DIODES INCORPORATED
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 2, 2003
NOTICE IS HEREBY GIVEN THAT THE ANNUAL MEETING (THE "MEETING")
OF THE STOCKHOLDERS OF DIODES INCORPORATED (THE "COMPANY") WILL BE HELD AT THE
RENAISSANCE HOTEL, 30100 AGOURA ROAD, AGOURA HILLS, CALIFORNIA 91301, ON MONDAY,
JUNE 2, 2003 AT 10:00 A.M. (CALIFORNIA TIME) FOR THE FOLLOWING PURPOSES:
TO ACT ON:
1. ELECTION OF DIRECTORS. To elect seven persons to the Board of
Directors of the Company, each to serve until the next annual
meeting of stockholders and until their successors have been
elected and qualified. The Board of Directors' nominees are: C.H.
Chen, Michael R. Giordano, Keh-Shew Lu, M.K. Lu, Shing Mao,
Raymond Soong and John M. Stich.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Moss Adams LLP as the Company's independent
certified public accountants for the year ended December 31, 2003.
3. OTHER BUSINESS. To transact such other business as properly may
come before the Meeting or any adjournment thereof.
Only persons who are stockholders of record (the
"Stockholders") at the close of business on April 18, 2003 are entitled to
notice of and to vote in person or by proxy at the Meeting or any adjournment or
postponement thereof.
The Proxy Statement, which accompanies this Notice, contains
additional information regarding the proposals to be considered at the Meeting,
and Stockholders are encouraged to read it in its entirety.
As set forth in the enclosed Proxy Statement, proxies are
being solicited by and on behalf of the Board of Directors of the Company. All
proposals set forth above are proposals of the Company. It is expected that
these materials first will be mailed to Stockholders on or about April 29, 2003.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE MARK,
DATE AND SIGN THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE
TO BE SURE THAT YOUR SHARES ARE VOTED. YOUR VOTE IS IMPORTANT, WHETHER YOU OWN A
FEW SHARES OR MANY. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY AND
VOTE YOUR SHARES IN PERSON. THE PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS
EXERCISE.
Dated at Westlake Village, California, this seventeenth day of
April, 2003.
By Order of the Board of Directors,
DIODES INCORPORATED
/s/ Carl Wertz
Carl Wertz,
Secretary
1
DIODES INCORPORATED
3050 EAST HILLCREST DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91362
(805) 446-4800
PROXY STATEMENT
ANNUAL MEETING: JUNE 2, 2003
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors (the "Board of Directors") of
Diodes Incorporated (the "Company") for use at the annual meeting (the Meeting")
of the stockholders of the Company to be held on Monday, June 2, 2003, at the
Renaissance Hotel, 30100 Agoura Road, Agoura Hills, California 91301, at 10:00
a.m. (California time) and at any adjournment or postponement thereof. C.H. Chen
and Carl C. Wertz, the designated proxyholders (the "Proxyholders"), are members
of the Company's management. Only stockholders of record (the "Stockholders") on
April 18, 2003 (the "Record Date") are entitled to notice of and to vote in
person or by proxy at the Meeting or any adjournment or postponement thereof.
This Proxy Statement and the enclosed proxy card (the "Proxy") first will be
mailed to Stockholders on or about April 29, 2003.
MATTERS TO BE CONSIDERED
The matters to be considered and voted upon at the Meeting
will be:
1. ELECTION OF DIRECTORS. To elect seven persons to the Board of
Directors of the Company, each to serve until the next annual
meeting of stockholders and until their successors have been
elected and qualified. The Board of Directors' nominees are: C.H.
Chen, Michael R. Giordano, Keh-Shew Lu, M.K. Lu, Shing Mao,
Raymond Soong and John M. Stich.
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS. To ratify the
appointment of Moss Adams LLP as the Company's independent
certified public accountants for the year ended December 31, 2003.
3. OTHER BUSINESS. To transact such other business as properly may
come before the Meeting or any adjournment thereof.
COST OF SOLICITATION OF PROXIES
This Proxy solicitation is made by the Board of Directors of
the Company, and the Company will bear the costs of this solicitation, including
the expense of preparing, assembling, printing and mailing this Proxy Statement
and any other material used in this solicitation of Proxies. This solicitation
of Proxies will be made by mail and may be supplemented by telephone or other
personal contact to be made without special compensation by regular officers and
employees of the Company. If it should appear desirable to do so to ensure
adequate representation at the Meeting, officers and regular employees may
communicate with Stockholders, beneficial owners, banks, brokerage houses,
custodians, nominees and others, by telephone, facsimile transmissions,
telegraph, or in person to request that Proxies be furnished. The Company will
reimburse banks, brokerage houses, and other custodians, nominees and
fiduciaries, for their reasonable expenses in forwarding proxy materials to
their principals. The total estimated cost for the printing and solicitation of
Proxies is $10,000.
2
OUTSTANDING SECURITIES AND VOTING RIGHTS; REVOCABILITY OF PROXIES
The authorized capital of the Company consists of (i)
30,000,000 shares of common stock ("Common Stock"), $0.66-2/3 par value, of
which 8,412,092 shares were issued and outstanding on the Record Date (with an
additional 1,075,672 shares held as treasury stock) and (ii) 1,000,000 shares of
Class A Preferred Stock, $1.00 par value ("Class A Preferred Stock"), none of
which were issued and outstanding on the Record Date. The Common Stock and the
Class A Preferred Stock are collectively referred to as the "Stock." A majority
of the outstanding shares of the Common Stock constitutes a quorum for the
conduct of business at the Meeting. Abstentions and "broker non-votes" (as
defined below) will be treated as shares present and entitled to vote for the
purpose of determining the presence of a quorum.
Each Stockholder is entitled to one vote, in person or by
proxy, for each share of Common Stock standing in his or her name on the books
of the Company as of the Record Date on any matter submitted to the
Stockholders, except that in connection with the election of directors, each
Stockholder has the right to cumulate votes, provided that the candidates' names
have been properly placed in nomination prior to commencement of voting and a
Stockholder has given notice prior to commencement of voting of his or her
intention to cumulate votes. If a Stockholder has given such notice, all
Stockholders may cumulate their votes for all nominated candidates. Cumulative
voting entitles a Stockholder to give one candidate a number of votes equal to
the number of directors to be elected multiplied by the number of shares of
Common Stock owned by such Stockholder, or to distribute such Stockholder's
votes on the same principle among as many candidates as the Stockholder shall
think fit. The candidates receiving the highest number of votes, up to the
number of directors to be elected, shall be elected. Discretionary authority to
cumulate votes is hereby solicited by the Board of Directors and the return of
the Proxy shall grant such authority.
A Proxy for use at the Meeting is enclosed. The Proxy must be
signed and dated by you or your authorized representative or agent. Telegraphed,
cabled or telecopied Proxies are also valid. You may revoke a Proxy at any time
before it is exercised at the Meeting by submitting a written revocation to the
Secretary of the Company or a duly executed Proxy bearing a later date or by
voting in person at the Meeting.
Brokers holding Common Stock in "street name" who are members
of a stock exchange are required by the rules of the exchange to transmit this
Proxy Statement to the beneficial owner of the Common Stock and to solicit
voting instructions with respect to the matters submitted to the Stockholders.
In the event any such broker has not received instructions from the beneficial
owner by the date specified in the statement accompanying such material, the
broker may give or authorize the giving of a Proxy to vote such Common Stock in
his discretion as to the election of directors or the appointment of independent
auditors. Certain other proposals, however, are non-discretionary, and brokers
or nominees who have received no instructions from their clients do not have
discretion to vote on such proposals without specific instructions from the
beneficial owner. When a broker or nominee votes a client's shares on some but
not all proposals, the missing votes are referred to as "broker non-votes." If
you hold Common Stock in "street name" and you fail to instruct your broker or
nominee as to how to vote such Common Stock, your broker or nominee may, in its
discretion, vote such Common Stock "FOR" the election of the Board of Director's
nominees and "FOR" the appointment of Moss Adams LLP as the Company's
independent auditors.
Each proposal described herein, other than the election of
directors, requires the affirmative vote of a majority of the outstanding shares
of Common Stock present in person or represented by proxy and entitled to vote
at the Meeting. Abstentions with respect to any proposal submitted to the
Stockholders, other than the election of directors, will be included in the
number of votes cast on such proposal and, accordingly, will have the effect of
a vote "AGAINST" such proposal. However, broker non-votes with respect to a
proposal submitted to the Stockholders will not be included in the number of
shares counted as being present for the purposes of voting on such proposed and,
accordingly, have no effect on the approval of the proposal.
Unless revoked, the shares of Common Stock represented by
Proxies will be voted in accordance with the instructions given thereon. In the
absence of any instruction in the Proxy, your shares of Common Stock will be
voted "FOR" the election of the nominees for director set forth herein and "FOR"
the other proposals described herein.
Of the shares of Common Stock outstanding on the Record Date,
3,067,639 (or approximately 36.5%) (the "Shares") were held in the name of
Lite-On Semiconductor Corporation ("LSC"), formerly named Lite-On Power
Semiconductor ("LPSC"). See "General Information - Security Ownership of Certain
Beneficial Owners and Management" and "Proposal One - Election of Directors -
Certain Relationships and Related Transactions" for a discussion of the
relationship between LPSC, LSC and the Company. An additional 215,312 shares (or
approximately
3
2.6%) were owned by directors and executive officers of the
Company on the Record Date. LSC and each director and executive officer has
informed the Company that they will vote "FOR" the election of the nominees to
the Board of Directors identified herein, and "FOR" the appointment of Moss
Adams LLP as the Company's independent auditors.
