def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant þ Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to Section 240.14a-12 |
SCM MICROSYSTEMS, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and
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SCM
MICROSYSTEMS, INC.
NOTICE OF 2006 ANNUAL MEETING
OF STOCKHOLDERS
October 6, 2006
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the 2006 Annual Meeting of
Stockholders of SCM Microsystems, Inc., a Delaware corporation,
will be held on October 6, 2006, at 10:00 a.m., local
time, at our corporate headquarters, 41740 Christy Street,
Fremont, California 94568, for the following purposes:
1. To elect two Class II directors to serve until the
expiration of the term of the Class II directors or until
their respective successors are duly elected and qualified or
until they are removed or resign;
2. To ratify the appointment of Deloitte & Touche
LLP as our independent registered public accountants for the
fiscal year ending December 31, 2006; and
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The foregoing items of business are more fully described in the
proxy statement accompanying this notice. All stockholders of
SCM Microsystems are cordially invited to attend the 2006 Annual
Meeting of Stockholders in person. Only stockholders of record
at the close of business on August 7, 2006 (the
Record Date) are entitled to notice of and to vote
at the 2006 Annual Meeting of Stockholders. To assure your
representation at the Annual Meeting, stockholders of record as
of the Record Date are urged to mark, sign, date and return the
enclosed proxy as promptly as possible in the envelope enclosed
for that purpose. Any stockholder of record as of the Record
Date attending the 2006 Annual Meeting of Stockholders in person
may vote in person even if he, she or it previously returned a
proxy.
Sincerely,
SCM MICROSYSTEMS, INC.
Stephan Rohaly
Secretary
Fremont, California
August 10, 2006
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE SCM MICROSYSTEMS 2006
ANNUAL MEETING OF STOCKHOLDERS, PLEASE SIGN THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING OF
STOCKHOLDERS AND SO DESIRE, YOU MAY WITHDRAW YOUR PROXY AND VOTE
IN PERSON.
THANK YOU FOR ACTING PROMPTLY
TABLE OF CONTENTS
SCM
MICROSYSTEMS, INC.
PROXY STATEMENT
FOR
2006 ANNUAL MEETING OF STOCKHOLDERS
October 6, 2006
The enclosed proxy is solicited on behalf of SCM Microsystems,
Inc. for use at our 2006 Annual Meeting of Stockholders (the
Annual Meeting) to be held on October 6, 2006,
at 10:00 a.m., local time, at our corporate headquarters,
located at 41740 Christy Street, Fremont, California 94568, or
any adjournment(s) or postponement(s) thereof, for the purposes
set forth herein and in the accompanying notice of 2006 Annual
Meeting of Stockholders.
These proxy solicitation materials are being mailed on or about
August 10, 2006 to all SCM Microsystems stockholders
entitled to notice of and to vote at the Annual Meeting.
INFORMATION
CONCERNING SOLICITATION AND VOTING
Record
Date
Our Board of Directors, which is also referred to in this proxy
statement as the Board, has fixed the close of business on
August 7, 2006 as the record date (Record Date)
for the determination of our stockholders entitled to notice of,
and to vote at, the Annual Meeting and any adjournment(s) or
postponement(s) thereof.
Shares Outstanding
As of July 17, 2006, we had issued and outstanding
15,642,223 shares of common stock, par value
$0.001 per share. For information regarding holders of more
than 5% of the outstanding common stock, see Securities
Ownership of Certain Beneficial Owners and Management.
Voting
Rights
Each stockholder of record on the Record Date will be entitled
to one vote per share of common stock held on the Record Date on
all matters submitted for consideration of, and to be voted upon
by, the stockholders at the Annual Meeting. The election of
directors shall be determined by a plurality of the votes cast:
each stockholder will be entitled to vote for up to two nominees
to our Board of Directors, and the two nominees with the
greatest number of votes will be elected to the Board of
Directors. All other matters shall be determined by a majority
of the votes cast, except as otherwise required by law. No
stockholder will be entitled to cumulate votes at the Annual
Meeting for the election of any members of our Board of
Directors.
Voting
Procedures
The required quorum for the transaction of business at the
Annual Meeting is one-third (1/3) of the shares of our common
stock issued and outstanding as of the Record Date. Shares voted
FOR, AGAINST or WITHHELD
from a matter voted upon by the stockholders at the Annual
Meeting will be treated as being present at the Annual Meeting
for purposes of establishing a quorum for the transaction of
business, and will also be treated as shares represented
and voting at the Annual Meeting (the
Votes Cast) with respect to any such matter.
While there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions, we believe
that abstentions should be counted for purposes of determining
both (i) the presence or absence of the quorum for the
transaction of business, and (ii) the total number of
Votes Cast with respect to a proposal. Accordingly,
abstentions will have the same effect as a vote against a
proposal submitted for consideration of the stockholders at the
Annual Meeting. Broker non-votes will be counted for purposes of
determining the presence or absence of a quorum for the
transaction of business at the Annual Meeting, but will not be
counted for purposes of determining the number of
Votes Cast with respect to a proposal. Consequently, votes
AGAINST and
WITHHELD and abstentions will have no effect on the
election of the Class II directors and will be counted as
votes against the proposal to ratify the appointment of our
independent registered public accountants.
Solicitation
of Proxies
The cost of soliciting proxies will be borne by us. We have
retained Innisfree M&A Incorporated, a U.S. proxy
solicitation firm to assist us with the solicitation at their
customary rates (which we estimate will be approximately
$15,000), plus reimbursement for their
out-of-pocket
expenses. In addition, we may reimburse brokerage firms, banks
and other persons representing the beneficial owners of shares
for their expenses in forwarding solicitation materials to such
beneficial owners. Solicitation of proxies by mail may be
supplemented by telephone, telegram, facsimile or personal
solicitation by our directors, officers or regular employees
without additional compensation.
Additional
Copies of the Proxy Statement
If you are a registered shareholder and have received only one
copy of the proxy statement and annual report in your household,
but wish to receive additional copies, we will deliver multiple
copies for some or all accounts upon your request, either by
calling SCM Microsystems at +1 510-360-2302, emailing us at
ir@scmmicro.com or writing to us at SCM Microsystems,
Inc., 41740 Christy Street, Fremont, California 94568,
Attention: Investor Relations. Similarly, if you share an
address with another stockholder and have received multiple
copies of our proxy materials, you may call or write us at the
above address to request consolidation of these materials into a
single mailing. Please note that if you are not a registered
shareholder and your shares are held by a broker or bank, you
must contact your bank or broker to request multiple copies or
consolidation of proxy materials.
Revocability
of Proxies
Your proxy is revocable at any time before it is voted at the
Annual Meeting either by delivering to us a written notice of
revocation or a duly executed proxy bearing a later date, or by
attending the Annual Meeting and voting in person. If you have
executed and returned a proxy and are present in person at the
Annual Meeting and wish to vote at the Annual Meeting, you may
elect to do so by notifying the Inspector of Elections and
thereby suspend the power of the proxy holders to vote the proxy
previously delivered by you. Attendance at the Annual Meeting,
however, will not by itself revoke a proxy previously delivered
to us.
Stockholder
Proposals for 2007 Annual Meeting of Stockholders
We anticipate that our 2007 Annual Meeting of Stockholders will
take place in mid-June 2007, more than thirty days from the date
of the 2006 Annual Meeting, and that we will mail our proxy
materials for the 2007 Annual Meeting of Stockholders in the
middle of April 2007. Therefore, Stockholder proposals that are
intended to be presented by our stockholders at our 2007 Annual
Meeting must be received by us no later than December 20,
2006, which is 120 days prior to our anticipated mailing
date of April 19, 2007, in order to be considered for
inclusion in the proxy statement and form of proxy relating to
our 2007 Annual Meeting.
2
PROPOSAL ONE:
ELECTION OF CLASS II DIRECTORS
Our Board of Directors is divided into three director classes
with staggered three-year terms. Currently our Board consists of
eight directors, of which two directors serve in Class I,
three directors serve in Class II, and three directors
serve in Class III. In February 2006, our Board of
Directors approved an increase in the size of the Board from
seven to eight directors and an increase in the size of
Class II of the Board from two to three directors,
effective as of February 2, 2006. Mr. Vought, a
Class II director, has decided not to stand for reelection
at our 2006 Annual Meeting. Following Mr. Voughts
resignation, which will be effective as of the date of the 2006
Annual Meeting, the number of directors constituting the Board
of Directors of the Company will be eight, including a vacancy
in Class II.
Each director elected at the Annual Meeting of Stockholders will
serve for a term ending on the date of the third annual meeting
after his or her election when his or her successor has been
elected and duly qualified or upon the date of his or her
earlier resignation or removal. Stockholders may not cumulate
votes in the election of directors.
The Nominating Committee of the Board of Directors has
recommended, and the Board of Directors has proposed, that
Werner Koepf and Simon Turner be elected as Class II
directors at the Annual Meeting. Unless otherwise instructed,
the proxy holders named in the enclosed proxy will vote the
proxies received by them for Messrs. Koepf and Turner, each
of whom currently serves as a director of the Company. In the
event that either of Messrs. Koepf and Turner is unable or
declines to serve as a director at the time of the Annual
Meeting, the proxies received by the proxy holders named in the
enclosed proxy will be voted for any nominee who is subsequently
designated by the Board of Directors to fill the vacancy. We do
not expect, however, that either of Messrs. Koepf and
Turner will be unable or will decline to serve as a director at
the Annual Meeting, as each of Messrs. Koepf and Turner has
agreed to serve if elected.
