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Micrel Inc · DEF 14A · For 5/22/03

Filed On 4/16/03 9:10am ET · SEC File 0-25236 · Accession Number 1188112-3-223

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

 4/16/03  Micrel Inc                        DEF 14A     5/22/03    1:29                                     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                29    175K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Proposal 1 Proposal 1 Election of Directors Proposal 2 Proposal 3 Shareholder Proposals
1	1st Page
4	Proposal 1
"	Proposal 1 Election of Directors
5	Proposal 2
"	Proposal 3
26	Shareholder Proposals

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Sponsored Ads...

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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
|X| Definitive proxy statement Commission Only (as permitted by
|_| Definitive additional materials Rule 14a-6(e)(2))
|_| 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:

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(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):

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(4) Proposed maximum aggregate value of transaction.

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(5) Total fee paid:

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|_| Fee paid previously with preliminary materials:

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|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and 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:

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(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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MICREL, INCORPORATED
2180 FORTUNE DRIVE
SAN JOSE, CALIFORNIA 95131

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 22, 2003

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 22, 2003 at 12:00 p.m., Pacific Daylight Time, for the
following purposes:

1. To elect five directors of the Company to serve until the 2004 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, 2003 ("Proposal 2");

3. To approve the adoption of the Company's 2003 Incentive Award Plan and
the issuance of up to 6,568,800 shares of common stock under such plan
("Proposal 3"); and

4. 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, 2003 as
the record date for determining the shareholders entitled to notice of and to
vote at the 2003 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 15, 2003

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MICREL, INCORPORATED
2180 FORTUNE DRIVE
SAN JOSE, CALIFORNIA 95131

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

PROXY STATEMENT

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

ANNUAL MEETING OF SHAREHOLDERS
MAY 22, 2003

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 22,
2003, and at any adjournment or postponement thereof. Only holders of the
Company's common stock of record on April 1, 2003 (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 92,093,009 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 15, 2003. 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"). Proposal 3 requires the affirmative vote in person or by
proxy of the holders of a majority of the shares represented at and entitled to
vote at the meeting. Any proxy that 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 PricewaterhousCoopers LLP as the independent
auditor of the Company as set forth in Proposal 2;

o FOR the approval of the adoption of the Company's 2003 Incentive Award
Plan as set forth in Proposal 3; and

o as the proxy holders deem advisable on other matters that may come
before the Annual Meeting.

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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 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 2004 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............ 65 President, Chief Executive Officer and Chairman of the Board 1978
Warren H. Muller........... 64 Director 1978
Larry L. Hansen............ 74 Director 1994
George Kelly............... 68 Director 1994
Donald H. Livingstone...... 60 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 employee 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. Mr. Muller serves as a member of the
Compensation Committee of the Board of Directors.

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

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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 Signal Technology Corp. and 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 California Independent Bancorp and is a Trustee of the Eureka Family of
Mutual Funds. Mr. Livingstone serves as a member of the Audit 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, 2003 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.

PROPOSAL 3

APPROVAL OF THE 2003 INCENTIVE AWARD PLAN

The Company's 1994 Stock Option Plan ("1994 Plan") will expire by its terms
in late 2003. In order to continue to provide long-term incentive to Company
employees, in March 2003, the Board adopted the 2003 Incentive Award Plan ("2003
Plan"), subject to shareholder approval. Subject to and upon approval of the
2003 Plan by the shareholders, the Company's 1994 Plan will terminate, and
approximately 6,568,800 shares of common stock otherwise available for future
awards under this plan will no longer be available for such purpose. The shares
currently available for issuance under the 1994 Plan will be transferred into
the 2003 Plan and be available for

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issuance thereunder. THIS PROPOSAL DOES NOT INCREASE THE AGGREGATE NUMBER OF
AUTHORIZED SHARES AVAILABLE FOR ISSUANCE UNDER OUR OPTION PLANS. As of April 2,
2003 there were 6,568,800 shares of common stock reserved for issuance under the
1994 Plan. The Board has not granted any awards under the 2003 Plan.

Options previously granted and outstanding under the 1994 Plan will
continue to remain outstanding in accordance with the terms and conditions of
the 1994 Plan. As of April 1, 2003, options to purchase an aggregate of
approximately 9,176,018 shares of common stock were outstanding under the 1994
Plan.

Shareholders are requested in this Proposal 3 to approve the 2003 Plan. The
affirmative vote in person or represented by proxy of the holders of a majority
of the shares represented at and entitled to vote at the meeting will be
required to approve the 2003 Plan. A vote FOR this proposal will be a vote to
approve the new 2003 Plan and transfer previously authorized but un-issued
shares from the 1994 Plan to the 2003 Plan.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE 2003 INCENTIVE
AWARD PLAN AS SET FORTH IN PROPOSAL 3.

SUMMARY OF 2003 PLAN

The following is a summary of the principal features of the 2003 Plan as it
is currently proposed. The summary, however, does not purport to be a complete
description of all the provisions of the 2003 Plan and is qualified in its
entirety by reference to the 2003 Plan itself, which is included as Appendix A
to this Proxy Statement.

SECURITIES SUBJECT TO THE 2003 PLAN

The shares of stock subject to the 2003 Plan shall be our common stock,
which had a closing sales price of $9.46 per share on The Nasdaq Stock Market on
April 1, 2003. Under the terms of the 2003 Plan, the aggregate number of shares
of common stock subject to options, grants of restricted stock, stock
appreciation rights ("SARs") and other awards will be no more than 6,568,800
shares. If there is any stock dividend, stock split, recapitalization, or other
subdivision, combination or reclassification of shares of common stock or
similar transaction, the Board or a committee of the Board appointed to
administer the 2003 Plan (the "Administrator") shall have the authority in its
discretion to appropriately adjust:

o the aggregate number and kind of shares of common stock (or other
securities or property) with respect to which awards may be granted or
awarded under the 2003 Plan;
o the number and kind of shares of common stock (or other securities or
property) subject to outstanding awards under the 2003 Plan; and
o the price per share of outstanding options, stock purchase rights,
SARs and other awards;

Shares subject to expired or canceled options will be available for future
grant or sale under the 2003 Plan. In addition, shares that are delivered to us
by an optionee or withheld by us upon the exercise of an award in payment of the
exercise price or in satisfaction of tax withholding obligations may again be
optioned, granted or awarded under the 2003 Plan. No shares may be optioned,
granted or awarded under the 2003 Plan, however, if such action would cause an
incentive stock option to fail to qualify as an "incentive stock option" under
Section 422 of the Code.