Recently, the Securities and Exchange Commission (the "SEC")
amended its rule governing a company's ability to use discretionary proxy
authority with respect to stockholder proposals with were not submitted by the
stockholders in time to be included in the proxy statement. As a result of that
rule change, in the event a stockholder proposal was not submitted to the
Company prior to March 15, 2003, the enclosed Proxy will confer authority on the
Proxyholders to vote the shares in accordance with their best judgment and
discretion if the proposal is presented at the Meeting. As of the date hereof,
no stockholder proposal has been submitted to the Company, and management is not
aware of any other matters to be presented for action at the Meeting. However,
if any other matters properly come before the Meeting, the Proxies solicited
hereby will be voted by the Proxyholders in accordance with the recommendations
of the Board of Directors. Such authorization includes authority to appoint a
substitute nominee or nominees to the Board of Directors' nominees identified
herein where death, illness or other circumstances arise which prevent any such
nominee for directors from serving in such position and to vote such Proxy for
such substitute nominee.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of
Common Stock as of the Record Date by (i) each person known to the Company to be
the beneficial owner of more than five percent of the outstanding shares of
Common Stock (other than depositories), (ii) each executive officer, director
and nominee for director of the Company, and (iii) all directors and executive
officers as a group:
AMOUNT AND
NATURE OF
BENEFICIAL PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER (1) OWNERSHIP (2) OF CLASS(3)
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Lite-On Semiconductor Corporation ("LSC") 3,067,639 (4) 36.5%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Fidelity Management & Research Company ("FMR") 814,800 9.7%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Dimensional Fund Advisors, Inc. ("Dimensional Funds") 452,050 5.4%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Raymond Soong 374,167 (5) 4.3%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
C.H. Chen 150,000 (5) 1.8%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Michael R. Giordano 107,625 (5)(6) 1.3%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Keh-Shew Lu 3,333 (5) *
- ------------------------------------------------------------------------ -- -------------- ----- ------------
M.K. Lu 63,333 (5) *
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Shing Mao 146,000 (5) 1.7%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
John M. Stich 19,333 (5)(7) *
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Joseph Liu 292,000 (5) 3.4%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Mark A. King 155,749 (5) 1.8%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
Carl C. Wertz 72,187 (5) *
- ------------------------------------------------------------------------ -- -------------- ----- ------------
All directors, nominees and executive officers as a group (10 persons) 1,383,727 (8) 14.4%
- ------------------------------------------------------------------------ -- -------------- ----- ------------
* Less than 1%.
(Footnotes continued on following page)
4
(Footnotes continued from previous page)
(1) The address of LSC is 9F. No. 233-2, Pao-Chiao Road, Hsin-Tien,
Taipei-hsien 23115, Taiwan, R.O.C. The address of the directors and
executive officers of the Company is 3050 East Hillcrest Drive,
Westlake Village, California 91362. The address of FMR is 82 Devonshire
Street, Boston, MA 02109-3614. The address of Dimensional Funds is 1299
Ocean Avenue, 11th Floor, Santa Monica, CA 90401.
(2) The named stockholder has sole voting power and investment power with
respect to the shares listed, except as indicated and subject to
community property laws where applicable.
(3) Shares which the person (or group) has the right to acquire within 60
days after the Record Date are deemed to be outstanding in calculating
the beneficial ownership and the percentage ownership of the person (or
group) but are not deemed to be outstanding as to any other person or
group.
(4) LSC, which holds 3,067,639 shares of Common Stock, as the record
holder, is a public company listed on the Taiwan OTC and a member of
the Lite-On Group of companies. See "Proposal One - Election of
Directors - Certain Relationships and Related Transactions" for a
discussion of the relationship among LSC, the Company and certain
directors and executive officers of the Company.
(5) Includes the following shares of Common Stock, which the named
individual has the right to acquire within 60 days after the Record
Date by the exercise of vested stock options:
NAMED INDIVIDUAL SHARES
---------------- ------
Raymond Soong 244,167
C.H. Chen 150,000
Michael R. Giordano 67,500
Keh-Shew Lu 3,333
M.K. Lu 63,333
Shing Mao 120,000
John M. Stich 18,333
Joseph Liu 277,000
Mark A. King 155,749
Carl C. Wertz 69,000
(6) Includes 1,500 shares of Common Stock held in the name of UBS
PaineWebber Trust for the IRA of Mr. Giordano.
(7) Includes 1,000 shares of Common Stock held in a joint account with
Mr. Stich's spouse.
(8) Includes 1,168,415 shares that the directors and executive officers
have the right to acquire within 60 days after the Record Date, by the
exercise of vested stock options, but excludes an additional 239,334
shares that the directors and executive officers will have the right to
acquire upon the exercise of stock options, which options will become
exercisable in installments more than 60 days after the Record Date.
PROPOSAL ONE - ELECTION OF DIRECTORS
DIRECTORS AND EXECUTIVE OFFICERS
The Company's Bylaws provide that the number of directors
shall be determined from time to time by the Board of Directors, but may not be
less than five nor more than seventeen. Currently, the Board of Directors has
fixed the number of directors at seven. The Bylaws further provide for the
election of each director at each annual meeting of stockholders.
The persons named below have been nominated for election to
the Board of Directors to serve until the next annual meeting of stockholders
and until their successors have been elected and qualified. All nominees have
indicated their willingness to serve and, unless otherwise instructed, Proxies
will be voted in such a way as to elect as many
5
of these nominees as possible under applicable voting rules. In the event that
any of the nominees should be unable to serve as a director, it is intended that
the Proxies will be voted for the election of such substitute nominees, if any,
as shall be designated by the Board of Directors. The Board of Directors has no
reason to believe that any nominee will be unavailable.
None of the directors, nominees for director or executive
officers were selected pursuant to any arrangement or understanding, other than
with the directors and executive officers of the Company acting within their
capacity as such. There are no family relationships among directors or executive
officers of the Company as of the date hereof, and, except as set forth, as of
the date hereof, no directorships are held by any director in a company that has
a class of securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or subject to the
requirements of Section 15(d) of the Exchange Act or any company registered as
an investment company under the Investment Company Act of 1940. Officers serve
at the discretion of the Board of Directors.
The following table sets forth certain biographical
information concerning the nominees for director and the executive officers of
the Company as of the Record Date.
DIRECTOR
OFFICERS AND DIRECTORS AGE POSITION WITH THE COMPANY SINCE
- ------------------------------- ---------- ----------------------------------------------------------- -------------
Raymond Soong (1) 61 Chairman of the Board of Directors 1993
- ------------------------------- ---------- ----------------------------------------------------------- -------------
C.H. Chen (2) 60 President, Chief Executive Officer and Director 2000
- ------------------------------- ---------- ----------------------------------------------------------- -------------
Michael R. Giordano (3) 56 Director 1990
- ------------------------------- ---------- ----------------------------------------------------------- -------------
Keh-Shew Lu (4) 56 Director 2001
- ------------------------------- ---------- ----------------------------------------------------------- -------------
M.K. Lu (5) 54 Director 1995
- ------------------------------- ---------- ----------------------------------------------------------- -------------
Shing Mao (6) 67 Director 1990
- ------------------------------- ---------- ----------------------------------------------------------- -------------
John M. Stich (7) 61 Director 2000
- ------------------------------- ---------- ----------------------------------------------------------- -------------
Joseph Liu (8) 61 Vice President, Operations --
- ------------------------------- ---------- ----------------------------------------------------------- -------------
Mark A. King (9) 44 Vice President, Sales and Marketing --
- ------------------------------- ---------- ----------------------------------------------------------- -------------
Carl C. Wertz (10) 48 Chief Financial Officer, Secretary and Treasurer --
- ------------------------------- ---------- ----------------------------------------------------------- -------------
(1) Mr. Raymond Soong has been the Chairman of the Board of Silitek
Corporation since 1990 and has been Chairman of the Boards of LSC,
formerly LPSC, since 1992, and Lite-On Technology Corporation (a
Lite-On Group company), since 1992. In October 2002, Silitek
Corporation and Taiwan Lite-On merged with Lite-On Technology
Corporation. See "General Information - Security Ownership of Certain
Beneficial Owners and Management" and "Proposal One - Election of
Directors - Certain Relationships and Related Transactions" for a
discussion of the relationships among Lite-On Technology, Silitek,
LPSC, LSC and the Company. Since 1996, Mr. Soong has also been Chairman
of the Board of FabTech, Inc. ("Diodes-FabTech" or "FabTech") (formerly
a subsidiary of LSC, acquired by the Company in December 2000). Mr.
Soong is a graduate of the National Taipei Institute of Technology's
Electronic Engineering Department. After serving as a senior engineer
for RCA and as a chief engineer for Texas Instruments, Inc. ("TI"), Mr.
Soong, together with several of his co-workers, founded Taiwan Lite-On
Electronic Co. Ltd. ("Taiwan Lite-On"), a manufacturer of electronic
components and subsystems, in 1975. Mr. Soong is also Chairman of the
Board of the Company's manufacturing subsidiary in Shanghai, China
("Diodes-China"), and its Taipei, Taiwan subsidiary ("Diodes-Taiwan").