Set forth below is Information about the background and age as
of July 17, 2006 of the directors nominated for election at
the Annual Meeting and each of the other incumbent directors:
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Director
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Name
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Age
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Position
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Since
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CLASS I DIRECTORS
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Steven Humphreys
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45
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Chairman of the Board
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1996
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Ng Poh Chuan
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44
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Director
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1995
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CLASS II DIRECTORS
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Werner Koepf
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Director
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2006
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Simon Turner
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54
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Director
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2000
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Andrew Vought
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51
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Director
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1996
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CLASS III DIRECTORS
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Dr. Manuel Cubero
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Director
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2002
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Dr. Hagen Hultzsch
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65
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Director
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2002
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Robert Schneider
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57
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Chief Executive Officer and
Director
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1990
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Class II
Directors Nominated for Election at the 2006 Meeting
Werner Koepf, age 64, has served as a director of
SCM since February 2006. Mr. Koepf is a director of telent
plc (formerly Marconi Corporation), where he serves on the
audit, nominations, remunerations and operations review
committees. Mr. Koepf also serves as chairman of the
supervisory board of telent GmbH. Mr. Koepf is a director
of Gemplus International SA and is chairman of the board of
directors of PXP Software AG. Mr. Koepf also is an advisor
to venture capital firms Techno Venture Management GmbH and
Invision AG. From 1993 to 2002, Mr. Koepf held a variety of
senior management positions with Compaq Computer Corporation
GmbH, including Vice President and General Manager of the
General Business Group from 1993 to 1999; Vice President and
General Manager of Compaq Europe, Middle East and Africa (EMEA)
from 1999 to 2000; and Chief Executive Officer and
3
Chairman for Compaq Computer, EMEA from 2000 to 2001. From 1989
to 1993, Mr. Koepf was Chairman and Chief Executive Officer
for European Silicon Structures SA, an ASIC manufacturer. Prior
to 1993, Mr. Koepf held various senior management positions
at Texas Instruments Inc., including Vice President and General
Manager of several divisions of the group. Mr. Koepf
received a masters degree in business administration from
the University of Munich and a bachelors degree with
honors in electrical engineering from the Technical College in
St. Poelten, Austria.
Simon Turner, age 54, has served as a director of
SCM since July 2000. Since January 2006, Mr. Turner has
served as Group Sourcing Director for consumer electronic
retailer DSG international plc. From January 2002 to January
2006, Mr. Turner was Managing Director of the PC World
Group of DSG, responsible for operations at PC World, PC World
Business and Genesis Communications in the UK and PC City in
Europe. From February 1999 to January 2002, Mr. Turner was
Managing Director of PC World, a large UK reseller of PCs and
PC-related equipment. From December 1996 to February 1999,
Mr. Turner was Managing Director of Philips Consumer
Electronics, UK and Ireland. Prior to that, he also served as
Senior Vice President of Philips Media, Commercial Director of
Belling and Company, and Group Marketing Manager at Philips
Consumer Electronics. Mr. Turner holds a B.S. degree from
the University of Surrey.
Class III
Directors Whose Terms Expire in 2007
Dr. Manuel Cubero, 43, has served as a director of
SCM since April 2002. In December 2005, Dr. Cubero was
named Managing Director for Kabel Deutschland GmbH, the largest
cable network operator in Europe. From November 2003 to November
2005, Dr. Cubero served as Vice President, Digital TV for
Kabel Deutschland. From January 2002 to October 2003, he was a
consultant for the media, IT and telecom markets with Egon
Zehnder International, an international management consultant
firm based in Hamburg, Germany. From April 2000 to June 2001, he
was Managing Director of alloo AG, an Internet
gaming company that he co-founded, based in Salzburg, Austria.
From January 1994 to March 2000, he held various senior
management positions with the Kirch Group, the largest
television broadcast company in Germany, including Co-chairman
of the commercial module requirements committee of the European
Digital Video broadcasting project for five years and Managing
Director of the technology investment division of the company.
Dr. Cubero holds M.S. and Ph.D. degrees in physics from the
Technical University in Darmstadt, Germany and an M.B.A. from
INSEAD in Fontainbleau, France.
Dr. Hagen Hultzsch, 65, has served as a director of
SCM since August 2002. Dr. Hultzsch currently sits on the
boards of more than 20 technology companies and academic
institutions in the U.S. and Europe, including Convergys
Corporation, RiT Technologies Ltd, TranSwitch Corporation and
VoiceObjects Inc. From 1993 until his retirement in 2001,
Dr. Hultzsch served as a member of the Board of Management
for Deutsche Telekoms technical services division. From
1988 to 1993, he was Corporate Executive Director for Volkswagen
AG, where he was responsible for organization and information
systems. Dr. Hultzsch holds M.S. and Ph.D. degrees in
nuclear physics from the University of Mainz, Germany.
Robert Schneider, 57, founded SCM in May 1990 as
President, Chief Executive Officer, General Manager and Chairman
of the Board and has served as a director since that time. He
has served as our Chief Executive Officer since April 2000 and
also previously held that position from May 1990 to January
1997. Mr. Schneider served as our President and Chairman of
the Board from May 1990 until July 1996, and also served as our
Chairman of the Board from January 1997 until April 2000. Prior
to founding SCM, Mr. Schneider held various positions at
Intel Corporation. He holds a B.S. degree in engineering from
HTBL Salzburg and a B.A. degree from the Akademie for Business
Administration in Ueberlingen.
Class I
Directors Whose Terms Expire in 2008
Steven Humphreys, 45, has served as a director of SCM
since July 1996 and as Chairman of the Board of Directors since
April 2000. Since October 2003, Mr. Humphreys has served as
chairman of Robotic Innovations International, Inc. (RIII), an
acquirer and developer of technologies for broad-based
applications of robotics, service automation and automated
companion devices. From October 2001 to October 2003, he served
as Chairman of the Board and Chief Executive Officer of
ActivCard Corporation, a provider of digital identity management
software. From July 1996 to October 2001, Mr. Humphreys was
an executive officer of SCM, serving as President
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and Chairman of the Board from July 1996 until December 1996, at
which time he became Chief Executive Officer and served as
President and Chief Executive Officer until April 2000.
Previously, Mr. Humphreys was President of Caere
Corporation, an optical character recognition software and
systems company. Prior to Caere, he spent ten years with General
Electric in a variety of positions. Mr. Humphreys is also a
director of several privately held companies, a limited partner
and advisor to several venture capital firms and from October
2001 to December 2003 was a director of ActivCard.
Mr. Humphreys holds a B.S. degree from Yale University and
M.S. and M.B.A. degrees from Stanford University.
Ng Poh Chuan, 44, has served as a director of SCM since
June 1995. Since June 1997, Mr. Ng has served as Managing
Director and Chairman of the Board of Global Team Technology
Pte. Ltd., a manufacturers representative for computer
products. From September 1994 through May 1997, Mr. Ng
served as Director, Business Development at ICS, a contract
manufacturing company and developer of communications products.
Mr. Ng is also a director of a privately held distribution
company in Singapore. He holds a B.S. degree in engineering from
the National University of Singapore.
Class II
Director Not Standing for Re-election
Andrew Vought, age 51, has served as a director of
SCM since March 1996. Since July 2003, Mr. Vought has
served as Chief Executive Officer and Director of BroadLight, a
privately held fabless semiconductor company supporting the
passive optical network (PON) market, based in Mountain View,
California. From September 2002 to February 2003,
Mr. Vought was Chief Executive Officer of Pulsent
Corporation, a digital video compression company. From May 1996
to September 2002, Mr. Vought held various executive
positions, including Chief Financial Officer and Office of the
President, Finance, Operations and Legal, at GlobespanVirata
Corporation, a publicly-traded communications semiconductor
developer for the broadband industry. From January 1995 to May
1996, Mr. Vought was a partner of Cheyenne Capital
Corporation. He also serves as a director of Artimi, a privately
held company based in California. Mr. Vought holds B.S. and
B.A. degrees from the University of Pennsylvania and an M.B.A.
degree from Harvard University.
To our knowledge, there are no family relationships among our
directors.
Vote
Required and Recommendation of the Board of Directors
At the Annual Meeting, the two nominees receiving the highest
number of affirmative votes of the shares present in person or
represented by proxy at the Annual Meeting and entitled to vote
on the election of directors will be elected to our Board of
Directors. Abstentions and votes withheld from or against any
director will be counted for purposes of determining the
presence or absence of a quorum, but have no other legal effect
under Delaware law in the election of directors. Stockholders
may not cumulate votes in the election of directors.
THE BOARD
OF DIRECTORS RECOMMENDS A VOTE FOR
THE TWO CLASS II DIRECTOR NOMINEES NAMED ABOVE
MATTERS
RELATING TO THE BOARD OF DIRECTORS
Board
Meetings
Our Board of Directors met four times and had five telephonic
meetings during fiscal year 2005. During fiscal 2005, none of
our current directors attended (i) fewer than 75% of the
total number of meetings of the Board of Directors held during
the period for which he served as a director or (ii) fewer
than 75% of the total number of meetings of the committees of
the Board of Directors on which he served held during the period
for which he served as a member of such committee, except for
Manuel Cubero, who attended 67% of Board meetings; Simon Turner,
who attended 67% of Board meetings and 50% of meetings held by
the committees on which he serves; and Andrew Vought, who
attended 67% of meetings held by the committees on which he
serves.
