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Micrel Inc · DEF 14A · For 5/27/04

Filed On 4/27/04 9:18am ET · SEC File 0-25236 · Accession Number 1188112-4-626

  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 4/27/04  Micrel Inc                        DEF 14A     5/27/04    1:34                                     Tri State Fina..Press/FA

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Solicitation Material                34    183K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Audit Committee Report Proposal 1 Proposal 1 Election of Directors Proposal 2 Raymond D. Zinn Shareholder Proposals
1	1st Page
2	Raymond D. Zinn
4	Proposal 1
"	Proposal 1 Election of Directors
5	Proposal 2
15	Audit Committee Report
23	Shareholder Proposals

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Sponsored Ads...

SCHEDULE 14A
(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant |X|
Filed by a party other than the Registrant |_|

Check the appropriate box:
|_| Preliminary proxy statement
|_| Confidential, For Use of the Commission Only (as
|X| Definitive proxy statement permitted by Rule 14a-6(e)(2))
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12

Micrel, Incorporated
(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):

|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

--------------------------------------------------------------------------------

(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):

--------------------------------------------------------------------------------

(4) Proposed maximum aggregate value of transaction.

--------------------------------------------------------------------------------

(5) Total fee paid:

--------------------------------------------------------------------------------

|_| Fee paid previously with preliminary materials:

--------------------------------------------------------------------------------

|_| Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.

(1) Amount previously paid:

--------------------------------------------------------------------------------

(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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DEF 14A 2nd Page of 34 TOC 1st Previous Next Bottom Just 2nd

MICREL, INCORPORATED
2180 FORTUNE DRIVE
SAN JOSE, CALIFORNIA 95131

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 27, 2004

To the Shareholders of Micrel, Incorporated:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Annual Meeting") of Micrel, Incorporated, a California corporation (the
"Company"), will be held at the Company's offices located at 2180 Fortune Drive,
San Jose, California 95131 on May 27, 2004 at 12:00 p.m., Pacific Daylight Time,
for the following purposes:

1. To elect five directors of the Company to serve until the 2005
annual meeting and until their successors are duly elected and
qualified ("Proposal 1");

2. To ratify the selection of PricewaterhouseCoopers LLP as the
independent auditor of the Company for its fiscal year ending
December 31, 2004 ("Proposal 2"); and

3. To transact such other business as may properly come before the
Annual Meeting and any adjournment or postponement thereof.

The foregoing items of business are more fully described in the Proxy
Statement, which is attached hereto and made a part hereof. The Annual Meeting
will be open to shareholders of record, proxy holders, and others by invitation
only. Beneficial owners of shares held by a broker or nominee must present proof
of such ownership to attend the Annual Meeting.

The Board of Directors has fixed the close of business on April 1, 2004
as the record date for determining the shareholders entitled to notice of and to
vote at the 2004 Annual Meeting and any adjournment or postponement thereof.

WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON, YOU ARE
URGED TO MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE IN THE POSTAGE-PREPAID ENVELOPE PROVIDED TO ENSURE YOUR REPRESENTATION
AND THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING. IF YOU SEND IN YOUR PROXY
CARD AND THEN DECIDE TO ATTEND THE ANNUAL MEETING TO VOTE YOUR SHARES IN PERSON,
YOU MAY STILL DO SO. YOUR PROXY IS REVOCABLE IN ACCORDANCE WITH THE PROCEDURES
SET FORTH IN THE PROXY STATEMENT.

By Order of the Board of Directors,

/s/ Raymond D. Zinn

Raymond D. Zinn
President, Chief Executive Officer
and Chairman of the Board of Directors

San Jose, California
April 27, 2004

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MICREL, INCORPORATED
2180 FORTUNE DRIVE
SAN JOSE, CALIFORNIA 95131

---------------

PROXY STATEMENT

---------------

ANNUAL MEETING OF SHAREHOLDERS
MAY 27, 2004

GENERAL INFORMATION

This Proxy Statement is being furnished to the shareholders of Micrel,
Incorporated, a California corporation (the "Company") in connection with the
solicitation by the Company of proxies in the accompanying form for use in
voting at the Annual Meeting of Shareholders (the "Annual Meeting") to be held
at 12:00 p.m., Pacific Daylight Time, at the Company's principal executive
offices located at 2180 Fortune Drive, San Jose, California 95131, on May 27,
2004, and at any adjournment or postponement thereof. Only holders of the
Company's common stock of record on April 1, 2004 (the "Record Date") will be
entitled to vote. Holders of common stock are entitled to one vote for each
share of common stock held as of the Record Date. There is no cumulative voting.
Shares represented by proxies received, properly marked, dated, executed and not
revoked will be voted at the Annual Meeting. At the close of business on the
Record Date, there were 93,204,958 shares of the Company's common stock
outstanding.

SOLICITATION AND VOTING; REVOCABILITY OF PROXIES

This Proxy Statement and the accompanying proxy were first sent by mail
to shareholders on or about April 27, 2004. The costs of this solicitation are
being borne by the Company. The Company may reimburse brokerage firms and other
persons representing beneficial owners of shares for their expenses in
forwarding solicitation material to such beneficial owners. Proxies may also be
solicited personally or by telephone, facsimile or telegram by certain of the
Company's directors, officers and regular employees, without additional
compensation.

Votes cast by proxy or in person at the Annual Meeting will be tabulated
by the Inspector of Elections. The Inspector of Elections will also determine
whether or not a quorum is present. The required quorum for the transaction of
business at the Annual Meeting is a majority of the shares entitled to vote at
the Annual Meeting, represented either in person or by proxy. The Inspector of
Elections will treat abstentions as shares that are present and entitled to vote
for purposes of determining the presence of a quorum but not as affirmative
votes for purposes of determining the approval of a proposal submitted to the
shareholders. If a broker indicates on the proxy or its substitute that it does
not have discretionary authority as to certain shares to vote on a particular
matter ("broker non-votes"), those shares will be considered present and
entitled to vote for purposes of determining a quorum but not as affirmative
votes for purposes of determining the approval of a proposal. While there is no
definitive specific statutory or case law authority in California concerning the
proper treatment of abstentions and broker non-votes, the Company believes that
the tabulation procedures to be followed by the Inspector of Elections are
consistent with the general statutory requirements in California concerning
voting of shares and determination of a quorum. At the Annual Meeting, the five
nominees receiving the highest number of affirmative votes, represented either
in person or by proxy, will be elected to the Board of Directors (the "Board" or
"Board of Directors"). Any proxy which is returned using the form of proxy
enclosed and which is not marked as to a particular item will be voted as
follows:

o FOR the election of all the director nominees identified in
Proposal 1;
o FOR the ratification of PricewaterhouseCoopers LLP as the
independent auditor of the Company as set forth in Proposal 2; and
o as the proxy holders deem advisable on other matters that may come
before the Annual Meeting.

Any person giving a proxy in the form accompanying this Proxy Statement
has the power to revoke it prior to its exercise. A proxy may be revoked by
filing a written notice of revocation or by submitting a duly executed proxy
bearing a later date, with the Secretary of the Company prior to the Annual
Meeting. A person may also

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revoke a proxy by attending the Annual Meeting and voting in person. Attendance
at the meeting, by itself, will not revoke a proxy.

PROPOSAL 1

ELECTION OF DIRECTORS

As set by the Board of Directors in accordance with the Bylaws of the
Company, the authorized number of directors is five. Directors will hold office
from the time of their election until the 2005 annual meeting and until their
successors are duly elected and qualified. The five nominees receiving the
highest number of affirmative votes will be elected as directors. Only votes
cast for a nominee will be counted in determining whether that nominee has been
elected as director. Shareholders may withhold authority to vote for the entire
slate as nominated or, by writing the name of an individual nominee in the space
provided on the proxy card, withhold the authority to vote for any individual
nominee. Votes withheld from any director are counted for purposes of
determining the presence or absence of a quorum, but have no other legal effect
under California law.

If any nominees identified in this proposal should decline or be unable
to act as a director, the shares may be voted for such substitute nominees as
the persons appointed by proxy may in their discretion determine. The proxies
cannot be voted for a greater number of persons than the number of nominees
named in this proposal.

The following table sets forth information with respect to the five
persons nominated by the Board of Directors for election to the Board at the
Annual Meeting.

· Enlarge/Download Table

NOMINEES FOR DIRECTOR AGE POSITION DIRECTOR SINCE
--------------------- --- -------- --------------

Raymond D. Zinn............ 66 President, Chief Executive Officer and Chairman of the Board 1978
Warren H. Muller........... 65 Director 1978
Larry L. Hansen............ 75 Director 1994
George Kelly............... 69 Director 1994
Donald H. Livingstone...... 61 Director 2002

The principal occupations and positions for at least the past five years
of the director nominees named above are as follows:

RAYMOND D. ZINN is a co-founder of the Company and has been its
President, Chief Executive Officer and Chairman of its Board of Directors since
the Company's inception in 1978. Prior to co-founding the Company, Mr. Zinn held
various management and manufacturing executive positions in the semiconductor
industry at Electromask TRE, Electronic Arrays, Inc., Teledyne, Inc., Fairchild
Semiconductor Corporation and Nortek, Inc. He holds a B.S. in Industrial
Management from Brigham Young University and a M.S. in Business Administration
from San Jose State University.

WARREN H. MULLER is a co-founder of the Company and has served as a
member of the Company's Board of Directors since the Company's inception in
1978. Mr. Muller currently works as a part-time consultant for the Company. Mr.
Muller was Vice President of Test Operations from 1978 until 1999. From 1999
until October 2001, Mr. Muller served as of Chief Technology Officer. He was
previously employed in various positions in semiconductor processing and testing
at Electronic Arrays, Inc. and General Instruments Corporation. Mr. Muller holds
a B.S.E.E. from Clarkson College.

LARRY L. HANSEN joined the Company's Board of Directors in June 1994.
From October 1988 to January 1991, Mr. Hansen served as Executive Vice President
of Tylan General, Inc. From February 1964 to September 1988, Mr. Hansen was
employed by Varian Associates, where he last served as Executive Vice President.
From 1975 to 1979, Mr. Hansen served as Chairman of the U.S. Department of
Commerce Technical Advisory Committee on Semiconductor Manufacturing Equipment.
Mr. Hansen serves on the Board of Directors of

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Electro Scientific Industries, Inc. Mr. Hansen serves as a member of the Audit
Committee, Compensation Committee and Nominating and Corporate Governance
Committee of the board of directors.

GEORGE KELLY joined the Company's Board of Directors in June 1994. He is
a retired partner of Deloitte & Touche LLP, where he was employed for thirty
years until his retirement in June 1989. He also serves on the Board of
Directors of Ion Systems, Inc., a private company. Mr. Kelly serves as a member
of the Audit Committee, Compensation Committee and Nominating and Corporate
Governance Committee of the Board of Directors.