(Footnotes continued on following page)
6
(Footnotes continued from previous page)
(2) Mr. C.H. Chen was appointed President and Chief Executive Officer of
the Company on March 30, 2000. From 1969 to 1990, Mr. Chen held various
positions at TI, most recently as Vice President of TI-Taiwan. In 1990,
he left TI to found Dyna Image Corporation (a public company listed on
the Taiwan OTC market), a Lite-On Group company and the world's leading
supplier of contact image sensors (CISs), which are key components in
fax machines and scanners. In December 2000, Dyna Image Corporation
merged with LPSC to form LSC. Mr. Chen is currently the Vice Chairman
of LSC, Chairman of the Company's Strategic Planning Committee, and a
director of Diodes-Taiwan and Diodes-FabTech.
(3) Mr. Michael R. Giordano joined the investment-banking firm of
PaineWebber, Inc. as a Senior Vice President-Investment Consulting when
PaineWebber, Inc. acquired his previous employer, Kidder Peabody and
Co., Inc. Mr. Giordano was with Kidder Peabody since 1979. In 2000,
PaineWebber, Inc. merged with UBS AG to form UBS PaineWebber, Inc. Mr.
Giordano advises corporations, foundations, trusts, and municipal
governments in investments and finance. Formerly a captain and pilot in
the United States Air Force, Mr. Giordano received his Bachelor of
Science degree in Aerospace Engineering from California State
Polytechnic University and his Masters degree in Business
Administration (Management and Finance) from the University of Utah.
Mr. Giordano also did post-graduate work in International Investments
at Babson College. Mr. Giordano was Chairman of the Board and Chief
Executive Officer of the Leo D. Fields Co. from 1980 to 1990, when GWC
Holdings acquired it. Mr. Giordano serves on the Board of Directors of
Professional Business Bank in Pasadena, California. Mr. Giordano is
Chairman of the Company's Audit Committee and the Compensation and
Stock Options Committee, and is a member of the Strategic Planning
Committee. Mr. Giordano is also the pension consultant for the
Company's 401(k) plan.
(4) In 2001, Dr. Keh-Shew Lu retired as Senior Vice President of TI and
manager of Worldwide Mixed-Signal Products--Semiconductor Group, in
which position he served since 1998. His responsibilities included all
aspects of the mixed-signal system and end-equipment businesses for TI
worldwide, including design, process and product development,
manufacturing and marketing. Dr. Lu's business areas included the
mixed-signal portion of TI's digital signal processing solutions,
display solutions, and mixed-signal wireless communications and RF.
From 1996 to 1998, Dr. Lu was manager of TI's worldwide memory
business. In addition, he served as President of TI Asia from 1994
until 1998, where he had responsibility for all of TI's activities in
Asia (excluding Japan). Since beginning his career at TI in 1974, Dr.
Lu has held a number of technical and managerial positions within TI's
Semiconductor Group, including Vice President and division manager of
the Linear Products Division. Dr. Lu holds a bachelor's degree in
engineering from the National Cheng Kung University in Taiwan, and a
master's degree and doctorate in electrical engineering from Texas Tech
University. Dr. Lu is a director of Zeevo, Inc., a privately held
emerging developer of Bluetooth and wireless controller products,
Chairman of Asia American Citizen's Council, and is a member of the
Advisory Board to Southern Methodist University's Asian Studies
Program. Dr. Lu is also a director of two publicly held companies in
Taiwan: Lite-On Technology Corporation and Winbond Electronics
Corporation ("Winbond"). Winbond is focused on the development,
manufacture, and marketing of personal computer, telecommunications,
and consumer electronics products. Dr. Lu is a member of the Company's
Compensation and Stock Options Committee, the Audit Committee and the
Strategic Planning Committee.
(5) Mr. M.K. Lu is currently President of LSC, to which position he was
re-appointed in March 2000. In November 1998, Mr. Lu formed a new
company, Actron Technology Corporation, and is also acting President of
this manufacturer of pressfit diodes for the automotive market. From
1991 to June 1998, Mr. Lu was President and a director of LPSC. From
1983 to 1990, Mr. Lu was General Manager/Vice President of Silitek. See
"General - Security Ownership of Certain Beneficial Owners and
Management" and "Proposal One - Election of Directors - Certain
Relationships and Related Transactions" for a discussion of the
relationship among Silitek, LPSC, LSC and the Company. Since 1995, Mr.
Lu has been a director of FabTech. Mr. Lu earned his Bachelor's degree
in Electrical Engineering at Tatung Institute of Technology and is a
Business Administration graduate of the National Chengchi University.
Mr. Lu is also a member of the Chinese Management Association and the
Chinese Association for Advancement of Management, and is a director of
Diodes-China.
(Footnotes continued on following page)
7
(Footnotes continued from previous page)
(6) In 2000, Dr. Shing Mao retired as Chairman of the Board of Lite-On,
Inc., a California corporation located in Milpitas, California, and a
wholly owned subsidiary of Taiwan Lite-On, in which position he served
since 1988. See "General Information - Security Ownership of Certain
Beneficial Owners and Management" and "Proposal One - Election of
Directors - Certain Relationships and Related Transactions" for a
discussion of the relationship among Silitek, LSC and the Company.
Since 1989, Dr. Mao has been a director of Dyna Investment Co., Ltd. of
Taiwan, a venture capital company. Dr. Mao was a director of LSC from
1989 to 2000. Since 1996, Dr. Mao has also been a director of FabTech.
Before joining Lite-On, Dr. Mao served in a variety of management
positions with Raytheon Company for four years, with TI for 11 years,
and with UTL Corporation (later acquired by Boeing Aircraft Company)
for seven years. Dr. Mao earned his Ph.D. degree in electrical
engineering at Stanford University in 1963. Dr. Mao is a member of the
Company's Strategic Planning Committee and the Compensation and Stock
Options Committee.
(7) Mr. John M. Stich is the President and Chief Executive Officer of The
Asian Network; a consulting company that specializes in assisting
high-technology companies to expand their business in Asia. Prior to
this position, Mr. Stich was the Chief Marketing Officer for TI in
Japan with responsibility for TI's sales and marketing in Japan from
1994 to 1999. Mr. Stich joined TI in 1964, and has served in various
management positions, including Marketing Manager for TI Asia in Tokyo
from 1970 to 1972, Marketing Director in Taiwan from 1978 to 1982,
Managing Director of TI-Hong Kong from 1982 to 1991, and Vice
President-Semiconductors for TI Asia from 1991 to 1994. Mr. Stich has
also been active in leading various industry associations, including
serving as Governor for the American Chamber of Commerce in Japan and
in Hong Kong, as Chairman of the Semiconductor Industry Association
(Japan Chapter), and as President of the Japan America Society of
Dallas/Fort Worth. Mr. Stich is also a member of the Advisory Board to
Southern Methodist University's Asian Studies Program and is President
of Project Oasis, a non-profit organization that helps needy children.
Mr. Stich is a member of the Company's Audit Committee, the
Compensation and Stock Options Committee and the Strategic Planning
Committee.
(8) In May 1998, Mr. Joseph Liu was appointed President of Vishay/LPSC and
Vice President, Far East Operations for the Company, the former
position in which he served until March 2000, when Vishay agreed to
sell its 65% interest in the Vishay/LPSC joint venture to the Lite-On
Group, the 35% owner. Mr. Liu continues to serve as the Company's
Vice-President, Operations. Mr. Liu previously served as Vice
President, Operations of the Company from 1994 to 1998 and Chief
Financial Officer, Secretary and Treasurer from 1990 to 1998. Mr. Liu
was also the Company's Vice-President, Administration from 1990 to
1994. Prior to joining the Company, Mr. Liu held various management
positions with TI Dallas, since 1971, including Planning Manager,
Financial Planning Manager, Treasury Manager, Cost Accounting Manager
and General Accounting Manager with TI Taiwan, Ltd. in Taipei; from
1981 to 1986 as Controller with TI Asia in Singapore and Hong Kong;
from 1986 to 1989 as Financial Planning Manager, TI Latin America
Division (for TI Argentina, TI Brazil and TI Mexico) in Dallas; and
from 1989 to 1990 as Chief Coordinator of Strategic Business Systems
for TI Asia Pacific Division in Dallas. Mr. Liu is also President and a
director of Diodes-China and President of Diodes-FabTech. See "Proposal
One - Election of Directors - Certain Relationships and Related
Transactions" for a discussion of the relationship between Diodes-China
and the Company.
(9) Mr. Mark A. King, the Company's Vice President, Sales since 1991, was
appointed the Company's Vice President, Sales and Marketing in May
1998. Before joining the Company, Mr. King served for nine years in
various sales management positions at Lite-On, Inc., a California
corporation located in Milpitas, California, and a manufacturer of
optoelectronic products.
(10) Mr. Carl C. Wertz, the Company's Controller since 1993, was appointed
the Company's Chief Financial Officer, Secretary and Treasurer in 1998.
Before joining the Company, Mr. Wertz served in various financial and
accounting positions, most recently as Controller of Westco Products, a
manufacturer and distributor of food products, headquartered in Pico
Rivera, California. Mr. Wertz, a licensed CPA, began his accounting
career with Deloitte & Touche LLP. Mr. Wertz is a director of
Diodes-China and Diodes-Taiwan.