AWARDS UNDER THE 2003 PLAN

The 2003 Plan provides that the Administrator may grant or issue stock
options, SARs, restricted stock, deferred stock, dividend equivalents,
performance awards and stock payments, 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.

NONQUALIFIED STOCK OPTIONS ("NQSOs") will provide for the right to purchase
common stock at a specified price determined by the Administrator which, except
with respect to NQSOs intended to qualify as performance-based compensation
under Section 162(m) of the Code, may be less than fair market value on the date
of grant, and

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usually will become exercisable (in the discretion of the Administrator) in one
or more installments after the grant date. NQSOs may be granted for any term
specified by the Administrator.

INCENTIVE STOCK OPTIONS ("ISOs") will be designed to comply with the
provisions of the Code and will be subject to certain restrictions contained in
the Code. Among such restrictions, ISOs must have an exercise price not less
than the fair market value of a share of common stock on the date of grant, may
only be granted to employees, must be exercised within a specified period of
time following the optionee's termination of employment, and must be exercised
within ten years after the date of grant; but may be subsequently modified to
disqualify them from treatment as ISOs. In the case of an ISO granted to an
individual who owns (or is deemed to own) at least 10% of the total combined
voting power of all of our classes of stock, the 2003 Plan provides that the
exercise price must be at least 110% of the fair market value of a share of
common stock on the date of grant and the ISO must expire no later than the
fifth anniversary of the date of its grant.

RESTRICTED STOCK may be sold to participants at various prices or granted
with no purchase price, and may be made subject to such restrictions as may be
determined by the Administrator. Restricted stock, typically, may be repurchased
by us at the original purchase price if the conditions or restrictions are not
met. In general, restricted stock may not be sold, or otherwise hypothecated or
transferred until restrictions are removed or expire. Purchasers of restricted
stock, unlike recipients of options, will have voting rights and will receive
dividends prior to the time when the restrictions lapse.

DEFERRED STOCK may be awarded to participants, typically without payment of
consideration, but subject to vesting conditions based on performance criteria
established by the Administrator. Like restricted stock, deferred stock may
generally not be sold, or otherwise hypothecated or transferred until vesting
conditions are removed or expire. Unlike restricted stock, deferred stock will
not be issued until the deferred stock award has vested, and recipients of
deferred stock generally will have no voting or dividend rights prior to the
time when vesting conditions are satisfied.

STOCK APPRECIATION RIGHTS may be granted in connection with stock options
or other awards, or separately. SARs granted by the Administrator in connection
with stock options or other awards typically will provide for payments to the
holder based upon increases in the price of our common stock over the exercise
price of the related option or other awards, but alternatively may be based upon
criteria such as book value. Except as required by Section 162(m) of the Code
with respect to an SAR intended to qualify as performance-based compensation as
described in Section 162(m) of the Code, there are no restrictions specified in
the 2003 Plan on the exercise of SARs or the amount of gain realizable
therefrom, although restrictions may be imposed by the Administrator in the SAR
agreements. The Administrator may elect to pay SARs in cash or in common stock
or in a combination of both.

DIVIDEND EQUIVALENTS represent the value of the dividends per share paid by
us, calculated with reference to the number of shares covered by the stock
options, SARs or other awards held by the participant.

PERFORMANCE AWARDS may be granted by the Administrator to employees or
consultants based upon, among other things, the contributions, responsibilities
and other compensation of the particular employee or consultant. Generally,
these awards will be based upon specific performance criteria and may be paid in
cash or in common stock or in a combination of both. Performance Awards may
include "phantom" stock awards that provide for payments based upon increases in
the price of our common stock over a predetermined period. Performance Awards to
consultants and employees may also include bonuses granted by the Administrator
and which may be payable in cash or in common stock or in a combination of both.

STOCK PAYMENTS may be authorized by the Administrator in the form of shares
of common stock or an option or other right to purchase common stock as part of
a deferred compensation arrangement in lieu of all or any part of compensation,
including bonuses, that would otherwise be payable in cash to the key employee
or consultant.

The Administrator may designate key employees as "Section 162(m)
Participants," whose compensation for a given fiscal year may be subject to the
limit on deductible compensation imposed by Section 162(m) of the Code. The
Administrator may grant to Section 162(m) Participants restricted stock,
deferred stock, SARs, dividend equivalents, performance awards, cash bonuses and
stock payments that are paid, vest or become exercisable upon

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the attainment of company performance goals which are related to one or more of
the following performance criteria:

o net income;
o pre-tax income;
o operating income;
o cash flow;
o earnings per share;
o earnings before interest, taxes, depreciation and/or amortization;
o return on equity;
o return on invested capital or assets;
o funds from operations;
o cost reductions or savings;
o the market price of a share of our common stock;
o specific product introductions; and
o specific product revenues.

The maximum number of shares which may be subject to options, stock
purchase rights, SARs and other awards granted under the 2003 Plan to any
individual in any calendar year may not exceed 1,000,000; provided, however,
that performance awards shall be limited to $2,000,000.

