life insurance, as well as health care,
dental and vision benefits, to all full-time employees,
including executive officers. The Company may in future also
provide additional statutory benefits to executive offices
located in foreign countries as required by applicable law.
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Mr. Alvarez joined the Company as its President and Chief
Executive Officer in November 2005. In connection with his hire,
the Committee Compensation designed a compensation plan
consistent with that provided to the Company’s other
executive officers and within the range of compensation provided
by our peer group of companies. For 2005 and 2006,
Mr. Alvarez received a base salary of $350,000. In
connection with his employment in 2005, Mr. Alvarez was
granted a stock option to purchase 750,000 shares of the
Company’s common stock, vesting over a period of four
years. In 2006, Mr. Alvarez did not receive any additional
stock option grants and did not receive a bonus due to the
Company’s failure to substantially achieve its corporate
objectives for the year.
In lieu of an adjustment to his base salary for 2007,
Mr. Alvarez was awarded a restricted stock unit for
8,750 shares. In recognition of Mr. Alvarez’s
leadership skills, contributions in reviving the Company’s
new product development and implementation of a diversification
strategy, the Compensation Committee increased
Mr. Alvarez’s 2007 target bonus to 80% of his base
salary. In consideration of these same factors, in March 2007
the Compensation Committee also awarded Mr. Alvarez an
option to purchase an additional 150,000 shares of common
stock at an exercise price of $4.01 per share, which was equal
to the fair market value of our common stock on the date of
grant. The option vests in monthly installments over a four-year
period beginning on the date of grant.
The Compensation Committee reviewed similar considerations for
each of the Company’s other executive officers, as well as
the following factors.
In recognition of Dr. Ken Lee’s contributions as Chief
Operating Officer and his importance to the Company’s
development of new technology, to equalize his compensation with
similarly situated executives within our peer group, and with
the anticipation that Dr. Lee will continue to play a key
role in our ongoing efforts to development advanced display
technologies, Dr. Lee’s 2006 base salary was raised to
$260,000 and he was awarded an option grant for
125,000 shares at an exercise price of $5.36 per share,
which was equal to the fair market value of our common stock on
the date of grant. The stock option vests over a period of four
years, beginning on the date of grant. Dr. Lee received a
bonus of $15,600 for 2006 under the 2006 Management Bonus Plan
in recognition of his achievement of certain individual
performance objectives. In March 2007, Dr. Lee was awarded
a restricted stock unit for 6,500 shares in lieu of an
adjustment to his base salary for 2007. In March 2007, the
Compensation Committee also awarded Dr. Lee an option to
purchase an additional 75,000 shares at an exercise price
of $4.01 per share, which was equal to the fair market value of
our common stock on the date of grant. The option vests in
monthly installments over a four-year period beginning on the
date of grant. In recognition of his value to the Company in
driving the development of new technology, Dr. Lee’s
target bonus for 2007 was increased to 60% of his base salary.
In recognition of Victor Lee’s contributions to
transforming our finance, HR and administration organization
into an efficient business unit by implementing new systems and
processes, and to equalize with similarly situated executives
within our peer group of companies, Mr. Lee’s 2006
base salary was increased to $240,000. The Compensation
Committee also approved an option grant for 100,000 shares
at an exercise price of $5.36 per share, which was equal to the
fair market value for each share of our common stock on the date
of grant. Mr. Lee received a bonus of $15,400 for 2006
under the 2006 Management Bonus Plan in recognition of his
achievement of certain individual performance objectives. In
March 2007, in recognition of his value to the Company in
establishing financial and administrative processes to support
the growth of the Company from one to multiple business units,
the Compensation Committee awarded Mr. Lee an option to
purchase an additional 35,000 shares at an exercise price
of $4.01 per share, which was equal to the fair market value of
our common stock on the date of grant. In recognition of the
same factors, Mr. Lee’s 2007 target bonus was
increased to 50% of his base salary. Mr. Lee voluntarily
resigned as the Company’s Chief Financial Officer in April
2007 to pursue another opportunity but will remain with the
Company through June 2007 to help with transition matters.
