¨
|
|
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 §
240.14a-12
|
|
|
|
x
|
No
fee required.
|
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
|
|
1)
|
|
Title
of each class of securities to which transaction applies:
|
|
|
2)
|
|
Aggregate
number of securities to which transaction applies:
|
|
|
3)
|
|
Per
unit price or other underlying value of transaction computed pursuant
to
Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is
calculated and state how it was determined):
|
|
|
4)
|
|
Proposed
maximum aggregate value of transaction:
|
|
|
5)
|
|
Total
fee paid:
|
|
¨
|
|
Fee
paid previously with preliminary materials.
|
¨
|
|
Check
box if any part of the fee is offset as provided by Exchange Act
Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid
previously. Identify the previous filing by registration statement
number,
or the Form or Schedule and the date of its filing.
|
|
1)
|
|
Amount
Previously Paid:
|
|
|
2)
|
|
Form,
Schedule or Registration Statement No.:
|
|
|
3)
|
|
Filing
Party:
|
|
|
4)
|
|
Date
Filed:
|
|
1.
|
To
elect four (4) directors to serve for the ensuing year and until
their
successors are elected;
|
2. |
To
ratify the appointment of Grant Thornton LLP as Sigma’s independent
registered public accounting firm for the fiscal year ending February
3,
2007; and
|
3.
|
To
transact such other business as may properly come before the meeting
or
any adjournment thereof.
|
WHETHER
OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE
COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD
AS
PROMPTLY AS POSSIBLE IN THE ENCLOSED
ENVELOPE.
|
Name
|
Age
|
Director
Since
|
Thinh
Q.Tran
|
52
|
1982
|
William
J. Almon (1)(2)(3)
|
73
|
1994
|
Julien
Nguyen (1)(3)
|
49
|
2000
|
Lung
C. Tsai (1)(2)(3)
|
58
|
2003
|
(1) |
Member
of the Audit Committee.
|
(2) |
Member
of the Compensation Committee.
|
(3) |
Member
of the Nominating and Corporate Governance
Committee.
|
·
|
Shareholders
may communicate with the non-employee members of the Board of Directors
by
writing to: Board of Directors, Sigma
Designs, Inc.,
1221 California Circle, Milpitas, California 95035.
|
·
|
The
Company’s chief financial officer initially receives such shareholder
communications. The chief financial officer logs the date of receipt
of
the communication as well as the identity of the correspondent (for
non-confidential communications) in the Company’s shareholder
communications log.
|
·
|
The
chief financial officer will review and summarize the communication
for
the Board of Directors in a timely manner. The summary will be in
the form
of a memo, which will become part of the Company’s shareholder
communications log. All members of the Board of Directors have access
to
the shareholder communications log.
|
·
|
The
chief financial officer will then forward the original shareholder
communication along with the memo to each director (or the lead committee
member, if the communication is addressed to a committee) for
review.
|
·
|
Upon
receipt of the communication from the chief financial officer, the
Chairman of the Audit Committee will, on behalf of the Board of Directors,
facilitate review of and, if appropriate, direct a response to the
communication.
|
·
|
Communications
relating to accounting, internal controls or auditing matters will
be
handled in accordance with the Company’s “Complaint Procedures for
Accounting and Auditing Matters.”
|
·
|
The
Company will retain all shareholder communications, the shareholder
communications log and all related documentation as required under
applicable law.
|
·
|
The
Corporate Governance and Nominating Committee regularly reviews the
current composition and size of the Board.
|
·
|
The
Corporate Governance and Nominating Committee oversees an annual
evaluation of the performance of the Board of Directors as a whole
and
evaluates the performance of individual members of the Board of Directors
eligible for re-election at the annual meeting of shareholders.
|
·
|
In
its evaluation of director candidates, including the members of the
Board
of Directors eligible for re-election, the Corporate Governance and
Nominating Committee seeks to achieve a balance of knowledge, experience
and capability on the Board and considers (1) the current size and
composition of the Board of Directors and the needs of the Board
of
Directors and the respective committees of the Board, (2) such factors
as
issues of character, judgment, diversity, age, expertise, business
experience, length of service, independence, other commitments and
the
like, and (3) such other factors as the Corporate Governance and
Nominating Committee may consider appropriate.