ELIGIBILITY

Our employees, consultants and non-employee directors are eligible to
receive awards under the 2003 Plan. As of April 1, 2003 we had approximately 805
employees and consultants and three non-employee directors. The Administrator
determines which of our employees, consultants and non-employee directors
(except as stated below) will be granted awards. No employee or consultant is
entitled to participate in the 2003 Plan as a matter of right. Only those
employees and consultants who are selected to receive grants by the
Administrator may participate in the 2003 Plan. Non-employee directors are also
eligible to receive automatic option grants under the 2003 Plan. GRANT AND TERMS
OF OPTIONS

The Administrator shall have the authority under the 2003 Plan to
determine:

o the number of shares subject to each option grant to employees,
consultants and directors;
o whether the option grant is an ISO or NQSO; and
o the terms and conditions of each option grant.

The Administrator may not grant an ISO under the 2003 Plan to any person
who owns more than 10% of the total combined voting power of all classes of our
stock (a "10% Owner") unless the stock option conforms to the applicable
provisions of Section 422 of the Code. Only our employees may be granted ISOs
under the 2003 Plan. Employees, consultants, and directors may receive NQSOs and
restricted stock under the 2003 Plan. Each option will be evidenced by a written
option agreement.

The exercise price for the shares of common stock subject to each option
will be specified in each option agreement. The Administrator shall set the
exercise price at the time the option is granted. In certain instances, the
exercise price is also subject to additional rules as follows:

o In the case of options intended to qualify as performance-based
compensation, or as ISOs, the exercise price may not be less than the
fair market value for the shares of common stock subject to such
option on the date the option is granted.
o In the case of ISOs granted to a 10% Owner, the exercise price may not
be less than 110% of the fair market value of the shares of common
stock subject to such option on the date the option is granted.

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o In the case of NQSOs granted to a non-employee director, the exercise
price shall be equal to the fair market value for the shares of common
stock subject to such option on the date the option is granted.

For purposes of the 2003 Plan, the fair market value of a share of common
stock as of a given date shall be the closing price of a share of common stock
on The Nasdaq Stock Market on the trading day previous to such date.

TERM OF OPTIONS

For options granted to our employees and consultants, the term of an option
shall be set by the Administrator. In the case of an ISO, the term of the option
may not be longer than 10 years from the date the ISO is granted, or if granted
to a 10% Owner, five years from the date of the grant. Generally, an option
granted to an employee or consultant may only be exercised while such person
remains our employee or consultant, as applicable. However, the Administrator
may, in the written option agreement related to an option granted to an employee
or consultant, provide that such outstanding option may be exercised subsequent
to the termination of employment or the consulting relationship.

Generally, unless otherwise determined by the Administrator at the time of
grant, options granted to our non-employee directors shall expire on the earlier
of ten years from the date on which the option is granted or thirty days after
the termination of the non-employee director's directorship.

VESTING OF OPTIONS

Generally, an option is exercisable when it vests. For options granted to
our employees and consultants, each option agreement will contain the period
during which the right to exercise the option in whole or in part vests in the
optionee. At any time after the grant of an option, the Administrator may
accelerate the period during which such option vests. No portion of an option
that is un-exercisable at an optionee's termination of employment or termination
of consulting relationship will subsequently become exercisable, except as may
be otherwise provided by the Administrator either in the agreement relating to
the stock option or by action following the grant of the option.

Options granted to our non-employee directors vest in equal annual
installments over four years from the date the option is granted. No portion of
an option which is un-exercisable at a non-employee director's termination of
directorship will subsequently become exercisable.

EXERCISE OF OPTIONS

An option may be exercised for any vested portion of the shares subject to
the option until the option expires. Only whole shares of common stock may be
purchased. An option may be exercised by delivering to our Secretary a written
notice of exercise on a form provided by us, together with full cash payment for
the shares in the form of cash or a check payable to us in the amount of the
aggregate option exercise price. However, the Administrator may in its
discretion and subject to applicable laws:

o allow payment through the delivery of shares of common stock which
have been owned by the optionee for at least six months;
o allow payment through the surrender of shares of common stock which
would otherwise be issuable on exercise of the option;
o allow payment through the delivery of property of any kind which
constitutes good and valuable consideration;
o allow payment by delivery of a full recourse promissory note to us in
a form and with terms prescribed by the Administrator;
o allow 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 us in satisfaction of the option exercise price; or
o allow payment through any combination of the foregoing.

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However, no option may be exercised by delivery of a promissory note or by
a loan from us if such loan or extension of credit is prohibited by law.

AUTOMATIC OPTION GRANTS TO NON-EMPLOYEE DIRECTORS

Each of our current non-employee directors will receive an automatic grant
of an option to purchase 5,000 shares of common stock on the date of the 2003
Annual Meeting and an automatic grant of an option to purchase 5,000 shares of
common stock at each annual meeting of our shareholders thereafter. Each person
who thereafter is elected or appointed as a non-employee director will receive
an automatic grant of an option to purchase 5,000 shares of common stock on the
date such person is first elected as an non-employee director and an automatic
grant of an option to purchase 5,000 shares of common stock at each annual
meeting of our shareholders thereafter. The options will vest in equal annual
installments over four years from the date of grant, subject to continued
service on our Board.

Pursuant to these arrangements, each of George Kelly, Larry L. Hansen and
Donald H. Livingstone, our current non-employee directors, will receive options
to purchase 5,000 shares of common stock in 2003.

ADMINISTRATION OF THE 2003 PLAN

All decisions, determinations and interpretations of the Administrator
shall be final and binding on all holders. The Administrator has the power to:

o construe and interpret the terms of the 2003 Plan and awards granted
pursuant to the 2003 Plan;
o adopt rules for the administration, interpretation and application of
the 2003 Plan that are consistent with the 2003 Plan; and
o interpret, amend or revoke any of the newly adopted rules of the 2003
Plan.

AWARDS NOT TRANSFERABLE

Awards may generally not be sold, pledged, transferred, or disposed of in
any manner other than pursuant to certain court orders with the Administrator's
consent and by will or by the laws of descent and distribution and may be
exercised, during the lifetime of the holder, only by the holder or such
transferees as have been transferred an award pursuant to court order with the
Administrator's consent.