Dr. Arreola joined the Company as its Vice President of
Engineering in January 2006. In connection with his employment,
Dr. Arreola received a base salary of $250,000 and was
granted a stock option to purchase
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280,000 shares of the Company’s common stock, vesting
over a period of four years beginning on Dr. Arreola’s
date of hire. Upon his hire, Dr. Arreola was placed on
international assignment in Korea to lead the Company’s
engineering team. Dr. Arreola was given a $15,000 bonus
associated with this assignment, as well as tax protection for
income tax in the foreign location in excess of what his tax
liability would have been in the United States. In lieu of an
adjustment to his base salary for 2007, Dr. Arreola
received a restricted stock unit for 9,375 shares. In March
2007, in recognition of his efforts in managing our Korea
operations, guiding the Company’s engineering team, and
improving the Company’s new product development and product
quality, Dr. Arreola received a bonus of $14,800 under the
2006 Management Bonus Plan, as well as a special bonus of
$25,000. In recognition of Dr. Arreola’s value to the
Company, in March 2007 the Compensation Committee also awarded
Dr. Arreola an option to purchase an additional
75,000 shares at an exercise price of $4.01 per share,
which was equal to the fair market value for each share of our
common stock on the date of grant. The option vests in monthly
installments over a four-year period beginning on the date of
grant. Dr. Arreola’s 2007 target bonus was increased
to 60% of his base salary.
The base salary of Mr. Hauck, our former Vice President of
Worldwide Sales, was increased to $220,000 in 2006 to equalize
his compensation with similarly situated executives within our
peer group, and he was awarded an option grant for
35,000 shares at an exercise price of $5.36 per share,
which was equal to the fair market value of our common stock on
the date of grant. The stock option vests over a period of four
years, beginning on the date of grant. Mr. Hauck left the
Company in October 2006 and, as a result, was not entitled to a
bonus payment under the 2006 Management Bonus Plan.
Effective January 1, 2006, we adopted the fair value
provisions of Financial Accounting Standards Board Statement
No. 123(R) (revised 2004), “Share-Based Payment,”
(or “FAS 123R”). Under FAS 123R, we are
required to estimate and record an expense for each award of
equity compensation (including stock options and restricted
stock units) over the vesting period of the award. The
Compensation Committee has determined to retain for the
foreseeable future our stock option program as the primary
component of its long-term compensation program, and, therefore,
to record this expense on an ongoing basis according to
FAS 123R.
It is the opinion of the Compensation Committee that the
aforementioned compensation policies and elements provide the
necessary incentives to properly align our performance and the
interests of our stockholders while maintaining progressive,
balanced and competitive executive compensation practices that
enable us to attract and retain the highest caliber of
executives.
The following report has been submitted by the Compensation
Committee of the Board of Directors:
The Compensation Committee of the Board of Directors has
reviewed and discussed the Compensation Discussion and Analysis
set forth above with management. Based on this review and
discussion, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be
included in this proxy statement and in Leadis’ Annual
Report on
Form 10-K
for the fiscal year ended December 31, 2006, as filed with
the SEC.
Jack Saltich, Chair
Byron Bynum
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The following table shows compensation awarded or paid to, or
earned by, each individual who served as the Company’s
principal executive officer and principal accounting officer
during the 2006 fiscal year and its other three most highly
compensated executive officers at December 31, 2006 whose
total annual compensation for fiscal 2006 exceeded $100,000 (the
“named executive officers”):
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The following tables show for the fiscal year ended
December 31, 2006, certain information regarding options
granted to, exercised by, and held at year end by, the named
executive officers.
Option
Grants in Year Ended December 31, 2006
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Outstanding
Equity Awards at December 31, 2006
The following table shows for the fiscal year ended
December 31, 2006, certain information regarding
outstanding equity awards held at year end by the named
executive officers.
The following table shows for the fiscal year ended
December 31, 2006, certain information regarding option
exercises made by named executive officers during the last
fiscal year.
In June 2006, the Board, upon recommendation of the Compensation
Committee, adopted a Change in Control and Severance Benefit
Plan that provides for certain severance benefits to our
officers in connection with specified termination events.
Eligible plan participants include each of the named executive
officers.