8
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has a standing Audit Committee, a
Compensation and Stock Options Committee, and a Strategic Planning Committee,
each of which consists of two or more directors who serve at the discretion of
the Board of Directors. The members of each Committee are as follows:
AUDIT COMMITTEE COMPENSATION AND STOCK OPTIONS COMMITTEE STRATEGIC PLANNING COMMITTEE
- --------------- ---------------------------------------- -----------------------------
Michael R. Giordano* Michael R. Giordano* C.H. Chen*
Dr. Keh-Shew Lu John M. Stich Michael. R. Giordano
John M. Stich Dr. Shing Mao Dr. Shing Mao
Dr. Keh-Shew Lu John M. Stich
* Chairman Dr. Keh-Shew Lu
The Audit Committee makes recommendations to the Board of
Directors regarding the engagement of the Company's independent auditors,
reviews the plan, scope and results of the audit, reviews with management the
Company's policies and procedures with respect to internal accounting and
financial controls and reviews changes in accounting policy and the scope of the
non-audit services which may be performed by the Company's independent auditors.
The Audit Committee also monitors policies to prohibit unethical, questionable
or illegal activities by the Company's employees.
The Compensation and Stock Options Committee makes
recommendations to the Board of Directors regarding compensation, benefits and
incentive arrangements for officers and other key employees of the Company. The
Compensation and Stock Options Committee also administers the Company's 1993
Incentive Stock Option Plan ("1993 ISO Plan"), the 1993 Non-Qualified Stock
Option Plan ("1993 NQO Plan"), the Incentive Bonus Stock Plan, and the Company's
401(k) profit sharing plan (the "401(k) Plan"), and the 2001 Omnibus Equity
Incentive Plan.
The Strategic Planning Committee focuses on new product
development, marketing, and research and development operations of the Company.
The Board of Directors held two meetings during calendar year
2002. The Compensation and Stock Options Committee held three meetings, the
Audit Committee held six meetings, and the Strategic Planning Committee held one
meeting during calendar year 2002. All of the persons who were directors of the
Company or members of committees were present for at least 75% of the meetings
during calendar year 2002.
EMPLOYEE BENEFITS PLANS
1993 ISO PLAN
The 1993 Incentive Stock Option Plan (the "1993 ISO Plan")
provides for the grant of incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), to purchase
up to 1,500,000 shares of the Company's Common Stock. Options granted under the
1993 ISO Plan are not transferable, except by will or the laws of descent or
distribution. A vested but unexercised option is normally exercisable for 90
days after termination of employment, other than by death or retirement. In the
event of death, unvested options are accelerated to maturity. An option granted
under the 1993 ISO Plan may not be priced at less than 100% of fair market value
on the date of grant and expires ten years from the date of grant. As of the
Record Date, 453,113 shares have been issued on the exercise of options granted,
1,038,992 shares were subject to outstanding options, and 7,895 shares were
available for issuance upon the grant of options under the 1993 ISO Plan. The
1993 ISO Plan expires on May 10, 2003 after which time no additional options can
be granted.
9
1993 NQO PLAN
The 1993 Non-Qualified Stock Option Plan (the "1993 NQO Plan")
became effective on July 6, 1993. The 1993 NQO Plan provides for the grant of
options that do not qualify as incentive stock options under Section 422 of the
Code to purchase up to 1,500,000 shares of the Company's Common Stock. The
options may be exercised by the optionee during his or her lifetime or after his
or her death by those who have inherited by will or intestacy. A vested but
unexercised option is normally exercisable for 90 days after termination of
employment, other than by death or retirement. In the event of death, unvested
options are accelerated to maturity. The shares to be issued upon exercise of
options under the 1993 NQO Plan require a three-year vesting period. An option
granted under the 1993 NQO Plan may not be priced at less than 100% of fair
market value on the date of grant and expires ten years from the date of grant.
As of the Record Date, 657,500 shares have been issued on the exercise of
options granted, 830,000 shares were subject to outstanding options, and 12,500
shares were available for issuance upon the grant of options under the 1993 NQO
Plan. The 1993 NQO Plan expires on May 10, 2003 after which time no additional
options can be granted.
2001 OMNIBUS EQUITY INCENTIVE PLAN
GENERAL. In April 2001, the 2001 Omnibus Equity Incentive Plan
(the "2001 Incentive Plan") became effective. Under the 2001 Incentive Plan,
employees, non-employee directors and consultants of the Company and its
subsidiaries are eligible to receive shares of Common Stock of the Company or
other securities or benefits with a value derived from the value of the Common
Stock of the Company. The purpose of the 2001 Incentive Plan is to enable the
Company to attract, retain and motivate employees, non-employee directors and
consultants by providing for or increasing their proprietary interests in the
Company and, thereby, further align their interests with those of the Company's
stockholders.
The maximum number of shares of Common Stock that may be
issued pursuant to awards granted under the 2001 Incentive Plan may not exceed
the sum of (i) 1,000,000 shares and (ii) on each January 1, an additional number
of shares equal to 1% of the total number of shares of Common Stock outstanding
on the immediately preceding December 31; provided, however, that the maximum
number of shares of Common Stock that may be issued pursuant to incentive stock
options under the 2001 Incentive Plan may not exceed 2,000,000 shares.
As of the Record Date, no shares have been issued on the
exercise of options granted, 324,000 shares were subject to outstanding options,
and 861,204 shares were available for issuance upon the grant of options under
the 2001 Incentive Plan.
ADMINISTRATION. The 2001 Incentive Plan is administered by a
committee (the "Committee") of two or more directors appointed by the Board,
each of whom is an "outside director" within the meaning of Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), and who otherwise
comply with the requirements of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). The Committee has full
and final authority to select the recipients of awards and to grant such awards.
Subject to the provisions of the 2001 Incentive Plan, the Committee has a wide
degree of flexibility in determining the terms and conditions of awards and the
number of shares to be issued pursuant thereto, including conditioning the
receipt or vesting of awards upon the achievement by the Company of specified
performance criteria. The expenses of administering the 2001 Incentive Plan are
borne by the Company.
TERMS OF AWARDS. The 2001 Incentive Plan authorizes the
Committee to enter into any type of arrangement with an eligible recipient that,
by its terms, involves or might involve the issuance of Common Stock or any
other security or benefit with a value derived from the value of Common Stock.
Awards are not restricted to any specified form or structure and may include,
without limitation, sales or bonuses of stock, restricted stock, stock options,
reload options, stock appreciation rights, phantom stock, dividend equivalents,
performance units or performance shares. An award may consist of one such
security or benefit or two or more of them in tandem or in the alternative.
An award granted under the 2001 Incentive Plan may include a
provision accelerating the receipt of benefits upon the occurrence of specified
events, such as a change of control of the Company or a dissolution,
liquidation, merger, reclassification, sale of substantially all of the property
and assets of the Company or other significant corporate transactions. The
Committee may grant options that either are intended to be "incentive stock
10
options" as defined under Section 422 of the Code, or are not intended to be
incentive options ("non-qualified stock options"). Incentive stock options may
be granted only to employees.
No incentive stock option may be granted under the 2001
Incentive Plan to any person who, at the time of the grant, owns (or is deemed
to own) stock possessing more than 10% of the total combined voting power of the
Company or any affiliate of the Company, unless the option exercise price is at
least 110% of the fair market value of the stock subject to the option on the
date of the grant and the term of the option does not exceed five years from the
date of the grant. In addition, the aggregate fair market value, determined at
the time of the grant, of the shares of Common Stock with respect to which
incentive stock options are exercisable for the first time by an optionee during
any calendar year (under all such plans of the Company and its subsidiaries) may
not exceed $100,000. As a result of enactment of Section 162(m) of the Code, and
to provide the Committee flexibility in structuring awards, the 2001 Incentive
Plan states that in the case of stock options and stock appreciation rights, no
person may receive in any year a stock option to purchase more than 100,000
shares or a stock appreciation right measured by more than 100,000 shares.
If awards granted under the 2001 Incentive Plan expire, are
canceled or otherwise terminate without being exercised, the Common Stock not
purchased pursuant to the award again becomes available for issuance under the
2001 Incentive Plan. Awards may not be granted under the 2001 Incentive Plan on
or after the tenth anniversary of the adoption of the 2001 Incentive Plan.
PAYMENT OF EXERCISE PRICE. An award may permit the recipient
to pay all or part of the purchase price of the shares or other property
issuable pursuant thereto, or to pay all or part of such recipient's tax
withholding obligation with respect to such issuance, by (i) delivering
previously owned shares of capital stock of the Company or other property or
(ii) reducing the amount of shares or other property otherwise issuable pursuant
to the award or (iii) delivering a promissory note, the terms and conditions of
which will be determined by the Committee. The exercise price and any
withholding taxes are payable in cash by consultants and non-employee directors,
although the Committee at its discretion may permit such payment by delivery of
shares of Common Stock, or by delivery of broker instructions authorizing a loan
secured by the shares acquired upon exercise or payment of proceeds from the
sale of such shares.
AMENDMENT. Subject to limitations imposed by law, the Board
may amend or terminate the 2001 Incentive Plan at any time and in any manner.
However, no such amendment or termination may deprive the recipient of any award
previously granted under the 2001 Incentive Plan or any rights thereunder
without the recipient's consent.
SECTION 16(B). Pursuant to Section 16(b) of the Exchange Act,
directors, certain officers and ten percent shareholders of the Company are
generally liable to the Company for repayment of any "short-swing" profits
realized from any non-exempt purchase and sale of Common Stock occurring within
a six-month period. Rule 16b-3, promulgated under the Exchange Act, provides an
exemption from Section 16(b) liability for certain transactions by an officer or
director pursuant to an employee benefit plan that complies with such Rule.