AMENDMENT AND TERMINATION OF THE 2003 PLAN

The Board may amend the 2003 Plan at any time; provided that the Board may
not, without shareholder approval given within 12 months of the Board's action,
amend the 2003 Plan so as to increase the number of shares of stock that may be
issued under the 2003 Plan, impair the rights of those who have received awards
under the 2003 Plan, change the description of persons eligible to receive an
award under the 2003 Plan or change the minimum exercise price of an award.

The Board may terminate the 2003 Plan at any time. The 2003 Plan will be in
effect until terminated by the Board. However, in no event may any incentive
stock option be granted under the 2003 Plan after March 26, 2013.

FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH THE 2003 PLAN

The following is a general summary under current law of the material
federal income tax consequences to participants in the 2003 Plan. This summary
deals with the general tax principles that apply and is provided only for
general information. Some kinds of taxes, such as state and local income taxes,
are not discussed. Tax laws are complex and subject to change and may vary
depending on individual circumstances and from locality to locality. The summary
does not discuss all aspects of income taxation that may be relevant in light of
a holder's personal investment circumstances. This summarized tax information is
not tax advice, and the Company recommends each person consult with his or her
own tax advisor.

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NON-QUALIFIED STOCK OPTIONS

For federal income tax purposes, if an optionee is granted NQSOs under the
2003 Plan, the optionee will not have taxable income on the grant of the option,
nor will we be entitled to any deduction. Generally, on exercise of NQSOs the
optionee will recognize ordinary income, and we will be entitled to a deduction,
in an amount equal to the difference between the option exercise price and the
fair market value of the common stock on the date of exercise. The optionee's
basis for the stock for purposes of determining gain or loss on subsequent
disposition of such shares generally will be the fair market value of the common
stock on the date the optionee exercises the option. Any subsequent gain or loss
will be generally taxable as capital gains or losses.

INCENTIVE STOCK OPTIONS

There is no taxable income to an optionee when an optionee is granted an
ISO or when that option is exercised. However, the amount by which the fair
market value of the shares at the time of exercise exceeds the option price will
be an "item of adjustment" for the optionee for purposes of the alternative
minimum tax. Gain realized by the optionee on the sale of an ISO is taxable at
capital gains rates, and no tax deduction is available to us, unless the
optionee disposes of the shares within (1) two years after the date of grant of
the option or (2) within one year of the date the shares were transferred to the
optionee. If the shares of common stock are sold or otherwise disposed of before
the end of the one-year and two-year periods specified above, the difference
between the option exercise price and the fair market value of the shares on the
date of the option's exercise will be taxed at ordinary income rates, and we
will be entitled to a deduction to the extent the optionee must recognize
ordinary income. If such a sale or disposition takes place in the year in which
the optionee exercises the option, the income the optionee recognizes upon sale
or disposition of the shares will not be considered income for alternative
minimum tax purposes. Otherwise, if the optionee sells or otherwise disposes the
shares before the end of the one-year and two-year periods specified above, the
maximum amount that will be included as alternative minimum tax income is the
gain, if any, the optionee recognizes on the disposition of the shares.

An ISO exercised more than three months after an optionee terminates
employment, other than by reason of death or disability, will be taxed as a
NQSO, and the optionee will have been deemed to have received income on the
exercise taxable at ordinary income rates. We will be entitled to a tax
deduction equal to the ordinary income, if any, realized by the optionee.

STOCK APPRECIATION RIGHTS

No taxable income is generally recognized upon the receipt of an SAR, but
upon exercise of the SAR the fair market value of the shares (or cash in lieu of
shares) received generally will be taxable as ordinary income to the recipient
in the year of such exercise. We generally will be entitled to a compensation
deduction for the same amount that the recipient recognizes as ordinary income.

RESTRICTED STOCK AND DEFERRED STOCK

An employee to whom restricted or deferred stock is issued generally will
not recognize taxable income upon such issuance and we generally will not then
be entitled to a deduction unless, with respect to restricted stock, an election
is made under Section 83(b) of the Code. However, when restrictions on shares of
restricted stock lapse, such that the shares are no longer subject to a
substantial risk of forfeiture, the employee generally will recognize ordinary
income and we generally will be entitled to a deduction for an amount equal to
the excess of the fair market value of the shares at the date such restrictions
lapse over the purchase price therefor. If a timely election is made under
Section 83(b) with respect to restricted stock, the employee generally will
recognize ordinary income on the date of the issuance equal to the excess, if
any, of the fair market value of the shares at that date over the purchase price
therefore, and we will be entitled to a deduction for the same amount.
Similarly, when deferred stock vests and is issued to the employee, the employee
generally will recognize ordinary income and we generally will be entitled to a
deduction for the amount equal to the fair market value of the shares at the
date of issuance. A Section 83(b) election is not permitted with regard to the
grant of deferred stock.

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DIVIDEND EQUIVALENTS

A recipient of a dividend equivalent award generally will not recognize
taxable income at the time of grant, and we will not be entitled to a deduction
at that time. When a dividend equivalent is paid, the participant generally will
recognize ordinary income, and we will be entitled to a corresponding deduction.

PERFORMANCE AWARDS

A participant who has been granted a performance award generally will not
recognize taxable income at the time of grant, and we will not be entitled to a
deduction at that time. When an award is paid, whether in cash or common stock,
the participant generally will recognize ordinary income, and we will be
entitled to a corresponding deduction.

STOCK PAYMENTS

A participant who receives a stock payment in lieu of a cash payment that
would otherwise have been made will generally be taxed as if the cash payment
has been received, and we generally will be entitled to a deduction for the same
amount.

DEFERRED COMPENSATION

Participants who defer compensation generally will recognize no income,
gain or loss for federal income tax purposes when NQSOs are granted in lieu of
amounts otherwise payable, and we will not be entitled to a deduction at that
time. When and to the extent such NQSOs are exercised, the rules regarding NQSOs
outlined above will generally apply.

