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SEC Filings
DEF 14A
QLOGIC CORP filed this Form DEF 14A on 07/23/1996
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<PAGE>   16
 
stock, and annual grants to the chairman of the board of options to purchase
5,000 shares of common stock. The Director Plan is intended to increase the
proprietary and vested interests of the non-employee directors of the Company
and the growth and performance of the Company by granting to them options to
purchase shares of common stock of the Company, to encourage them to continue
their services to the Company, and to attract individuals with outstanding
ability to serve on the Board of Directors of the Company. The foregoing
amendments were adopted and are recommended for approval by the Company's
stockholders because the Board believes that continued option grants under the
Director Plan play an important role in the Company's efforts to attract and
retain the services of individuals of outstanding ability as directors of the
Company. The Board also believes that option grants such as those contemplated
in the Director Plan are consistent with a trend in computer industry companies
similar in size and complexity to the Company to compensate directors with stock
options.
 
     A copy of the Director Plan, as amended by the Board subject to stockholder
approval, is set forth in full as Appendix A to this Proxy Statement. Following
is a summary of the principal provisions of the Director Plan, as amended:
 
     Administration. The Board of Directors is authorized to administer the
Director Plan in accordance with its terms; however, the Board shall have no
discretion with respect to the selection of directors to receive options, the
number of shares of common stock of the Company subject to any such options, or
the exercise price thereof. The Board may, in its sole discretion, delegate any
or all of its administrative duties to a committee of not fewer than two
non-employee members of the Board.
 
     Eligibility. Each director of the Company shall be eligible to receive an
option under the Director Plan only if such director (i) is not then an employee
of the Company or any of its subsidiaries, (ii) has not within the three years
immediately preceding such time, received any stock option, stock bonus, stock
appreciation right, or other similar stock award from the Company or any of its
subsidiaries, other than options granted to such director under the Director
Plan, and (iii) does not then beneficially own more than 10% of the outstanding
stock of the Company (an "Eligible Director"). Only Eligible Directors may
receive options under the Director Plan. All current members of the Board of
Directors, other than Mr. Desai, are Eligible Directors.
 
     Shares Subject to the Director Plan. An aggregate of 200,000 shares of
common stock of the Company shall be available for issuance upon exercise of
options granted under the Director Plan. This number is subject to adjustment in
the event of a stock split, stock dividend, subdivision or combination of the
common stock or other change in corporate structure affecting the common stock
of the Company.
 
     Grant, Term and Conditions of Options. The Director Plan provides that an
option to purchase 8,000 shares of common stock of the Company shall be granted
automatically to each Eligible Director on the date on which such director first
becomes an Eligible Director. Thereafter, an option to purchase an additional
3,000 shares of common stock of the Company shall be granted automatically to
each such director (other than the chairman of the board) at the close of
business on the date of each annual meeting of stockholders at which such
director is elected or reelected (commencing with the 1996 Annual Meeting of
Stockholders). An option to purchase an additional 5,000 shares of common stock
of the Company shall be granted annually to the chairman of the board following
each such election. If a period of less than 12 months elapses between the
initial grant date and the first annual grant date, the number of shares of
common stock that can be purchased under the option granted on the annual grant
date shall be prorated. Because each of the current non-employee directors of
the Company previously has been granted an option to purchase 12,500 shares of
common stock under the Director Plan, no current non-employee director will
receive an 8,000 share initial option grant. Options granted under the Director
Plan are non-qualified stock options not eligible for favorable tax consequences
given to incentive stock options by Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"). The purchase price per share of the common stock
of the Company issuable upon exercise of the option shall be 100% of the fair
market value per share of such common stock on the date of grant.
 
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