UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
MICROTUNE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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[_] 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
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[LOGO] Microtune
2201 Tenth Street
Plano, Texas 75074
Dear Stockholder:
You are cordially invited to attend the 2002 annual meeting of stockholders
of Microtune, Inc., which will be held on Thursday, April 17, 2002 at the Plano
Station, 1012 16th Street, Suite 105, Plano, Texas 75086 at 4:00 p.m. (Central
Time).
Details of the business to be conducted at the annual meeting are given in
the attached Notice of Annual Meeting of the Stockholders and Proxy Statement.
After careful consideration, the Company's Board of Directors has
unanimously approved the proposals set forth in the Proxy Statement and
recommends that you vote for each proposal.
In order for us to have an efficient meeting, please sign, date and return
the enclosed proxy promptly in the accompanying reply envelope. If you are able
to attend the annual meeting, you may revoke your proxy and vote in person.
We look forward to seeing you at the annual meeting of stockholders.
Sincerely,
DOUGLAS J. BARTEK
Chief Executive Officer
and Chairman of the Board
Plano, Texas
March 18, 2002
YOUR VOTE IS IMPORTANT
In order to assure your representation at the meeting, you are requested to
complete, sign and date the enclosed proxy as promptly as possible and return
it in the enclosed envelope. No postage need be affixed if mailed in the
United States.
MICROTUNE, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, APRIL 17, 2002
TO THE STOCKHOLDERS OF MICROTUNE, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Microtune,
Inc., a Delaware corporation (the Company), will be held on Thursday, April 17,
2002 at 4:00 p.m., Central Time, at the Plano Station, 1012 16th Street, Suite
105 Plano, Texas 75086, for the following purposes:
1. To approve an amendment to 2000 Director Option Plan (the Plan) that
will affect the following changes:
(i) increase the number of shares of our common stock subject to initial
option grants under the Plan from 10,000 shares to 15,000 shares; and
(ii) increase the number of shares of our common stock subject to
subsequent option grant under the Plan on and after the date of this Annual
Meeting of Stockholders from 5,000 to 7,500.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the year ending December 31, 2002; and
3. To transact such other business as may properly come before this Annual
Meeting of Stockholders or at any and all continuation(s) or
adjournment(s) thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record of our common stock at the close of business on
February 28, 2002, are entitled to receive notice of, to attend and to vote at
the meeting and any adjournment thereof.
All stockholders are cordially invited to attend the meeting in person. Any
stockholder attending the meeting may vote in person even if such stockholder
returned a proxy.
BY ORDER OF THE BOARD OF DIRECTORS
Nancy A. Richardson
Secretary
Plano, Texas
March 18, 2002
IMPORTANT: REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE COMPLETE, DATE
AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN
ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES.
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
GENERAL
The enclosed Proxy is solicited on behalf of the Board of Directors of
Microtune, Inc. (the Company or Microtune) for use at the Annual Meeting of
Stockholders (the Annual Meeting) to be held Thursday, April 17, 2002, at 4:00
p.m., Central Time, or at any and all continuation(s) or adjournment(s)
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting of Stockholders. The Annual Meeting will be held at the Plano
Station, 1012 16th Street, Suite 105, Plano, Texas 75086. The Company's
headquarters are located at 2201 10th Street, Plano, Texas 75074, and the
telephone number is (972) 673-1600.
These proxy solicitation materials were mailed on or about March 18, 2002,
to all stockholders entitled to vote at the Annual Meeting.
RECORD DATE AND SHARES OUTSTANDING
Stockholders of record at the close of business on February 28, 2002 (the
Record Date), are entitled to notice of, and to vote at the Annual Meeting. On
the Record Date, 53,092,277 shares of the Company's common stock were issued
and outstanding. For information regarding security ownership by management and
more than 5% stockholders, see OTHER INFORMATION--Security Ownership of Certain
Beneficial Owners and Management. The closing price of the Company's common
stock on The Nasdaq Stock Market on the Record Date was $11.41 per share.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Secretary of the
Company a written notice of revocation or a duly executed proxy bearing a later
date, or by attending the Annual Meeting and voting in person. Attending the
Annual Meeting in and of itself will not constitute a revocation of proxy.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
The required quorum for the transaction of business at the Annual Meeting is
a majority of the shares of common stock outstanding on the Record Date. Shares
that are voted FOR or AGAINST a matter are treated as being present at the
Annual Meeting for purposes of establishing a quorum. Under the General
Corporation Law of the State of Delaware, abstentions and broker non-votes are
also included for purposes of determining whether a quorum of shares is present
at the meeting. A broker non-vote occurs when a nominee holding shares for a
beneficial owner does not vote on a particular proposal because the nominee
does not have discretionary voting power with respect to that item and has not
received instructions from the beneficial owner.
Each share outstanding on the Record Date entitles its owner to one vote on
all matters. Shares that are voted FOR or AGAINST as well as abstentions with
respect to a matter are deemed to be the Votes Cast. Directors are elected by a
plurality vote. The proposals described in this Proxy Statement will be
approved only if they receive an affirmative vote of a majority of Votes Cast;
in other words, each proposal must receive more votes FOR than votes AGAINST or
abstentions.
Therefore, abstentions will have the same effect as votes against each other
proposal. However, since broker non-votes are not included in the tabulation of
the voting results on the issues requiring approval of a majority of the Votes
Cast, they have no effect with respect to the outcome of such votes.
1
VOTING AND SOLICITATION
The specific proposals to be considered and acted upon at our Annual Meeting
are summarized in the accompanying notice and are described in more detail in
this proxy statement. Each share of common stock outstanding on the Record Date
will be entitled to one vote on all matters. 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.
Shares of common stock represented by properly executed proxies will, unless
such proxies have been previously revoked, be voted in accordance with the
instructions indicated thereon. In the absence of specific instructions to the
contrary, properly executed proxies will be voted FOR each proposal. No
business other than that set forth in the accompanying Notice of Annual Meeting
of Stockholders is expected to come before the Annual Meeting. Should any other
matter requiring a vote of stockholders properly arise, the persons named in
the enclosed form of proxy will vote such proxy as the Board of Directors may
recommend.
This solicitation is being made by the Company and the cost of this
solicitation will be borne by the Company. The Company may reimburse brokerage
firms and other persons representing beneficial owners of shares for their
expenses in forwarding solicitation material to such beneficial owners. The
Company expects to engage a proxy solicitor in connection with the Annual
Meeting, and anticipates that the fees of such solicitor will be between $5,000
and $10,000. Proxies may also be solicited by certain of the Company's
directors, officers and regular employees, without additional compensation
other than reimbursement of expenses, personally or by telephone, facsmilie or
letter.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of the Company's stockholders that are intended to be presented by
such stockholders at the Company's next Annual Meeting of Stockholders (the
2003 Annual Meeting) must be received by the Company at its principal executive
offices no later than 120 days prior to the anniversary of the date of this
year's mailing, or November 18, 2002, in order to be considered for possible
inclusion in the Proxy Statement and form of Proxy relating to the 2003 Annual
Meeting.