Following each physical Board of Directors meeting, our
independent directors meet without SCM management present to
address any issues they determined to be appropriate.
5
Board
Independence
The Board of Directors has determined that each of the current
directors, including each of the directors standing for
re-election, is independent within the meaning of the NASDAQ
Stock Market, Inc. director independence standards, with the
exception of Robert Schneider, who is the Chief Executive
Officer of the Company, and Andrew Vought. Mr. Vought
received compensation of $98,000 in July, 2003 in connection
with his services related to the sale and divestiture of our
Digital Media and Video business, and thus is not considered
independent under the NASDAQ rules.
Board
Committees
The Board of Directors currently has Audit, Compensation,
Nominating and Strategy Committees. Each committee has a written
charter which is available on the Corporate Governance page
within the Investor Relations section of our website at
www.scmmicro.com, except for the Strategy Committee
charter, which is pending Board approval. All members of these
committees are appointed by the Board of Directors and are
non-employee directors. From time to time the Board of Directors
may choose to create additional committees. The following
describes each of our current committees, its function, its
current membership and the number of meetings held during fiscal
2005.
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Audit
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Compensation
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Nominating
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Strategy
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Name of Director
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Committee
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Committee
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Committee
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Committee
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Manuel Cubero
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Member
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Hagen Hultzsch
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Member
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Member
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Member
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Steven Humphreys
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Member
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Chair
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Chair
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Chair
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Ng Poh Chuan
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Member
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Simon Turner
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Chair
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Member
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Member
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Member
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Andrew Vought
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Resigned October 2005
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Resigned April 2006
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Member
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Audit Committee. The Audit Committee,
established in accordance with Section 3(a)(58)(A) of the
Exchange Act, assists the Board of Directors in fulfilling its
responsibility for oversight of the quality and integrity of our
financial reporting processes, system of internal control,
process for monitoring compliance with laws and regulations,
audit process and standards of business conduct. The Internal
Audit and Sarbanes-Oxley Compliance functions of the Company
report directly to the Audit Committee. The Audit Committee is
currently comprised of Messrs. Hultzsch, Humphreys, Ng and
Turner. Mr. Turner has served as chairman of the Audit
Committee since April 27, 2004. Mr. Vought resigned
from the Audit Committee in October 2005. The Board of Directors
has determined that each current member of the Audit Committee
is independent within the meaning of the NASDAQ Stock Market,
Inc. director independence standards. The Board has further
determined that at least one member of the Audit Committee,
Mr. Turner, is a financial expert as defined by
the rules and regulations of the Securities and Exchange
Commission. The Audit Committee held four physical meetings and
three telephonic meetings during 2005. The Audit Committee
Report is included herein on page 21.
Compensation Committee. The Compensation
Committee reviews and makes recommendations to the Board of
Directors regarding our compensation policies and the
compensation to be provided to the Chief Executive Officer, his
direct reports, and our directors. The Compensation Committee is
currently comprised of Messrs. Cubero, Humphreys and
Turner. Mr. Vought was chairman of the Compensation
Committee during fiscal 2005, but resigned from the Committee on
April 12, 2006. Mr. Humphreys was subsequently
appointed chairman of the Compensation Committee in
Mr. Voughts place. The Board of Directors has
determined that each current member of the Compensation
Committee is independent within the meaning of the NASDAQ Stock
Market, Inc. director independence standards. The Compensation
Committee held four meetings during 2005. The Compensation
Committee Report is included herein on page 17.
Nominating Committee. The Nominating Committee
assists in identifying individuals qualified to become members
of the Board of Directors. The Nominating Committee is currently
comprised of Messrs. Hultzsch, Humphreys and Turner and
Mr. Humphreys currently serves as the committees
chairman. The Board of Directors has determined that each of the
members of the Nominating Committee is independent within the
meaning of the
6
NASDAQ Stock Market, Inc. director independence standards. The
Nominating Committee held one meeting during 2005.
Strategy Committee. In February 2006, the
Board appointed a Strategy Committee to consider possible
strategic alternatives and opportunities. The Strategy Committee
is currently comprised of Messrs. Hultzsch, Humphreys,
Turner and, until his resignation at our 2006 Annual Meeting,
Vought. Mr. Humphreys serves as the committees
chairman. The Board of Directors has determined that each
current member of the Strategy Committee is independent within
the meaning of the NASDAQ Stock Market, Inc. director
independence standards, except for Mr. Vought. See
Board Independence above.
Identification
and Evaluation of Nominees for Directors
The primary role of the Nominating Committee is to develop and
recommend to the Board criteria for identifying and evaluating
director candidates and to establish a procedure for
consideration of director candidates recommended by our
stockholders. The Nominating Committee periodically assesses the
appropriate size of the Board of Directors and whether any
vacancies are expected due to retirement or otherwise. In the
event that vacancies are anticipated, the Nominating Committee
seeks to identify and evaluate potential candidates at meetings
of the Nominating Committee, which can take place at any point
during the year.
As part of its selection process, the Nominating Committee may
consider recommendations of director candidates with diverse
backgrounds and experience who are expected to enhance the
quality of the Board, serve stockholders long-term
interests and contribute to our overall corporate goals.
Directors should possess the highest personal and professional
ethics, integrity and values, informed judgment, and sound
business experience and be committed to representing the
long-term interests of our stockholders. Candidates must also
have an inquisitive and objective perspective, the ability to
make independent analytical inquiries, practical wisdom and
mature judgment. In evaluating candidates, the Nominating
Committee may consider a candidates work experience
related to our business, general professional experience and
overall expected contributions to the Board of Directors in
relation to other directors already serving on the Board. When
evaluating existing directors for nomination for re-election,
the Nominating Committee may also consider the directors
past Board and committee meeting attendance and participation.
We endeavor to have a Board representing diverse experience at
policy-making levels in various areas that are relevant to our
global activities.
Our stockholders may propose nominees for future consideration
by the Nominating Committee by submitting the name(s) and
supporting information to Corporate Secretary, SCM Microsystems,
Inc., 41740 Christy Street, Fremont, California 94568.
Corporate
Governance Guidelines
The Board of Directors has adopted Corporate Governance
Guidelines for the Board, which include, without limitation,
guidelines relating to Board composition, director
qualifications and selection process, director independence,
Board committees and auditor independence. The Corporate
Governance Guidelines are available on the Corporate Governance
page within the Investor Relations section of our website at
www.scmmicro.com. The Nominating Committee and the Board
of Directors review the Corporate Governance Guidelines annually
and the Board may amend the Corporate Governance Guidelines at
any time.
Code of
Conduct and Ethics
The Board of Directors has adopted a Code of Conduct and Ethics
for all of our employees, including our Chief Executive Officer,
Chief Financial Officer, Controller and any other principal
accounting officer, and for the members of our Board of
Directors. Our Code of Conduct and Ethics is posted on the
Corporate Governance page within the Investor Relations section
of our website, at www.scmmicro.com. The Board reviews
our Code of Conduct and Ethics annually and the Board may amend
the Code of Conduct and Ethics at any time.
7
Communication
with the Board of Directors
Although we do not have a formal policy regarding communications
between our stockholders and our Board, stockholders may
communicate with the Board of Directors by sending an email to
ir@scmmicro.com or by writing to the Board at SCM
Microsystems, Inc., 41740 Christy Street, Fremont, California
94568, Attention: Investor Relations. The Investor Relations
staff will forward such communication to the Board of Directors
or to any individual director or directors to whom the
communication is directed unless the communication is unduly
hostile, threatening, illegal or similarly inappropriate, in
which case Investor Relations staff has the authority to discard
the communication or take appropriate legal action regarding the
communication.
Director
Attendance at Stockholder Meetings
We do not have a policy regarding director attendance at
stockholder meetings. No directors attended the 2005 Annual
Meeting of Stockholders and no directors are expected to attend
the 2006 Annual Meeting of Stockholders.
Director
Compensation
Each non-employee member of our Board of Directors currently
receives an annual retainer of $10,000, except for the chairman,
who currently receives an annual retainer of $20,000. In
addition, each non-employee director currently receives $1,000
for each Board meeting attended in person for his services as
director, as well as reimbursement of travel expenses associated
with such Board meetings or committee meetings. Each
non-employee member of our Compensation and Nomination
Committees currently receives an annual retainer of $2,000 for
such participation, with the exception of the chairman of each
committee, who currently receives an annual retainer of $4,000.
Each member of the Audit Committee currently receives an annual
retainer of $5,000 for participation on the committee, with the
exception of the chairman of the committee, who currently
receives an annual retainer of $10,000. Members of the Strategy
Committee receive $500 per quarter. In addition, members of
the Strategy Committee who participate in additional committee
services receive $1,500 per day of service plus
reimbursement of expenses. During 2005, SCMs directors
were paid in the currency of the country of their residence,
using the average rate of exchange as of April 2003.