DONALD H. LIVINGSTONE joined the Company's Board of Directors in June
2002. Mr. Livingstone is a director for the Center of Entrepreneurship and a
Professor of Accountancy at the Marriott School of Management at Brigham Young
University, where he has taught since 1994. Mr. Livingstone serves on the Board
of Directors of Humboldt Bancorp and is a Trustee of the Eureka Family of Mutual
Funds. Mr. Livingstone serves as a member of the Audit Committee, Compensation
Committee and Nominating and Corporate Governance Committee of the Board of
Directors.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
ELECTION OF EACH NOMINEE NAMED IN PROPOSAL 1.

PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board has selected PricewaterhouseCoopers LLP as the Company's
independent auditor for the fiscal year ending December 31, 2004 and has further
directed that management submit the selection of the independent auditor for
ratification by the shareholders at the Annual Meeting. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting,
will have an opportunity to make a statement if they so desire and will be
available to respond to appropriate questions.

Shareholder ratification of the selection of PricewaterhouseCoopers LLP
as the Company's independent auditor is not required by the Company's Bylaws or
otherwise; however, the Board is submitting the selection of
PricewaterhouseCoopers LLP to the shareholders for ratification as a matter of
good corporate practice. If the shareholders fail to ratify the selection, the
Audit Committee and the Board will reconsider whether or not to retain that
firm. Even if the selection is ratified, the Audit Committee and the Board in
their discretion may direct the appointment of a different independent auditor
at any time during the year if they determine that such a change would be in the
best interests of the Company and its shareholders.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE
RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
AUDITOR AS SET FORTH IN PROPOSAL 2.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information known to the Company
with respect to beneficial ownership of the Company's common stock as of April
1, 2004, by (i) each shareholder known to the Company to own beneficially more
than 5% of the Company's Common Stock, (ii) each of the Company's directors,
(iii) the Chief Executive Officer and each of the four other most highly
compensated officers (collectively, the "Named Executive Officers") and (iv) all
executive officers and directors of the Company as a group.

· Enlarge/Download Table

NUMBER OF SHARES
----------------
NAME BENEFICIALLY OWNED(1)
---- ---------------------
NUMBER PERCENT
------ -------

Warren H. Muller (2).................................................... 12,067,800 12.9%
Raymond D. Zinn (3)..................................................... 11,578,464 12.4%
Franklin Resources, Inc (4)
901 Mariners Island Boulevard, 6th Floor
San Mateo, CA 94404......,,.......................................... 9,859,423 10.6%
Capital Research Management Company (5)
333 South Hope Street
Los Angeles, CA 90071................................................ 5,117,110 5.5%
SmallCap World Fund, Inc (6)
333 South Hope Street
Los Angeles, CA 90071................................................ 4,767,112 5.1%
Robert Whelton (7)...................................................... 402,207 *
Larry L. Hansen (8)..................................................... 117,500 *
George Kelly (9)........................................................ 91,500 *
Jung-Chen Lin (10)...................................................... 78,294 *
James G. Gandenberger (11).............................................. 69,126 *
Mark Lunsford (12)...................................................... 60,492 *
Donald H. Livingstone (13).............................................. 2,700 *
All executive officers and directors as a group (14).................... 24,468,083 25.9%

--------------------
*Less than 1%

(1) 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 April 1,
2004 are deemed outstanding. Such shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership of
each other person. Except as indicated in the footnotes to this table and
pursuant to applicable community property laws, the persons named in the
table have sole voting and investment power with respect to the shares
set forth opposite such person's name.
(2) Includes 180,000 shares subject to stock options exercisable within 60
days of April 1, 2004.
(3) Includes 500,619 shares subject to stock options exercisable within 60
days of April 1, 2004.
(4) Based on a Schedule 13G filed February 13, 2004.
(5) Based on a Schedule 13G filed jointly with SmallCap World Fund, Inc. on
February 13, 2004.
(6) Based on a Schedule 13G filed jointly with Capital Research Management
Company on February 13, 2004.
(7) Includes 399,449 shares subject to stock options exercisable within 60
days of April 1, 2004.
(8) Includes 37,500 shares subject to stock options exercisable within 60
days of April 1, 2004.
(9) Includes 54,000 shares held of record by the Kelly Family Trust of which
Mr. Kelly is a trustee. Includes 37,500 shares subject to stock options
exercisable within 60 days of April 1, 2004.
(10) Includes 73,910 shares subject to stock options exercisable within 60
days of April 1, 2004.
(11) Includes 64,397 shares subject to stock options exercisable within 60
days of April 1, 2004.
(12) Includes 60,492 shares subject to stock options exercisable within 60
days of April 1, 2004.
(13) Includes 2,500 shares subject to stock options exercisable within 60 days
of April 1, 2004.
(14) Includes 1,356,367 shares subject to stock options exercisable within 60
days of April 1, 2004.

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CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS

Information regarding each of our executive officers as of April 1, 2004
is set forth below.

· Enlarge/Download Table

NAME AGE POSITION
---- --- --------

Raymond D. Zinn..................... 66 President, Chief Executive Officer and Chairman of the Board

Robert Whelton...................... 64 Executive Vice President of Operations

Robert J. Barker.................... 57 Vice President, Corporate Business Development

Richard D. Crowley, Jr.............. 47 Vice President, Finance and Chief Financial Officer

James G. Gandenberger............... 43 Vice President, Wafer Fab Operations

Jung-Chen Lin....................... 50 Vice President, Ethernet Products

Mark Lunsford....................... 46 Vice President, World-Wide Sales

Carlos Mejia........................ 53 Vice President, Human Resources

Jack B. Small....................... 52 Vice President, Analog Design, R&D

J. Vincent Tortolano................ 54 Vice President, General Counsel and Secretary

Scott Ward.......................... 49 Vice President, Test Division

Thomas Wong......................... 48 Vice President, High Bandwidth Products

Richard Zelenka..................... 48 Vice President, Quality Assurance

The principal occupations and positions for at least the past five years
of the executive officers named above, other than Mr. Zinn whose information is
included above under the caption "Proposal 1 Election of Directors," are as
follows:

Mr. Whelton joined the Company as Executive Vice President of Operations
in January 1998. From 1996 to 1997, Mr. Whelton was employed by Micro Linear
Corp., where he held the position of Executive Vice President in charge of
operations, design, sales and marketing. Prior to Micro Linear, Mr. Whelton was
employed by National Semiconductor Corp., from 1985 to 1996 where he held the
position of Vice President of the Analog Division. Mr. Whelton holds a B.S.E.E.
from U.C. Berkeley, and a M.S.E.E. from the University of Santa Clara.

Mr. Barker has served as Vice President, Corporate Business Development
since October 1999. Mr. Barker also served as the Company's Secretary from May
2000 until May 2001. From April 1994 to September 1999 he held the position of
Vice President, Finance and Chief Financial Officer. From April 1984 until he
joined Micrel, Mr. Barker was employed by Waferscale Integration, Inc., where
his last position was Vice President of Finance and Secretary. Prior to 1984,
Mr. Barker held various accounting and financial positions at Monolithic
Memories and Lockheed Missiles and Space Co. He holds a B.S. in Electrical
Engineering and a M.B.A. from University of California at Los Angeles.

Mr. Crowley joined the Company as Vice President, Finance and Chief
Financial Officer in September 1999. From December 1998 until he joined Micrel,
Mr. Crowley was employed by Vantis Corporation as its Vice President, Chief
Financial Officer. From 1980 to 1998 Mr. Crowley was employed by National
Semiconductor Corporation, where his last position was Vice President, Corporate
Controller. He holds a B.B.A. in Finance from the University of Notre Dame and a
Masters in Management in Accounting and Finance from Northwestern University.

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Mr. Gandenberger has served as Vice President of Wafer Fab Operations
since July 2002. From October 2000 to June 2002 he held the position of Managing
Director of Wafer Fab Operations. Prior to joining the Company, Mr. Gandenberger
was employed by National Semiconductor Corporation from 1997 to 2000 as the
Managing Director of Santa Clara Wafer Fabs. From 1994 to 1997, Mr. Gandenberger
was employed by Asyst Technologies where he held the position of Vice President,
Sales and Marketing. From 1984 to 1994, Mr. Gandenberger served in a variety of
positions at LSI Logic, where his last position was Director of Operations of
the VLSI CMOS Division. Mr. Gandenberger holds a B.S. in Business Administration
from Saint Mary's College and a M.B.A from Golden Gate University.

Mr. Lin has served as Vice president of the Ethernet Group since April
2003. He joined the Company through the acquisition of Kendin Communications
Inc. in May 2001 as Vice President of Design of Kendin Operations. Prior to the
acquisition, he served as Vice President of Engineering at Kendin from 1996 to
2001. Prior to Kendin, Mr. Lin was employed by Pericom Semiconductors Corp as
Design Manager of the data communication group from April 1995 to April 1996. He
worked for Hitachi Micro Systems, Inc. as Principle Engineer from August 1993 to
April 1995. From 1990 to 1993, he was employed by Vitesse Semiconductor Corp.,
where he held a design manager position. From 1986 to 1990, he worked for
Philips Components at various locations as Senior Member of Technical Staff in
Mixed Signal Circuit Design area. Mr. Lin holds a Ph.D. and M.S.E.E. degrees
from University of Cincinnati, and B.S.E.E. degree from National Taiwan
University.

Mr. Lunsford joined the Company in September 2001 as Vice President
World-Wide Sales. Prior to joining Micrel, Mr. Lunsford was Director of
Marketing and Business Development at Broadcom Corporation from 2000 to 2001.
Prior to 2000, Mr. Lunsford held the position of Vice President WorldWide Sales
at Pivotal Technologies from 1999 until Pivotal was acquired by Broadcom in
2000. Prior to 1999 Mr. Lunsford held various senior level management positions
at Advanced Micro Devices from 1984 to 1999. He holds a B.S. degree in
Mechanical Engineering from the University of California, Davis.

Mr. Mejia joined the Company in June 1999 as Vice President, Human
Resources. From 1976 until he joined Micrel, Mr. Mejia was employed by Analog
Devices, Inc. where his last position was Director, Human Resources. Prior to
Analog Devices, Inc., Mr. Mejia held various human resource positions at ROHR
Industries and California Computer Products. He holds a B.S. in Industrial
Technology and a M.A.H.R. from the University of Redlands.