SECTION 162(M) OF THE CODE

In general, under Section 162(m), income tax deductions of publicly-held
corporations may be limited to the extent total compensation (including base
salary, annual bonus, stock option exercises and non-qualified benefits paid)
for certain executive officers exceeds $1,000,000 (less the amount of any
"excess parachute payments" as defined in Section 280G of the Code) in any one
year. However, under Section 162(m), the deduction limit does not apply to
certain "performance-based compensation" established by an independent
compensation committee which is adequately disclosed to, and approved by,
shareholders. In particular, stock options and SARs will satisfy the
"performance-based compensation" exception if the awards are made by a
qualifying compensation committee, the 2003 Plan sets the maximum number of
shares that can be granted to any person within a specified period and the
compensation is based solely on an increase in the stock price after the grant
date (i.e. the option exercise price is equal to or greater than the fair market
value of the stock subject to the award on the grant date). Performance or
incentive awards granted under the 2003 Plan may qualify as "qualified
performance-based compensation" for purposes of Section 162(m) if such awards
are granted or vest upon the pre-established objective performance goals
described above.

We have attempted to structure the 2003 Plan in such a manner that the
Committee can determine the terms and conditions of stock options, SARs and
performance and incentive awards granted thereunder such that remuneration
attributable to such awards will not be subject to the $1,000,000 limitation. We
have not, however, requested a ruling from the Internal Revenue Service or an
opinion of counsel regarding this issue. This discussion will neither bind the
Internal Revenue Service nor preclude the Internal Revenue Service from adopting
a contrary position.

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EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information as of December 31, 2002 for all
of our current equity compensation plans, including our 1989 Stock Option Plan,
our 1994 Plan, our 1994 Stock Purchase Plan, and our 2000 Non-Qualified Stock
Incentive Plan ("2000 Plan").

[Enlarge/Download Table]

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
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS REFLECTED IN COLUMN (A))
------------- ------------------- ------------------- ---------------
(A) (B) (C)

Equity Compensation Plans
Approved by Security Holders....... 9,183,894(1) $12.87 7,672,513 (2)
Equity Compensation Plans Not
Approved by Security Holders....... 37,600(3) $25.49 162,280 (4)
Total.............................. 9,221,494 $12.92 7,834,793

-------------
(1) Includes (i) 9,067,094 shares of common stock issuable upon the exercise of
options granted under the 1994 Plan, of which 5,533,581 shares were
exercisable as of December 31, 2002, and (ii) 116,800 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, 2002.
(2) Includes (i) 6,568,800 shares of common stock available for issuance under
the 1994 Plan; and (ii) 1,103,713 shares of common stock available for
issuance under the Company's 1994 Stock Purchase Plan.
(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.

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.

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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

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.

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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.

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, 2003, 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 and two additional highly compensated individuals of the
Company (collectively, the "Named Executive Officers") and (iv) all executive
officers and directors of the Company as a group.

[Download Table]

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

Raymond D. Zinn(2)..................................... 12,148,390 13.1%
Warren H. Muller(3).................................... 11,912,800 12.9%
Franklin Resources, Inc.(4)
901 Mariners Island Boulevard, 6th Floor
San Mateo, CA 94404............................... 10,406,847 11.3%
FMR Corp.(5)
82 Devonshire Street
Boston, MA 02109.................................. 10,216,510 11.1%
Wasatch Advisors, Inc.(6)
150 Social Hall Avenue
Salt Lake City, UT 84111.......................... 6,308,112 6.9%
Capital Research Management Company(7)
333 South Hope Street
Los Angeles, CA 90071............................. 4,842,110 5.3%
Robert Whelton(8)...................................... 491,522 *
Christopher Dingley(9)................................. 52,275 *
Tian-I Liou ........................................... 124,081 *
Mark A. Downing........................................ 2,068 *
James G. Gandenberger(11).............................. 8,774 *
J. Vincent Tortolano (12).............................. 5,000 *
George Kelly (13)...................................... 105,250 *
Larry L. Hansen(14).................................... 131,250 *
Donald H. Livingstone.................................. 200 *
All executive officers and directors as a group(15).... 26,452,680 27.9%

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

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(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, 2003 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 400,000 shares subject to stock options exercisable within 60 days
of April 1, 2003.
(3) Includes 144,000 shares subject to stock options exercisable within 60 days
of April 1, 2003.
(4) Based on a Schedule 13G filed February 12, 2003.
(5) Based on a Schedule 13G filed February 13, 2003. (6) Based on a Schedule
13G filed February 13, 2003. (7) Based on a Schedule 13G filed February 13,
2003.
(8) Includes 490,000 shares subject to stock options exercisable within 60 days
of April 1, 2003.
(9) Includes 52,275 shares subject to stock options exercisable within 60 days
of April 1, 2003.
(11) Includes 6,200 shares subject to stock options exercisable within 60 days
of April 1, 2003.
(12) Includes 5,000 shares subject to stock options exercisable within 60 days
of April 1, 2003.
(13) Represents 54,000 shares held of record by the Kelly Family Trust of which
Mr. Kelly is a trustee. Includes 51,250 shares subject to stock options
exercisable within 60 days of April 1, 2003.
(14) Includes 51,250 shares subject to stock options exercisable within 60 days
of April 1, 2003. (15) Includes 2,561,375 shares subject to stock options
exercisable within 60 days of April 1, 2003.

CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS

Information regarding each of our executive officers as of April 1, 2003 is
set forth below.

[Enlarge/Download Table]

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

Raymond D. Zinn.............. 65 President, Chief Executive Officer and Chairman of the Board

Robert Whelton............... 63 Executive Vice President of Operations

Robert J. Barker............. 56 Vice President, Corporate Business Development

Richard D. Crowley, Jr....... 46 Vice President, Finance and Chief Financial Officer

Mark Downing................. 42 Vice President, Marketing

Mark Lunsford................ 45 Vice President, World-Wide Sales

Carlos Mejia................. 52 Vice President, Human Resources

Jack B. Small................ 51 Vice President, Design and Process Engineering

Scott Ward................... 48 Vice President, Test Division

Thomas Wong.................. 47 Vice President, High Bandwidth Products

J. Vincent Tortolano......... 53 Vice President, General Counsel, and Secretary

Richard Zelenka.............. 47 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.