|
·
|
While
the Corporate Governance and Nominating Committee has not established
specific minimum qualifications for Director candidates, the Corporate
Governance and Nominating Committee believes that candidates and
nominees
must reflect a Board that is comprised of directors who (1) are
predominantly independent, (2) are of high integrity, (3) have broad,
business-related knowledge and experience at the policy-making level
in
business or technology, including their understanding of the digital
media
processing industry and the Company’s business in particular, (4) have
qualifications that will increase overall Board effectiveness and
(5) meet
other requirements as may be required by applicable rules, such as
financial literacy or financial expertise with respect to audit committee
members.
|
·
|
With
regard to candidates who are properly recommended by shareholders
or by
other means, the Corporate Governance and Nominating Committee will
review
the qualifications of any such candidate, which review may, in the
Corporate Governance and Nominating Committee’s discretion, include
interviewing references for the candidate, direct interviews with
the
candidate, or other actions that the Corporate Governance and Nominating
Committee deems necessary or proper.
|
·
|
In
evaluating and identifying candidates, the Corporate Governance and
Nominating Committee has the authority to retain and terminate any
third
party search firm that is used to identify director candidates, and
has
the authority to approve the fees and retention terms of any search
firm.
|
·
|
The
Corporate Governance and Nominating Committee will apply these same
principles when evaluating Board candidates who may be elected initially
by the full Board to fill vacancies or add additional directors prior
to
the annual meeting of shareholders at which directors are elected.
|
·
|
After
completing its review and evaluation of director candidates, the
Corporate
Governance and Nominating Committee selects, or recommends to the
full
Board of Directors for selection, the director nominees.
|
(In
thousands)
|
2006
|
2005
|
|||||||||||
Grant
Thornton
|
Deloitte
&
Touche
|
Total
|
Deloitte
&
Touche
|
||||||||||
Audit
Fees (1)
|
$
|
450
|
$
|
215
|
$
|
665
|
$
|
709
|
|||||
Tax
Fees (2)
|
-
|
91
|
91
|
90
|
|||||||||
All
Other Fees (3)
|
-
|
-
|
-
|
-
|
|||||||||
Total
|
$
|
450
|
$
|
306
|
$
|
756
|
$
|
799
|
(1)
|
Audit
Fees consisted of fees billed for professional services rendered
for the
audit of the Company’s annual financial statements included in the
Company’s Annual Reports on Form 10-K and for the review of the financial
statements included in the Company’s Quarterly Reports on Form 10-Q, the
audit of management’s assessment of the Company’s internal control over
financial reporting for the year ended January 28, 2006 and January
29,
2005, audit of the Company’s internal control over financial reporting for
the year ended January 28, 2006 and January 29, 2005, Sarbanes-Oxley
Act,
Section 404 advisory services, and services
rendered in connection with the filing of registration statements
with the
U.S. Securities Exchange
Commission.
|
(2)
|
Tax
Fees consisted of fees billed for tax compliance, consultation and
planning services.
|
(3)
|
All
Other Fees consisted of fees billed for
services related to employee benefits and seminars.
|
·
|
The
Company's personnel who are responsible for performing and overseeing
the
period- end financial closing and reporting process lack the understanding
of generally accepted accounting principles (GAAP) and SEC reporting
matters for their assigned duties, and consequently the Company's
process
to determine and monitor compliance with GAAP and SEC reporting matters
is
not operating effectively. In addition, the Company has not designed
and
implemented appropriate controls to ensure that financial information
(both routine and non-routine) is adequately analyzed and reviewed
to
detect misstatements. For example, the Company did not appropriately
consider the recoverability of a material trade receivable from a
related
party, totaling approximately $2.5 million and certain impairment
indicators which were present when assessing a material investment
in this
related party, totaling $2.0 million. In addition, numerous audit
adjustments to the financial statements, including the reversal of
a $1.1
million gain on sale of investment that had not been consummated
as of
January 29, 2005, and modifications to the financial statement footnote
disclosures were necessary to present fairly, in all material respects,
the annual financial statements for the year ended January 29, 2005
in
accordance with generally accepted accounting principles.