Mr. Small has served as Vice President, Design and Process Engineering
since June 2002. Mr. Small also served as the Company's Vice President, Wafer
Fab from April 1998 until June 2002. Prior to joining the Company, Mr. Small was
employed by IC Works from 1996 to 1998, where he was Vice President of
Operations. From 1971 to 1995, Mr. Small was employed by National Semiconductor
Corp. where he held the position of Vice President of Linear Standard Products.
Mr. Small holds a B.A. in Physics from U.C. Berkeley and an M.A. in Physics and
an M.B.A. from University of California at Los Angeles.

Mr. Tortolano joined the Company in August 2000 as its Vice President,
General Counsel. Mr. Tortolano has also served as the Company's Secretary since
May 2001. From 1999 until he joined the Company, Mr. Tortolano was employed by
Lattice Semiconductor Corporation, where he held the position of Vice President,
Co-General Counsel. From 1983 to 1999, Mr. Tortolano was employed by Advanced
Micro Devices, Inc., where his last position was Vice President, General Counsel
of AMD's Vantis subsidiary. Mr. Tortolano holds a B.S.E.E. from Santa Clara
University and a Juris Doctor degree from University of California at Davis.

Mr. Ward joined the Company in August 1999 as Vice President, Test
Division. From 1997 until he joined Micrel, Mr. Ward was employed by QuickLogic
Corporation as Vice President of Engineering. From 1980 to 1997, Mr. Ward was
employed by National Semiconductor Corporation where he held various Product
Line Director positions in the Analog Division. Mr. Ward holds a B.S.E.T. degree
from California Polytechnic University at San Luis Obispo.

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Mr. Wong joined the Company in November 1998 as its Vice President, High
Bandwidth Products. Prior to joining the Company, Mr. Wong was a co-founder of
Synergy Semiconductor and held various management positions including Chief
Technical Officer, Vice President Engineering, Vice President Standard Products
and Vice President Product Development for Synergy Semiconductor from 1987 to
November 1998 at which time Synergy was acquired by the Company. From 1978 to
1986, Mr. Wong was employed by Advanced Micro Devices where his last position
was Design Engineering Manager. He holds a B.S.E.E. from the University of
California at Berkeley and a M.S.E.E. from San Jose State University.

Mr. Zelenka has served as Vice President, Quality Assurance since August
2000. From January 1998 to July 2000 he held the position of Director of Product
Assurance. Prior to joining the Company, Mr. Zelenka was employed by National
Semiconductor from 1987 to 1998 as a Senior Quality Manager. From 1983 to 1987
Mr. Zelenka was employed by Fairchild Semiconductor where he held the position
of Wafer Fab Quality Manager. He holds a B.S. in Chemical Engineering from the
University of Wyoming.

COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors held four regularly scheduled or special meetings
during the fiscal year ended December 31, 2003. Each member of the Board of
Directors who served during 2003 attended at least 75% of the total number of
meetings of the Board of Directors and of the Committees on which he served
during the year.

The Company has standing Audit, Compensation and Nominating and Corporate
Governance Committees of the Board of Directors.

AUDIT COMMITTEE. The audit committee is responsible for the appointment,
compensation and oversight of our independent accountants, reviewing and
monitoring the annual audit of our financial statements, our internal controls,
our accounting practices and policies and related tasks as specified in its
charter or required by the applicable Nasdaq rules. The members of the audit
committee presently are Messrs. Livingstone, Kelly, and Hansen, each an
independent director as defined by the listing standards of the Nasdaq National
Market. Messrs. Livingstone and Kelly qualify as audit committee financial
experts within the definition adopted by the Securities and Exchange Commission.
In 2003, the audit committee met in person four times and each incumbent member
of the audit committee attended at least 75% of those meetings. Please see the
information under the caption "Audit Committee Report" for further information
regarding the audit committee. The Board of Directors adopted and approved a new
charter for the Audit Committee on April 9, 2004. A copy of the charter is
attached as Appendix A to this Proxy Statement.

COMPENSATION COMMITTEE. The Compensation Committee makes recommendations
to the Board of Directors regarding all forms of compensation to executive
officers and directors and all bonus and stock compensation to employees,
administers the Company's stock option plans and performs such other duties as
may from time to time be determined by the Board of Directors. The Compensation
Committee consists of Messrs. Hansen, Kelly, and Livingstone, each an
independent director as defined by the listing standards of the Nasdaq National
Market. The Compensation Committee met two times in 2003.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. The Nominating and
Corporate Governance Committee makes recommendations to the Board of Directors
regarding nominees for the Board, monitors the size and composition of the
Board, assists the Board with review and consideration of developments in
corporate governance practices and performs such other duties as the Board of
Directors shall from time to time prescribe. The Nominating and Corporate
Governance Committee consists of Messrs. Kelly, Hansen, and Livingstone, each an
independent director as defined by the listing standards of the Nasdaq National
Market. The Nominating and Corporate Governance Committee has identified in
Proposal 1 its nominees for election at the Annual Meeting. As set forth in the
Company's 2003 Proxy Statement, shareholder proposals must have been received no
later than

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March 1, 2004, to be considered at the Annual Meeting. No shareholder proposals
were received by the Secretary within such time and, accordingly, there were no
nominees recommended by the shareholders to be considered by the Nominating and
Corporate Governance Committee for election at the Annual Meeting. With respect
to the election of directors at the 2005 annual meeting, the Nominating and
Corporate Governance Committee will consider shareholder nominations if they are
timely, in accordance with the provisions set forth in this Proxy Statement
under the caption "Shareholder Proposals."

The Board of Directors adopted and approved a charter for the Nominating
and Corporate Governance Committee on November 21, 2002. A copy of the charter
is attached as Appendix B to this Proxy Statement.

NOMINATION PROCESS

The nominating and corporate governance committee identifies director
nominees by first evaluating the current members of the Board of Directors
willing to continue in service. Current members with skills and experience that
are relevant to our business and are willing to continue in service are
considered for re-nomination, balancing the value of continuity of service by
existing members of the Board of Directors with that of obtaining a new
perspective. If any member of the Board of Directors does not wish to continue
in service or the committee or Board of Directors decides not to re-nominate a
member for re-election, the committee identifies the desired skills and
experience of a new nominee consistent with the committee's criteria for Board
of Directors service. Current members of the Board of Directors and management
are polled for their recommendations. Research may also be performed or third
parties retained to identify qualified individuals. To date, we have not engaged
third parties to identify or evaluate potential nominees; however, we may in the
future choose to do so.

The nominating and corporate governance committee will consider
nominees recommended by stockholders, and any such recommendations should be
forwarded to the nominating and corporate governance committee in writing at our
executive offices as identified in this proxy statement. Such recommendations
should include the following information:

o such information as may be reasonably necessary to determine
whether the recommended director candidate is independent from the
security holder that has recommended the candidate;

o such information as may be reasonably necessary to determine
whether the director candidate is qualified to serve on the audit
committee; and

o such information as may be reasonably necessary to determine
whether the director candidate meets the independence standards of
the Nasdaq National Market.

We will also request such other information as may reasonably be required
to determine whether each person recommended by a security holder meets the
criteria listed below and to enable us to make appropriate disclosures to the
security holders entitled to vote in the election of directors. Any
recommendations received from stockholders will be evaluated in the same manner
as potential nominees suggested by board members, management or other parties.

The nominating and corporate governance committee evaluates director
candidates based upon a number of criteria, including:

o a high level of personal and professional integrity;

o commitment to promoting the long term interests of our company's
security holders and independence from any particular
constituency;

o professional and personal reputations that are consistent with our
values;

o broad general business experience and acumen, which may include
experience in management, finance, marketing and accounting,
across a broad range of industries with particular emphasis on the

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semiconductor industry generally, along with experience operating
at a policy-making level in an appropriate business, financial,
governmental, educational, non-profit, technological or global
field;

o adequate time to devote attention to the affairs of the company;

o such other attributes, including independence, relevant in
constituting a board that also satisfies the requirements imposed
by the Securities and Exchange Commission and the Nasdaq National
Market; and

o board balance in light of our company's current and anticipated
needs and the attributes of the other directors and executives.

SECURITY HOLDER COMMUNICATION WITH BOARD MEMBERS

Any holder of our securities may contact the Board of Directors or a
specified individual director by writing to the attention of the Board of
Directors or a specified individual director and sending such communication to
our General Counsel at our executive offices as identified in this proxy
statement. Each communication from a security holder should include the
following information in order to permit security holder status to be confirmed
and to provide an address to forward a response if deemed appropriate: o the
name, mailing address and telephone number of the security holder sending the
communication;

o the number and type of our securities owned by such security
holder; and

o if the security holder is not a record owner of our securities,
the name of the record owner of our securities beneficially owned
by the security holder.

Our General Counsel will forward all appropriate communications to the
Board of Directors or individual members of the Board of Directors as specified
in the communication. Our General Counsel may (but is not required to) review
all correspondence addressed to the Board of Directors, or any individual member
of the Board of Directors, for any inappropriate correspondence more suitably
directed to management. Communications may be deemed inappropriate for this
purpose if it is reasonably apparent from the face of the correspondence that it
relates principally to a customer dispute involving the purchase of goods or
services from the company or any of its operating units. Our policies regarding
the handling of security holder communications were approved by the Board of
Directors, including a majority of our independent directors.

ANNUAL MEETING ATTENDANCE

The policy of the Board of Directors is that all directors attend the
annual meeting of stockholders, absent compelling circumstances that prevent
attendance. All directors attended the annual meeting of stockholders held in
2003.

EMPLOYMENT AGREEMENTS

None of the Named Executive Officers has an employment agreement with the
Company.

COMPENSATION OF DIRECTORS

Non-employee directors of the Company receive $1,000 in compensation for
each meeting of the Board of Directors attended and $1,000 for each committee
meeting not held in conjunction with a Board meeting.

The Company's 2003 Incentive Award Plan (the "Plan") provides for annual
automatic grants of nonqualified stock options to continuing non-employee
directors. In accordance with the Plan, as amended, on the date of each annual
shareholders' meeting, each individual who is at the time continuing to serve as
a non-employee director will automatically be granted an option to purchase
10,000 shares of the Company's Common Stock. All

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options automatically granted to non-employee directors will have an exercise
price equal to 100% of the fair market value, defined as the closing price of a
share of the Company's Common Stock on the Nasdaq exchange on the trading day
previous to the date of grant, and become exercisable at the rate of 25% per
year. On May 22, 2003, Messrs. Kelly, Hansen and Livingstone received automatic
stock option grants for 5,000 shares each of the Company's Common Stock.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING
COMPENSATION COMMITTEE REPORT SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY
SUCH FILINGS, NOR SHALL IT BE DEEMED TO BE SOLICITING MATERIAL OR DEEMED FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

COMPENSATION PHILOSOPHY. The Compensation Committee believes that the
primary goal of the Company's compensation program should be related to creating
shareholder value. The Compensation Committee seeks to offer the Company's
executive officers competitive compensation opportunities based upon their
personal performance, the financial performance of the Company and their
contribution to that performance. The executive compensation program is designed
to attract and retain executive talent that contributes to the Company's
long-term success, to reward the achievement of the Company's short-term and
long-term strategic goals, to link executive officer compensation and
shareholder interests through equity-based plans, and to recognize and reward
individual contributions to Company performance.