A total of 280,000 shares of common stock are currently
reserved for issuance under our 1997 Director Option Plan
(the Director Plan). The Director Plan provides that
the number of shares of our common stock reserved for issuance
under the Director Plan is increased on each anniversary date of
adoption of the Director Plan by an amount equal to the total
number of shares underlying the options granted in the
immediately preceding year or a lesser amount determined by the
Board of Directors. Each then serving non-employee director was
granted an initial option to purchase 5,000 shares of
common stock on the effective date of the Director Plan and each
person who became or becomes a non-employee director after that
date has been granted and currently will automatically be
granted an initial option to purchase 10,000 shares of
common stock. In addition, each then serving non-employee
director has been granted and will currently automatically be
granted an annual option to purchase an additional
5,000 shares of common stock under the Director Plan on the
date of each annual meeting of our stockholders, subject to
continued service as a non-employee director, unless such
director has not been serving as a non-employee director for at
least six months. All options granted under the Director Plan
have an exercise price equal to the fair market value of the
common stock at the date of grant, have a term of ten years and
vest monthly over one year from the date of grant. Options
granted under the Director Plan are not transferable unless
approved by the Board of Directors. The Director Plan will
terminate in March 2007. We expect to propose a new director
stock plan for adoption at our 2007 Annual Meeting of
Stockholders.
The Board of Directors and the Compensation Committee reviews
and may from time to time make changes to the compensation paid
to the non-employee directors, including with respect to service
on any additional committee that is created.
8
EXECUTIVE
OFFICERS
Information concerning our current executive officers, including
their backgrounds and ages as of July 17, 2006, is set
forth below:
Robert Schneider, age 57, founded SCM in May 1990
and has served as a director since that time. He has served as
our Chief Executive Officer since April 2000 and also previously
held that position from May 1990 to January 1997.
Mr. Schneider served as our President and Chairman of the
Board from May 1990 until July 1996, and also served as our
Chairman of the Board from January 1997 until April 2000. Prior
to founding SCM, Mr. Schneider held various positions at
Intel Corporation. He holds a B.S. degree in engineering from
HTBL Salzburg and a B.A. degree from the Akademie for Business
Administration in Ueberlingen.
Dr. Manfred Mueller, age 36, joined SCM
Microsystems in August 2000 as Director of Strategic Business
Development. From July 2002 to July 2005, he served as Director
of Strategic Marketing. He was appointed Vice President of
Strategic Business Development in July 2005. In February 2006,
he was named Vice President of Marketing, in which position he
is responsible for product management, marketing, communications
and the Companys IP protection. Prior to SCM, from August
1998 to July 2000, Dr. Mueller was Product Manager and
Business Development Manager at BetaResearch GmbH, the digital
TV technology development division of the Kirch Group.
Dr. Mueller holds masters and Ph.D degrees in Chemistry
from Regensburg University in Germany and an MBA from the
Edinburgh Business School of Heriot Watt University in
Edinburgh, Scotland.
Stephan Rohaly, age 41, joined SCM Microsystems in
March 2006 as Vice President Finance and Chief Financial
Officer. Previously, from February 2003 to February 2006,
Mr. Rohaly was Director of Corporate Finance at Viatris, a
German pharmaceutical firm. From July 1995 to December 2002, he
served as Business Unit and Finance & Administration
Director for Nike Germany. Prior to Nike, Mr. Rohaly was
Symantecs Finance & Administration Officer for
Central and Eastern Europe. He received his MBA degree from Rice
University, and holds a Bachelor of Science and Business
Administration, Magna Cum Laude in Mathematics and Computer
Information Systems Management from Houston Baptist University.
To our knowledge, there are no family relationships between any
of our executive officers and any of our directors.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
Ownership
The table below sets forth information known to us as of
July 17, 2006 with respect to the beneficial ownership of
our common stock by:
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each person who is known by us to be the beneficial owner of
more than 5% of our outstanding common stock;
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each of our directors;
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each of the Named Executive Officers (as defined below) and our
other current executive officers; and
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all of our directors and executive officers as a group.
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Except as otherwise indicated, and subject to applicable
community property laws, to our knowledge, the persons named in
this table have sole voting and investment power with respect to
all shares held by them. Applicable percentage ownership in the
following table is based on 15,642,223 shares of common
stock outstanding as of July 17, 2006.
Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission. In computing the
number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock
subject to options held by that person that are currently
exercisable or exercisable within 60 days of July 17,
2006 are deemed outstanding. Such shares, however, are not
deemed outstanding for the purpose of computing the percentage
ownership of each other person.
9
Unless specified below, the mailing address for each individual,
officer or director is c/o SCM Microsystems, Inc., 41740
Christy Street, Fremont, California 94568.
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Shares Beneficially Owned
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Name of Beneficial Owner
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Number
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Percent
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Royce & Associates, LLC(1)
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1,246,700
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7.8
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%
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1414 Avenue of the Americas
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New York, NY 10019
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Dimensional Fund Advisors,
Inc.(2)
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1,013,721
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6.5
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%
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1299 Ocean Avenue, 11th Floor
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Santa Monica, Calif., 90401
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Robert Schneider(3)
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797,219
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5.0
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%
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Steven Humphreys(4)
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92,915
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*
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Colas Overkott(5)
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77,670
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*
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Ng Poh Chuan(6)
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40,000
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*
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Andrew Vought(7)
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36,000
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*
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Simon Turner(8)
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35,000
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*
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Manfred Mueller(9)
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33,579
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*
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Ingo Zankel(10)
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26,980
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*
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Manuel Cubero(11)
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25,000
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*
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Hagen Hultzsch(12)
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25,000
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*
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Werner Koepf(13)
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5,833
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*
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Steven L. Moore(14)
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*
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Stephan Rohaly(15)
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*
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All directors and executive
officers as a group (13 persons)(16)
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1,195,196
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7.3
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%
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* |
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Less than one percent. |
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(1) |
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Based solely on information contained in a Schedule 13F
filed on March 31, 2006. |
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(2) |
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Based solely on information contained in a Schedule 13F
filed on March 31, 2006. |
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(3) |
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Includes (i) 13,510 shares held by Robert
Schneiders wife, Ursula Schneider and (ii) options to
purchase 333,775 shares of common stock exercisable within
60 days of July 17, 2006. |
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(4) |
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Includes options to purchase 81,415 shares of common stock
exercisable within 60 days of July 17, 2006. |
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(5) |
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Includes options to purchase 71,651 shares of common stock
exercisable within 60 days of July 17, 2006.
Mr. Overkott left SCM Microsystems at the end of fiscal
2005. |
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(6) |
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Consists of options to purchase 40,000 shares of common
stock exercisable within 60 days of July 17, 2006. |
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(7) |
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Includes options to purchase 35,000 shares of common stock
exercisable within 60 days of July 17, 2006. |
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(8) |
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Consists of options to purchase 35,000 shares of common
stock exercisable within 60 days of July 17, 2006. |
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(9) |
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Includes options to purchase 28,832 shares of common stock
exercisable within 60 days of July 17, 2006. |
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(10) |
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Mr. Zankel left SCM Microsystems at the end of fiscal 2005. |
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(11) |
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Consists of options to purchase 25,000 shares of common
stock exercisable within 60 days of July 17, 2006. |
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(12) |
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Consists of options to purchase 25,000 shares of common
stock exercisable within 60 days of July 17, 2006. |
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(13) |
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Consists of options to purchase 5,833 shares of common
stock exercisable within 60 days of July 17, 2006. |
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(14) |
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Mr. Moore left SM Microsystems in June 2006. |
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(15) |
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Mr. Rohaly joined SCM Microsystems in March 2006. |
10
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(16) |
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Includes options to purchase 684,006 shares of common stock
exercisable within 60 days of July 17, 2006 that may
be deemed to be beneficially owned by our directors and certain
executive officers. These shares are shown as being held by our
directors and officers for purposes of this table only. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our executive officers and directors, and
persons who own more than ten percent of a registered class of
our equity securities, or 10% stockholders, to file certain
reports of ownership with the Securities and Exchange Commission
and with the National Association of Securities Dealers. Such
officers, directors and 10% stockholders are also required by
the Securities and Exchange Commissions rules and
regulations to provide us with copies of all forms that they
file under Section 16(a) of the Exchange Act.
Based solely on our review of copies of such forms received by
us, and on written representations from reporting persons, we
believe that, during the period from January 1, 2005 to
December 31, 2005, our executive officers, directors and
10% stockholders filed all required reports under
Section 16(a) of the Exchange Act on a timely basis.
EXECUTIVE
COMPENSATION
Summary
of Executive Compensation
The following table sets forth all compensation awarded to,
earned by, or paid to our Chief Executive Officer and other
executive officers (collectively, the Named Executive
Officers) for services rendered to us in all capacities
during the years ended December 31, 2003, 2004 and 2005.
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Long-Term
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Compensation
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Securities
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All Other
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Annual Compensation
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Underlying
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Compensation
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Name and Principal Position (1)
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Year
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Salary ($)
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Bonus ($)
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Options (#)
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($)
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Robert Schneider(2)
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2005
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$
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351,663
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$
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15,000
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$
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10,701
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Chief Executive Officer and
Managing
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2004
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377,710
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84,360
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10,477
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Director of German subsidiary
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2003
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272,063
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22,209
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15,601
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9,405
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Steven L. Moore(3)
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2005
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185,384
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33,333
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10,000
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18,821
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Chief Financial Officer and
Secretary
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2004
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194,385
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20,000
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16,961
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2003
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89,308
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12,375
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75,000
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70,658
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Colas Overkott(4)
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2005
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228,581
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37,934
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256,981
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Executive Vice President, Sales and
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2004
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238,651
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28,798
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35,610
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14,349
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Marketing
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2003
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222,092
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33,147
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70,000
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19,909
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Ingo Zankel(5)
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2005
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|
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251,188
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33,282
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80,000
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391,087
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Chief Operating Officer
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2004
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2003
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(1) |
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In addition to the executive officers listed above, we currently
have two other executive officers. Dr. Manfred Mueller
became an executive officer in February 2006 and Stephan Rohaly
joined the Company and became an executive officer in March
2006. Because neither was an officer of the Company in 2005,
they are not included in this table. |
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(2) |
|
During 2005, 2004 and 2003, Mr. Schneider was paid in local
currency, which is the euro. For each of the years 2005 and
2004, Mr. Schneiders original base salary was
350,000, which in September 2004 he voluntarily reduced
for the period of one year in exchange for additional options to
purchase shares of SCM Microsystems stock under the Executive
Compensation Arrangement of September 2004. Under the
arrangement, options for 50 shares of common stock were
granted for each $100 of salary reduction (to be taken over one
year) by the executive officer. The 2005 and 2004 salary amounts
in the table above reflect such reduction and the options
granted under this arrangement are included in Long-Term
Compensation for 2004. Mr. Schneider was paid a salary of
280,000 and was not paid a bonus for 2005.