|
·
|
The
Company failed to design and implement appropriate supervisory and
review
controls over the recording of stock options. The Company's Chief
Financial Officer records all inputs and changes to the stock option
file
and there is no independent review of such inputs. An error in recording
option grants or cancellations may potentially misstate stock compensation
expense and/or pro-forma footnote disclosures under SFAS No. 123
by an
amount considered to be material to the interim or annual financial
statements.
|
Shares
Beneficially Owned (1)(2)
|
||||||||
Name
|
Number
|
Percent
(3)
|
||||||
Kingdon
Capital Management, LLC (4)
|
1,472,433
|
6.5
|
%
|
|||||
Thinh
Q. Tran (5)
|
1,341,565
|
5.7
|
||||||
Silvio
Perich (6)
|
296,332
|
1.3
|
||||||
Jacques
Martinella (7)
|
183,882
|
*
|
||||||
Kit
Tsui (8)
|
271,771
|
1.2
|
||||||
Kenneth
Lowe (9)
|
132,831
|
*
|
||||||
William
J. Almon (10)
|
46,172
|
*
|
||||||
Julien
Nguyen (11)
|
34,914
|
*
|
||||||
Lung
Tsai (12)
|
6,000
|
*
|
||||||
All
Directors and Executive Officers as a group (8
persons)(13)
|
2,313,467
|
9.5
|
%
|
(1) |
The
number and percentage of shares beneficially owned is determined
under
rules of the Securities and Exchange Commission, and the information
is
not necessarily indicative of beneficial ownership for any other
purpose.
Under such rules, beneficial ownership includes any shares as to
which the
individual has sole or shared voting power or investment power and
also
any shares that the individual has the right to acquire within sixty
(60)
days of April 24, 2006 through the exercise of any stock option or
other
right.
|
(2) |
The
persons named in the table have sole voting and investment power
with
respect to all shares of Common Stock shown as beneficially owned
by them,
subject to community property laws where applicable and the information
contained in the footnotes to this table. Unless otherwise noted,
the
address for all persons shall be the principal executive office of
Sigma.
|
(3) |
Based
upon 22,752,929 shares of common stock outstanding as of April 24,
2006.
|
(4) |
Based
on information set forth in a Schedule 13G filed with the Securities
and
Exchange Commission on February 13, 2006 by Kingdon Capital Management
LLC, 152 West 57th
Street, 50th
floor, New York, NY 10019.
|
(5) |
Includes
909,483 shares issuable upon exercise of outstanding options which
were
exercisable at April 24, 2006 or within sixty (60) days thereafter;
and 213,293 shares of common stock held by Thinh Q Tran’s family trust and
38,000 shares of common stock held by his four children’s trusts (9,500
shares each). Thinh Q Tran disclaims beneficial ownership of common
stocks
held by these trusts.
|
(6) |
Includes
190,332 shares issuable upon the exercise of outstanding options
which
were exercisable at April 24, 2006 or within sixty (60) days
thereafter.
|
(7) |
Includes
183,882 shares issuable upon the exercise of outstanding options
which
were exercisable at April 24, 2006 or within sixty (60) days
thereafter.
|
(8) |
Includes
206,332 shares issuable upon the exercise of outstanding options
which
were exercisable at April 24, 2006 or within sixty (60) days
thereafter.
|
(9) |
Includes
132,831 shares issuable upon the exercise of outstanding options
which
were exercisable at April 24, 2006 or within sixty (60) days
thereafter.
|
(10) |
Includes
12,875 shares issuable upon the exercise of outstanding options which
were
exercisable at April 24, 2006 or within sixty (60) days
thereafter.