The compensation of the Company's executive officers consists of three
principal components: salary, bonus and long-term incentive compensation.

SALARY. Salaries for the Company's executive officers are determined
primarily on the basis of the executive officer's responsibility, general salary
practices of peer companies and the officer's individual qualifications and
experience. The base salaries are reviewed annually and may be adjusted by the
Compensation Committee in accordance with certain criteria which include (i)
individual performance, (ii) the functions performed by the executive officer,
(iii) the scope of the executive officer's on-going duties, (iv) general changes
in the compensation peer group in which the Company competes for executive
talent, and (v) the Company's financial performance, generally. The weight given
such factors by the Compensation Committee may vary from individual to
individual. Due to the difficult business conditions impacting the semiconductor
industry since early 2001, no salary increases were given to officers for 2001,
2002 and 2003. Furthermore, all officers were subject to pay reductions from
April 2001 through December 31, 2003.

BONUS. In order to increase incentives for outstanding performance, a
portion of each executive officer's compensation is paid in the form of
contingent cash bonuses. The bonus amounts for executive officers are dependent
in part on the Company's net income performance, as well as individualized
criteria such as achievement of specified goals for the department or divisions
for which the executive officer has responsibility and satisfactory completion
of special projects supervised by the executive officer.

LONG-TERM INCENTIVE AWARDS. Stock options serve to further align the
interests of management and the Company's shareholders by providing executive
officers with an opportunity to benefit from the stock price appreciation that
can be expected to accompany improved financial performance. Options also
enhance the Company's ability to attract and retain executives. The number of
option shares granted and other option terms, such as vesting, are determined by
the Compensation Committee, based on recommendations of management in light of,
among other factors, each executive officer's level of responsibility, prior
performance and other compensation. However, the Company does not provide any
quantitative method for weighing these factors, and a decision to grant an award
is primarily based upon an evaluation of the past as well as the future
anticipated performance and responsibilities of the individual in question.

CHIEF EXECUTIVE OFFICER COMPENSATION. The compensation of the Chief
Executive Officer is reviewed annually on the same basis as discussed above for
all executive officers. Raymond D. Zinn's base salary for the

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fiscal year ended December 31, 2003 was $301,625, which reflects a pay reduction
equal to or greater than the pay reduction taken by other officers. Mr. Zinn's
full base salary, prior to reductions, was established, in part, by comparing
the base salaries of chief executive officers at other companies of similar size
and geographic location using published compensation sources. Mr. Zinn's
compensation is also based on his position and responsibilities, his past and
expected contribution to the Company's future success and on the financial
performance of the Company. The Compensation Committee's assessment is that Mr.
Zinn's compensation is at the low end of the range for Chief Executives with
comparable responsibilities in companies of similar size and complexity.
However, at Mr. Zinn's request, the Committee has chosen to keep Mr. Zinn's base
salary at such a level.

POLICY REGARDING DEDUCTIBILITY OF COMPENSATION. The Company is required
to disclose its policy regarding qualifying executive compensation for
deductibility under Section 162(m) of the Internal Revenue Code of 1986, as
amended, which provides that, for purposes of the regular income tax and the
alternative minimum tax, the otherwise allowable deduction for compensation paid
or accrued with respect to the executive officers of a publicly-held
corporation, which is not performance-based compensation, is limited to no more
than $1 million per year per officer. It is not expected that the compensation
to be paid to the Company's executive officers for the fiscal year ended
December 31, 2004 will exceed the $1 million limit per officer. Option grants
under the 2003 Incentive Award Plan are intended to qualify as performance-based
compensation not subject to the $1 million limitation.

OPTION EXCHANGE PROGRAM. In November 2002 we implemented a voluntary
stock option exchange program to address the increasing inability of existing
options to serve as a meaningful incentive for employees to remain in the
Company's employ. Under the program, employees who held outstanding options to
purchase shares of common stock with an exercise price of $13.00 or higher per
share, were given the opportunity to exchange those options for new options that
would be granted at least six months and two days after the completion of the
option exchange program. The Company's directors, CEO and CFO were not eligible
to participate in the stock option exchange program. The offer to exchange
contemplated a grant of new options to eligible employees in a ratio equivalent
to one new option granted for every two options elected for exchange and
cancelled with respect to employees who held the position of vice president or
higher, and two new options granted for every three options elected for exchange
and cancelled with respect to all other employees.

On December 11, 2002 we accepted for exchange and cancellation options to
purchase an aggregate of 3,330,401 shares of our common stock. On June 13, 2003
we granted new options to purchase an aggregate of 2,131,675 shares of our
common stock to replace the eligible options that had been tendered and
cancelled under the program. The exercise price per share for the new options
was $10.72, the closing sales price of our common stock as quoted on the Nasdaq
National Market on the date preceding the replacement grant date.

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The table below provides certain information concerning our executive
officers who tendered eligible options in the option exchange program and the
options that were cancelled pursuant to that program. Except for the December
2002 option exchange program, the Company has not implemented any other option
repricing or option cancellation/regrant programs.

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LENGTH OF
ORIGINAL
OPTION TERM
NUMBER OF REMAINING AT
SECURITIES MARKET PRICE DATE OF
UNDERLYING OF STOCK AT EXERCISE PRICE NEW CANCELLATION
DATE OF OPTIONS TIME OF AT TIME OF EXERCISE ------------
NAME CANCELLATION REPRICED CANCELLATION CANCELLATION PRICE (YEARS)
---- ------------ -------- ------------ ------------ ----- -------

Mark A. Downing (1) 12/11/02 7,575 $9.75 $33.00 $10.72 1.0
12/11/02 500 9.75 22.86 10.72 1.0
12/11/02 54,925 9.75 33.00 10.72 1.0
12/11/02 2,000 9.75 22.86 10.72 1.0

James G. Gandenberger 12/11/02 41,400 9.75 38.75 10.72 7.7
Vice President, 12/11/02 5,162 9.75 38.75 10.72 7.7
Wafer Fab Operations 12/11/02 1,199 9.75 38.75 10.72 7.7
12/11/02 2,917 9.75 28.03 10.72 8.6
12/11/02 23,999 9.75 10.09 10.72 9.3
12/11/02 4,802 9.75 10.09 10.72 9.3

Jeng-Chen Lin 12/11/02 92,462 9.75 25.20 10.72 8.5
Vice President, 12/11/02 7,538 9.75 25.20 10.72 8.5
Ethernet Products

J. Vincent Tortolano, 12/11/02 5,405 9.75 46.25 10.72 7.6
Vice President, 12/11/02 57,095 9.75 46.25 10.72 7.6
General Counsel 12/11/02 6,771 9.75 28.03 10.72 8.6

Thomas S. Wong 12/11/02 2,020 9.75 49.50 10.72 7.6
Vice President, 12/11/02 5,333 9.75 49.50 10.72 7.6
High Band Width 12/11/02 22,980 9.75 49.50 10.72 7.6
12/11/02 3,250 9.75 28.03 10.72 8.6
12/11/02 1,704 9.75 49.50 10.72 7.6

Richard Zelenka 12/11/02 2,000 9.75 49.50 10.72 7.6
Vice President, 12/11/02 443 9.75 22.86 10.72 9.6
Quality Assurance 12/11/02 3,000 9.75 49.50 10.72 7.6
12/11/02 650 9.75 28.03 10.72 8.6
12/11/02 557 9.75 22.86 10.72 9.3

------------------
(1) Prior to his departure from the Company in October, 2003, Mr. Downing
served as our Vice President, Marketing.

COMPENSATION COMMITTEE

Larry L. Hansen, Chairman
George Kelly
Donald Livingstone

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AUDIT COMMITTEE REPORT

The audit committee currently consists of Messrs. Livingstone, Kelly and
Hansen, with Mr. Livingstone serving as the chairman of the committee and one of
the audit committee's financial experts. Our audit committee is composed of
"independent" directors, as that term is defined in Rule 4200(a)(15) of the
National Association of Securities Dealers' listing standards, and operates
under a written charter adopted by the Board of Directors, a copy of which is
attached as Appendix A to this proxy statement.

Management is responsible for the company's internal controls and the
financial reporting process. The independent auditors are responsible for
performing an independent audit of the company's consolidated financial
statements in accordance with generally accepted accounting principles and to
issue a report thereon. The audit committee's responsibility is to monitor and
oversee these processes.

The following is the audit committee's report submitted to the Board of
Directors for the fiscal year ended December 31, 2003.

The audit committee has:

o reviewed and discussed the company's audited financial statements
with management and PricewaterhouseCoopers LLP, the company's
independent accountants;

o discussed with PricewaterhouseCoopers LLP the matters required to
be discussed by Statement on Auditing Standards No. 61, as may be
modified or supplemented; and

o received from PricewaterhouseCoopers LLP the written disclosures
and the letter regarding their independence as required by
Independence Standards Board Standard No. 1, as may be modified or
supplemented, and discussed the auditors' independence with them.

Based on the review and discussions referred to above, the audit
committee recommended to the Board of Directors that the audited financial
statements be included in the company's Annual Report on Form 10-K for the
fiscal year ended December 31, 2003, for filing with the Securities and Exchange
Commission.

THE AUDIT COMMITTEE REPORT SHALL NOT BE DEEMED INCORPORATED BY REFERENCE
BY ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO
ANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES EXCHANGE ACT OF
1934, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER THESE ACTS.

AUDIT COMMITTEE

Donald Livingstone, Chairman
George Kelly
Larry L. Hansen

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EXECUTIVE COMPENSATION

The following table sets forth the annual compensation earned during the
years ended December 31, 2003, 2002 and 2001 by each of the Company's Named
Executive Officers:

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SUMMARY COMPENSATION TABLE

ANNUAL LONG-TERM
COMPENSATION COMPENSATION
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#) COMPENSATION(2)
--------------------------- ---- --------- ----------- ------------- ---------------

Raymond D. Zinn,................... 2003 $301,625 -- 3,095 $16,796
President, Chief Executive 2002 308,625 -- -- 16,729
Officer and 2001 301,251 -- -- 15,314
President, Chief Executive
Officer
and Chairman of the Board
James G. Gandenberger, ............ 2003 182,336 $50,500 84,503 222
Vice President, Wafer Fab 2002 177,982 -- 36,000 222
Operations 2001 168,154 20,000 29,376 222

Robert Whelton,.................... 2003 209,687 -- 42,247 1,465
Executive Vice President, 2002 206,806 -- 40,000 1,465
Operations 2001 204,688 -- -- 1,465

Mark Lunsford (3),................. 2003 168,572 24,721 1,762 333
Vice President, World-Wide Sales 2002 162,471 -- -- 333
2001 42,799 -- 150,000 68

Jung-Chen Lin (4), ................ 2003 183,273 -- 110,000 333
Vice President, Ethernet 2002 172,699 -- -- 331
Products 2001 104,369 -- -- 141

-----------------------
(1) All bonuses for a particular year reflect amounts earned in that year
whether or not paid in that or the following year.
(2) Represents premiums paid on term life insurance and an automobile
allowance for Mr. Zinn of $13,849 in 2001, $13,910 in 2002, and $14,302
in 2003.
(3) Mr. Lunsford joined the company in September 2001.
(4) Mr. Lin joined the company in June 2001.