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If a named executive officer’s employment terminates due to
an involuntary termination without cause or a constructive
termination within 12 months following a change in control,
then the named executive officer would be entitled to the
following benefits under the plan:
(a) a cash payment equal to the sum of the named executive
officer’s base salary and target bonus for
(i) 12 months for named executive officers (other than
the Chief Executive Officer) and (ii) 24 months for
the Chief Executive Officer;
(b) the vesting of up to all of the Named Executive
Officer’s options will accelerate in full and any
reacquisition or repurchase rights held by us in respect of
common stock issued or issuable pursuant to any stock awards
granted under our 2004 Equity Incentive Plan will lapse; and
(c) payment of COBRA premiums for any health, dental, or
vision plan sponsored by the Company for a period of up to
(i) 12 months for named executive officers (other than
the Chief Executive Officer) and (ii) 24 months for
the Chief Executive Officer.
In addition, for the Chief Executive Officer, Chief Financial
Officer and other Executive Vice Presidents, if any of the
severance benefits payable under the plan would constitute a
“parachute payment” subject to the excise tax imposed
by Section 4999 of the Internal Revenue Code, the Company
will pay the excise tax associated with such severance benefits
on behalf of such officers. For other executive officers, if any
of the severance benefits payable under the plan would
constitute a “parachute payment” subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code,
the officer may receive a reduced amount of the affected
severance benefits (the plan does not provide for the gross up
of any excise taxes imposed by Section 4999 of the Internal
Revenue Code).
The following table describes the potential severance payments
and benefits under our Change in Control and Severance Benefit
Plan to which certain of the named executive officers would be
entitled in connection with specified termination events, as if
such named executive officers’ employment terminated as of
December 31, 2006, the last day of our last fiscal year.
There are no other agreements, arrangements or plans that
entitle any named executive officers to any additional
severance, perquisites or other enhanced benefits upon
termination of employment.
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Under Mr. Alvarez’s employment agreement with us, if
his employment is terminated by us without cause we would be
obligated to pay severance equal to twelve months of salary,
plus Mr. Alvarez’s target bonus for the year, and
continued medical benefits for twelve months. If
Mr. Alvarez’s employment is terminated following a
change of control, Mr. Alvarez would be entitled to
severance payments as described above.
Under Victor Lee’s employment agreement with us, if his
employment is terminated by us without cause at any time, we
would be obligated to pay severance equal to three months of
salary and continued medical benefits for three months, and
Mr. Lee would be entitled to three months of accelerated
vesting of his outstanding options and unvested stock holdings.
If Mr. Lee’s employment is terminated following a
change of control, he will receive severance payments as
described above. Mr. Lee voluntarily resigned from the
Company in April 2007 to pursue another opportunity.
Under Dr. Arreola’s employment agreement with us, if
his employment is terminated by us without cause at any time, we
would be obligated to pay severance equal to three months of
salary and continued medical benefits for three months, and
Dr. Arreola would be entitled to three months of
accelerated vesting of his outstanding options and unvested
stock holdings. If Dr. Arreola’s employment is
terminated following a change of control, he would be entitled
to receive severance payments as described above.
We have four stockholder-approved equity compensation plans: the
2000 Stock Incentive Plan, the 2004 Equity Incentive Plan, the
2004 Non-Employee Directors’ Stock Option Plan, and the
2004 Employee Stock Purchase Plan. We do not have any equity
compensation plans that have not been approved by our security
holders. The following table provides certain information with
respect to all of our equity compensation plans as of
December 31, 2006.
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Certain
Relationships and Related Transactions
We have entered into employment agreements and change in control
severance agreements with our executive officers. For more
information regarding these agreements, see “Employment,
Severance and Change of Control Agreements,” above.
We have entered into indemnity agreements with our officers and
directors which provide, among other things, that we will
indemnify such officer or director, under the circumstances and
to the extent provided for therein, for expenses, damages,
judgments, fines and settlements he or she may be required to
pay in actions or proceedings which he or she is or may be made
a party by reason of his or her position as a director, officer
or other agent of the Company, and otherwise to the fullest
extent permitted under Delaware law and the Company’s
Bylaws.