|
(11) |
Includes
13,407 shares issuable upon the exercise of outstanding options which
were
exercisable at April 24, 2006 or within sixty (60) days
thereafter.
|
(12) |
Includes
6,000 shares issuable upon the exercise of outstanding options which
were
exercisable at April 24, 2006 or within sixty (60) days thereafter.
|
(13) |
Includes
1,655,142 shares issuable upon the exercise of outstanding options
held by
eight (8) officers and directors which were exercisable at April 24,
2006 or within sixty (60) days
thereafter.
|
Annual
Compensation
|
Long-Term
Compensation
Awards
|
||||||
Name
and Principal Position
|
Fiscal
Year
|
Salary
|
Bonus
|
Securities
Underlying
Options
(#)
|
|||
Thinh
Q. Tran
Chairman
of the Board,
Executive
Officer
|
2006
2005
2004
|
$339,039
314,136
294,308
|
—
—
—
|
150,000
150,000
120,000
|
|||
Kit
Tsui
Chief
Financial Officer
|
2006
2005
2004
|
$168,056
158,353
150,231
|
—
—
—
|
25,000
25,000
25,000
|
|||
Silvio
Perich
Senior
Vice President,
Worldwide
Sales
|
2006
2005
2004
|
$176,169
169,665
165,000
|
$
84,481
86,779
89,665
|
(1)
(1)
(1)
|
25,000
25,000
25,000
|
||
Jacques
Martinella
Vice
President,
Engineering
|
2006
2005
2004
|
$208,979
196,927
188,157
|
—
—
—
|
30,000
30,000
25,000
|
|||
Kenneth
Lowe
Vice
President,
Strategic
Marketing
|
2006
2005
2004
|
$168,056
158,354
150,231
|
$
—
1,000
|
(2)
|
25,000
25,000
25,000
|
Name
|
Number
of Securities Underlying Options Granted
|
Percentage
of Total Options Granted To Employees in Fiscal Year
(1)
|
Exercise
Price
|
Expiration
Date
|
Potential
Realizable
Value
at Assumed
Annual
Rates of
5%(2)
10%(2)
|
|||||||||||||||
Thinh
Q. Tran
|
150,000
|
(3)
|
15.50
|
%
|
|
$
9.89
|
10/28/2015
|
|
$932,965
|
|
$2,364,317
|
|||||||||
Kit
Tsui
|
25,000
|
(3)
|
2.58
|
%
|
9.89
|
10/28/2015
|
155,494
|
394,053
|
||||||||||||
Silvio
Perich
|
25,000
|
(3)
|
2.10
|
%
|
9.89
|
10/28/2015
|
155,494
|
394,053
|
||||||||||||
Jacques
Martinella
|
30,000
|
(3)
|
2.58
|
%
|
9.89
|
10/28/2015
|
186,593
|
472,863
|
||||||||||||
Kenneth
Lowe
|
25,000
|
(3)
|
2.58
|
%
|
9.89
|
10/28/2015
|
155,494
|
394,053
|
(1)
|
Sigma
granted options representing 967,900 shares to employees during fiscal
year 2006 under Sigma's 2001 Option
Plan.
|
(2)
|
The
5% and 10% assumed annual rates of appreciation are mandated by the
rules
of the Securities and Exchange Commission and do not represent Sigma's
estimate or projection of future Common Stock
price.
|
(3)
|
These
options were granted under Sigma's 2001 Option Plan and have exercise
prices equal to the fair market value on the date of grant. The options
become exercisable cumulatively over a period of five (5) years at
the
rate of twenty percent (20%) of the shares one (1) year after the
vesting
commencement date specified in the grants and one-sixtieth (1/60)
of the
shares each month thereafter for the next four (4) years. The options
expire ten (10) years from the date of grant. The 2001 Option Plan
is
currently administered by the Board of Directors, except for grants
to
executive officers, which are administered by the Compensation Committee.