Mr. Schneider was paid a salary of 306,250 and was
not |
11
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paid a bonus for 2004. In 2003, Mr. Schneider was paid a
base salary of 245,000 and a bonus of 20,000.
Payments of 8,520, 8,495 and 8,470,
respectively, were made on his behalf in 2005, 2004 and 2003 for
health, life and accident insurance coverage and are included
under All Other Compensation in the table above. Due
to fluctuations in exchange rates during 2005, 2004 and 2003,
Mr. Schneiders salary, bonus and other compensation
amounts in U.S. dollars varied from month to month during
the respective years. The salary, bonus and insurance premium
amounts shown above in dollars were derived using an average
exchange rate of $1.25594 per euro in 2005,
$1.23334 per euro in 2004 and $1.11047 per euro in
2003. |
|
(3) |
|
In 2005 and 2004, Mr. Moores original base salary was
$200,000, which in September 2004 he voluntarily reduced for the
period of one year in exchange for additional options to
purchase shares of SCM Microsystems stock under the Executive
Compensation Arrangement of September 2004. Under the
arrangement, options for 50 shares of common stock were
granted for each $100 of salary reduction (to be taken over one
year) by the executive officer. The 2005 and 2004 salary amounts
in the table above reflect such reduction and the options
granted under this arrangement are included in Long-Term
Compensation for 2004. Mr. Moore was paid a salary of
$185,384 in 2005 and earned a bonus of $33,333 for 2005 which
was paid in 2006. Mr. Moore was paid a salary of $194,385
and was not paid a bonus for 2004. Payments of $18,821 and
$16,961 were made on his behalf in 2005 and 2004, respectively,
for health and disability insurance coverage and under the
Companys 401K matching program, and these respective
amounts are included under All Other Compensation
for the years 2005 and 2004 in the table above. Mr. Moore
joined us in June 2003, and therefore the amounts shown for 2003
do not reflect an entire year. Payments of $5,730 were made on
his behalf in 2003 for health and disability insurance coverage
and in early 2004 a payment of $2,000 was made to his 401K
retirement account for 2003 under the Companys 401K
matching program. Both of these sets of payments are included
under All Other Compensation for the year 2003 in
the table above. From March 2003 to June 2003, Mr. Moore
provided consulting services to the Company related to the sale
and divestiture of our Digital Media and Video business.
Consulting fees and related expenses paid to Mr. Moore by
the Company for these services totaled $62,928 and this amount
is also included under All Other Compensation for
the year 2003 in the table above. Stephan Rohaly replaced
Mr. Moore as chief financial officer in March 2006
following our announcement that we intend to move our corporate
headquarters to Germany during fiscal 2006. Mr. Moore
continued to provide support services to us through May 2006. |
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(4) |
|
During 2005, 2004 and 2003, Mr. Overkott was paid in local
currency, which is the euro. For each of the years 2005 and
2004, Mr. Overkotts original base salary was
200,000, which in September 2004 he voluntarily reduced
for the period of one year in exchange for additional options to
purchase shares of SCM Microsystems stock under the Executive
Compensation Arrangement of September 2004. Under the
arrangement, options for 50 shares of common stock were
granted for each $100 of salary reduction (to be taken over one
year) by the executive officer. The 2005 and 2004 salary amounts
in the table above reflect such reduction and the options
granted under this arrangement are included in Long-Term
compensation for 2004. In 2005, Mr. Overkott was paid a
base salary of 182,000 and a bonus of 30,204.
Mr. Overkott was paid a salary of 193,500 and a bonus
of 23,350 for 2004. In 2003, he was paid a base salary of
200,000 and a bonus of 29,850. In 2005, 2004 and
2003, Mr. Overkott was also paid a household allowance of
3,600, 3,600 and 4,200, respectively and in
2003 he was paid a car allowance of 5,773. During 2005,
2004 and 2003, payments were made on his behalf for
pension/retirement and unemployment insurance of 8,112,
8,034 and 7,956, respectively. All payments for
household and car allowance, pension/retirement and unemployment
insurance are included under All Other Compensation
in the table above. Also included in Other
Compensation is a severance payment of $220,000 and a
payment for accrued but unused vacation of 17,733.
Mr. Overkott left the Company at the end of 2005. Following
his departure from the Company, the exercise period for
unexercised options granted to Mr. Overkott while an
employee of the Company was extended through December 31,
2006. Due to fluctuations in exchange rates during 2005, 2004
and 2003, Mr. Overkotts salary, bonus and other
compensation amounts in U.S. dollars varied from month to
month during the respective years. The salary, bonus and other
compensation amounts shown above in dollars were derived using
an average exchange rate of $1.25594 per euro in 2005,
$1.23334 per euro in 2004 and $1.11047 per euro in
2003. |
|
(5) |
|
Mr. Zankel joined the Company in January 2005 and left the
Company in December 2005, so only one year of compensation data
is shown. During 2005, Mr. Zankel was paid in local
currency, which is the euro. In 2005, Mr. Zankel was paid a
base salary of 200,000 and a bonus of 26,500.
Mr. Zankel was also paid a car |
12
|
|
|
|
|
allowance of 15,000. During 2005, payments were made on
his behalf for pension/retirement and unemployment insurance of
11,390. All payments for household and car allowance,
pension/retirement and unemployment insurance are included under
All Other Compensation in the table above. Also
included in Other Compensation is a severance
payment of 285,000. Options granted to Mr. Zankel
during 2005 were cancelled following his departure from the
Company. Due to fluctuations in exchange rates during 2005,
Mr. Zankels salary, bonus and other compensation
amounts in U.S. dollars varied from month to month during
the respective years. The salary, bonus and other compensation
amounts shown above in dollars were derived using an average
exchange rate of $1.25594 per euro in 2005. |
Summary
of Stock Option Grants
The following table sets forth for each of the Named Executive
Officers information concerning stock options granted during
2005.