We and certain of our stockholders entered into an agreement
prior to our initial public offering pursuant to which these and
other stockholders will have registration rights with respect to
their shares of common stock. If we propose to register any of
our securities under the Securities Act of 1933 either for our
own account or for the accounts of other security holders,
subject to certain conditions and limitations, the holders of
registration rights will be entitled to include their shares of
common stock in the registered offering. In addition, holders of
registration rights may require us on not more than two
occasions to file a registration statement under the Securities
Act of 1933 with respect to their shares of common stock.
Further, the holders of registration rights may require us to
register their shares on
Form S-3
if we are eligible to use this form. These rights terminate on
the earlier of June 16, 2009 or, with respect to an
individual holder, when such holder is able to sell all its
shares pursuant to Rule 144 under the Securities Act in any
three-month period. These registration rights are subject to
conditions and limitations, including the right of the
underwriters to limit the number of shares of our common stock
included in the registration statement.
We believe that all of the transactions set forth above were
made on terms no less favorable to the Company than could have
been obtained from unaffiliated third parties. All future
transactions between us and our officers, directors, principal
stockholders and their affiliates will be approved by a majority
of our Board, including a majority of independent and
disinterested directors in these transactions.
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To be considered for inclusion in next year’s proxy
materials, stockholder proposals must be submitted in writing by
December 31, 2007 to the Corporate Secretary of the Company
at 800 W. California Avenue, Suite 200, Sunnyvale,
California 94086. If you wish to submit a proposal that is not
to be included in next year’s proxy materials or nominate a
director, you must do so by delivering the written notice to the
Corporate Secretary not later than the close of business on
March 8, 2008 nor earlier than the close of business on
February 7, 2008. You are also advised to review the
Company’s Bylaws, which contain additional requirements
about advance notice of stockholder proposals and director
nominations.
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
“householding,” potentially means extra convenience
for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are
Leadis stockholders will be “householding” our proxy
materials. A single proxy statement will be delivered to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be
“householding” communications to your address,
“householding” will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in “householding” and
would prefer to receive a separate proxy statement and annual
report, please notify your broker, direct your written request
to the Corporate Secretary, Leadis Technology, Inc., 800 W.
California Avenue, Suite 200, Sunnyvale, California 94086,
or contact John K. Allen, our Corporate Secretary, at
(408) 331-8600.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
“householding” of their communications should contact
their broker.
A copy of the Company’s Annual Report to the Securities and
Exchange Commission on
Form 10-K
for the fiscal year ended December 31, 2006 is available
without charge upon written request to: Corporate Secretary,
Leadis Technology, Inc., 800 W. California Avenue,
Suite 200, Sunnyvale, California 94086.
The Board of Directors knows of no other matters that will be
presented for consideration at the Annual Meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
John K. Allen
Corporate Secretary
April 30, 2007
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PROXY
LEADIS TECHNOLOGY, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 6, 2007 The undersigned hereby appoints Antonio Alvarez and John Allen, and each of them,
each with full power of substitution, to act as attorney and proxy for the undersigned to
vote all shares of common stock of Leadis Technology, Inc. that the undersigned is entitled
to vote at the Annual Meeting of Stockholders to be held at the company’s offices located at
800 W. California Avenue, Suite 200, Sunnyvale, California, on Wednesday, June 6, 2007, at
11:30 a.m., and at any and all adjournments thereof, as follows:
You can now access Leadis Technology, Inc. account online.
Access your Leadis Technology, Inc. shareholder/stockholder account online via Investor
ServiceDirect® (ISD).
Mellon Investor Services LLC, Transfer Agent for Leadis Technology, Inc., now makes it easy and
convenient to get current information on shareholder account.
Visit us on the web at http://www.melloninvestor.com
For Technical Assistance Call 1-877-978-7778 between 9am-7pm
Monday-Friday Eastern Time Investor ServiceDirect® is a registered trademark of Mellon Investor Services LLC
Mellon
Online
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The Board of Directors recommends a vote “FOR” the nominees for director listed below and
“FOR” Proposal 2, the ratification of the selection of
independent registered public accounting firm.
NOTE: Please sign as name appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
5FOLD AND DETACH HERE5
Mellon
Online
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