Specifically, the grant of an option under an employee benefit plan that
complies with Rule 16b-3 will not be deemed a purchase of a security for
purposes of Section 16(b). The 2001 Incentive Plan is designed to comply with
Rule 16b-3.
TERM. Awards may not be granted under the 2001 Incentive Plan
on or after the tenth anniversary of the adoption of the 2001 Incentive Plan.
Although any award that was duly granted on or prior to such date may thereafter
be exercised or settled in accordance with its terms, no shares of Common Stock
may be issued pursuant to any award on or after the twentieth anniversary of the
adoption of the 2001 Incentive Plan.
PERFORMANCE GOALS. The business criteria on which performance
goals are based under the 2001 Incentive Plan will be determined on a
case-by-case basis, except that with respect to stock options and stock
appreciation rights compensation is based on increases in the value of the
Common Stock after the date of grant of award. Similarly, the maximum amount of
compensation that could be paid to any participant or the formula used to
calculate the amount of compensation to be paid to the participant if a
performance goal is obtained will be determined on a case-by-case basis, except
that in the case of stock options the maximum possible compensation will be
calculated as the difference between the exercise price of the option and the
fair market value of the Common Stock on the date of option exercise, times the
maximum number of shares for which grants may be made to any participant.
ADJUSTMENTS. If there is any change in the stock subject to
the 2001 Incentive Plan or subject to any award made under the 2001 Incentive
Plan (through merger, consolidation, reorganization, re-capitalization, stock
dividend, dividend in kind, stock split, liquidating dividend, combination or
exchange of shares, change in corporate
11
structure or otherwise), the 2001 Incentive Plan and shares outstanding
thereunder will be appropriately adjusted as to the class and the maximum number
of shares subject to the 2001 Incentive Plan and the class, number of shares and
price per share of stock subject to such outstanding options as determined by
the Committee to be fair and equitable to the holders, the Company and the
shareholders. In addition, the Committee may also make adjustments in the number
of shares covered by, and the price or other value of any outstanding awards
under the 2001 Incentive Plan in the event of a spin-off or other distribution
(other than normal cash dividends) of Company assets to stockholders.
INCENTIVE BONUS STOCK PLAN
The Company's Incentive Bonus Stock Plan provides that the
Board of Directors may fix a dollar value to an employee bonus and determine to
pay such bonus in the form of shares of the Common Stock of the Company. The
number of shares to be awarded to the employee is determined by dividing the
dollar amount of the bonus by the fair market value of one share of Common
Stock. The Board of Directors may also elect to grant a number of shares of
Common Stock to the employee. As of the Record Date, 186,000 were available for
issuance under the Incentive Bonus Stock Plan.
401(K) PLAN
The Company maintains a 401(k) profit sharing plan ("401(k)
Plan") for the benefit of qualified employees in North America. Employees who
participate may elect to make salary deferral contributions to the 401(k) Plan
up to 17% of the employees' eligible payroll, subject to annual Internal Revenue
Code maximum limitations. The Company makes a contribution of $1 for every $2
contributed by the participant, up to 6% of the participant's eligible payroll.
In addition, the Company may make a discretionary contribution to the qualified
employees, in accordance with the 401(k) Plan.
COMPENSATION OF DIRECTORS
Each director of the Company receives (i) a fee of $1,500 for
each meeting of the Board of Directors or committee meeting attended in person,
and (ii) a fee of $750 for each meeting in which such director participates by
telephone. The Board of Directors may modify such compensation in the future.
Both employee and non-employee directors are eligible to receive stock option
grants.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Under Section 16(a) of the Exchange Act, the Company's
directors, executive officers and any persons holding ten percent or more of the
Common Stock are required to report their ownership of Common Stock and any
changes in that ownership to the SEC and to furnish the Company with copies of
such reports. Specific due dates for these reports have been established and the
Company is required to report any failure to file on a timely basis by such
persons. Based solely upon a review of copies of reports filed with the SEC
during the calendar year ended December 31, 2002, or written representations
that no reports were necessary, all reporting persons filed reports on a timely
basis. To avoid the inadvertent failure of directors and executive officers to
timely file these reports, the Company periodically advises such persons of
their filing obligations.
12
EXECUTIVE COMPENSATION AND RELATED INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth certain information concerning
compensation paid or accrued by the Company to its Chief Executive Officer and
to each of the other four most highly compensated executive officers (the "Named
Executives") for each of the fiscal years ended December 31, 2000, 2001 and
2002:
SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION
----------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------- -------------------- --------------------
OTHER SECURITIES
ANNUAL RESTRICTED UNDERLYING ALL OTHER
NAME AND COMPENSATION STOCK OPTIONS/ SARS LTIP COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) (1) AWARDS ($) (#) PAYOUTS($) ($)
- ------------------ ---- ---------- --------- ---------- ---------- --- ---------- ---
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
C.H. CHEN 2002 150,000 210,000 -- -- 50,000 -- --
President and 2001 150,000 -- -- -- -- -- --
Chief Executive 2000 112,500(2) 290,000 -- -- 150,000 -- --
Officer
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
JOSEPH LIU 2002 164,800 170,000 51,800 -- 15,000 -- --
Vice President, 2001 160,000 -- 42,100 -- 12,000 -- --
Operations 2000 160,000 244,000 52,600 -- 108,000 -- --
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
MARK KING 2002 164,800 140,000 32,400 -- 12,000 -- --
Vice President, Sales 2001 160,000 -- 22,200 -- 12,000 -- --
and Marketing 2000 160,000 244,000 -- -- 18,000 -- --
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
CARL WERTZ 2002 123,600 100,000 24,500 -- 9,000 -- --
Chief Financial 2001 120,000 -- 18,500 -- 9,000 -- --
Officer, Secretary 2000 120,000 176,200 30,000 -- 13,500 -- --
and Treasurer
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
WALTER BUCHANAN 2002 240,200(3) -- -- -- -- -- 281,000(5,6)
Former President, 2001 255,600 -- -- -- -- -- 150,000 (5)
Diodes-FabTech 2000 21,845(4) -- -- -- -- --
--
- ----------------------- -------- ------------- ------------- -------------- ------------- --------------- ------------- ------------
(1) Certain of the Company's executive officers receive personal benefits
in addition to salary and cash bonuses, including, but not limited to,
auto allowances, per-diem, life insurance payable at the direction of
the employee, contributions under the Company's 401(k) Plan, and group
health insurance. This amount is reported only when the aggregate
amount of such personal benefits exceeds the lesser of $50,000 or 10%
of the total annual salary and bonus reported for the individual Named
Executive.
(2) Mr. Chen was appointed President and Chief Executive Officer of the
Company on March 30, 2000 at a base salary of $150,000 per year.
(3) Mr. Buchanan's employment was terminated in October 2002.
(Footnotes continued on following page)
13
(Footnotes continued from previous page)
(4) Mr. Buchanan joined the Company in December 2000 as part of the
Company's acquisition of FabTech, Inc.
(5) Amounts paid are accordance with the terms of a management incentive
agreement as part of the FabTech acquisition, and these amounts paid by
the Company are reimbursed by LSC, the selling party.
(6) Includes severance pay of $131,000 paid in January 2003.
STOCK OPTION GRANTS
The following table contains certain information concerning
the grant of stock options during the fiscal year ended December 31, 2002 to the
Named Executives. The Company granted no Stock Appreciation Rights ("SARs")
during 2002.
OPTION/SAR GRANTS IN FISCAL YEAR 2002
- --------------------------------------------------------------------------------------------------- ----------------------------
POTENTIAL REALIZABLE VALUE
AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS TEN-YEAR OPTION TERM(1)
- --------------------------------------------------------------------------------------------------- ----------------------------
NUMBER OF SECURITIES
UNDERLYING PERCENT OF TOTAL
OPTIONS/SARS OPTIONS/SARS EXERCISE OR
GRANTED (#) GRANTED TO BASE PRICE EXPIRATION
NAME EMPLOYEES (%) ($/SH) DATE 5% ($) 10% ($)
---- ------------- ------ ---- ------ -------
------------------- ---------------------- ------------------- ------------------ ----------------- ------------- --------------
C.H. CHEN 50,000 20.0 8.53 6/28/2012 268,224 679,731
------------------- ---------------------- ------------------- ------------------ ----------------- ------------- --------------
JOSEPH LIU 15,000 6.0 8.53 6/28/2012 80,467 203,919
------------------- ---------------------- ------------------- ------------------ ----------------- ------------- --------------
MARK A. KING 12,000 4.8 8.53 6/28/2012 64,374 163,135
------------------- ---------------------- ------------------- ------------------ ----------------- ------------- --------------
CARL C. WERTZ 9,000 3.6 8.53 6/28/2012 48,280 122,352
------------------------------------------------------------------------------- ------------------------ ------------------------
Increase in market value of the Company's Common Stock for all stockholders 5% (to $13.89/share) 10% (to $22.12/share)
at assumed annual rates of stock price appreciation (as used in the table -------------------- ---------------------
above) from $8.53 per share, over the ten-year period, based upon 8,217,092 $44.1 million $111.7 million
shares outstanding on December 31, 2002
- ------------------------------------------------------------------------------- ------------------------ ------------------------
(1) The Potential Realizable Value is the product of (a) the difference
between (i) the product of the closing sale price per share at the date
of grant and the sum of (A) 1 plus (B) the assumed rate of appreciation
of the Common Stock compounded annually over the term of the option and
(ii) the per share exercise price of the option and (b) the number of
shares of Common Stock underlying the option at December 31, 2002.