If a stockholder intends to submit a proposal at the 2003 Annual Meeting
which is not eligible for inclusion in the proxy statement and form of proxy
relating to the meeting, the stockholder must do so no later than 60 days
before the date of the 2003 Annual Meeting.
BOARD OF DIRECTORS
Microtune's Board of Directors is currently comprised of seven members,
divided into three classes with overlapping three-year terms. As a result, a
portion of Microtune's Board of Directors is designed to be elected each year.
Douglas J. Bartek, Harvey B. (Berry) Cash and Walter S. Ciciora have been
designated Class I directors, and their terms expire at the 2004 Annual Meeting
of Stockholders. Jack D. Furst has been designated Class II director, and his
term expires at this Annual Meeting. James H. Clardy, Eric Lindberg and William
P. Tai have been designated Class III directors, and their terms expire at the
2003 Annual Meeting of Stockholders.
Any additional directorships resulting from an increase in the number of
directors will be distributed among the three classes so that, as nearly as
possible, each class will consist of an equal number of directors.
At the present time, two seats have been left empty by the retirement of
Martin Englmeier and John P. Norsworthy in August 2001 and September 2001,
respectively. Mr. Furst, a representative from Hicks Muse Tate & Furst which
was formerly the largest stockholder of Microtune, has decided not to seek
re-election to the Board of Directors. All three of these board seats will
remain empty for the present time. It is the intention to replace one or more
of these seats with industry experts.
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INCUMBENT CLASS III DIRECTORS WHOSE TERM EXPIRES IN 2003
Name Age Position
---- --- --------
James H. Clardy 67 Director
Eric Lindberg 30 Director
William P. Tai 38 Director
James H. Clardy became a director of Microtune in August 1996. Mr. Clardy
has been a venture partner of Austin Ventures, a venture capital firm, since
January 1998. From October 1997 to January 1998, Mr. Clardy was a private
consultant, and from October 1991 until October 1997, he was President of
Crystal Semiconductor, a wholly-owned subsidiary of Cirrus Logic, Inc. He
currently serves on the Board of Directors of several privately held companies.
Mr. Clardy holds a B.S. in electrical engineering from the University of
Tennessee.
Eric Lindberg became a director of Microtune in August 2001 replacing
Lawrence J. Stuart. Mr. Lindberg has been an associate of Hicks, Muse, Tate &
Furst, Incorporated, a private investment firm, since August 1998. Mr. Lindberg
also serves on the Board of Directors of Cablevision SA and several privately
held companies. Mr. Lindberg holds a B.A. in economics and science from Denison
University and a M.B.A. from Harvard Business School.
William P. Tai became a director of Microtune in June 1998. Mr. Tai has been
a general partner or managing director of Institutional Venture Partners, a
venture capital firm, since July 1997. Mr. Tai also serves on the Board of
Directors of 8x8, Inc., a provider of IP Telephony silicon and solutions, ImGo
Inc., a listed company on the Hong Kong Stock Exchange focused on wireless, and
Transmeta Corp., a provider of microprocessors, as well as several privately
held companies including Chemconnect Inc., IPInfusion Inc., Kinetic Tide Inc.,
and RLX Technologies, Inc. Mr. Tai holds a B.S. in electrical engineering from
the University of Illinois and an M.B.A. from Harvard Business School.
INCUMBENT CLASS I DIRECTORS WHOSE TERM EXPIRES IN 2004
Name Age Position
---- --- --------
Douglas J. Bartek 52 Chief Executive Officer and Chairman
Harvey B. (Berry) Cash 63 Director
Walter S. Ciciora 59 Director
Douglas J. Bartek co-founded Microtune in May 1996 and has served as Chief
Executive Officer and Chairman since that time. From April 1992 to May 1996,
Mr. Bartek held various positions with Cirrus Logic, Inc., a semiconductor
company, most recently as a Division President. Mr. Bartek has worked in the
electronics industry since 1972, and has held senior management or engineering
positions at Acumos, where he was President and CEO, VSLI Technology, Motorola
and Honeywell. Mr. Bartek also serves as a director of several privately held
companies. Mr. Bartek holds a B.S. in electrical engineering from the
University of Texas at Austin and an M.S. in engineering and computer science
and an M.B.A. from Arizona State University.
Harvey B. (Berry) Cash became a director of Microtune in August 1996. Mr.
Cash has been a general partner of InterWest Partners, a venture capital firm,
since 1986, and is an advisor to Austin Ventures, a venture capital firm. He
also currently serves on the Board of Directors of Airspan Networks, Inc., a
provider of fixed wireless DSL equipment, Ciena Corporation, a designer and
manufacturer of multiplexing systems for fiber optic networks, Liberte
Investors Inc., an investment company, i2 Technologies, Inc., a provider of
marketplace services, Silicon Laboratories Inc., an integrated circuit company,
and several privately held companies. Mr. Cash holds a B.S. in electrical
engineering from Texas A&M University and an M.B.A. from Western Michigan
University.
3
Walter S. Ciciora became a director of Microtune in November 1996. Mr.
Ciciora has been an independent consultant for companies in the cable,
television, consumer electronics and telecommunications industries since
October 1993. Mr. Ciciora holds a B.S., M.S. and Ph.D. in electrical
engineering from the Illinois Institute of Technology and an M.B.A. from the
University of Chicago.
There are no family relationships among any of the directors, officers or
key employees of Microtune.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held eight meetings during the year
ended December 31, 2001 and acted a number of times by unanimous written
consent. Each director nominee and incumbent director who served as a director
during 2001 attended no less than 75% of the aggregate of all meetings of the
Board of Directors and any committees of the Board of Directors on which such
director served, if any, during 2001, except that Mr. Phillippe von
Stauffenberg, who resigned from the Board of Directors in August 2001, attended
only one meeting. The Board of Directors has a standing Audit Committee,
Compensation Committee and Nominating Committee.
The Audit Committee reviews Microtune's audited financial statements and
accounting practices, and considers and recommends the employment of, and
approves the fee arrangements with, independent auditors for both audit
functions and for advisory and other consulting services. The current members
of the Audit Committee are Messrs. Cash, Clardy, and Lindberg. The audit
committee held four meetings during 2001.