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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.

Mr. Downing joined the Company as Vice President, Marketing in December
2000. Prior to joining the Company he was employed by Pericom Semiconductor
Corporation as its Vice President, Marketing from October 1997 to December 2000.
From 1988 to 1997 Mr. Downing was employed by National Semiconductor in various
marketing management positions in their international sales and marketing
operations and their Analog division. He holds a BSc in Physics from the
University of Aston in Birmingham, England and an M.B.A. from the Open
University, Milton Keynes, England.

Mr. Lunsford joined the Company in September 2001 as Vice President
WorldWide 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. 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.

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.

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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. 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, 2002. Each member of the Board of
Directors who served during 2002 attended at least 75% of the aggregate 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 consists of Messrs. Livingstone,
Kelly, and Hansen. The Audit Committee reviews with the Company's independent
auditor and management the scope and results of the annual audit, the scope of
other services provided by the Company's independent auditor, proposed changes
in the Company's financial and accounting standards and principles, and the
Company's policies and procedures with respect to its internal accounting,
auditing and financial controls and makes recommendations to the Board of
Directors on the engagement of an independent auditor, as well as other matters
which may come before it or as directed by the Board of Directors. The Audit
Committee met seven times in 2002.

The Board of Directors adopted and approved a charter for the Audit
Committee on May 25, 2000, which was amended on January 23, 2001. A copy of the
charter was attached as Appendix A to Company's 2001 Proxy Statement.

COMPENSATION COMMITTEE. The Compensation Committee consists of Messrs.
Hansen, Kelly, and Muller. The Compensation Committee makes recommendations to
the Board of Directors regarding all forms of compensation to executive officers
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 met two times
in 2002.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE. A Nominating Committee of
the Board of Directors was formed in February 2002. Subsequently, in November
2002, the Nominating Committee assumed the additional responsibility of
overseeing the Company's corporate governance practices. The Nominating and
Corporate Governance Committee consists of Messrs. Kelly, Hansen, and
Livingstone. 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 has identified in Proposal 1
its nominees for election at the Annual Meeting. As set forth in the Company's
2002 Proxy Statement, shareholder proposals must have been received no later
than March 3, 2003, 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 2004 annual meeting,
the Nominating

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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."

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 1994 Plan provides for annual automatic grants of
nonqualified stock options to continuing non-employee directors. 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 5,000 shares of the Company's common stock. All options automatically
granted to non-employee directors will have an exercise price equal to 100% of
the fair market value on the date of grant and become exercisable at the rate of
25% per year. On May 23, 2002, Messrs. Kelly and Hansen received automatic stock
option grants under the Company's 1994 Plan for 5,000 shares each of the
Company's common stock, and Mr. Livingstone received a grant of 5,000 shares
upon his appointment to the Board of Directors in June 2002.

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
and 2002. Furthermore, all officers have been subject to pay reductions since
April 2001.

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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 fiscal year ended
December 31, 2002 was $308,625. This base salary 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.

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, 2003 will exceed the $1 million limit per officer. Option grants
under the 1994 Stock Option Plan are intended to qualify as performance-based
compensation not subject to the $1 million limitation.

COMPENSATION COMMITTEE

Larry L. Hansen, Chairman
George Kelly
Warren H. Muller

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AUDIT COMMITTEE REPORT

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 AUDIT
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.

In accordance with its written charter adopted by the Board of Directors of
the Company, the Audit Committee of the Board assists the Board in fulfilling
its responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. During the fiscal
year ended December 31, 2002, the Audit Committee met seven times, and discussed
the interim financial information contained in each quarterly earnings
announcement with the chief financial officer, controller and independent
auditor prior to public release.

In discharging its oversight responsibility as to the audit process, the
Audit Committee obtained from the independent auditor a formal written statement
relating to relationships between the auditor and the Company that might bear on
the auditor's independence, consistent with the Independence Standards Board
Standard No. 1, "Independence Discussions with Audit Committees," discussed with
the auditor any relationships that may impact their independence and satisfied
itself as to the auditor's independence. The Audit Committee also discussed with
management, and the independent auditor the quality and adequacy of the
Company's internal controls. The Audit Committee reviewed with the independent
auditor the audit plans, audit scope and identification of audit risks.

The Audit Committee discussed with the independent auditor all matters
required to be discussed as described in Statement on Auditing Standards No. 61,
as amended, "Communication with Audit Committees" and, with and without
management present, discussed and reviewed the results of the independent
auditor's examination of the financial statements.

The Audit Committee reviewed the audited financial statements of the
Company as of and for the fiscal year ended December 31, 2002, with management
and the independent auditor. Management has the responsibility for the
preparation of the Company's financial statements and the independent auditor
has the responsibility for the examination of those statements.

Based on the above-mentioned review and discussions with management and the
independent auditor, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report on Form
10-K for the fiscal year ended December 31, 2002, for filing with the Securities
and Exchange Commission.

Each of the members of the Audit Committee is independent as defined in
Rule 4200(a)(14) of the National Association of Securities Dealers' Marketplace
Rules.