The Board of Directors and the Compensation Committee have broad
discretion and authority to amend outstanding options and to reprice
options, whether through an exchange of options or an amendment thereto.
Grants under the 2001 Option Plan are made at the discretion of the
Board
of Directors; accordingly, future grants under the 2001 Option Plan
are
not yet determinable.
|
Number
of Securities
Underlying
Unexercised
Options
at Fiscal Year End
|
Value
of Unexercised
In-the-money
Options
at
Fiscal Year End (1)
|
||||||||||||||||||
Name
|
Shares
Acquired
on
Exercise (#)
|
Value
Realized
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||||||
Thinh
Q. Tran
|
140,000
|
|
$1,493,500
|
907,029
|
372,929
|
|
$12,047,871
|
|
$3,593,444
|
||||||||||
Jacques
Martinella
|
20,000
|
185.540
|
181,299
|
77,417
|
2,317,088
|
758,847
|
|||||||||||||
Silver
Perich
|
13,000
|
1,465,100
|
231,166
|
68,834
|
3,099,703
|
691,197
|
|||||||||||||
Kenneth
Lowe
|
6,000
|
59,580
|
125,332
|
63,668
|
1,590,687
|
617,003
|
(1)
|
Calculated
by determining the difference between the closing price of the common
stock underlying the options at January 27, 2006 ($15.91) as reported
on
the Nasdaq National Market and the exercise price of the options.
|
(1)
|
The
lines represent yearly index levels derived from compounded daily
returns
that include all dividends.
|
(2)
|
If
the yearly interval, based on the fiscal year-end, is not a trading
day,
the preceding trading day is used. The Company’s fiscal year ends on the
Saturday closest to January 31. For convenience, the fiscal years
are
shown as ending on January 31.
|
(3)
|
The
index level for all series was set to $100.00 on January 31,
2001.
|
·
|
the
plan for, and the independent registered public accounting firm’s report
on, each audit of Sigma’s financial
statements;
|
·
|
Sigma’s
financial disclosure documents, including all financial statements
and
reports filed with the SEC or sent to shareholders, as well as the
adequacy of Sigma’s internal accounting controls, and accounting and
financial personnel;
|
·
|
changes
in Sigma’s accounting practices, principles, controls or methodologies, or
in Sigma’s financial statements, and recent developments in accounting
rules; and
|
· |
the
establishment and maintenance of an environment at Sigma that promotes
ethical behavior.
|
PROXY |
SIGMA
DESIGNS, INC.
|
PROXY
|
FOR
|
WITHHOLD
ALL
|
|
1.
ELECTION OF DIRECTORS:
Nominees:
Thinh Q. Tran,
William
J. Almon,
Julien
Nguyen and Lung C. Tsai
|
[ ]
|
[ ]
|
[X] Please
mark your votes
as this
|
|||||||
FOR
|
AGAINST
|
ABSTAIN
|
|||||
2. Ratification
of the appointment of Grant Thornton LLP as independent auditors
of Sigma
for the
fiscal
year
ending February 3, 2007.
|
[
]
|
[
]
|
[
]
|
||||
The
shares represented by this proxy will be voted in the manner directed.
In
the absence of any direction, the shares will be voted FOR Proposals
1 and
2, and as said proxies deem advisable on such other matters as
may
properly come before the meeting. The
undersigned acknowledges receipt of the Notice of Annual Meeting
of
Shareholders, Proxy Statement dated May 22, 2006 and Sigma’s Annual Report
to Shareholders.
|
|||||||
Please
mark, sign and date this proxy and return it promptly whether you
plan to
attend the meeting or not. If you do attend, you may vote in person
if you
desire.
|
|||||||
Signature(s)
________________________ Dated _________, 2006
|
|||||||
Please
sign exactly as name appears hereon. Joint owners should each sign.
Trustees and others acting in a representative capacity should
indicate
the capacity in which they sign and give their full title. If a
corporation, please sign in full corporate name by an authorized
officer.
If a partnership please sign in partnership name by an authorized
person.
|