The Compensation Committee reviews and approves the compensation and
benefits for Microtune's key executive officers, administers Microtune's
employee benefit plans and makes recommendations to the Board of Directors
regarding grants of stock options and any other incentive compensation
arrangements. The current members of the Compensation Committee are Messrs.
Cash and Ciciora. The Compensation Committee held two meetings and acted a
number of times by written consent during 2001.
The Nominating Committee consists of Messrs. Bartek, Cash, and Ciciora.
The Board of Directors may, from time to time, establish other committees to
facilitate the management of the Company or for purposes it may deem
appropriate.
None of Microtune's executive officers serves on the board of directors or
compensation committee of any entity that has one or more executive officers
serving as a member of Microtune's Board of Directors or Compensation Committee.
DIRECTOR COMPENSATION
Non-employee directors are reimbursed for their reasonable travel expenses
in attending meetings of Microtune's Board of Directors. Non-employee directors
are eligible to receive options under Microtune's 2000 Director Option Plan but
receive no cash compensation. Prior to Microtune's initial public offering, its
non-employee directors were eligible to receive options under its 1996 Stock
Option Plan.
PROPOSAL NO. 1
APPROVAL OF AMENDMENT TO 2000 DIRECTOR OPTION PLAN
You are being asked to approve an amendment to our 2000 Director Option Plan
(the Plan) that will affect the following changes:
(i) increase the number of shares of our common stock subject to initial
option grants under the Plan from 10,000 shares to 15,000 shares; and
4
(ii) increase the number of shares of our common stock subject to
subsequent option grants under the Plan on and after the date of this Annual
Meeting from 5,000 to 7,500.
The Board of Directors adopted the amendment on January 30, 2002, subject to
stockholder approval at this Annual Meeting.
The Board of Directors believes the amendment is necessary to assure that
the option grants to our non-employee board members are comparable to those
granted to non-employee board members of comparable companies. We rely solely
on equity incentives in the form of stock option grants in order to attract and
retain highly qualified individuals to serve on our Board of Directors and
believe that such equity incentives are necessary for us to remain competitive
in the marketplace for executive talent since our board members receive no cash
compensation.
The following is a summary of the principal features of the Plan. Any
stockholder of Microtune who wishes to obtain a copy of the actual plan
document may do so upon written request to us at 2201 Tenth Street, Plano,
Texas 75074.
Share Reserve
At present, there is a total of 150,000 shares of common stock reserved in
the aggregate for issuance over the term of the Plan. On the first day of each
fiscal year beginning 2001, the number of shares available for issuance under
the Plan will increase equal to the lesser of (i) 75,000 shares, (ii) 1.0% of
the outstanding shares on such date, or (iii) an amount determined by the
Board. In no event will the increase, together with the proposed increases in
the number of shares available under all employee and director stock plans,
result in a total number of shares available under all employee and director
stock plans equal to or exceeding 30% of the outstanding shares of the Company
on the first day of such fiscal year.
The shares of common stock issuable under the Plan may be drawn from shares
of our authorized but uninssued shares of common stock or from shares of common
stock reacquired by us, including shares repurchased in the open market.
Eligibility
Non-employee board members are eligible to participate in the Plan. As of
February 28, 2002, six non-employee board members were eligible to participate
in the Plan. Currently, Mr. Bartek, CEO and Chairman, is the only employee
board member and, therefore, is not eligible to receive options under the Plan.
Valuation
The fair market value per share of common stock on any relevant date under
the Plan will be deemed to be equal to the closing selling price per share on
that date on The Nasdaq Stock Market. The closing price of the Company's common
stock on The Nasdaq Stock Market on the Record Date of February 28, 2002, was
$11.41 per share.
Grants
Under the automatic option program, eligible non-employee board members
receive a series of option grants over their period of board service. Each
non-employee board member will, at the time of his or her initial election or
appointment to the board, receive an option grant of 15,000 shares of common
stock, provided such individual has not previously been in our employ when
elected or appointed to the Board of Directors. This option becomes exercisable
33 1/3% on each anniversary of the date of the grant provided that the optionee
continues to serve as a director on each such date. In addition, on the date of
each annual stockholders meeting
5
following his or her election or appointment to the board, each non-employee
board member will receive an option for 7,500 shares of common stock. These
options become exercisable 50% on each anniversary of the grant provided that
the optionee continues to serve as a director on each such date.
Acceleration
In the event that we are acquired by merger or asset sale, each outstanding
option that is not assumed or replaced by the successor corporation will
automatically accelerate in full and become immediately exercisable. In
addition, even if the successor corporation assumes each outstanding option or
substitutes an equivalent option, if any non-employee director's status as a
director of Microtune or the successor corporation is terminated for any reason
other than a voluntary resignation, each outstanding option under the Plan for
that director will immediately vest and become exercisable.
Stock Awards
The table below shows the number of shares of common stock subject to option
grants under the Plan from April 2000 through December 2001, together with the
weighted average exercise price payable per share.
OPTION TRANSACTIONS
Number of Shares Weighted Average
Underlying Exercise Price
Name of Non-employee Director Options Granted (#) Per Share ($)
----------------------------- ------------------- ----------------
Harvey B. Cash.............. 5,000 10.29
James H. Clardy............. 5,000 10.29
Walter S. Ciciora........... 5,000 10.29
Jack D. Furst............... 10,000 18.35
Eric Lindberg............... 10,000 18.35
Lawrence J. Stuart.......... 5,000* 10.29
Phillippe von Stauffenberg.. 5,000* 10.29
William P. Tai.............. 5,000 10.29
--------
*These options terminated upon Mr. von Stauffenberg's and Mr. Stuart's
resignation from the board.
Option Grants
Options granted under the Plan are non-statutory options which are not
intended to qualify for any special tax benefits to the Optionee. No taxable
income is recognized by an optionee upon the grant of a non-statutory option.
The optionee will in general recognize ordinary income, in the year in which
the option is exercised, equal to the excess of the fair market value of the
purchased shares on the exercise date over the exercise price for the shares,
and the optionee will be required to satisfy the tax withholding requirements
applicable to such taxes. We will be entitled to an income tax deduction equal
to the amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for
the taxable year of Microtune in which such ordinary income is recognized by
the optionee.
New Plan Benefits
Upon stockholder approval of this Proposal, on the date of our annual
meeting, Messrs. Cash, Clardy, Ciciora, Lindberg, and Tai will each receive an
option grant for 7,500 shares of common stock at an exercise price equal to the
fair market value per share of the common stock on that date.