These amounts represent certain assumed rates of appreciation only. For
example, an $8.53 per share price with a 5% annual growth rate for 10
years results in a stock price of $13.89 per share and a 10% growth
rate results in a price of $22.12 per share. Actual gains, if any, on
stock option exercises are dependent upon a variety of factors,
including market conditions and the price performance of the Common
Stock. No assurance can be made that the rate of appreciation presented
in this table can be achieved.
14
STOCK OPTION EXERCISES AND HOLDINGS
The following table contains certain information with respect
to the Named Executives concerning the exercise of options during the fiscal
year ended December 31, 2002 and unexercised options held by the Named
Executives as of December 31, 2002:
AGGREGATED OPTION / SAR EXERCISES IN FISCAL YEAR 2002
AND FISCAL YEAR-END OPTION VALUES (1)
SHARES VALUE OF UNEXERCISED
ACQUIRED ON VALUE NUMBER OF UNEXERCISED "IN-THE-MONEY" OPTIONS/SARS
NAME EXERCISE (#) REALIZED ($) OPTIONS/SARS AT 12/31/02 (#) AT 12/31/02 ($) (2)
- ---- ------------ ------------ ---------------------------- -----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------ -------------- ------------ --------------
- ----------------------- ---------------- --------------- ----------------- ------------------- --------------- ------------------
C.H. CHEN -- -- 100,000 100,000 0 54,000
- ----------------------- ---------------- --------------- ----------------- ------------------- --------------- ------------------
JOSEPH LIU -- -- 271,000 29,000 938,310 26,520
- ----------------------- ---------------- --------------- ----------------- ------------------- --------------- ------------------
MARK A. KING -- -- 149,749 26,000 658,724 23,280
- ----------------------- ---------------- --------------- ----------------- ------------------- --------------- ------------------
CARL C. WERTZ -- -- 64,500 19,500 260,895 17,460
- ----------------------- ---------------- --------------- ----------------- ------------------- --------------- ------------------
(1) All stock options have been adjusted to account for the Company's
three-for-two stock split in July 2000.
(2) The value of unexercised "in-the-money" options is the difference
between the closing sale price of the Company's Common Stock on
December 31, 2002 ($9.61 per share) and the exercise price of the
option, multiplied by the number of shares subject to the option.
REPORT OF THE COMPENSATION AND STOCK OPTIONS COMMITTEE
OF THE BOARD OF DIRECTORS TO STOCKHOLDERS
The Report of the Compensation and Stock Options Committee of
the Board of Directors shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act of 1933 or under the Securities Exchange Act of
1934, except to the extent that the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.
REPORT OF THE COMPENSATION AND STOCK OPTIONS COMMITTEE
GENERAL
The Compensation and Stock Options Committee (the "Committee")
consists of four directors, Michael R. Giordano (Chairman), Dr. Shing Mao, John
M. Stich and Dr. Keh-Shew Lu who are not employees or former employees of the
Company. The Committee makes recommendations to the Board of Directors regarding
compensation, benefits and incentive arrangements for officers and other key
employees of the Company. The Committee also administers the Company's 1993 ISO
Plan, the 1993 NQO Plan, the 2001 Omnibus Equity Incentive Plan, the Incentive
Stock Bonus Plan and the 401(k) Plan.
The Company's policy in compensating executive officers is to
establish methods and levels of compensation that will provide strong incentives
to promote the profitability and growth of the Company and reward superior
performance. Compensation of executive officers includes base salary,
performance-based incentive bonuses and stock-based programs. The Company's
general approach to compensating executive officers is to pay cash salaries
which are competitive with salaries paid to executives of other companies in the
Company's industry, which are of similar size and engaged in a similar line of
business. Salaries are established by the Committee based on the Committee's
subjective assessment of the executive's scope of responsibility, level of
experience, individual performance, and past and potential contribution to the
Company's business.
The Committee believes that the emphasis on performance-based
and stock-based compensation serves to align the interests of the executive
officers with the interests of the Company's stockholders. The Committee also
seeks to establish overall compensation levels that are sufficiently competitive
to attract, retain, and motivate highly competent management personnel. Base
salaries for Messrs. Chen, King, Liu and Wertz are paid in accordance with
subjective criteria set by the President and Chief Executive Officer of the
Company. Performance-based incentive
15
bonuses are paid in accordance with specific financial performance results
against goals established prior to the start of the calendar year.
COMPENSATION FOR THE PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. C.H. Chen was appointed President, Chief Executive Officer, and a
director of the Company on March 30, 2000. Mr. Chen also serves as the Vice
Chairman of LSC, a Lite-On Group company (now listed on the Taiwan OTC market),
for which he is also compensated by LSC. Stock options granted to Mr. Chen are
based upon the Committee's subjective assessment of the performance of Mr. Chen
and the Company.
STOCK OPTIONS
The Committee believes that the interests of senior management must be
closely aligned with those of the Company's stockholders. Stock options are
granted to officers and selected employees whose contributions and skills are
important to the long-term success of the Company. Stock options granted to
executive officers to date have been granted at no less than the fair market
value of the Common Stock as of the date of grant with a ten-year term. If
employment is terminated, the option expires 90 days from the termination date.
To encourage retention, the ability to exercise options granted under the plans
is subject to vesting restrictions. The Committee's policy is to award an
initial grant at the date of employment, which vests over three years, and is in
recognition of the executive officer's potential contribution to the Company.
The three-year vesting period may be increased or decreased at the Committee's
discretion. Decisions made by the Committee regarding the timing and size of
other option grants take into consideration the Company's and the individual's
performance, competitive market practices, and the size and term of option
grants made in prior years.
The Company's stock option plans have been amended and approved by the
stockholders so stock options that have been awarded can qualify for exclusion
under Section 162(m) of the Internal Revenue Code of 1986 as performance-based
compensation.
Dated: April 17, 2003
Compensation and Stock Options Committee
of the Board of Directors of Diodes Incorporated
Michael R. Giordano, Chairman
Dr. Shing Mao
John M. Stich
Dr. Keh-Shew Lu
COMPENSATION AND STOCK OPTIONS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Options Committee consists of four directors,
Michael R. Giordano (Chairman), Dr. Shing Mao, John M. Stich and Dr. Keh-Shew
Lu. No person who served as a member of the Company's Compensation and Stock
Options Committee during the 2002 calendar year has ever been an officer or
employee of the Company or any of its subsidiaries.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS TO STOCKHOLDERS
The Report of the Audit Committee of the Board of Directors
shall not be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing under the
Securities Act of 1933 or under the Securities Exchange Act of 1934, except to
the extent that the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
REPORT OF THE AUDIT COMMITTEE
The Board of Directors maintains an Audit Committee comprised
of three of the Company's directors, Michael R. Giordano (Chairman), Dr.
Keh-Shew Lu and John M. Stich. Each member of the Audit Committee meets
16
the independence and experience requirements of the Nasdaq Stock Market. The
Audit Committee assists the Board of Directors in monitoring the accounting,
auditing and financial reporting practices of the Company.
Management is responsible for the preparation of the Company's
financial statements and financial reporting process, including its system of
internal controls. In fulfilling its oversight responsibilities, the Audit
Committee:
o Reviewed and discussed with management the audited
financial statements contained in the Company's Annual
Report on Form 10-K for fiscal 2002; and
o Obtained from management their representation that the
Company's financial statements have been prepared in
accordance with accounting principles generally accepted
in the United States.
The independent auditors are responsible for performing an
audit of the Company's financial statements in accordance with the auditing
standards generally accepted in the United States and expressing an opinion on
whether the Company's financial statements present fairly, in all material
respects, the Company's financial position and results of operations for the
periods presented and conform with accounting principles generally accepted in
the United States. In fulfilling its oversight responsibilities, the Audit
Committee:
o Discussed with the independent auditors the matters
required to be discussed by Statement on Auditing
Standards No. 61, as amended ("Communication with Audit
Committees"); and
o Received and discussed with the independent auditors the
written disclosures and the letter from the independent
auditors required by Independent Standards Board Standard
No. 1 ("Independence Discussions with Audit Committees"),
and reviewed and discussed with the independent auditors
whether the rendering of the non-audit services provided
by them to the Company during fiscal 2002 was compatible
with their independence.
The Audit Committee operates under a written charter, which
was adopted by the Board of Directors and is assessed annually for adequacy by
the Audit Committee. The Audit Committee held six meetings during fiscal 2002.
In performing its functions, the Audit Committee acts only in
an oversight capacity. It is not the responsibility of the Audit Committee to
determine that the Company's financial statements are complete and accurate, are
presented in accordance with accounting principles generally accepted in the
United States or present fairly the results of operations of the Company for the
periods presented or that the Company maintains appropriate internal controls.
Nor is it the duty of the Audit Committee to determine that the audit of the
Company's financial statements has been carried out in accordance with generally
accepted auditing standards or that the Company's auditors are independent.
Based upon the reviews and discussions described above, and
the report of the independent auditors, the Audit Committee has recommended to
the Board of Directors, and the Board of Directors has approved, that the
audited financial statements be included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2002 for filing with the Securities
and Exchange Commission. The Audit Committee also has recommended, and the Board
of Directors also has approved, subject to stockholder ratification, the
selection of Moss Adams LLP as the Company's independent auditors for the fiscal
year ending December 31, 2003.