AUDIT COMMITTEE

Donald H. 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, 2002, 2001 and 2000 by each of the Company's Named
Executive Officers:

[Enlarge/Download Table]

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,.................... 2002 308,625 -- -- 16,729
President, Chief Executive 2001 301,251 -- -- 15,314
Officer and President, Chief 2000 307,477 400,000 -- 13,255
Executive Officer and Chairman
of the Board

Robert Whelton,..................... 2002 206,806 -- 40,000 1,465
Executive Vice President, 2001 204,688 -- -- 1,465
Operations 2000 216,560 150,000 -- 1,465

Christopher R. Dingley ............. 2002 153,739 35,204 1,500 215
Director of Sales for World 2001 150,615 15,960 975 209
Wide Distribution & Electronic 2000 158,554 89,896 7,500 221
Manufacturing Subcontractors

Dr. Tian-I Liou, PhD. (3)........... 2002 181,455 -- 333
Vice President and General 2001 74,769 -- 300,000 141
Manager of Kendin Operations --

Mark A. Downing (4)................. 2002 138,663 42,000 5,000 222
Vice President, Marketing 2001 144,272 33,450 125,000 210
2000 -- 20,000 -- --

James G. Gandenberger (5)........... 2002 177,760 -- 36,000 222
Director of 2001 167,933 -- 29,376 222
Fabrication\Operations 2000 44,423 45,000 75,000 60

J. Vincent Tortolano (6)............ 2002 152,345 17,694 25,000 510
Vice President, General Counsel, 2001 154,716 29,625 13,542 499
and Secretary 2000 67,307 42,000 125,000 216

---------------------
(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 in 2000, an automobile
allowance of $11,801 for Mr. Zinn, in 2001 an automobile allowance of
$13,849 for Mr. Zinn, and in 2002 an automobile allowance of $13,910 for
Mr. Zinn.
(3) Dr. Liou joined the company in June 2001 upon the acquisition of Kendin
Communications.
(4) Mr. Downing joined the company in December 2000.
(5) Mr. Gandenberger joined the company in September 2000.
(6) Mr. Tortolano joined the company in August 2000.

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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 1994 Option Plan to each of the Named
Executive Officers during the fiscal year ended December 31, 2002.

[Enlarge/Download Table]

POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION FOR
UNDERLYING OPTIONS TO EXERCISE OPTION TERM(3)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE DATE 0% 5% 10%
---- ---------- -------------- ----- ---------- -- -- ---

Raymond D. Zinn.............. -- -- -- -- -- -- --
Robert Whelton............... 40,000 3.7% $7.09 10/24/12 -- $178,355 $451,985
Christopher R. Dingley....... 1,500 0.1% $22.86 3/14/12 -- $21,565 $54,649
Tian-I Liou.................. -- -- -- -- -- -- --
Mark Downing................. 5,000 0.5% $22.86 3/14/12 -- $71,883 $182,165
James G. Gandenberger ....... 6,000 0.6% $22.86 3/14/12 -- $86,259 $218,598
30,000 2.8% $10.09 8/5/12 -- $190,366 $482,426
J. Vincent Tortolano ....... 25,000 2.3% $22.86 03/14/12 -- $359,413 $910,824

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

(1) The options vest in equal installments over five years.
(2) The total number of shares underlying all options granted to employees in
2002 was 1,069,620
(3) 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, 2002. 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, 2002.

[Enlarge/Download Table]

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
AT DECEMBER 31, 2002 DECEMBER 31, 2002($)(1)
SHARES ACQUIRED VALUE ---------------------- -------------------------
NAME ON EXERCISE(#) REALIZED($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------------- -------------- ----------- ------------- ----------- -------------

Raymond D. Zinn.......... -- -- 300,000 200,000 -- --
Robert Whelton........... -- -- 490,000 40,000 $1,293,600 $72,000
Christopher R. Dingley... -- -- 51,975 1,500 $4,800 --
Tian-I Liou.............. 8,477 $61,808 1 -- (2) $4 --
Mark Downing............. -- -- -- -- -- --
James G. Gandenberger.... -- -- 5,000 26,000 -- --
J. Vincent Tortolano..... -- -- -- 25,000 -- --

----------------------------
(1) Calculated by determining the difference between the fair market value of
the securities underlying the option at December 31, 2002 which was $8.98
and the exercise price of the Named Executive Officers' respective options.
(2) Dr. Liou terminated his employment with the company as of March 2003,
therefore the remaining unexercised shares were cancelled and returned to
the Plan and were not presented as "unexercisable."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

During fiscal 2002, the Compensation Committee consisted of Messrs. Hansen,
Kelly and Muller. 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 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 employee 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, 1997 through the end of the Company's last fiscal year, December 31, 2002,
with the percentage change in the cumulative total return for The Nasdaq Stock
Market (U.S. Companies) and the JP Morgan H&Q Technology Index and the Goldman
Sachs Technology Index. The JP Morgan H&Q Technology Index was discontinued in
April 2002. As a result, the Company has substituted the Goldman Sachs
Technology Index, which was initiated in March 2001. The comparison assumes an
investment of $100 on December 31, 1997 in the Company's common stock and in
each of the foregoing indices and assumes

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reinvestment of dividends. THE STOCK PRICE PERFORMANCE SHOWN ON THE GRAPH BELOW
IS NOT NECESSARILY INDICATIVE OF FUTURE PRICE PERFORMANCE.

MICREL, INCORPORATED
JPMORGAN H&Q TECHNOLOGY INDEX
NASDAQ COMPOSITE
GOLDMAN SACHS TECHNOLOGY INDEX

[PERFORMANCE GRAPH]