6
Stockholder Approval
The affirmative vote of at least a majority of the outstanding shares of
common stock present in person or by proxy at the Annual Meeting and entitled
to vote is required for approval of the amendment to the Plan. Should such
stockholder approval not be obtained, then under the Plan the number of shares
subject to initial grants will remain unchanged at 10,000 and the number of
shares subject to subsequent grants will remain at 5,000. The Plan will
continue in effect, and option grants may continue to be made under the Plan
until all shares available for issuance under the Plan have been issued
pursuant to such option grants.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTOR DEEMS PROPOSAL NO.1 TO BE IN THE BEST INTERESTS OF
MICROTUNE AND OUR STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE "FOR" APPROVAL
OF THE PROPOSAL.
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors appointed Ernst & Young LLP, independent auditors, to
audit the consolidated financial statements of the Company for the year ended
December 31, 2001 and has appointed Ernst & Young LLP to serve in the same
capacity for the year ending December 31, 2002. The Board of Directors is
asking the stockholders to ratify this appointment. Ernst & Young has audited
the Company's financial statements since 1996. In the event of a negative vote
on such ratification, the Board of Directors will reconsider its appointment.
Even if the selection is ratified, the Board of Directors, in its discretion,
may direct the appointment of a different independent accounting firm at any
time during the year if the Board of Directors believes such change would be in
Microtune's and its stockholders' best interest.
Fees billed to the Company by Ernst & Young LLP during the year ended
December 31, 2001:
Audit Fees: During the year ended December 31, 2001, Ernst & Young LLP
billed $189,000 for audit of our annual financial statements and for review of
the financial statements included in our quarterly reports on Form 10-Q and
other SEC filings during 2001.
Financial Information Systems Design and Implementation Fees: We did not
engage Ernst &Young LLP to provide us with advice regarding financial
information systems design and implementation during the year ended December
31, 2001.
All other fees: During the year ended December 31, 2001, for all other
non-audit services Ernst & Young LLP billed us $409,000, including tax related
services of $171,000 and audit related fees of $238,000 including services in
connection with the filings of a shelf registration statement and related
prospectus supplement and acquisition related services.
The Audit Committee, as stated in its Audit Committee Report included
elsewhere in this proxy statement, has considered whether the provision of the
services described in the preceding paragraphs is compatible with maintaining
the independence of Ernst & Young LLP.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and are expected to be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL NO. 2
RATIFYING THE APPOINTMENT OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2002.
7
OTHER INFORMATION
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of Microtune as of February 28, 2002.
Name Age Position
---- --- --------
Douglas J. Bartek 52 Chief Executive Officer and Chairman
William L. Housley 46 President and Chief Operating Officer
Hock Law 51 Exec. Vice President, Wireless Connectivity Business Unit
Leon K. Humble 63 Exec. Vice President,Worldwide Operations
Everett (Buddy) Rogers 45 Chief Financial Officer and Vice President of Finance and
Administration
Albert H. Taddiken 38 Chief Technical Officer and Vice President, Broadband Business Unit
Nancy A. Richardson 42 General Counsel, Secretary, and Vice President
--------
Biographical information concerning Mr. Bartek is set forth under "Board of
Directors".
William L. Housley was named President in December 2001 and Chief Operating
Officer in August 2001 after joining us in April 2001. Mr. Housley was
President of the Optical Storage Group for Oak Technology from April 1999 to
January 2001. Prior to that, Mr. Housley was Director of Operations, Imaging
and Storage Division of Motorola Semiconductor Products Sector from February
1997 to April 1999. Mr. Housley holds a B.S. degree from Northeastern State
University in Tahlequah, OK.
Hock Law was named Executive Vice President, Wireless Connectivity Business
Unit in December 2001. Mr. Law previously served as CEO and Chairman of
Transilica Inc. from August 1999 to November 2001. From October 1996 through
July 1999, Mr. Law was an Executive Vice President for Uniden, Inc. Mr. Law
holds a B.Sc. in electronic engineering from Hull University in England and a
M.Sc. in system science from City University in England.
Leon K. Humble was named Executive Vice President, Worldwide Operations in
December 2001 after serving as Senior Vice President of Manufacturing since
December 2000. Mr. Humble was Vice President, General Manager of MOS Power
Products Division for ON Semiconductor from September 1997 through August 2000.
Prior to that, Mr. Humble served as Vice President, General Manager of Flat
Panel Display division of Cirrus Logic Inc. from May 1995 to April 1997. Mr.
Humble holds a B.S. in electrical engineering and an M.B.A. from Arizona State
University.
Everett (Buddy) Rogers was named Chief Financial Officer in January 2000
after joining us in January 1998 as Vice President of Finance and
Administration, a role he continues. From January 1997 to January 1998, Mr.
Rogers was Director of Finance of Cypress Semiconductor, Inc., a semiconductor
company. From October 1993 to December 1996, Mr. Rogers was Division Controller
of Crystal Semiconductor, Inc., a semiconductor company. Mr. Rogers holds a
B.S. in business administration from Kentucky Wesleyan College and an M.B.A. in
international marketing from Huron University, London, England.
Albert H. Taddiken was named Chief Technical Officer and Vice President,
Broadband Business Unit in December 2001 after serving as our Chief Technical
Officer since September 2001 and Vice President, IC Engineering since May 1998.
Mr. Taddiken had previously served as our Director, IC Engineering since May
1998 and Director, RFIC Development since November 1996. Mr. Taddiken began his
career at Texas Instruments. Mr. Taddiken holds a B.S. in electrical
engineering from Massachusetts Institute of Technology.
Nancy A. Richardson was named General Counsel, Secretary, and Vice President
upon joining us in April 2001. Ms. Richardson was General Counsel and Secretary
for Concero Inc., a software consulting company, from May 1997 to April 2001,
last serving there as Senior Vice President. Ms. Richardson began her career
with Ernst & Young LLP. Ms. Richardson holds a J.D. and an M.B.A. from the
University of Texas and a B.A. in accountancy from St. Edward's University as
well as a CPA license.
8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Microtune's
common stock as of the Record Date by:
. each person who is known by Microtune to beneficially own more than 5%
of Microtune's common stock;
. the Chief Executive Officer and each of the next four most highly
compensated executive officers during 2001;
. each director of Microtune; and
. all of the current executive officers and directors of Microtune as a
group.
Percentage of ownership is based on 53,092,277 shares outstanding as of the
Record Date. Beneficial ownership is calculated based on the requirements of
the Securities and Exchange Commission. All shares of the common stock subject
to options currently exercisable or exercisable within 60 days after the Record
Date are deemed to be outstanding for the purpose of computing the percentage
of ownership of the person holding the options, but are not deemed to be
outstanding for computing the percentage of ownership of any other person.