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STOCK OPTION GRANTS AND EXERCISE

OPTION GRANTS IN LAST FISCAL YEAR

The following table provides certain information with respect to the
grant of stock options under the Company's 2003 Incentive Award Plan to each of
the Named Executive Officers during the fiscal year ended December 31, 2003.

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POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS TO EXERCISE OPTION TERM(12)
OPTIONS EMPLOYEES PRICE PER EXPIRATION -------------------------------
NAME GRANTED(1) IN FISCAL SHARE DATE 0% 5% 10%
---- ---------- ------ ----- ---------- -- -- ---
YEAR(11)
--------

Raymond D. Zinn.............. 3,095 (1) 0.08% $10.50 5/27/13 $2,012 $23,714 $57,011--
Robert Whelton............... 2,247 (1) 0.06 10.50 5/27/13 1,460 17,217 41,390
40,000 (1) 1.07 13.09 8/28/13 13,200 350,791 868,721
James G. Gandenberger........ 41,400 (2) 1.11 10.72 6/13/13 -- 249,435 660,069
6,355 (3) 0.17 10.72 6/13/13 -- 38,289 101,322
23,999 (4) 0.64 10.72 6/13/13 -- 144,594 382,633
5,162 (5) 0.14 10.72 6/13/13 -- 31,101 82,301
1,199 (6) 0.03 10.72 6/13/13 -- 7,224 19,116
317 (7) 0.01 10.72 6/13/13 -- 1,910 5,054
4,802 (8) 0.13 10.72 6/13/13 -- 28,932 76,562
1,269 (9) 0.03 10.72 6/13/13 -- 7,646 20,233
Jung-Chen Lin................ 10,000 (1) 0.27 10.72 6/13/13 -- 60,250 159,437
100,000 (4) 2.68 10.72 6/13/13 -- 602,500 1,594,370
Mark Lunsford................ 1,054 (10) 0.03 10.50 5/27/13 685 8,076 19,415
708 (1) 0.02 10.50 5/27/13 460 3,525 13,042

----------------

(1) The option vests in equal installments over five years.
(2) 80% of the option vested at the time of grant with the remaining 20%
vesting on October 27, 2004.
(3) The option was fully vested at the time of grant.
(4) 40% of the option vested at the time of grant with the remaining 60%
vesting in equal installments over three years.
(5) 34% of the option vested at the time of grant with the remaining 66%
vesting in equal installments over two years.
(6) The option vests on August 5, 2006.
(7) The option vests on June 13, 2006.
(8) 25% of the option vested at the time of grant with the remaining 75%
vesting over four years.
(9) The option vests in equal installments over four years beginning June 13,
2003.
(10) The option vests in equal installments over three years.
(11) The total number of shares underlying all options granted to employees in
2003 was 3,725,003.
(12) The potential realizable value portion of the foregoing table is based on
the rules of the Securities and Exchange Commission and does not
represent our estimates or projections of the future price of our common
stock. Actual gains, if any, on stock option exercise are dependent upon
a number of factors, including the future performance of the Common
Stock, overall stock market conditions, and the timing of option
exercises, if any. There can be no assurance that amounts reflected in
this table will be achieved.

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AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES

The following table sets forth for each of the Named Executive Officers
certain information concerning the number of shares subject to both exercisable
and unexercisable stock options as of December 31, 2003. Also reported are
values for "in-the-money" options that represent the positive spread between the
respective exercise prices of outstanding stock options and the fair market
value of the Company's common stock as of December 31, 2003.

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NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT DECEMBER 31, 2003 DECEMBER 31, 2003($)(1)
-------------------- -----------------------
SHARES ACQUIRED VALUE
NAME ON EXERCISE(#) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- -------------- ----------- ------------- ----------- -------------

Raymond D. Zinn........... -- -- 500,000 3,095 $1,265,000 $15,661
Robert Whelton............ 49,000 $503,000 449,000 74,247 3,707,970 381,208
James G. Gandenberger..... -- -- 64,397 51,106 251,664 157,327
Jung-Chen Lin............. -- -- 73,910 70,001 561,190 338,805
Mark Lunsford............. -- -- 60,000 91,762 -- 8,916

-----------------------------

(1) Calculated by determining the difference between the fair market value of
the securities underlying the option at December 31, 2003 which was
$15.56 and the exercise price of the Named Executive Officers' respective
options.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information as of December 31, 2003 for
all of our current equity compensation plans, including our 1989 Stock Option
Plan, our 1994 Stock Option Plan, our 1996 Amended and Restated Stock Purchase
Plan, our 2000 Non-Qualified Stock Incentive Plan ("2000 Plan"), and our 2003
Incentive Award Plan.

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NUMBER OF SECURITIES
NUMBER OF SECURITIES REMAINING AVAILABLE FOR
TO BE ISSUED UPON WEIGHTED-AVERAGE FUTURE ISSUANCE UNDER
EXERCISE OF EXERCISE PRICE OF EQUITY COMPENSATION PLANS
OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, (EXCLUDING SECURITIES
WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------------- ------------------- -----------------------
PLAN CATEGORY (A) (B) (C)
-------------

Equity Compensation Plans
Approved by Security Holders...... 11,431,651 (1) $12.70 4,320,437 (2)
Equity Compensation Plans Not
Approved by Security Holders...... 86,334 (3) $16.17 113,406 (4)
Total............................. 11,517,985 $12.73 4.433,843

----------
(1) Includes (i) 2,977,962 shares of common stock issuable upon the exercise
of options granted under the 2003 Plan, of which 877,659 shares were
exercisable as of December 31, 2003 (ii) 8,354,489 shares of common stock
issuable upon the exercise of options granted under the 1994 Plan, of
which 6,345,443 shares were exercisable as of December 31, 2003, and
(iii) 99,200 shares of common stock issuable upon the exercise of options
granted under our 1989 Stock Option Plan, all of which were exercisable
as of December 31, 2003.
(2) Includes (i) 3,441,444 shares of common stock available for issuance
under the 2003 Plan, (ii) 321,522 shares of common stock available for
issuance under the 1994 Plan, and (iii) 557,471 shares of common stock
available for issuance under the 1994 Stock Purchase Program.
(3) Represents shares of common stock issuable upon the exercise of options
granted under the 2000 Plan. (4) Represents the remaining shares of
common stock available for issuance under the 2000 Plan.

SUMMARY OF THE 2000 PLAN

The following is a summary of the principal features of the 2000 Plan.
The summary, however, does not purport to be a complete description of all the
provisions of the 2000 Plan and is qualified in its entirety by reference to the
2000 Plan itself.

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STOCK SUBJECT TO THE 2000 PLAN

The aggregate number of shares of common stock which are subject to
issuance under the 2000 Plan will not exceed 200,000. The shares available for
issuance under the 2000 Plan may be either previously unissued shares or
treasury shares. The Administrator (as defined below) shall make appropriate
adjustments in the number of securities subject to the 2000 Plan and to
outstanding awards thereunder to reflect a stock split, reverse stock split,
stock dividend, reclassification or combination or similar event affecting the
shares. Shares covered by an award under the 2000 Plan that is forfeited or
canceled, expires or is settled in cash, will continue to be available for
issuance under the 2000 Plan.

ADMINISTRATION OF THE PLAN

The 2000 Plan is administered by the Board or a committee designated by
the Board (the "Administrator"). The Administrator has the authority to select
the persons to whom awards are to be made, to determine the number of shares
subject to such award, to set, amend, construe and interpret the terms and
conditions of the award, and to take any other action that is consistent with
the terms of the 2000 Plan.

ELIGIBILITY

Awards under the 2000 Plan may be granted only to employees and
consultants of the Company. Officers and directors of the Company are not
eligible to receive awards under the 2000 Plan.

TERMS AND CONDITIONS OF 2000 PLAN AWARDS.

The 2003 Plan provides that the Administrator may grant or issue
nonqualified stock options, stock appreciation rights, restricted stock,
dividend equivalents, performance units, performance shares, any other security
with the value derived from the value of the Company's Common Stock, or any
combination thereof. Each award will be set forth in a separate agreement with
the person receiving the award and will indicate the type, terms and conditions
of the award.

Subject to the terms of the 2000 Plan, the Administrator shall determine
the terms and conditions of awards, including vesting schedules, repurchase
provisions, forfeiture provisions, form of payment, and satisfaction of
performance criteria. Performance criteria may be based on one or more of the
following factors:

o increase in share price;

o earnings per share;

o total stockholder return;

o return on equity;

o return on assets;

o return on investment;

o net operating income;

o cash flow;

o revenue;

o economic value added;

o personal management objectives; or

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o other measures specified by the Administrator.

The exercise price or purchase price of each award under the 2000 Plan
shall be determined by the Administrator in accordance with the principles of
Section 424(a) of the Code. Unless otherwise determined by the Administrator,
the per share exercise price of nonqualified stock options shall not be less
than 85% of the fair market value per share on the date of grant.

EXERCISE OF 2000 PLAN AWARDS

An option may be exercised by delivering written notice of such exercise
to the Company in accordance with the terms of the award, together with full
payment for the shares. The Administrator may in its discretion and subject to
applicable laws allow payment in the following forms:

o cash;

o check;

o full recourse promissory note in a form and with terms prescribed
by the Administrator;

o payment through the delivery of shares of common stock of the
Company;

o payment through the delivery of a notice that the optionee has
placed a market sell order with a broker with respect to shares of
common stock then issuable on exercise of the option, and that the
broker will pay a sufficient portion of the net proceeds of the
sale to the Company in satisfaction of the option exercise price;
or

o payment through any combination of the foregoing.

WITHHOLDING TAX OBLIGATIONS

As a condition to the issuance or delivery of stock pursuant to the
exercise of an award granted under the 2000 Plan, the Company requires
participants to make arrangements acceptable to the Administrator for the
satisfaction of applicable withholding tax obligations. Upon the exercise of an
award, the Company shall withhold or collect an amount sufficient to satisfy
such withholding tax obligations.