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Total
|
|
|
|
|
|
|
|
|
Potential Realizable Value
|
|
|
|
Securities
|
|
|
Options
|
|
|
Exercise
|
|
|
|
|
|
at Assumed Annual Rates
|
|
|
|
Underlying
|
|
|
Granted to
|
|
|
or Base
|
|
|
|
|
|
of Stock Price Appreciation for
|
|
|
|
Options
|
|
|
Employees
|
|
|
Price per
|
|
|
Expiration
|
|
|
Option Term(1)
|
|
Name
|
|
Granted
|
|
|
in 2005
|
|
|
Share
|
|
|
Date
|
|
|
5%
|
|
|
10%
|
|
|
Robert Schneider(2)
|
|
|
15,000
|
|
|
|
5.0
|
%
|
|
$
|
3.08
|
|
|
|
7/27/2015
|
|
|
$
|
29,055
|
|
|
$
|
73,631
|
|
Steven L. Moore(2)
|
|
|
10,000
|
|
|
|
3.3
|
%
|
|
$
|
3.08
|
|
|
|
7/27/2015
|
|
|
$
|
19,370
|
|
|
$
|
49,087
|
|
Colas Overkott
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingo Zankel(3)
|
|
|
80,000
|
|
|
|
26.5
|
%
|
|
$
|
4.92
|
|
|
|
1/03/2015
|
|
|
$
|
247,533
|
|
|
$
|
627,297
|
|
|
|
|
(1) |
|
The 5% and 10% assumed annual rates of compounded stock price
appreciation are mandated by rules of the Securities and
Exchange Commission and do not represent our estimate or
projection of our future common stock prices. The actual value
realized may be greater or less than the potential realizable
values set forth in the table. |
|
(2) |
|
The option grants presented above vest
1/12th per
month commencing on July 27, 2009, which is the fourth
anniversary of the vesting commencing date. |
|
(3) |
|
The option grants presented above vest as to
1/4th of
the shares one year from the date of grant, and
1/48th of
the shares per month over the next 36 months. |
Aggregate
Option Exercises in Last Fiscal Year and Year-End Option
Values
The following table sets forth, for each of the Named Executive
Officers, information regarding the exercise of stock options in
the last fiscal year and the year-end value of unexercised
options as of December 31, 2005:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities Underlying
|
|
|
Value of Unexercised
|
|
|
|
Shares
|
|
|
|
|
|
Unexercised Options at
|
|
|
In-the-Money Options
|
|
|
|
Acquired on
|
|
|
Value
|
|
|
Year-End:
|
|
|
at Year-End(1):
|
|
Name
|
|
Exercise
|
|
|
Realized
|
|
|
Exercisable(2)
|
|
|
Unexercisable(2)
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Robert Schneider
|
|
|
|
|
|
|
|
|
|
|
333,775
|
|
|
|
45,601
|
|
|
$
|
44,390
|
|
|
$
|
16,416
|
|
Steven L. Moore
|
|
|
|
|
|
|
|
|
|
|
56,875
|
|
|
|
48,125
|
|
|
$
|
6,400
|
|
|
$
|
9,800
|
|
Colas Overkott
|
|
|
|
|
|
|
|
|
|
|
71,651
|
|
|
|
28,959
|
|
|
$
|
16,390
|
|
|
$
|
6,400
|
|
Ingo Zankel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Calculated by taking the difference between the $3.42 fair
market value of a share of SCM common stock as of
December 31, 2005 and the exercise price of each
in-the-money
option and multiplying that difference by the number of shares
underlying such option. |
|
(2) |
|
Options indicated as Exercisable are those options
which were both vested and exercisable as of December 31,
2005. All other options are indicated as
Unexercisable. |
13
Equity
Compensation Plan Information
The following table summarizes information as of
December 31, 2005 about our common stock that may be issued
upon the exercise of options, warrants and rights granted to
employees, consultants or members of our Board of Directors
under all of our existing equity compensation plans, including
our 1997 Stock Plan, Director Plan, 1997 Employee Stock Purchase
Plan (the Employee Stock Purchase Plan) and 2000
Nonstatutory Stock Option Plan (the Nonstatutory
Plan). The 1997 Stock Plan, Director Plan and Employee
Stock Purchase Plan expire in 2007. We expect to propose new
stock plans for adoption at our 2007 Annual Meeting of
Stockholders.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available for
|
|
|
|
Number of Securities to be
|
|
|
|
|
|
Future Issuance Under
|
|
|
|
Issued Upon Exercise
|
|
|
Weighted-average Exercise
|
|
|
Equity Compensation Plans
|
|
|
|
of Outstanding Options,
|
|
|
Price of Outstanding Options,
|
|
|
(Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in Column (a))
|
|
|
Equity compensation plans approved
by stockholders(1)
|
|
|
2,171,553
|
|
|
$
|
20.0814
|
|
|
|
3,525,504
|
|
Equity compensation plans not
approved by security holders(2)
|
|
|
633,827
|
|
|
$
|
3.3864
|
|
|
|
103,506
|
|
Total(3)
|
|
|
2,805,380
|
|
|
$
|
16.3095
|
|
|
|
3,629,010
|
(4)
|
|
|
|
(1) |
|
Equity plans approved by stockholders consist of the 1997 Stock
Plan, the Director Plan and the Employee Stock Purchase Plan. |
|
(2) |
|
Equity plans not approved by stockholders consist of the
Nonstatutory Plan. |
|
(3) |
|
Does not include options to purchase an aggregate of
17,281 shares of common stock, 13,213 of which were awarded
under Dazzle Multimedia plans prior to our acquisition of Dazzle
Multimedia in 2000 and 4,168 of which were awarded under Shuttle
Technologies plans prior to our acquisition of Shuttle
Technologies in 1998. These options have a weighted average
exercise price of $8.074 and were granted under plans assumed in
connection with transactions under which no additional options
may be granted. |
|
(4) |
|
Includes securities available under the following plans that
have formulas for determining the amount of securities available
for issuance each year: 1) the 1997 Stock Plan, under which
the maximum aggregate amount which may be optioned and sold
increases on each anniversary date of the adoption of the Plan
by an amount equal to the lesser of
(i) 500,000 Shares, (ii) 4.9% of the outstanding
shares on such date or (iii) a lesser amount determined by
the Board; 2) the Director Plan, under which the maximum
aggregate amount which may be optioned and sold increases on
July 1 of each year by an amount equal to (i) the
optioned stock underlying options granted in the immediately
preceding year, or (ii) a lesser amount determined by the
Board; and 3) the Employee Stock Purchase Plan, under which
the maximum amount available increases on each anniversary date
of the adoption of the Plan by an amount equal to the lesser or
(i) 150,000 shares, (ii) 1% of the outstanding
shares on such date or (iii) a lesser amount determined by
the Board. |
Material
features of plans not approved by stockholders
Under the Nonstatutory Plan, non-qualified stock options may be
granted to our employees, including officers, and to
non-employee consultants. The plans administrators may set
the terms for each option grant made under the plan, including
the rate of vesting, allowable exercise dates and the option
term of such options granted. In general, the exercise price of
a stock option under the Nonstatutory Plan shall be equal to the
fair market value of our common stock on the date of grant.
However, either our Board or its Compensation Committee may, at
its discretion, reduce the exercise price of any option to the
then current fair market value if the fair market value of the
common stock covered by such option shall have declined since
the date the option was granted. 750,000 shares are
reserved for issuance under the Nonstatutory Plan, and options
for 797,668 shares have been granted under the plan to date.
14
Employment
Contracts
We pay the salary of Mr. Schneider through SCM Microsystems
GmbH, our wholly-owned German subsidiary. SCM Microsystems GmbH
has entered into an employment agreement with Mr. Schneider
pursuant to which he serves as Managing Director of the
subsidiary. The agreement continues for an indefinite term and
each party may terminate the agreement at any time with six to
twelve months notice. On May 22, 2006, our German
subsidiary entered into an amended employment agreement with
Mr. Schneider pursuant to which Mr. Schneider will be
entitled to receive severance, in part, for his signing a
Restrictive Covenant that imposes certain restrictions on
Mr. Schneiders ability to compete with Kudelski S.A.,
the company to which we sold our Digital TV solutions business
in May 2006. Pursuant to his amended employment agreement,
Mr. Schneider also received a one-time signing bonus of
$80,000 in May 2006.
Under Mr. Schneiders amended employment agreement, if
SCM Microsystems GmbH were to terminate
Mr. Schneiders employment without cause
or Mr. Schneider were to resign within 90 days of an
event constituting good reason (each as defined in
the amended employment agreement), Mr. Schneider would be
entitled to receive monthly payments equal to his then current
monthly base salary payment for 24 months following his
departure from SCM Microsystems GmbH. The right to receive the
monthly payments is subject to certain conditions, including
Mr. Schneiders agreement to abide by the Restrictive
Covenant as described above.
Furthermore, Mr. Schneider is subject to a non-compete
provision for a period of one year after the termination of his
employment with SCM Microsystems GmbH. Mr. Schneiders
employment agreement provides that his salary and bonus will be
determined from time to time by the Compensation Committee of
the Board.
In January 2006, we entered into a new employment contract with
Mr. Moore. Under the agreement, if SCM were to terminate
Mr. Moore without cause or if Mr. Moore
were to terminate his employment with us within 90 days of
an event constituting good reason (each as defined
in the employment agreement), then Mr. Moore would be
entitled to a severance package consisting of 1) payment of
his then-current monthly base salary for one year following the
termination of his employment; 2) payment of any bonus
earned during 2005 (if not already paid) under our MBO Plan and
a pro rata portion of any bonus earned under the MBO Plan during
2006; and 3) payment of any special bonus earned with
respect to projects completed within 180 days of the date
of Mr. Moores termination. In addition,
Mr. Moore would be entitled to receive coverage under SCM
group health insurance program for up to one year following the
date of termination. Stephan Rohaly replaced Mr. Moore as
Chief Financial Officer effective March 21, 2006, following
our announcement that we intend to move our corporate
headquarters to Germany during 2006. Following his departure
from the Company in June 2006, Mr. Moore received his full
severance package, as detailed above, which included severance
of $200,000, a pro rated bonus payment for 2006 of $41,667 based
on objectives achieved under the Companys MBO Plan, as
well as a bonus of $75,000 related to the successful sale of our
Digital TV Solutions business in May 2006.
In January 2006, we entered into a separation agreement with
Mr. Overkott. Mr. Overkott left his position as
Executive Vice President, Sales and Marketing with us effective
January 15, 2006. Under the separation agreement,
Mr. Overkott received a severance payment of approximately
$220,000. In addition, Mr. Overkott received an additional
$100,000 bonus payment related to the successful sale of our
Digital TV Solutions business in May 2006. Furthermore, the
period during which he may exercise his SCM stock options was
extended through December 31, 2006, subject to the
provisions of our employee stock option plan. Under the
separation agreement, Mr. Overkott continued to provide
limited support to SCM on various matters through the end of
February 2006.
On March 14, 2006, we entered into an employment agreement
with Stephan Rohaly, who became our Chief Financial Officer on
March 21, 2006. Under the terms of the agreement,
Mr. Rohaly will receive an annual base salary of
200,000, or approximately $238,704 based on the average
exchange rate for March 14, 2006, and will be eligible to
receive an annual bonus up to 60,000, or approximately
$71,611 based on the average exchange rate for March 14,
2006, in accordance with the Companys existing or future
Management by Objective Bonus Plan. Mr. Rohaly will also
have the use of a company car. Either the Company or
Mr. Rohaly may terminate this agreement with three
months notice at any time during the first six months of
his employment with the Company. Thereafter, if the Company
terminates Mr. Rohaly s employment for any reason
other than cause (as defined in the employment
agreement), then Mr. Rohaly will be entitled to a severance
package consisting of six months
15
salary. Mr. Rohalys employment contract provides that
his salary and bonus amounts will be determined from time to
time by the Board.
In January 2006, we entered into a separation agreement with
Mr. Zankel, under which Mr. Zankels employment
with SCM was terminated, effective December 31, 2005. Under
the separation agreement, Mr. Zankel received a lump sum
severance payment of 285,000, or approximately $358,000.