Unless otherwise indicated below, each stockholder named in the table has sole
voting and investment power with respect to all shares beneficially owned,
subject to applicable community property laws. Unless otherwise indicated, the
address for each stockholder listed in the following table is c/o Microtune,
Inc., 2201 10th Street, Plano, Texas 75074.
Number of Percentage of Shares
Name and Address Shares Beneficially Owned
---------------- --------- --------------------
Morgan Stanley Dean Witter & Co.(1).................... 3,039,192 5.7%
1585 Broadway
New York, NY 10035
Janus Capital Corporation(2)........................... 2,810,210 5.3%
c/o Thomas H. Bailey
100 Fillmore Street
Denver, CO 80206-4923
Institutional Venture Partners VII(3).................. 2,778,668 5.2%
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Douglas J. Bartek(4)................................... 2,909,897 5.5%
James A. Fontaine(5)................................... 421,496 *
Everett "Buddy" Rogers(6).............................. 113,628 *
John P. Norsworthy..................................... 406,000 *
Albert H. Taddiken(7).................................. 132,812 *
Harvey B. (Berry) Cash(8).............................. 72,500 *
Walter S. Ciciora(9)................................... 82,500 *
James H. Clardy(10).................................... 70,500 *
Eric Lindberg.......................................... 262 *
Jack D. Furst.......................................... 35,880 *
William P. Tai(11)..................................... 2,735,788 5.2%
All directors and current executive officers as a group
(13 Persons)......................................... 6,734,309 12.6%
9
--------
* Less than 1% of the outstanding shares of common stock.
(1) Based upon a Schedule 13G dated February 13, 2002 filed with the
Securities and Exchange Commission by Morgan Stanley Dean Witter and Co.
The 13G states that Morgan Stanley Dean Witter and Co. has shared voting
power as to 2,347,402 shares and shared dispositive power as to 3,039,192
shares.
(2) Based upon a Schedule 13G filed on February 12, 2002 by Janus Capital
Corporation ("Janus Capital"). Janus Capital and Thomas H. Bailey filed
a Schedule 13G on February 12, 2002, indicating that Janus Capital and
Thomas H. Bailey have sole voting power and sole dispositive power with
respect to 2,810,210 shares.
(3) Includes 94,773 shares held by Institutional Venture Management VII,
2,597,061 shares held by Institutional Venture Partners VII and 86,834
shares held by IVP Founders Fund I, L.P.
(4) Includes 2,198,700 shares of common stock outstanding held by Bartek
Investments-1, Ltd., of which Mr. Bartek is the general partner, 420,700
shares for options which are immediately exercisable, and 92,699 shares
for options which are exercisable within 60 days.
(5) Includes 248,780 shares of common stock outstanding held by Fontaine
Family Limited Partnership, of which Mr. Fontaine is the general
partner. Of these shares, 50,001 are unvested and subject to repurchase
by Microtune upon the termination of Mr. Fontaine's employment with
Microtune. Also includes 156,049 shares for options which are
immediately exercisable and 16,666 shares for options which are
exercisable within 60 days.
(6) Includes 56,424 shares for options which are immediately exercisable and
20,300 shares for options which become exercisable within 60 days.
(7) Includes 50,168 shares held by Taddiken Investments, Ltd. Of which Mr.
Taddiken is the general partner, 80,417 shares for options which are
immediately exercisable, and 2,083 shares for options which become
exercisable within 60 days.
(8) Includes 2,500 shares for options which become exercisable within 60 days.
(9) Includes 2,500 shares for options which become exercisable within 60 days.
(10) Includes 25,000 shares of common stock held by trusts, of which Mr. Clardy
acts as co-trustee, for the benefit of Mr. Clardy's children, none of
whom are dependents of Mr. Clardy. Also includes 2,500 shares for
options which become exercisable within 60 days.
(11) Includes 94,773 shares held by Institutional Venture Management VII and
2,597,061 shares held by Institutional Venture Partners VII. Mr. Tai is
a general partner of each of these partnerships, shares voting and
dispositive power with respect to the shares held by each of these
entities and disclaims beneficial ownership of the shares held by these
entities, except to the extent of his pecuniary interest. Also includes
2,500 shares for options which become exercisable within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 2001, Microtune has not been a party to, and it has no plans to be a
party to, any transaction or series of similar transactions in which the amount
involved exceeds $60,000, and in which any director, executive officer or
holder of more than 5% of any class of Microtune voting stock, or any member of
the immediate family of any of the foregoing persons, had or will have a direct
or indirect material interest, other than as described under Management and the
transactions described below.
Microtune believes that all transactions between it and its officers,
directors, principal stockholders and other affiliates have been and will be on
terms no less favorable to Microtune than could be obtained from unaffiliated
third parties.
On April 25, 2001, William L. Housley, President and Chief Operating
Officer, issued a promissory note to Microtune in the principal amount of
$105,000. The note bears interest at 4.86% and is due and payable on April 25,
2003. The total amount of principal and $3,402 of interest on the note was
outstanding as of December 31, 2001. On January 31, 2002, this note was
cancelled and a new note was issued to Microtune by Mr. Housley as described
below.
10
On January 31, 2002, William L. Housley, President and Chief Operating
Officer, issued a promissory note to Microtune in the principal amount of
$232,200 in connection with the exercise of stock options and the cancellation
of the note described above. The note bears interest at 2.73% and is due and
payable on October 31, 2002.
On January 31, 2002, Nancy A. Richardson, General Counsel and Secretary,
issued a promissory note to Microtune in the principal amount of $75,000 in
connection with the exercise of stock options. The note bears interest at 2.73%
and is due and payable on October 31, 2002.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section16(a) of the Securities and Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to file certain
reports regarding ownership of, and transactions in, the Company's securities
with the Securities and Exchange Commission and with The Nasdaq Stock Market.
Such officers, directors and 10% stockholders are also required to furnish the
Company with copies of all Section 16(a) forms that they file.
Based solely on Microtune's review of copies of Forms 3, 4, 5 and amendments
thereto furnished to the Company pursuant to Rule 16a-3(e), Microtune believes
that, during the year ended December 31, 2001, all Section 16(a) filing
requirements applicable to Microtune's officers, directors and 10% stockholders
were met.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below sets forth the compensation earned for services rendered to
Microtune in all capacities for the years ended December 31, 1999, 2000, and
2001, by Microtune's Chief Executive Officer and its next four most highly
compensated executive officers who earned more than $100,000 during 2001. These
executives are referred to as the named executive officers elsewhere in this
proxy statement.