CORPORATE TRANSACTIONS

In the event of (i) a merger or consolidation in which the Company is not
the surviving entity, (ii) the sale of substantially all the assets of the
Company, or (iii) the change in control of more than 50% of the Company's voting
securities, all outstanding awards under the 2000 Plan shall terminate, unless
otherwise assumed by the surviving entity or acquiring person.

TERM OF THE 2000 PLAN AND AMENDMENTS

The 2000 Plan will expire on November 16, 2010, unless earlier
terminated. The 2000 Plan can be amended, suspended or terminated by the Board.
Amendments of the 2000 Plan will not, without the consent of the participant,
affect such person's rights under an award previously granted under the 2000
Plan.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Through August 28, 2003, the Compensation Committee consisted of Messrs.
Hansen, Kelly and Muller. On August 28, 2003, Mr. Muller was replaced as a
committee member by Mr. Livingstone. There are and were no interlocking
relationships between the Board of Directors or the Compensation Committee and
the board of directors or compensation committee of any other company, nor has
any such relationship existed in the past. Mr. Muller

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served as Vice President of Test Operations for the Company from 1978 until
1999, and Chief Technology Officer from 1999 until October 2001. Mr. Muller
currently works as a part-time consultant for the Company.

STOCK PERFORMANCE GRAPH

NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN ANY OF THE
COMPANY'S PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT MIGHT INCORPORATE FUTURE
FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE OR IN PART, THE FOLLOWING
STOCK PERFORMANCE GRAPH SHALL NOT BE INCORPORATED BY REFERENCE INTO ANY SUCH
FILINGS, NOR SHALL IT BE DEEMED TO BE SOLICITING MATERIAL OR DEEMED FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.

The following stock performance graph compares the percentage change in
the cumulative total shareholder return on the Company's common stock from
December 31, 1998 through the end of the Company's last fiscal year, December
31, 2003, with the percentage change in the cumulative total return for The
Nasdaq Stock Market (U.S. Companies) and the Goldman Sachs Technology Index. The
comparison assumes an investment of $100 on December 31, 1998 in the Company's
common stock and in each of the foregoing indices and assumes reinvestment of
dividends. THE STOCK PRICE PERFORMANCE SHOWN ON THE GRAPH BELOW IS NOT
NECESSARILY INDICATIVE OF FUTURE PRICE PERFORMANCE.

MICREL, INCORPORATED
NASDAQ COMPOSITE
GOLDMAN SACHS TECHNOLOGY INDEX

[PERFORMANCE GRAPH]

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INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP ("PwC") was the Company's independent auditor
for the year ended December 31, 2003. Representatives of PricewaterhouseCoopers
LLP are expected to be present at the Annual Meeting and will have an
opportunity to make a statement if they so desire. Moreover, they will be
available to respond to appropriate questions from shareholders.

Deloitte & Touche LLP was previously the principal accounting firm
engaged by the Company. On August 30, 2002, the Company notified Deloitte &
Touche that it would not be retained as independent auditor for the fiscal year
2002. This action followed the Company's extensive evaluation of Deloitte &
Touche and other firms to audit Micrel's consolidated financial statements for
its fiscal year ending December 31, 2002. The Audit Committee recommended, and
the Board of Directors of the Company approved, the appointment of PwC as the
Company's independent auditor for fiscal year 2002.

The audit report of Deloitte & Touche on the consolidated financial
statements of Micrel and its subsidiaries as of and for the year ended December
31, 2001 did not contain any adverse opinion or disclaimer of opinion, nor was
it qualified or modified as to uncertainty, audit scope, or accounting
principles.

During the fiscal year ended December 31, 2001, and the subsequent
interim period through June 30, 2002, (i) there were no disagreements with
Deloitte & Touche on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which disagreements if
not resolved to the satisfaction of Deloitte & Touche would have caused it to
make reference to the subject matter of the disagreement(s) in connection with
its reports; and (ii) there were no reportable events as set forth in Item
304(a)(1)(v) of Regulation S-K.

The Company engaged PwC as its independent auditor for fiscal year 2002
effective September 6, 2002. During the fiscal year ended December 31, 2001, and
the subsequent interim period through June 30, 2002, the Company did not consult
with PwC regarding the application of accounting principles to any specific
transaction, either proposed or completed, or the type of audit opinion that
might be rendered on the Company's consolidated financial statements. There were
no disagreements or reportable events about which the Company consulted with
PwC.

The information below represents the aggregate fees billed by
PricewaterhouseCoopers LLP for audit services rendered in connection with the
consolidated financial statements and reports for the year ended December 31,
2003 and for other services rendered during fiscal year 2003 on behalf of
Micrel, as well as all out-of-pocket costs incurred in connection with these
services, which have been billed to Micrel:

AUDIT FEES. The aggregate fees billed for professional services rendered
for the audit of our annual financial statements for the fiscal years ending
December 31, 2003 and December 31, 2002, and the reviews of the financial
statements included in our Forms 10-Q, or services that are normally provided by
the accountant in connection with statutory and regulatory filings or
engagements, for those fiscal years were $203,350 and $140,000, respectively.

AUDIT-RELATED FEES. The aggregate fees billed in the year ending December
31, 2003 for assurance and related services by the principal accountant that are
reasonably related to the performance of the audit or review of the registrant's
financial statements and are not included in the above paragraph. No
audit-related fees were billed in the years ending December 31, 2002 and 2003.

TAX FEES. The aggregate fees billed in each of the years ending December
31, 2003 and December 31, 2002 for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning were
$104,084 and $13,000, respectively. 2003 and 2002 tax fees consisted of fees for
tax compliance and tax audit report services.

ALL OTHER FEES. No fees were billed for services rendered by our
principal accountants, other than described above, for the fiscal years ending
December 31, 2003 and December 31, 2002.

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All audit related services, tax services and other services were
pre-approved by our audit committee, which concluded that the provision of such
services by PricewaterhouseCoopers LLP was compatible with the maintenance of
that firm's independence in the conduct of its auditing functions. The audit
committee's pre-approval policy provides for the pre-approval of audit,
audit-related and tax services specifically described by the committee on an
annual basis, and unless a type of service is pre-approved under the policy, it
will require separate pre-approval by the committee if it is to be provided by
the independent auditor. The policy authorizes the committee to delegate to one
or more of its members pre-approval authority with respect to permitted
services.

OTHER MATTERS

ANNUAL REPORT AND FINANCIAL STATEMENTS

The 2003 Annual Report of the Company, which includes its audited
financial statements for the fiscal year ended December 31, 2003, is enclosed
with this Proxy Statement.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Under the securities laws of the United States, the Company's directors,
executive officers, and any persons holding more than ten percent of the
Company's common stock ("Reporting Persons") are required to report, to the
Securities and Exchange Commission and to the Nasdaq Stock Market, their initial
ownership of the Company's stock and any subsequent changes in that ownership.
Specific due dates for these reports have been established, and the Company is
required to disclose in this Proxy Statement any failure to file these reports
on a timely basis.

Based solely on its review of the copies of such reports received by it
or written representations from certain Reporting Persons that no Forms 3, 4 or
5 were required, the Company believes that during fiscal 2003, all Reporting
Persons complied with all applicable filing requirements.

SHAREHOLDER PROPOSALS

REQUIREMENTS FOR SHAREHOLDER PROPOSALS TO BE BROUGHT BEFORE AN ANNUAL
MEETING. For shareholder proposals to be considered properly brought before the
Company's 2005 annual meeting by a shareholder, the shareholder must have given
timely notice in writing to the Secretary of the Company. To be timely, a
shareholder's notice must be delivered to or mailed and received by the
Secretary of the Company at the principal executive offices of the Company, not
later than March 1, 2005. A shareholder's notice to the Secretary must set forth
as to each matter the shareholder proposes to bring before the annual meeting
(i) a brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of the shareholder proposing such business, (iii)
the class and number of shares of the Company which are beneficially owned by
the shareholder, and (iv) any material interest of the shareholder in such
business.

REQUIREMENTS FOR SHAREHOLDER PROPOSALS TO BE CONSIDERED FOR INCLUSION IN
THE COMPANY'S PROXY MATERIALS. Shareholder proposals submitted pursuant to Rule
14a-8 under the Securities Exchange Act of 1934 and intended to be presented at
the Company's 2005 annual meeting of shareholders must be received by the
Company not later than December 28, 2004, in order to be considered for
inclusion in the Company's proxy materials for that meeting.

OTHER BUSINESS

The Board of Directors knows of no other business that will be presented
at the Annual Meeting. If any other business is properly brought before the
Annual Meeting, it is intended that proxies in the enclosed form will be voted
in respect thereof in accordance with the judgments of the persons voting the
proxies.

It is important that the proxies be returned promptly and that your
shares be represented. Shareholders are urged to fill in, sign and promptly
return the accompanying proxy card in the enclosed envelope.

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ANNUAL REPORT ON FORM 10-K

The Company's Annual Report on Form 10-K for the year ended December 31,
2003, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. A copy of this Form 10-K may be obtained by
each shareholder receiving this Proxy Statement without charge upon request.
Please direct such requests to: Micrel, Incorporated, Attention - Secretary,
2180 Fortune Drive, San Jose, California, 95131, (408) 944-0800.

By Order of the Board of Directors,

/s/ Raymond D. Zinn

Raymond D. Zinn
President, Chief Executive Officer and
Chairman of the Board of Directors

April 27, 2004
San Jose, California

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APPENDIX A

AUDIT COMMITTEE CHARTER
OF THE AUDIT COMMITTEE
OF MICREL, INCORPORATED

This Audit Committee Charter was adopted by the Board of Directors (the
"Board") of Micrel, Incorporated (the "Company") on April 9, 2004.

I. PURPOSE

The purpose of the Audit Committee (the "Committee") is to oversee the
accounting and financial reporting processes of the Company and the audits of
the financial statements of the Company.

In addition to the powers and responsibilities expressly delegated to the
Committee in this Charter, the Committee may exercise any other powers and carry
out any other responsibilities delegated to it by the Board from time to time
consistent with the Company's bylaws. The powers and responsibilities delegated
by the Board to the Committee in this Charter or otherwise shall be exercised
and carried out by the Committee as it deems appropriate without requirement of
Board approval, and any decision made by the Committee (including any decision
to exercise or refrain from exercising any of the powers delegated to the
Committee hereunder) shall be at the Committee's sole discretion. While acting
within the scope of the powers and responsibilities delegated to it, the
Committee shall have and may exercise all the powers and authority of the Board.
To the fullest extent permitted by law, the Committee shall have the power to
determine which matters are within the scope of the powers and responsibilities
delegated to it.