Dated: April 17, 2003
The Audit Committee of the Board of Directors of Diodes Incorporated,
Michael R. Giordano, Chairman
Dr. Keh-Shew Lu
John M. Stich
17
AUDIT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Audit Committee consists of three directors, Michael R.
Giordano, Dr. Keh-Shew Lu and John M. Stich. No person who served as a member of
the Company's Audit Committee during the 2002 calendar year has ever been an
officer or employee of the Company or any of its subsidiaries.
EQUITY COMPENSATION PLAN INFORMATION
- --------------------------------------------------------------------------------------------------------------------------
NUMBER OF SECURITIES TO
BE ISSUED UPON EXERCISE WEIGHTED-AVERAGE
OF OUTSTANDING OPTIONS, EXERCISE PRICE OF NUMBER OF SECURITIES
WARRANTS AND RIGHTS OUTSTANDING OPTIONS, REMAINING AVAILABLE FOR
(A) WARRANTS AND RIGHTS FUTURE ISSUANCE UNDER
(B) EQUITY COMPENSATION PLANS
(EXCLUDING SECURITIES
REFLECTED IN COLUMN (A))
PLAN CATEGORY (C)
- --------------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans Approved by
Security Holders 2,384,492 (1) $8.86 1,067,099 (2)
- --------------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans Not Approved by
Security Holders 0 N/A 0
- --------------------------------------------------------------------------------------------------------------------------
Total 2,384,492 $8.86 1,067,099
- --------------------------------------------------------------------------------------------------------------------------
(1) Shares issuable pursuant to outstanding options under the 1993
Non-qualified Stock Option Plan, the 1993 Incentive Stock
Option Plan, and the 2001 Omnibus Equity Incentive Plan as of
December 31, 2002.
(2) Represents shares of Company Common Stock which may be issued
pursuant to future awards under the Incentive Bonus Stock
Plan, the 1993 Non-qualified Stock Option Plan, the 1993
Incentive Stock Option Plan, and the 2001 Omnibus Equity
Incentive Plan.
18
PERFORMANCE GRAPH
On June 19, 2000, the Company's Common Stock commenced trading
on the NASDAQ Stock Market, National Market System ("Nasdaq"), under the symbol
"DIOD." From November 10, 1966 to June 16, 2000, the Company's Common Stock
traded on the American Stock Exchange ("Amex"), under the symbol "DIO." Set
forth below is a line graph comparing the yearly percentage change in the
cumulative total stockholder return of the Company's Common Stock against the
cumulative total return of the Nasdaq Composite and the Nasdaq Industrial Index
for the five calendar years ending December 31, 2002. The graph is not
necessarily indicative of future price performance.
The graph shall not be deemed incorporated by reference by any
general statement incorporating by reference this Proxy Statement into any
filing under the Securities Act or under the Exchange Act, except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
[GRAPH OMITTED]
---------------------------------------- -------- ------------ ----------- ------------ ------------ -----------
TOTAL RETURN ANALYSIS (1) 1997 1998 1999 2000 2001 2002
---------------------------------------- -------- ------------ ----------- ------------ ------------ -----------
DIODES INCORPORATED $ 100 $ 51.28 $ 220.51 $ 159.68 $ 102.34 $147.90
---------------------------------------- -------- ------------ ----------- ------------ ------------ -----------
NASDAQ COMPOSITE INDEX 100 139.63 259.14 157.32 124.20 85.05
---------------------------------------- -------- ------------ ----------- ------------ ------------ -----------
NASDAQ INDUSTRIAL INDEX 100 106.82 183.37 121.46 113.78 84.33
---------------------------------------- -------- ------------ ----------- ------------ ------------ -----------
(1) The graph assumes $100 invested on December 31, 1997 in the Common
Stock of the Company, the stock of the companies in the Nasdaq
Composite Index and the Nasdaq Industrial Index, and that all dividends
received within a quarter, if any, were reinvested in that quarter.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company conducts business with two related party
companies, LSC, a public company listed on the Taiwan OTC market, and Xing
International. LSC, a 36.5% shareholder, is the Company's largest shareholder,
and Xing International is owned by the Company's 5% joint venture partner in
Diodes-China, Ms. J.Y. Xing. C.H. Chen, the Company's President and Chief
Executive Officer, and a member of the Company's Board of Directors, is also
Vice-Chairman of LSC. M.K. Lu, a member of the Company's Board of Directors, is
President of LSC, while
19
Raymond Soong, the Company's Chairman of the Board, is
the Chairman of Lite-On Technology Corporation, a significant shareholder of
LSC.
In 2002, the Company sold silicon wafers to LSC totaling 13.7%
(7.7% in 2001) of the Company's sales, making LSC the Company's largest
customer. Also for 2002, 17.9% (15.2% in 2001) of the Company's sales were from
discrete semiconductor products purchased from LSC, making LSC the Company's
largest outside vendor. The Company has a long-standing sales agreement where
the Company is the exclusive North American distributor for certain of LSC's
product lines. In addition, the Company leases warehouse space from LSC for its
operations in Hong Kong. All such transactions are on terms no less favorable to
the Company than could be obtained from unaffiliated third parties.
In December 2000, the Company acquired the wafer foundry,
FabTech, Inc., from LSC. As part of the purchase price, at December 31, 2002,
LSC holds a subordinated, interest-bearing note for approximately $8.8 million.
In May 2002, the Company renegotiated the terms of the note to extend the
payment period from two years to four years, and therefore, payments of
approximately $208,000 plus interest began in July 2002. In connection with the
terms of the acquisition, LSC entered into a volume purchase agreement to
purchase wafers from FabTech. In addition, as per the terms of the stock
purchase agreement, the Company has entered into several management incentive
agreements with members of FabTech's management. The agreements provide members
of FabTech's management guaranteed annual payments as well as contingent bonuses
based on the annual profitability of FabTech, subject to a maximum annual
amount. Any portion of the guaranteed and contingent liability paid by FabTech
is reimbursed by LSC.
In 2002, the Company sold silicon wafers to companies owned by
Xing International totaling 1.5% (0.6% in 2001) of the Company's sales. Also for
2002, 5.6% (4.4% in 2001) of the Company's sales were from discrete
semiconductor products purchased from companies owned by Xing International. In
addition, Diodes-China leases its manufacturing facilities from, subcontracts a
portion of its manufacturing process (metal plating) to, and pays a consulting
fee to Xing International. All such transactions are on terms no less favorable
to the Company than could be obtained from unaffiliated third parties. Ms. J.Y.
Xing is also a director of Diodes-China.
In October 2002, Silitek and Taiwan Lite-On merged with
Lite-On Technology Corporation, a publicly traded company on the Taiwan Stock
Exchange. Prior to this merger, Silitek was affiliated through common ownership
and control with Taiwan Lite-On, and both companies were members of the Lite-On
Group and publicly traded on the Taiwan Stock Exchange.
Mr. Raymond Soong, who became a director and Chairman of the
Board of the Company effective March 1993, is also the Chairman of the Boards of
the Lite-On Group, Lite-On Technology Corporation, Diodes-China, Diodes-Taiwan
and Diodes-FabTech.
Dr. Shing Mao, who is a director of the Company, retired in
2000 as Chairman of the Board of Lite-On Milpitas, a wholly-owned subsidiary of
Taiwan Lite-On which merged with Lite-On Technology Corporation in 2002. Dr. Mao
was also a director of LSC from 1989 to 2000, and since 1996, has been a
director of FabTech.
Mr. M.K. Lu, who has been a director of the Company since
1995, is also President of LSC and acting President of Actron Technology
Corporation, both Lite-On Group companies. From 1983 to 1990, Mr. Lu was General
Manager/Vice President of Silitek. Mr. Lu is also a director of Diodes-China and
Diodes-FabTech.
Mr. Michael Giordano, a director of the Company and Senior
Vice President-Investment Consulting at the investment-banking firm of UBS
PaineWebber, Inc., has, from time to time, assisted directors and executive
officers of the Company in stock option exercises and subsequent stock sales of
the Company's Common Stock. Mr. Giordano is also the pension consultant for the
Company's 401(k) plan. Mr. Giordano has, from time to time, assisted directors
and officers of the Company and LSC in stock transactions. Compensation received
by Mr. Giordano for services rendered to the Company and LSC for services other
than as a director in 2002 was less than $20,000.
Mr. John M. Stich, a director of the Company, is also
President and CEO of The Asian Network. Mr. Stich has previously received fees
as a marketing consultant to the Company. During 2002, Mr. Stich did not perform
marketing consulting services for the Company, and thus received no fees.
20
Dr. Keh-Shew Lu, a director of the Company, retired as Senior
Vice President of TI and manager of Worldwide Mixed-Signal Products -
Semiconductor Group in 2001. During 2002, Dr. Lu received approximately $46,000
as an engineering consultant to the Company. Dr. Lu is also a director of
Lite-On Technology Corporation.
Mr. Mark A. King, the Company's Vice President of Sales and
Marketing, has a $100,000 investment in one of the Company's computer software
vendors (a privately-held company). Mr. King's investment was made subsequent to
the Company's purchase of the software, which is used for quotation and channel
management. Fees paid to this software vendor in 2002, including annual software
maintenance, were approximately $35,000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE BOARD OF DIRECTORS' NOMINEES.