Long-Term
Compensation Awards
---------------------
Annual Compensation
Fiscal ------------------- Securities Underlying All Other
Name and Principal Position Year Salary Bonus Options(#) Compensation(1)
--------------------------- ------ -------- ----- --------------------- ---------------
Douglas J. Bartek..................... 2001 $178,374 $0 231,200 $652
Chief Executive Officer and Chairman 2000 165,122 0 1,000,000 647
1999 149,551 0 350,000 319
James A. Fontaine..................... 2001 $160,008 $0 81,000(4) $ 52
Chief Strategy Officer(2) 2000 157,506 0 500,000 256
1999 150,000 0 300,000 199
Everett "Buddy" Rogers................ 2001 $150,000 $0 67,300 $ 0
Chief Financial Officer 2000 139,485 0 200,000 0
1999 98,755 0 28,800 0
John P. Norsworthy (3)................ 2001 $130,487 $0 0 $ 0
Chief Technical Officer 2000 157,506 0 0 92
1999 150,000 0 100,000 193
Albert H. Taddiken . . . . . ......... 2001 $127,420 $0 86,500 $ 0
Chief Technology Officer and Vice 2000 121,266 0 40,000 0
President Broadband Business Unit 1999 110,616 0 150,000 0
--------
(1) These amounts consist solely of reimbursement for life insurance
premiums paid by Microtune.
(2) Mr. Fontaine ceased being an executive officer in December 2001 when he
became Chief Strategy Officer.
(3) Mr. Norsworthy retired from Microtune in September 2001.
(4) 50,000 of these options have been cancelled by mutual agreement between
Microtune and Mr. Fontaine.
11
OPTION GRANTS DURING LAST FISCAL YEAR
The following table sets forth certain information with respect to stock
options granted to each of the named executive officers during the year ended
December 31, 2001, including the potential realizable value over the ten-year
term of the options, based on assumed, annually compounded rates of stock value
appreciation. The assumed 5% and 10% annual rates of stock price appreciation
from the date of grant to the end of the option term are provided in accordance
with rules of the Securities and Exchange Commission and do not represent
Microtune's estimate or projection of the future common stock price. Actual
gains, if any, on stock option exercises are dependent on the future
performance of Microtune common stock, overall market conditions and the option
holders' continued employment through the vesting period. This table does not
take into account any actual appreciation in the price of the common stock from
the date of grant to the present.
During 2001, Microtune granted options to purchase up to an aggregate of
2,435,950 shares to employees and directors. All options were granted at
exercise prices equal to the fair market value of Microtune common stock as
determined by the Company's Board of Directors on the date of grant. All
options have a term of ten years. Optionees may pay the exercise price by cash,
check or delivery of already-owned shares of Microtune common stock. Options
generally vest over five years, with 20% of the shares vesting one year after
the option vesting start date and the remaining option shares vesting ratably
on a monthly basis over the succeeding 48 months, unless otherwise stated below.
Individual Grants
Percent of
Total
Number of Options Potential Realizable Value at Assumed
Securities Granted to Annual Rates of Stock Price Appreciation
Underlying Employees for Option Term
Options In Last Exercise ----------------------------------------
Name Granted Fiscal Year Price (1) Date 5% 10%
---- ---------- ----------- --------- -------- -------- ----------
Douglas J. Bartek (1).... 100,000 4.11% $ 7.75 03/06/11 $487,393 $1,310,442
(2) 56,000 2.30 7.75 03/06/11 273,915 694,155
(3) 75,000 3.08 10.21 10/01/11 481,576 1,220,408
James A. Fontaine(4) 50,000 2.05 7.75 03/06/11 243,695 617,575
(5) 31,000 1.27 7.75 03/06/11 151,092 382,897
Everett "Buddy" Rogers(6) 35,000 1.44 7.75 03/06/11 170,588 432,302
(7) 20,300 0.83 7.75 03/06/11 98,941 250,735
(8) 12,000 0.49 10.21 10/01/11 77,053 195,265
John P. Norsworthy(9).... 25,000 1.03 7.75 03/06/11 121,848 308,787
(9) 6,700 0.28 7.75 03/06/11 32,655 82,755
Albert H. Taddiken (10).. 50,000 2.05 7.75 03/06/11 243,697 617,575
(11) 12,500 1.03 7.75 03/06/11 60,924 154,394
(12) 24,000 0.99 10.21 10/01/11 154,105 390,531
--------
(1) This option vests 1/12th each month beginning February 1, 2005.
(2) This option vests 1/12th each month beginning April 6, 2001.
(3) This option vests 1/12th each month beginning May 1, 2002.
(4) This option grant has been cancelled by mutual agreement between Microtune
and Mr. Fontaine.
(5) This option vests 1/12th each month beginning April 6, 2001.
(6) This option vests 1/12th each month beginning February 1, 2005.
(7) This option vests 1/12th each month beginning April 6, 2001.
(8) This option vests 1/12th each month beginning July 1, 2002.
(9) This option grant terminated upon Mr. Norsworthy's retirement.
(10) This option vests 1/12th each month beginning November 1, 2005.
(11) This option vests 1/12th each month beginning April 6, 2001.
(12) This option vests 1/24th each month beginning May 1, 2002.
12
Aggregate Option Exercises During the Last Fiscal Year and Fiscal Year-End
Option Values
The following table sets forth information with respect to the named
executive officers concerning the exercisable and unexercisable options held by
them as of December 31, 2001. The Value Realized is based on the fair market
value of Microtune common stock as quoted on The Nasdaq Stock Market on the
trading day immediately prior to the date of exercise, less the per share
exercise price, multiplied by the number of shares issued. The Value of
Unexercised In-the-Money Options at Fiscal Year End is based on the closing
price of $23.46 per share of Microtune common stock as quoted as on the Nasdaq
Stock Market on December 31, 2001 (the last day of trading of 2001), less the
per share exercise price, multiplied by the number of shares issuable upon
exercise of the options.