Mr. Zankel has no further claims to past or future
remuneration from us.
On June 8, 2006, SCM Microsystems GmbH entered into an
amended employment agreement with Dr. Manfred Mueller, Vice
President of Marketing. Pursuant to the agreement,
Dr. Mueller will receive an annual base salary of
145,000, or approximately $185,774 based on the average
daily exchange rate for June 8, 2006, and has the use of a
company car. Dr. Mueller is also eligible to receive an
aggregate annual bonus of up to 16.67% of his annual base
salary. The bonus will be paid in quarterly installments and the
actual amount will be determined based on the achievement of
targets relating to personal performance and our results of
operations.
Either Dr. Mueller or SCM may terminate the agreement and
Mr. Muellers employment with us upon at least six
months prior written notice. Should Dr. Mueller be
terminated without cause (as defined in the
employment agreement), he is entitled to receive a severance
payment at the time of termination equal to 12 months of
his then current base salary and bonus. Dr. Muellers
employment contract provides that his salary and bonus amounts
will be determined from time to time by the Chief Executive
Officer.
Compensation
Committee Interlocks and Insider Participation
In 2005, the Compensation Committee consisted of
Messrs. Humphreys, Turner, Vought and Dr. Cubero. No
member of the Compensation Committee is, or was during 2005, an
officer or employee of SCM or any of its subsidiaries. To our
knowledge, no interlocking relationship exists, or existed
during 2005, between any member of the Compensation Committee
and the board of directors or compensation committee of any
other publicly traded company.
Certain
Relationships and Related Transactions
None.
REPORT OF
THE COMPENSATION COMMITTEE OF THE BOARD OF
DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and makes recommendations to
the Board of Directors regarding our compensation policies and
the compensation to be provided to our executive officers and
directors. The following is the report of the Compensation
Committee that describes the compensation policies applicable to
the compensation of our executive officers and directors for
their services to us during 2005.
Compensation Philosophy. Our philosophy in
setting our compensation policies for executive officers is to
maximize stockholder value over time. The primary goal of our
executive compensation program is therefore to closely align the
interests of the executive officers with those of our
stockholders. To achieve this goal, we attempt to:
|
|
|
|
|
offer compensation opportunities that attract and retain
executives whose abilities are critical to our long-term
success, motivate individuals to perform at their highest level
and reward outstanding achievement;
|
|
|
|
maintain a portion of the executive total compensation at risk,
with payment of that portion tied to achievement of financial,
organizational and management performance goals; and
|
|
|
|
encourage executives to manage from the perspective of owners
with an equity stake in SCM.
|
The Compensation Committee currently uses salary, incentive
bonuses and stock options to meet these goals.
Base Salary. The base salary component of
total compensation is primarily designed to attract, motivate,
reward and retain highly skilled executives and to compensate
executives competitively within the industry and the
16
marketplace. The Compensation Committee reviewed fiscal 2005
base salaries for the Chief Executive Officer and Chief
Financial Officer at the beginning of fiscal 2005. In
establishing base salaries for these executive officers, the
Compensation Committee evaluated benchmark data for salaries of
executive officers in similar positions as well as each
officers salary history, scope of responsibility, prior
experience, past performance for us and recommendations from
management. Based on this evaluation, the Compensation Committee
determined that salary levels for the Chief Executive Officer
and Chief Financial Officer should be set around the median
level for companies of similar size, and left unchanged the
annual salary for Mr. Schneider at 350,000, or
approximately $439,578 based on average exchange rates during
2005, and the annual salary for Mr. Moore at $200,000.
Incentive Bonuses. Each executive
officers annual bonus is based on qualitative and
quantitative factors and is intended to motivate and reward
executive officers by directly linking the amount of the bonus
to performance targets. In addition, incentive bonuses for
executive officers are intended to reflect the Compensation
Committees belief that the compensation of each executive
officer should be contingent upon our overall performance. To
carry out this philosophy, our Board of Directors reviews and
approves the financial goals for the fiscal year. The
Compensation Committee evaluates our overall performance and
approves performance bonuses based on the extent to which the
goals of the Board of Directors have been achieved. In early
2005, the Compensation Committee determined that the opportunity
for bonuses for the Chief Executive Officer and Chief Financial
Officer should be closely linked to the Companys financial
performance and therefore established an annual bonus with the
opportunity to earn bonus ranging from 50% to 100% of salary for
stretch targets. Consequently, in 2005, Mr. Schneider was
eligible for a bonus of 50% of salary, with the criteria that
the Company make an operating profit for fiscal 2005 as a whole.
As an operating profit was not recorded for fiscal 2005,
Mr. Schneider did not receive a bonus payment for 2005. In
2005, Mr. Moore was eligible to receive a bonus of 50% of
his base salary, evenly split between three criteria: 1) no
material weakness in internal controls for financial reporting;
2) achieve certain financial staff recruiting objectives by
the end of the fourth quarter; and 3) reduce year over year
fourth quarter general and administrative expenses by $450,000.
Based on these criteria, Mr. Moore earned a bonus of
$33,333 for 2005 which was paid out in 2006.
Equity Incentives. The Compensation Committee
views stock option grants as an important component of its
long-term, performance-based compensation philosophy. The
Company provides long-term incentives to our Chief Executive
Officer and our other executive officers through its 1997 Stock
Plan. The purpose of the 1997 Stock Plan is to attract and
retain the best employee talent available and to create a direct
link between compensation and our long-term performance. The
Compensation Committee believes that stock options directly
motivate our executive officers to maximize long-term
stockholder value. The options also utilize vesting periods that
encourage key executives to continue in our employ. All options
granted to executive officers to date have been granted at the
fair market value of our common stock on the date of grant. The
Board of Directors considers the grant of each option
subjectively, considering factors such as the individual
performance of the executive officer and the anticipated
contribution of the executive officer to the attainment of our
long-term strategic performance goals. During 2005, we granted
new stock options to Messrs. Schneider, Moore and Zankel.
Executive Compensation Arrangement. To support
the Companys efforts to lower operating expenses, in
September 2004, certain of our employees, including executive
officers, were given the opportunity to receive options for
50 shares of our common stock for every $100 in voluntary
salary reductions they elected to take for one year beginning in
October 2004. Under this arrangement, salary reductions were in
effect through September 2005 and the resulting stock options
vested 100% one year from the date of grant, which was
September 16, 2004. Messrs. Schneider, Moore and
Overkott all participated in this compensation arrangement.
CEO Compensation. The compensation of
Mr. Schneider, our Chief Executive Officer, consists of
base salary, an annual bonus and stock options. The Board of
Directors periodically reviews the Chief Executive
Officers base salary and bonus and revises his
compensation based on the Boards overall evaluation of his
performance toward the achievement of our financial, strategic
and other goals, with consideration given to his length of
service and to comparative chief executive officer compensation
information. The Compensation Committee believes that our
success is dependent in part upon the efforts of our Chief
Executive Officer. In 2005, the Compensation Committee made no
change to Mr. Schneiders base salary of
350,000, or approximately $439,578 based on average
exchange rates during 2005, and established an annual bonus
heavily tied to financial performance. In September 2004,
Mr. Schneider voluntarily reduced his base salary for the
period of one year in
17
exchange for additional options under the Executive Compensation
Arrangement of September 2004, as described above.
No incentive bonus was earned by or paid to Mr. Schneider
during 2005. During fiscal 2004, SCM granted new stock options
to Mr. Schneider. Mr. Schneiders salary in 2005,
after voluntary reductions, was 280,000, which was the
equivalent of approximately $351,663 based on average exchange
rates during 2005.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Steven Humphreys, Chairman
Manuel Cubero
Simon Turner
18
Performance
Graph
The following performance graph compares the cumulative total
return to holders of our common stock since December 29,
2000, to the cumulative total return over such period of the
NASDAQ National Market index and the RDG Technology Index.
The performance graph assumes that $100 was invested on
December 29, 2000 in our common stock and in each of the
comparative indices. The performance graph further assumes that
such amount was initially invested in our common stock at a
price of $33.00 per share, the closing price on
December 29, 2000.
Our historic stock price performance is not necessarily
indicative of future stock price performance. The information
contained in the performance graph shall not be deemed to be
soliciting material or to be filed with
the Commission, nor shall such information be incorporated by
reference into any existing or future filing by the Company
under the Securities Act of 1933 or the Exchange Act except to
the extent that we specifically incorporate such information by
reference into any such filing.
COMPARISON
OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG SCM MICROSYSTEMS, INC., THE NASDAQ STOCK MARKET (U.S.)
INDEX
AND THE RDG TECHNOLOGY COMPOSITE INDEX
|
|
|
* |
|
$100 invested on 12/31/00 in stock or index-including
reinvestment of dividends. Fiscal year ending December 31. |
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Measurement Period (Fiscal Year Covered)
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Dec-00
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Dec-01
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Dec-02
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Dec-03
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Dec-04
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Dec-05
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SCM Microsystems
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100
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44
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13
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23
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15
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10
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Nasdaq National Market
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100
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|
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80
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|
|
|
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56
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|
|
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84
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|
|
|
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91
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|
|
|
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93
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RDG Technology
|
|
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100
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73
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45
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67
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69
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71
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19
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee assists the Board of Directors in fulfilling
its responsibility for oversight of the quality and integrity of
our financial reporting processes, system of internal control,
process for monitoring compliance with laws and regulations,
audit process and standards of business conduct. The Audit
Committee manages the Companys relationship with our
independent auditors, who report directly to the Audit
Committee. The Audit Committee also oversees the Internal Audit
and Sarbanes-Oxley Compliance functions of the Company, which
report directly to the Audit Committee. The Audit Committee has
the authority to obtain advice and assistance from outside
legal, accounting or other advisors as the Audit Committee deems
necessary to carry out its duties and to allocate appropriate
funding, as determined by the Audit Committee, from the Company
for such advice and assistance.