PROPOSAL TWO - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The firm of Moss Adams LLP, certified accountants, has been
the Company's independent accountants since 1993 and has been selected by the
Board of Directors to serve as its independent accountants for the calendar year
ending December 31, 2003. Professional services rendered by Moss Adams LLP for
the calendar year ended December 31, 2002 consisted of an audit of the Company's
financial statements, consultation on interim financial statements, services
related to filings with the SEC, meetings with the Company's Audit Committee and
consultation on various matters relating to accounting and financial reporting.
All professional services rendered by Moss Adams LLP during calendar 2002 were
furnished at customary rates and terms. The Audit Committee of the Board of
Directors met with representatives of Moss Adams LLP during the past calendar
year. The members of the Audit Committee are Messrs. Giordano, Lu, and Stich.
Representatives of Moss Adams LLP are expected to be present at the Meeting.
They will have the opportunity to make a statement, if they so desire, and
respond to appropriate questions from Stockholders.
AUDIT FEES, TAX FEES, AND ALL OTHER FEES
For the fiscal year ended December 31, 2002, fees for services
provided by Moss Adams LLP were approximately as follows:
--------------------------------------------------------------- --------------
AUDIT FEES, including audit of financial statements included in
the Annual Report on Form 10-K and Quarterly Reports on Form
10-Q $ 128,000
--------------------------------------------------------------- --------------
AUDIT-RELATED FEES, including assurance related fees $ 0
--------------------------------------------------------------- --------------
TAX FEES, professional services for income tax return
preparation, tax advice and tax planning $ 51,000
--------------------------------------------------------------- --------------
ALL OTHER FEES, include Audit Committee meetings, accounting
consulting and similar matters $ 33,000
--------------------------------------------------------------- --------------
TOTAL $ 212,000
--------------------------------------------------------------- --------------
Moss Adams LLP has advised the Company that neither the firm,
nor any member of the firm, has any financial interest, direct or indirect, in
any capacity in the Company or its subsidiaries. The Audit Committee, in
reliance on the independent auditors, determined that the provision of these
services is compatible with maintaining the independence of Moss Adams LLP.
Stockholders are being asked to ratify the appointment of Moss
Adams LLP as the Company's independent public accountants for the calendar year
ending December 31, 2003. Ratification of the proposal requires the affirmative
vote of a majority of the shares of Common Stock represented and voting at the
Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.
21
PROPOSALS OF STOCKHOLDERS
Under certain circumstances, stockholders are entitled to
present proposals at stockholder meetings. Any such proposal to be included in
the proxy statement for the Company's 2004 annual meeting of stockholders must
be submitted by a stockholder prior to December 30, 2003, in a form that
complies with applicable regulations. Recently, the SEC amended its rule
governing a company's ability to use discretionary proxy authority with respect
to stockholder proposals, which are not submitted by the stockholders in time to
be included in the proxy statement. As a result of that rule change, in the
event a stockholder proposal is not submitted to the Company prior to March 15,
2004, the proxies solicited by the Board of Directors for the 2004 annual
meeting of stockholders will confer authority of the holders of the proxy to
vote the shares in accordance with their best judgment and discretion if the
proposal is presented at the 2004 annual meeting of stockholders without any
discussion of the proposal in the proxy statement for such meeting.
ANNUAL REPORT AND FORM 10-K
The Company's annual report to stockholders for the calendar
year ended December 31, 2002 accompanies or has preceded this Proxy Statement.
The annual report contains consolidated financial statements of the Company and
its subsidiaries and the report thereon of Moss Adams LLP, the Company's
independent auditors, for the calendar years ended December 31, 2000, 2001 and
2002.
STOCKHOLDERS MAY OBTAIN, WITHOUT CHARGE, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS REQUIRED TO
BE FILED WITH THE SEC PURSUANT TO THE EXCHANGE ACT, FOR THE CALENDAR YEAR ENDED
DECEMBER 31, 2002, BY WRITING TO THE COMPANY; ATTN: INVESTOR RELATIONS, 3050
EAST HILLCREST DRIVE, WESTLAKE VILLAGE, CALIFORNIA 91362, OR EMAIL THE REQUEST
TO DIODES-FIN@DIODES.COM. THE INFORMATION IS ALSO AVAILABLE ON THE COMPANY'S
WEBSITE AT WWW.DIODES.COM.
OTHER MATTERS
Management knows of no business that will be presented for
consideration at the Meeting other than as stated in the Notice of Meeting. If,
however, other matters are properly brought before the Meeting, it is the
intention of the Proxyholders to vote the shares represented by the Proxies on
such matters in accordance with the recommendation of the Board of Directors and
authority to do so is included in the Proxy.
On December 4, 2000, the SEC adopted amendments to the proxy
rules, permitting companies and intermediaries to satisfy the delivery
requirements for proxy and information statements with respect to two or more
security holders sharing the same address by delivering a single proxy statement
or information statement to those security holders. "Householding," as this is
commonly known, will reduce the amount of duplicate information that security
holders receive and lower printing and mailing costs for companies. Householding
is in effect for the Company's proxy distribution. However, Stockholders can
obtain additional material if desired by contacting the Company directly.
Dated at Westlake Village, California, this seventeenth day of
April 2003.
By Order of the Board of Directors,
DIODES INCORPORATED
/s/ Carl Wertz
Carl Wertz,
Secretary
22
REVOCABLE PROXY REVOCABLE PROXY
DIODES INCORPORATED
ANNUAL MEETING OF STOCKHOLDERS - JUNE 2, 2003
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder(s) of Diodes Incorporated (the "Company")
hereby nominates, constitutes and appoints C.H. Chen and Carl C. Wertz, the
attorneys, agents and proxies of the undersigned, with full power of
substitution, to vote all stock of the Company which the undersigned is entitled
to vote at the annual meeting of stockholders of the Company (the "Meeting") to
be held at the Renaissance Hotel, 30100 Agoura Road, Agoura Hills, California
91301, on Monday, June 2, 2003 at 10:00 a.m. (California time), and any
adjournments thereof, as fully and with the same force and effect as the
undersigned might or could do if personally thereat, as follows:
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as marked to the contrary below) vote for all nominees listed below
Discretionary authority to cumulate votes is granted
Nominees: C.H. Chen, Michael R. Giordano, Keh-Shew Lu, M.K. Lu, Shing Mao,
Raymond Soong, and John M. Stich.
(Instructions: To withhold authority to vote for any one or more nominees,
write that nominee's or nominees' name(s) in the space provided)
- --------------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
TO ratify the appointment of Moss Adams LLP as the Company's
independent certified public accountants for the year ending December
31, 2003.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. OTHER BUSINESS
In their discretion, the Proxyholders are authorized to transact such
other business as properly may come before the Meeting and any
adjournment thereof.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
Please Sign And Date On Reverse Side
23
REVOCABLE PROXY REVOCABLE PROXY
THE BOARD OF DIRECTORS RECOMMENDS A VOTE OF "FOR" THE ELECTION OF EACH
OF THE NOMINEES, AND "FOR" RATIFICATION OF MOSS ADAMS LLP AS THE COMPANY'S
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS FOR THE YEAR ENDING DECEMBER 31, 2003.
ALL PROPOSALS TO BE ACTED UPON ARE PROPOSALS OF THE COMPANY. IF ANY OTHER
BUSINESS IS PROPERLY PRESENTED AT THE MEETING, INCLUDING, AMONG OTHER THINGS,
CONSIDERATION OF A MOTION TO ADJOURN THE MEETING TO ANOTHER TIME OR PLACE IN
ORDER TO SOLICIT ADDITIONAL PROXIES IN FAVOR OF THE RECOMMENDATIONS OF THE BOARD
OF DIRECTORS, THIS PROXY SHALL BE VOTED BY THE PROXYHOLDERS IN ACCORDANCE WITH
THE RECOMMENDATIONS OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE DATE THIS
PROXY STATEMENT WENT TO PRESS, WE DID NOT ANTICIPATE ANY OTHER MATTERS WOULD BE
RAISED AT THE ANNUAL MEETING.
The undersigned hereby ratifies and confirms all that said attorneys
and Proxyholders, or either of them, or their substitutes, shall lawfully do or
cause to be done by virtue hereof, and hereby revokes any and all proxies
heretofore given by the undersigned to vote at the Meeting. The undersigned
hereby acknowledges receipt of the Notice of Annual Meeting and the Proxy
Statement accompanying said notice.
Date:
-----------------------
------------------------
(Name of Stockholder, Printed)
-----------------------
(Signature of Stockholder)
-----------------------
(Name of Stockholder, Printed)
-----------------------
(Signature of Stockholder)
(Please date this
Proxy and sign
your name as it
appears on your
stock
certificate(s).
Executors,
administrators,
trustees, etc.
should give their
full titles. All
joint owners
should sign.)
I (We) do [ ] do not [ ] expect to attend the Meeting.
This Proxy will be voted "FOR" the election of all nominees whose names
appear above unless authority to do so is withheld. Unless "AGAINST" or
"ABSTAIN" is indicated, the Proxy will be voted "FOR" the ratification of the
appointment of Moss Adams LLP as the Company's independent auditors. PLEASE
SIGN, DATE AND RETURN THIS PROXY AS PROMPTLY AS POSSIBLE IN THE POSTAGE PREPAID
ENVELOPE PROVIDED.
24