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year-End Fiscal Year-End
Acquired on Value -------------------------- -------------------------
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ---------- ----------- ------------- ----------- -------------
Douglas J. Bartek..... 26,086 $ 229,883 494,713 1,010,401 $10,934,207 $21,340,892
James A. Fontaine..... 119,000 1,193,403 199,049 290,951 4,370,936 6,536,089
Everett "Buddy" Rogers 75,625 1,310,864 99,375 197,350 2,155,332 4,067,407
John P. Norsworthy.... 52,234 883,469 0 0 0 0
Albert H. Taddiken.... 115,168 1,652,540 78,334 268,166 1,759,127 5,497,598
CHANGE OF CONTROL ARRANGEMENTS/EMPLOYMENT AGREEMENTS
Shares subject to options granted under Microtune's 1996 Stock Option Plan
and 2000 Stock Option Plan generally vest over five years, with 20% of the
shares vesting after one year and the remaining shares vesting in monthly
installments over the next 48 months. In addition, the option agreements for
some of the key employees provide for variations in the standard vesting and
for accelerated vesting of a portion of the employees' unvested option shares
if the employee is terminated without cause by the surviving corporation
following a change of control. A change of control is defined in the respective
employee's option agreement, but typically is defined to mean the sale of all
or substantially all of Microtune's assets, or the acquisition of Microtune by
another entity by means of consolidation or merger pursuant to which
Microtune's stockholders immediately prior to such transaction shall hold less
than 50% of the voting power of the surviving corporation.
Agreement with Douglas J. Bartek.
On March 23, 2000, Microtune entered into an employment agreement with
Douglas J. Bartek, Chief Executive Officer and Chairman of the Board of
Directors. This agreement provides for an initial term of three years and an
initial base annual salary of $150,000. In addition, Mr. Bartek is entitled to
participate in employee benefit plans for which other senior executives are
generally eligible. Mr. Bartek is eligible for an annual discretionary bonus as
determined by Microtune's Board of Directors. No bonus has been paid under the
agreement.
Under the terms of the employment agreement, Mr. Bartek may not terminate
his employment prior to March 23, 2003, except for reasons enumerated in the
agreement, including:
. a reduction in his compensation or benefits that is not part of a
generally applicable reduction for all executives;
. a material demotion in his responsibilities or duties;
. a relocation of his workplace to a place more than 50 miles from Dallas,
Texas; or
. a material breach of the agreement by Microtune.
13
Microtune may terminate Mr. Bartek's employment at any time with 30 days
notice, but if Microtune terminates his employment without cause, or if there
is constructive termination, he is entitled to receive his base annual salary
for an additional 12 months plus the highest bonus paid to him in the three
years prior to his termination. No bonus has been paid under this agreement. He
is also entitled to receive any and all employee benefits for two years from
the date of termination. In addition, any stock options and stock subject to
repurchase rights held by him that would have vested during the 12-month salary
continuation period will fully vest upon termination.
If Mr. Bartek's employment is terminated within two years of the date that
Microtune experiences a change in control, as defined in the agreement, he
shall be entitled to receive a lump sum severance payment equal to two times
the sum of his base annual compensation plus the highest bonus paid to him in
the three years prior to the change in control. All unvested stock options will
immediately vest upon his termination, and he will continue to receive any and
all employee benefits for 24 months. Mr. Bartek has agreed not to compete with
Microtune and not to solicit Microtune customers or employees for a period of
three years from the date of the termination of his employment.
Agreement with James A. Fontaine.
James A. Fontaine entered into an employment agreement with Microtune on
August 1, 1998. Mr. Fontaine's initial base annual salary was set at a rate of
$150,000, and he is eligible for an annual discretionary bonus as determined by
Microtune's Board of Directors. In addition, Mr. Fontaine agreed not to compete
with Microtune for 12 months following the termination of his employment, and
not to solicit Microtune customers or employees for 24 months following the
termination of his employment, with limited exceptions.
Agreement with Hock Law.
Hock Law entered into an employment agreement with Microtune on November 28,
2001. Mr. Law agreed not to compete with Microtune for 1 year following the
termination of his employment, and not to solicit Microtune customers or
employees for 1 year following the termination of his employment.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The Compensation Committee (the Compensation Committee) is composed of
Harvey B. (Berry) Cash and Walter S. Ciciora, each of whom is a non-employee
director. The Compensation Committee sets, reviews and administers the
Company's executive compensation program. The role of the Compensation
Committee is to establish and recommend salaries and other compensation paid to
executive officers of the Company and to administer the Company's stock plans.
The Compensation Committee approves all stock option grants to executive
officers, all executive officer base salaries and any cash bonus payments to
executive officers, and reviews all stock option grants to employees.
The Company's executive pay programs are designed to attract, retain, and
motivate executives who will contribute to the Company's long-term success, to
mesh executive and stockholder interest through stock option based plans and to
provide a compensation package that recognizes individual contributions and
Company performance. A meaningful portion of each executive's total
compensation is intended to be variable, and to relate to and be contingent
upon, Company performance.
At this time in the Company's growth, the Compensation Committee has
determined that the most effective means of compensation are base salaries and
long-term incentives through the Company's stock plans.
BASE SALARY
The base salaries of executive officers, including the Company's Chief
Executive Officer, are initially determined by evaluating the responsibilities
of the position held and the experience and performance of the individual, with
reference to the competitive marketplace for executive talent, including a
comparison to base
14
salaries for comparable positions in high growth, technology-based companies of
reasonably similar size. The Compensation Committee reviews executive salaries
annually and recommends to the Board of Directors salary adjustments as
appropriate to reflect changes in the market conditions and individual
performance and responsibility. All salary changes for executive officers are
submitted for approval by the entire Board of Directors, although the
Compensation Committee may grant options to such officers without Board
approval.
BONUS
The Company does not have an officer bonus program. Bonuses awarded to
executive officers are determined based on achievement of individual and
Company performance goals. No cash bonuses were awarded to executive officers
in 2001.
STOCK OPTIONS
Under the Company's 2000 Stock Plan, stock options may be granted to
executive officers and other employees of the Company. Upon joining the
Company, an individual's initial option grant is based on the individual's
responsibilities and position. The sizes of stock option awards are based
primarily on an individual's performance and responsibilities. Due in part to
the competitive environment of the technology industry, the Compensation
Committee believes stock option grants are an effective method of incenting
executives to take a longer-term view of the Company's performance and to
ensure that the executives' and the stockholders' interests are aligned.
OTHER
Other elements of executive compensation include Company-wide medical and
life insurance benefits and the ability to defer compensation pursuant to a
401(k) plan. The Company did not match contributions in the 401(k) Plan in 2001.
The Compensation Committee has considered the potential impact of Section
162(m) of the Internal Revenue Code of 1986, as amended, and the regulations
thereunder. Section 162(m) disallows a tax deduction for any publicly held
corporation for individual compensation exceeding $1 million in any taxable
year for any of the executive officers, unless such compensation is
performance-based. Since the cash compensation of each of the executive
officers is below the $1 million threshold and the Compensation Committee
believes that any options granted under the Company's 2000 Stock Plan will meet
the requirements of being performance-based, the Compensation Committee
believes that Section 162(m) will not reduce the tax deduction available to the
Company. The Company's policy is to qualify, to the extent reasonable, its
executive officers' compensation for deductibility under applicable tax laws.