The Audit Committee has reviewed and discussed with the
Companys management the audited financial statements of
the Company for the fiscal year ended December 31, 2005.
The Audit Committee also has discussed with Deloitte &
Touche LLP, the Companys independent accountants, the
matters required to be discussed by Statement on Auditing
Standards No. 61.
Furthermore, the Audit Committee has received the written
disclosures and the letter from Deloitte & Touche LLP
required by Independence Standards Board Standard No. 1 and
the Audit Committee has discussed the independence of
Deloitte & Touche LLP with that firm.
In performing all these functions, the Audit Committee acts only
in an oversight capacity and necessarily relies on the work and
assurances of the Companys management and independent
accountants, which, in their report, express an opinion on the
conformity of the Companys annual consolidated financial
statements to accounting principles generally accepted in the
United States. In reliance on the reviews and discussions
referred to in this report, and in light of its role and
responsibilities, the Audit Committee recommended to the Board
of Directors that the audited financial statements for the
Company for the three years ended December 31, 2005 be
included for filing with the Securities and Exchange Commission
in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2005, and the Board of
Directors has approved such inclusion.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Simon Turner, Chairman
Hagen Hultzsch
Steven Humphreys
Ng Poh Chuan
PRINCIPAL
ACCOUNTING FEES AND SERVICES
Fees
Billed to SCM by Deloitte & Touche LLP during Fiscal
2005 and 2004
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2005
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2004
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Audit Fees
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$
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1,027,765
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(1)
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$
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1,295,727
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Audit-related Fees
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30,400
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Tax Planning, Compliance and
Preparation Fees
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33,075
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25,100
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Tax Advisory and Consulting Fees
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34,800
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All Other Fees
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15,200
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Total
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$
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1,060,840
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$
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1,401,227
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(1) |
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Amount reflects fees billed to date and unbilled estimated fees
for services rendered in connection with our audit of the
financial statements for fiscal 2005. Additional fees may be
billed for these services. |
20
Audit Fees. Audit fees include fees associated
with the audit and review of our annual financial statements
included in our Annual Report on
Form 10-K,
reviews of those financial statements included in our quarterly
reports on
Form 10-Q
and statutory audits.
Audit-related Fees. Audit-related fees
principally include fees for the audits of subsidiaries, due
diligence procedures, registration statements and consultations
on accounting and auditing matters.
Tax Planning, Compliance and Preparation
Fees. Tax Planning, Compliance and Preparation
Fees principally include assistance with preparation of federal,
state and foreign tax returns, tax compliance and tax planning.
Tax Advisory and Consulting Fees. Tax Advisory
and Consulting Fees principally include fees for tax consulting
for the Companys various entities.
All Other Fees. All Other Fees include
Sarbanes-Oxley consultation and training.
Our Audit Committee has determined that the provision of audit
and non-audit services by Deloitte & Touche LLP is
compatible with maintaining the independence of
Deloitte & Touche as our independent auditors. Our
Audit Committee is required to approve the engagement of and
engages Deloitte & Touche LLP to perform audit and
other services for the Company and its subsidiaries. All
services provided by Deloitte & Touche are subject to
pre-approval by our Audit Committee.
PROPOSAL TWO:
RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS
Our Audit Committee has appointed Deloitte & Touche LLP
as our independent registered public accountants, to audit our
financial statements for the current year ending
December 31, 2006. Deloitte & Touche LLP has
audited our consolidated financial statements since 1999. At the
Annual Meeting, our stockholders are being asked to ratify the
appointment of Deloitte & Touche LLP as our independent
registered public accountants to audit our financial statements
for the current fiscal year ending December 31, 2006. We
expect that a representative of Deloitte & Touche LLP
will be available at the Annual Meeting, will have the
opportunity to make a statement if he or she desires to do so,
and will be available to respond to any appropriate questions.
Stockholder ratification of the selection of Deloitte &
Touche LLP as our independent registered public accountants is
not required by our Bylaws or other applicable legal
requirement. However, the Board is submitting the selection of
Deloitte & Touche LLP to the stockholders for
ratification as a matter of good corporate practice. In the
event that our stockholders fail to ratify the appointment of
Deloitte & Touche LLP as independent registered public
accountants to audit our financial statements for the current
year ending December 31, 2006, our Audit Committee may
reconsider its selection. Even if the selection is ratified, the
Audit Committee at its discretion may direct the appointment of
a different independent accounting firm at any time during the
year if it determines that such a change would be in the best
interests of the Company and our stockholders.
Vote
Required and Recommendation of the Board of Directors
The affirmative vote of the holders of a majority of the
Votes Cast (as defined under Voting Procedures
on page 1 of this Proxy Statement) will be required to
approve the proposed ratification of Deloitte & Touche
LLP, independent registered public accountants, to audit our
financial statements for the current year ending
December 31, 2006.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE COMPANYS
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2006
21
OTHER
MATTERS
We do not intend to bring any matters before the Annual Meeting
other than those set forth herein, and our management has no
present knowledge that any other matters will or may be brought
before the Annual Meeting by others. However, if any other
matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote the
shares they represent as our Board of Directors may recommend.
BY ORDER OF THE BOARD OF DIRECTORS
SCM MICROSYSTEMS, INC.
Stephan Rohaly
Secretary
Fremont, California
August 10, 2006
22
SCM MICROSYSTEMS, INC.
PROXY FOR
2006 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SCM MICROSYSTEMS, INC., a Delaware corporation, hereby
acknowledges receipt of the Notice of 2006 Annual Meeting of Stockholders and Proxy Statement, each
dated August 10, 2006, and hereby appoints each of Steven Humphreys and Stephan Rohaly as proxies
and attorneys-in-fact, with full power of substitution, on behalf and in the name of the
undersigned, to represent the undersigned at the 2006 Annual Meeting of Stockholders to be held at
our corporate headquarters, 41740 Christy Street, Fremont, California 94568, on October 6, 2006 at
10:00 a.m. local time, and any adjournment(s) and postponement(s) thereof, and to vote all shares
of common stock that the undersigned would be entitled to vote thereat if then and there personally
present, on the matters in the manner set forth below:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
[SEE REVERSE SIDE]
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PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE |
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FOR all
nominees listed below
(except as indicated)
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WITHHOLD
authority to vote
for the nominees
listed below |
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1.
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Proposal by management
to elect the following two
nominees as members of our Board of Directors
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o
o
NOMINEES: Werner Koepf and Simon Turner
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2. |
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Proposal by management to ratify the appointment of Deloitte
& Touche LLP as our independent registered public
accountants for our fiscal year ending December 31, 2006.
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FOR
o
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AGAINST
o
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ABSTAIN
o |
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INSTRUCTIONS: IF YOU WISH TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH SUCH NOMINEES NAME ON THE LIST ABOVE. |
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VOTE YOUR PROXY OVER
THE INTERNET OR BY TELEPHONE!
Its fast, convenient, and your vote is immediately confirmed and tabulated. Most important, by
choosing either option, you help us reduce postage and proxy tabulation costs.
OPTION 1: VOTE OVER THE INTERNET
1. |
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Read the accompanying Proxy Statement. |
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2. |
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Have your 12-digit control number located on your voting ballot available. |
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3. |
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Point your browser to http://www.proxyvote.com. |
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4. |
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Follow the instructions to cast your vote. |
OPTION 2: VOTE BY TELEPHONE
1. |
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Read the accompanying Proxy Statement. |
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2. |
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Have your 12-digit control number located on your voting ballot available. |
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3. |
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Using a touch-tone phone, call the toll-free number shown on the voting ballot. |
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4. |
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Follow the recorded instructions. |
YOUR VOTE IS IMPORTANT
Using the Internet or telephone, you can vote anytime, 24 hours a day. Or if you prefer, you can
return the enclosed paper ballot in the envelope provided.
Please do not return the enclosed paper ballot if you are voting using the Internet or telephone.
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In their discretion, the proxies are authorized to vote upon such other
matter(s) which may properly come before the annual meeting,
or at any adjournment(s) or postponement(s) thereof. |
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THIS PROXY WILL BE VOTED AS DIRECTED AND, IF NO
DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR THE
TWO LISTED NOMINEES FOR ELECTION AS DIRECTORS AND TO
RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS
INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR OUR FISCAL
YEAR ENDING DECEMBER 31, 2006. |
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Both of the foregoing attorneys-in-fact or their
substitutes or, if only one shall be present and acting
at the annual meeting or any adjournment(s) or
postponement(s) thereof, the attorney-in-fact so
present, shall have and may exercise all of the powers
of said attorney-in-fact hereunder. |
SIGNATURE(S)
DATE
NOTE: THIS PROXY SHOULD BE MARKED, DATED AND SIGNED BY THE STOCKHOLDER EXACTLY AS HIS, HER OR ITS
NAME APPEARS HEREON. PERSONS SIGNING IN A FIDUCIARY CAPACITY SHOULD SO INDICATE AND IF SHARES ARE
HELD BY JOINT TENANTS OR AS COMMUNITY PROPERTY, BOTH SHOULD SIGN.