Notwithstanding the foregoing, the Committee's responsibilities are
limited to oversight. Management of the Company is responsible for the
preparation, presentation and integrity of the Company's financial statements as
well as the Company's financial reporting process, accounting policies, internal
audit function, internal accounting controls and disclosure controls and
procedures. The independent auditor is responsible for performing an audit of
the Company's annual financial statements, expressing an opinion as to the
conformity of such annual financial statements with generally accepted
accounting principles and reviewing the Company's quarterly financial
statements. It is not the responsibility of the Committee to plan or conduct
audits or to determine that the Company's financial statements and disclosure
are complete and accurate and in accordance with generally accepted accounting
principles and applicable laws, rules and regulations. Each member of the
Committee shall be entitled to rely on the integrity of those persons within the
Company and of the professionals and experts (including the Company's
independent auditor) from which the Committee receives information and, absent
actual knowledge to the contrary, the accuracy of the financial and other
information provided to the Committee by such persons, professionals or experts.

Further, auditing literature, particularly Statement of Accounting
Standards No. 71, defines the term "review" to include a particular set of
required procedures to be undertaken by independent auditors. The members of the
Committee are not independent auditors, and the term "review" as used in this
Charter is not intended to have that meaning and should not be interpreted to
suggest that the Committee members can or should follow the procedures required
of auditors performing reviews of financial statements.

II. MEMBERSHIP

The Committee shall consist of at least three members of the Board;
provided, that if at any time there is a vacancy on the Committee and the
remaining members meet all membership requirements, then the Committee may
consist of two members until the earlier of the Company's next annual
stockholders meeting or one year from the occurrence of the vacancy. Each
Committee member must be able to read and understand fundamental financial
statements, including a company's balance sheet, income statement and cash flow
statement. Members of the Committee are not required to be engaged in the
accounting and auditing profession and, consequently, some members may not be
expert in financial matters, or in matters involving auditing or accounting.
However, at least one member of the Committee shall have past employment
experience in finance or accounting, requisite

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professional certification in accounting, or any other comparable experience or
background which results in the individual's financial sophistication, including
being or having been a chief executive officer, chief financial officer or other
senior officer with financial oversight responsibilities. In addition, either at
least one member of the Committee shall be an "audit committee financial expert"
within the definition adopted by the Securities and Exchange Commission (the
"SEC") or the Company shall disclose in its periodic reports required pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act") the
reasons why at least one member of the Committee is not an "audit committee
financial expert." Each Committee member shall satisfy the independence
requirements of the Nasdaq Stock Market and Rule 10A-3(b)(1) under the Exchange
Act; provided, that if a member of the Committee ceases to be independent for
reasons outside the member's reasonable control, then the member may remain on
the Committee until the earlier of the Company's next annual stockholders
meeting or one year from the occurrence of the event that caused the member to
cease to be independent.

The members of the Committee, including the Chair of the Committee, shall
be appointed by the Board on the recommendation of the Nominating/Corporate
Governance Committee. Committee members may be removed from the Committee, with
or without cause, by the Board.

III. MEETINGS AND PROCEDURES

The Chair (or in his or her absence, a member designated by the Chair)
shall preside at each meeting of the Committee and set the agendas for Committee
meetings. The Committee shall have the authority to establish its own rules and
procedures for notice and conduct of its meetings so long as they are not
inconsistent with any provisions of the Company's bylaws that are applicable to
the Committee.

The Committee shall meet at least once during each fiscal quarter and
more frequently as the Committee deems desirable. The Committee shall meet
separately, periodically, with management, with the internal auditor if such
position is occupied, and with the independent auditor.

All non-management directors that are not members of the Committee may
attend and observe meetings of the Committee, but shall not be entitled to vote.
The Committee may, at its discretion, include in its meetings members of the
Company's management, representatives of the independent auditor, any other
financial personnel employed or retained by the Company or any other persons
whose presence the Committee believes to be necessary or appropriate.
Notwithstanding the foregoing, the Committee may also exclude from its meetings
any persons it deems appropriate, including, but not limited to, any
non-management director that is not a member of the Committee.

The Committee may retain any independent counsel, experts or advisors
(accounting, financial or otherwise) that the Committee believes to be necessary
or appropriate. The Committee may also utilize the services of the Company's
regular legal counsel or other advisors to the Company. The Company shall
provide for appropriate funding, as determined by the Committee, for payment of
compensation to the independent auditor for the purpose of rendering or issuing
an audit report or performing other audit, review or attest services, for
payment of compensation to any advisors employed by the Committee and for
ordinary administrative expenses of the Committee that are necessary or
appropriate in carrying out its duties.

The Committee may conduct or authorize investigations into any matters
within the scope of the powers and responsibilities delegated to the Committee.

IV. POWERS AND RESPONSIBILITIES

INTERACTION WITH THE INDEPENDENT AUDITOR

1. APPOINTMENT AND OVERSIGHT. The Committee shall be directly
responsible for the appointment, compensation, retention and oversight of the
work of the independent auditor (including resolution of any disagreements
between Company management and the independent auditor regarding financial
reporting) for the purpose of preparing or issuing an audit report or related
work or performing other audit, review or attest services for the Company, and
the independent auditor shall report directly to the Committee.

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2. PRE-APPROVAL OF SERVICES. Before the independent auditor is
engaged by the Company or its subsidiaries to render audit or non-audit
services, the Committee shall pre-approve the engagement. Committee pre-approval
of audit and non-audit services will not be required if the engagement for the
services is entered into pursuant to pre-approval policies and procedures
established by the Committee regarding the Company's engagement of the
independent auditor, provided the policies and procedures are detailed as to the
particular service, the Committee is informed of each service provided and such
policies and procedures do not include delegation of the Committee's
responsibilities under the Exchange Act to the Company's management. The
Committee may delegate to one or more designated members of the Committee the
authority to grant pre-approvals, provided such approvals are presented to the
Committee at a subsequent meeting. If the Committee elects to establish
pre-approval policies and procedures regarding non-audit services, the Committee
must be informed of each non-audit service provided by the independent auditor.
Committee pre-approval of non-audit services (other than review and attest
services) also will not be required if such services fall within available
exceptions established by the SEC.

3. INDEPENDENCE OF INDEPENDENT AUDITOR. The Committee shall, at least
annually, review the independence and quality control procedures of the
independent auditor and the experience and qualifications of the independent
auditor's senior personnel that are providing audit services to the Company. In
conducting its review:

(i) The Committee shall ensure that the independent auditor
prepare and deliver, at least annually, a written statement delineating all
relationships between the independent auditor and the Company, consistent with
Independence Standards Board Standard 1. The Committee shall actively engage in
a dialogue with the independent auditor with respect to any disclosed
relationships or services that, in the view of the Committee, may impact the
objectivity and independence of the independent auditor. If the Committee
determines that further inquiry is advisable, the Committee shall take
appropriate action in response to the independent auditor's report to satisfy
itself of the auditor's independence.

(ii) The Committee shall confirm with the independent auditor
that the independent auditor is in compliance with the partner rotation
requirements established by the SEC.

(iii) The Committee shall, if applicable, consider whether the
independent auditor's provision of any permitted information technology services
or other non-audit services to the Company is compatible with maintaining the
independence of the independent auditor.

ANNUAL FINANCIAL STATEMENTS AND ANNUAL AUDIT

4. MEETINGS WITH MANAGEMENT AND THE INDEPENDENT AUDITOR.

(i) The Committee shall meet with management and the
independent auditor in connection with each annual audit to discuss the scope of
the audit, the procedures to be followed and the staffing of the audit.

(ii) The Committee shall review and discuss with
management and the independent auditor any material off-balance sheet
transactions, arrangements, obligations (including contingent obligations) and
other relationships of the Company with unconsolidated entities of which the
Committee is made aware that do not appear on the financial statements of the
Company and that may have a material current or future effect on the Company's
financial condition, results of operations, liquidity, capital expenditures,
capital resources or significant components of revenues or expenses.

(iii) The Committee shall review and discuss the annual audited
financial statements with management and, if necessary, the independent auditor,
including the Company's disclosures under "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

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5. SEPARATE MEETINGS WITH THE INDEPENDENT AUDITOR.

(i) The Committee shall discuss with the independent auditor
the report that such auditor is required to make to the Committee regarding: (A)
all accounting policies and practices to be used that the independent auditor
identifies as critical; (B) all alternative treatments within GAAP for policies
and practices related to material items that have been discussed among
management and the independent auditor, including the ramifications of the use
of such alternative disclosures and treatments, and the treatment preferred by
the independent auditor; and (C) all other material written communications
between the independent auditor and management of the Company, such as any
management letter, management representation letter, reports on observations and
recommendations on internal controls, independent auditor's engagement letter,
independent auditor's independence letter, schedule of unadjusted audit
differences and a listing of adjustments and reclassifications not recorded, if
any.

(ii) The Committee shall discuss with the independent auditor
the matters required to be discussed by Statement on Auditing Standards No. 61,
"Communication with Audit Committees," as then in effect.

6. RECOMMENDATION TO INCLUDE FINANCIAL STATEMENTS IN ANNUAL REPORT.
The Committee shall, based on the review and discussions in paragraphs 4(iii)
and 5(ii) above, and based on the disclosures received from the independent
auditor regarding its independence and discussions with the auditor regarding
such independence pursuant to subparagraph 3(i) above, determine whether to
recommend to the Board that the audited financial statements be included in the
Company's Annual Report on Form 10-K for the fiscal year subject to the audit.

QUARTERLY FINANCIAL STATEMENTS

7. Meetings with Management and the Independent Auditor. The
Committee shall review and discuss the quarterly financial statements with
management and, if necessary, the independent auditor, including the Company's
disclosures under "Management's Discussion and Analysis of Financial Condition
and Results of Operations."

OTHER POWERS AND RESPONSIBILITIES

8. The Committee shall review all related-party transactions on an
ongoing basis and all such transactions must be approved by the Committee.

9. The Committee shall discuss with management and the independent
auditor any correspondence from or with regulators or governmental agencies, any
employee complaints or any published reports that raise material issues
regarding the Company's financial statements, financial reporting process,
accounting policies or internal audit function.

10. The Committee shall discuss with the Company's General Counsel or
outside counsel any legal matters brought to the Committee's attention that
could reasonably be expected to have a material impact on the Company's
financial statements.

11. The Committee shall request assurances from management and the
independent auditor that the Company's foreign subsidiaries and foreign
affiliated entities, if any, are in conformity with applicable legal
requirements, including disclosure of affiliated party transactions.

12. The Committee shall establish procedures for the receipt,
retention and treatment of complaints received by the Company regarding
accounting, internal accounting controls or auditing matters. The Committee
shall also establish procedures for the confidential and anonymous submission by
employees regarding questionable accounting or auditing matters.