However, the Compensation Committee believes that its primary responsibility is
to provide a compensation program that will attract, retain and reward the
executive talent necessary to the Company's success. Consequently, the
Compensation Committee recognizes that the loss of a tax deduction could be
necessary in some circumstances.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Harvey B. (Berry) Cash
Walter S. Ciciora
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
In March 2000, the Board of Directors established the Audit Committee (the
Audit Committee). The Audit Committee is composed of Harvey B. (Berry) Cash,
James H. Clardy and Eric Lindberg, each of whom is a non-employee director. The
Audit Committee oversees Microtune's financial reporting process on behalf of
the Board of Directors, pursuant to its Charter.
15
Management has the primary responsibility for the financial statements and
the reporting process including the systems of internal controls. In fulfilling
its oversight responsibilities, the Audit Committee reviewed the audited
financial statements in the Annual Report on Form 10-K for the year ended
December 31, 2001 with management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements.
The Audit Committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
under generally accepted auditing standards. In addition, the Audit Committee
has discussed with the independent auditors the auditors' independence from
management and the Company including the matters in the written disclosures
received by the Committee from the independent auditors required by the
Independence Standards Board, and considered the compatibility of non-audit
services with the auditors' independence.
The Audit Committee discussed with Microtune's independent auditors the
overall scope and plans for their respective audits. The Audit Committee meets
with the independent auditors, with and without management present, to discuss
the results of their examinations, their evaluations of the Company's internal
controls, and the overall quality of Microtune's financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Annual Report on Form
10-K for the year ended December 31, 2001, for filing with the Securities and
Exchange Commission. The Audit Committee and the Board of Directors have also
recommended, subject to stockholder approval, the selection of the Company's
independent auditors for 2002.
Microtune believes that each of the members of the Audit Committee is an
independent director, as defined in the rules regarding audit committees
promulgated by the National Association of Securities Dealers, Inc. (the NASD),
except as discussed below. Eric Lindberg is currently an associate at Hicks,
Muse, Tate & Furst, Incorporated, a private investment firm (HMTF) which holds
4.8% of the outstanding stock of Microtune, and has two representatives on the
Company's Board of Directors. Accordingly, it is possible that Mr. Lindberg
would not be deemed to be independent under the rules of the NASD. Microtune
believes that Mr. Lindberg's service on the Audit Committee is in the best
interests of the Company and its stockholders due in part to Mr. Lindberg's
unique knowledge in financial matters gained through his association with HMTF.
In addition, as an associate of a stockholder of Microtune, his interests in
ensuring that the financial statements are accurate and the internal controls
of the Company are adequate to detect fraud, errors or omissions in the
financial reporting activities of the Company are strongly aligned with those
of the other stockholders of the Company.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Harvey B. (Berry) Cash
James H. Clardy
Eric Lindberg
PERFORMANCE GRAPH
The following graph shows a comparison of cumulative total stockholder
return, calculated on a dividend reinvested basis, from the effective date of
the initial public offering of the Company's common stock (August 4, 2000)
through December 31, 2001, with the NASDAQ Composite Index and the Philadelphia
Semiconductor Index. The graph assumes that $100 was invested in the Company's
common stock (at the initial public offering price of $16.00 per share), and in
the above indices on August 4, 2000. Note that historic stock price performance
is not necessarily indicative of future stock price performance.
16
Comparison of Cumulative Total Return Among Microtune, Inc., Nasdaq
Composite Index and Philadelphia Semiconductor Index
[CHART]
Microtune Inc Nasdaq US Phila Semiconductor
Aug 200 100 100 100
2000 103.52 65.15 62.62
2001 146.63 51.7 56.77
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any
other matters properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed proxy to vote the shares they represent as
the Board of Directors may recommend.
Any stockholder or stockholder's representative who, because of a
disability, may need special assistance or accommodation to allow him or her to
participate at the Annual Meeting may request reasonable assistance or
accommodation from the Company by contacting Barbara Ureste at Microtune, Inc.,
2201 10th Street, Plano, Texas 75074. The telephone number at that location is
(972) 673-1600. To provide the Company sufficient time to arrange for
reasonable assistance or accommodation, please submit all such requests by
April 12, 2002.
It is important that your shares be represented at the meeting, regardless
of the number of shares that you hold. You are, therefore, urged to execute and
return the accompanying proxy in the envelope that has been enclosed, at your
earliest convenience.
FOR THE BOARD OF DIRECTORS
Douglas J. Bartek
Chief Executive Officer
and Chairman of the Board
DATED: MARCH 18, 2002
17
--------------------------------------------------------------------------------
Proxy - Microtune, Inc.
--------------------------------------------------------------------------------
ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF MICROTUNE, INC. ("MICROTUNE")
The undersigned hereby appoints Douglas J. Bartek and Everett (Buddy) Rogers,
and each of them, as attorneys-in-fact and proxies of the undersigned, with full
power of substitution, to vote all of the shares of Microtune's common stock
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders of Microtune to be held at the Plano Station, 1012 16th Street,
Suite 105, Plano, Texas 75086, on Thursday, April 17, 2002, at 4:00 p.m. local
time, and at any and all adjournments or postponements thereof, with all of the
powers the undersigned would possess if personally present, upon and in respect
of the following proposals and in accordance with the following instructions.
The proposals referred to herein are described in detail in the accompanying
proxy statement.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
PROPOSALS SPECIFIED ON THE REVERSE SIDE. IF A SPECIFIC DIRECTION IS INDICATED,
THIS PROXY WILL BE VOTED IN ACCORDANCE THEREWITH.
(Continued and to be signed on reverse side)
CONTROL NUMBER
Microtune, Inc.
Holder Account Number
Use a black pen.
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Print in CAPITAL [ ] Mark this box with an X if
letters inside the you have made changes to
grey areas as shown your name or address details
in this example. [A][B][C] [1][2][3] [X] above.
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Annual Meeting Proxy Card
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A Proposals
The Board of Directors recommends a vote FOR the following proposals.
For Against Abstain
1. To approve an amendment to 2000 Director
Option Plan. [ ] [ ] [ ]
2. To vote for the ratification of Ernst &
Young LLP as independent auditors. [ ] [ ] [ ]
B Authorized Signatures - Sign Here - This section must be completed for your
instructions to be executed.
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If the signer
is a corporation, please give the full corporate name and have a duly authorized
officer sign stating such officers' title. If the signer is a partnership,
please sign the partnership name by an authorized person.
Signature 1 Signature 2 Date (dd/mm/yyyy)
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A429 1 U P X 007P4B