13. The Committee shall provide the Company with the report of the
Committee with respect to the audited financial statements required by Item 306
of Reg. S-K, for inclusion in each of the Company's annual proxy statements.

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14. The Committee, through its Chair, shall report regularly to, and
review with, the Board any matter the Committee determines is necessary or
advisable to report to the Board.

15. The Committee shall at least annually perform an evaluation of the
performance of the Committee and its members, including a review of the
Committee's compliance with this Charter.

16. The Committee shall at least annually review and reassess this
Charter and submit any recommended changes to the Board for its consideration.

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APPENDIX B

CHARTER OF THE NOMINATING AND

CORPORATE GOVERNANCE COMMITTEE

MICREL, INCORPORATED

AUTHORITY AND PURPOSE

The Nominating and Corporate Governance Committee (the "Committee") of
Micrel, Incorporated (the "Corporation") is appointed by the Corporation's Board
of Directors (the "Board") to assist and advise the Board on composition and
operation of the Board, including membership selection, committee selection and
rotation practices, and to assist with review and consideration of developments
in corporate governance practices. The Committee shall undertake those specific
duties and responsibilities listed below and such other duties as the Board
shall from time to time prescribe.

The primary objectives of the Nominating and Corporate Governance
Committee are to assist the Board by: (i) considering and/or recruiting
individuals qualified to become Board members and recommending that the Board
select a group of director nominees for each next annual meeting of the
Corporation's stockholders; (ii) recommending members of the Audit, Compensation
and Nominating and Corporate Governance Committees of the Board who are
qualified and experienced "independent" directors; (iii) assisting management
and the Board in developing and recommending to the Board corporate governance
policies and procedures applicable to the Corporation; and (iv) monitoring
compliance with appropriate corporate governance practices as they relate to the
duties of both management and the Board. All powers of the Committee are subject
to the restrictions designated in the Corporation's bylaws and by applicable
law.

COMMITTEE MEMBERSHIP

The Committee members (the "Members") shall be elected annually by the
Board and will serve at the discretion of the Board. The Committee will consist
of at least three (3) members of the Board, each of whom shall satisfy the
applicable independence requirements of NASDAQ and any other relevant regulatory
requirements. Unless otherwise directed by the Board, Committee members shall
serve until his or her successor has been duly qualified and appointed by the
Board.

DUTIES AND RESPONSIBILITIES

The duties of the Committee shall include, without limitation, the
following:

Nominating Responsibilities

(1) Monitor the size and composition of the Board;

(2) Consider and make recommendations to the Board with respect
to the nominations or elections of directors of the
Corporation;

(3) Appoint directors to committees and suggest rotations for
chairpersons of committees of the Board as the Board deems
desirable from time to time; and

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(4) Recommend to the Board a policy on succession planning for
the CEO and senior executive management; review the policy
on an annual basis and report to the Board on the results.

In considering potential new directors and officers, the Committee will review
individuals from various disciplines and backgrounds. Among the qualifications
to be considered in the selection of candidates are broad experience in
business, finance or administration; familiarity with national and international
business matters; familiarity with the Corporation's industry; and prominence
and reputation. Since prominence and reputation in a particular profession or
field of endeavor are what bring most persons to the Board's attention, there is
the further consideration of whether the individual has the time available to
devote to the work of the Board and one or more of its committees.

A review is also to be made of the activities and associations of each
candidate to ensure that there is no legal impediment, conflict of interest, or
other consideration that might hinder or prevent service on the Board. In making
its selection, the Committee will bear in mind that the foremost responsibility
of a director of a Corporation is to represent the interests of the shareholders
as a whole.

The Committee shall periodically review and reassess the adequacy of this
Charter and propose any changes to the Board for approval.

(a) Corporate Governance Responsibilities

(1) Regularly review issues and developments related to
corporate governance and recommend to the Board new
governance standards and/or modifications to existing
standards;

(2) Evaluate and recommend any revisions to board and committee
meeting policies and logistics;

(3) Consider and recommend changes in the size of the Board;
and

(4) On an annual basis, solicit input from the Board and
conduct a review of the effectiveness of the operation of
the Board and its committees, including reviewing
governance and operating practices.

CONDUCT OF BUSINESS

The Committee shall conduct its business in accordance with this Charter
and any direction by the Board of Directors. The Committee shall report, at
least annually, to the Board. Prior to the annual meeting of shareholders, the
Committee will recommend to the Board the persons who will be the nominees of
the Board of Directors for the election of whom the Board will solicit proxies.
As part of this process, the Committee will review candidates recommended by
shareholders of the Corporation. A shareholder who wishes to recommend an
individual for Board membership may do so by writing to: Corporate Secretary,
Micrel, Incorporated, 1849 Fortune Drive, San Jose, CA 95131. Notice by a
shareholder that the shareholder intends to nominate one or more persons as a
Board member at a meeting of shareholders or otherwise must be received by the
Secretary within the time periods prescribed by the Corporation's bylaws and
applicable law.

MEETINGS

The Committee will meet at least twice per year and more frequently as
circumstances require. The Committee may establish its own schedule which
it will provide to the Board in advance.

B-2

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MINUTES

The Committee will maintain written minutes of its meetings, which
minutes will be filed with the minutes of the meetings of committees of
the Board.

(i) COMMITTEE RESOURCES

The Nominating and Corporate Governance Committee shall have the
authority to obtain advice and seek assistance from internal or external legal,
accounting or other advisors. The Committee shall have the authority to retain
and terminate any search firm to be used to identify director candidates,
including authority to approve such search firm's fees and other retention
terms.

B-3

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· Enlarge/Download Table

Please Mark
Here for
Address Change / /
or Comments
SEE REVERSE SIDE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF
DIRECTORS AND FOR PROPOSAL 2.
FOR AGAINST ABSTAIN
Shares represented by this proxy will be voted as directed
by the shareholder. IF NO SUCH DIRECTIONS ARE INDICATED, THE 2. To ratify the appointment of
PROXIES WILL HAVE AUTHORITY TO VOTE FOR THE ELECTION OF ALL PricewaterhouseCoopers LLP as the / / / / / /
DIRECTORS AND FOR PROPOSAL 2. Company's independent auditors for
the fiscal year ending December 31,
2004.
3. In their discretion, the Proxies are authorized to vote upon
1. Election of Directors (see reverse) such business as may properly come before the Annual Meeting.

01 Raymond D. Zinn FOR WITHHOLD
02 Warren H. Muller
03 Larry L. Hansen / / / / PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
04 George Kelly CARD PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.
05 Donald Livingstone

FOR, except vote withheld from the following nominee(s):

_____________________________________________________________

SIGNATURE___________________________________________ SIGNATURE_________________________________________ DATE____________________
NOTE: PLEASE SIGN AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH.

^ FOLD AND DETACH HERE ^
TRAVEL DIRECTIONS TO MICREL
(FOR MEETING APPOINTMENTS)

From San Francisco Int'l Airport
or San Francisco via US 101:

Take US 101 south (towards San Jose);
exit Montague Expwy.; right at Trade
Zone Blvd.; immediate right at Ringwood
Ave., left on Fortune Dr. [PICTURE OMITTED]

FROM SAN JOSE INT'L AIRPORT:

Take Airport Parkway (becomes Brokaw Rd.
then Murphy Rd.); left on Ringwood Ave.;
right on Fortune Dr.

FROM SAN FRANCISCO VIA I-280

Take I-280 South (toward San Jose); exit I-880
north (toward Oakland); exit Montague Expwy. east;
right at Trade Zone Blvd.; immediate right at
Ringwood Ave., left on Fortune Dr. 2180 Fortune
Drive 1931 Fortune Drive 1849 Fortune Drive
San Jose, CA 95131 408-944-0800

-53-

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PROXY
MICREL, INCORPORATED
1849 FORTUNE DRIVE
SAN JOSE, CA 95131

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON MAY 27, 2004

Raymond D. Zinn and Richard D. Crowley, Jr., or either of them, each with
the power of substitution, are hereby authorized to represent and vote the
shares of the undersigned, with all the powers which the undersigned would
possess if personally present, at the Annual Meeting of Shareholders of Micrel,
Incorporated (the "Company"), to be held on Thursday, May 27, 2004, and any
adjournment or postponement thereof.

Election of five directors (or if any nominee is not available for
election, such substitute as the Board of Directors or the proxy holders may
designate). Nominees: 01 RAYMOND D. ZINN, 02 WARREN H. MULLER, 03 LARRY L.
HANSEN, 04 GEORGE KELLY AND 05 DONALD LIVINGSTONE.

(CONTINUED, AND TO BE SIGNED ON THE OTHER SIDE)

--------------------------------------------------------------------------------
ADDRESS CHANGE/COMMENTS (MARK THE CORRESPONDING BOX ON THE REVERSE SIDE)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

^ FOLD AND DETACH HERE ^

[LOGO] MICREL

ANNUAL SHAREHOLDER MEETING

THURSDAY, MAY 27, 2004
12:00 PM

2180 FORTUNE DRIVE
SAN JOSE, CA 95131

================================================================

IMPORTANT REMINDER

Whether or not you plan to attend this meeting, your vote is
important to us. WE URGE YOU TO COMPLETE, DETACH AND MAIL THE
PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED ENVELOPE.

================================================================

We look forward to seeing you at the meeting. On behalf of the
management and directors of Micrel, Incorporated, we want to
thank you for your support.

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This DEF 14A Filing	Date	First	Last	Other Filings

	12/31/98	21		10-K
	12/31/01	16	22	5, 10-K, 11-K
	6/30/02	22		10-Q
	8/30/02	22
	9/6/02	22		8-K
	11/21/02	10
	12/11/02	13
	12/31/02	16	22	5, 11-K, 10-K
	5/22/03	12		DEF 14A
	6/13/03	13	17
	8/28/03	20
	12/31/03	9	24	8-K, 10-K, 10-K/A, 11-K
	2/13/04	6		SC 13G/A, 4
	3/1/04	10
	4/1/04	2	7
	4/9/04	9	25
Filed On / Filed As Of / Effective As Of	4/27/04	2	24
For The Period Ended	5/27/04	2	34	DEF 14A
	10/27/04	17
	12/28/04	23		4
	12/31/04	2	33	5/A, 5, 10-K, 11-K
	3/1/05	23
	6/13/06	17
	8/5/06	17
	11/16/10	20

Top				List All Filings

Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)

Micrel Inc · DEF 14A · For 5/27/04

Filed On 4/27/04 9:18am ET · SEC File 0-25236 · Accession Number 1188112-4-626

Definitive Proxy Solicitation Material · Schedule 14AFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Definitive Proxy Solicitation Material · Schedule 14A
Filing Table of Contents