JP Morgan H&Q Goldman Sachs
Micrel, Technology Nasdaq Technology
DATES Incorporated Index Composite Index
------ ------------ ------------- --------- -------------
Dec-97 100.00 100.00 100.00
Jan-98 108.04 106.41 103.12
Feb-98 131.03 119.07 112.75
Mar-98 135.49 121.08 116.90
Apr-98 140.18 125.79 118.98
May-98 111.72 116.62 113.28
Jun-98 116.07 123.96 120.66
Jul-98 107.14 122.40 119.23
Aug-98 103.79 96.26 95.47
Sep-98 94.64 110.19 107.86
Oct-98 117.41 119.48 112.80
Nov-98 144.87 133.69 124.15
Dec-98 196.43 155.54 139.63
Jan-99 175.89 176.82 159.58
Feb-99 160.71 157.23 145.70
Mar-99 178.79 169.40 156.74
Apr-99 210.27 175.79 161.93
May-99 200.00 178.21 157.32
Jun-99 264.29 200.63 171.05
Jul-99 282.14 197.89 168.02
Aug-99 273.66 207.52 174.44
Sep-99 309.82 212.25 174.88
Oct-99 388.39 234.52 188.90
Nov-99 351.79 274.14 212.45
Dec-99 406.70 347.38 259.13
Jan-00 451.79 332.35 250.92
Feb-00 823.21 424.80 299.09
Mar-00 685.71 391.87 291.20
Apr-00 617.86 349.56 245.85
May-00 455.36 307.34 216.57
Jun-00 620.54 351.98 252.56
Jul-00 715.18 329.47 239.88
Aug-00 1091.96 387.53 267.86
Sep-00 957.14 345.57 233.89
Oct-00 646.43 314.12 214.58
Nov-00 410.71 224.86 165.44
Dec-00 481.25 224.57 157.32
Jan-01 657.14 244.00 176.57
Feb-01 401.79 174.09 137.03
Mar-01 399.11 149.02 117.19 100.00
Apr-01 485.14 177.56 134.76 118.75
May-01 436.00 168.23 134.40 114.79
Jun-01 471.43 165.89 137.63 116.99
Jul-01 481.14 155.00 129.09 107.85
Aug-01 440.86 137.67 114.97 92.97
Sep-01 284.86 108.24 95.44 73.93
Oct-01 359.29 124.03 107.63 86.23
Nov-01 418.00 144.25 122.94 100.10
Dec-01 374.71 146.47 124.20 99.00
Jan-02 337.14 143.66 123.16 97.93
Feb-02 286.86 127.14 110.26 84.86
Mar-02 360.29 139.86 117.51 91.31
Apr-02 313.57 107.51 79.82
May-02 299.14 102.89 76.56
Jun-02 205.43 93.18 65.66
Jul-02 163.86 84.58 58.50
Aug-02 157.86 83.73 58.81
Sep-02 88.00 74.64 48.09
Oct-02 118.00 84.68 58.38
Nov-02 162.44 94.17 68.36
Dec-02 128.29 85.05 58.67

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP ("PwC") was the Company's independent auditor
for the year ended December 31, 2002. A representative of PricewaterhouseCoopers
LLP is expected to be present at the Annual Meeting and will have an opportunity
to make a statement if he or she so desires. Moreover, he or she will be
available to respond to appropriate questions from the 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 reports of Deloitte & Touche on the consolidated financial
statements of Micrel and its subsidiaries as of and for the years ended December
31, 2001 and 2000, did not contain any adverse opinion or disclaimer of opinion,
nor were they qualified or modified as to uncertainty, audit scope, or
accounting principles.

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During the two fiscal years ended December 31, 2001 and 2000, 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 two fiscal years ended December 31, 2001
and 2000, 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.

During the Company's fiscal year ended December 31, 2002, the Company was
billed the following aggregate fees by PricewaterhouseCoopers LLP:

AUDIT FEES. The aggregate fees for professional services rendered by
PricewaterhouseCoopers LLP ("PricewaterhouseCoopers") in connection with the
audit of the Company's consolidated financial statements as of and for the year
ended December 31, 2002 and its limited reviews of the Company's unaudited
condensed consolidated interim financial statements were $140,000.

FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES. During the
year ended December 31, 2002, PricewaterhouseCoopers rendered no professional
services to the Company in connection with the design and implementation of
financial information systems.

ALL OTHER FEES. In addition to the fees described above, aggregate fees of
$13,000 were billed by PricewaterhouseCoopers during the year ended December 31,
2002, primarily for tax related services.

The Audit Committee has considered whether the provision of financial
information systems design and implementation services and other non-audit
services is compatible with the accountants' independence and concluded that
provision of financial information systems design and implementation services
and other non-audit services are compatible with maintaining the independence of
the Company's external auditor.

OTHER MATTERS

ANNUAL REPORT AND FINANCIAL STATEMENTS

The 2002 Annual Report of the Company, which includes its audited financial
statements for the fiscal year ended December 31, 2002, 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 2002, 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 2004 annual meeting by a shareholder, the

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shareholder must have given timely notice therefor 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, 2004. 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 2004 annual meeting of shareholders must be received by the
Company not later than December 18, 2003, 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.

ANNUAL REPORT ON FORM 10-K

The Company's Annual Report on Form 10-K for the year ended December 31,
2002, 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 15, 2003
San Jose, California

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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 PROPOSALS 2 AND 3. FOR AGAINST ABSTAIN
2. To ratify the appointment of / / / / / /
Shares represented by this proxy will be voted as directed by PricewaterhouseCoopers LLP as the
the shareholder. IF NO SUCH DIRECTIONS ARE INDICATED, THE Company's independent auditors for the
PROXIES WILL HAVE AUTHORITY TO VOTE FOR THE ELECTION OF ALL fiscal year ending December 31, 2003.
DIRECTORS AND FOR PROPOSALS 2 AND 3. FOR AGAINST ABSTAIN
3. To approve the adoption of the 2003 / / / / / /
1. Election of Directors (see reverse) Incentive Award Plan of Micrel,
Incorporated.

01 Raymond D. Zinn FOR WITHHELD 4. In their discretion, the Proxies are authorized to vote upon
02 Warren H. Muller / / / / such other business as may properly come before the Annual
03 Larry L. Hansen Meeting.
04 George Kelly
05 Donald Livingstone

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED REPLY ENVELOPE.

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.
[MAP]
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 MICREL
TRADE ZONE BLVD.; IMMEDIATE SEMICONDUCTOR
RIGHT AT RINGWOOD AVE., LEFT
ON FORTUNE DR. San Jose, CA 95131
408-944-0800
-------------------------------------------------------

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

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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 22, 2003

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 22, 2003, 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) ANNUAL SHAREHOLDER MEETING
----------------------------------------------------------------------------

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

--------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^

[LOGO] MICREL
ANNUAL SHAREHOLDER MEETING

THURSDAY, MAY 22, 2003
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

	12/31/97	24		10-K
	5/25/00	18		DEF 14A, PRE 14A, S-3, S-8
	12/31/00	22	26	10-K, 10-K/A
	1/23/01	18
	12/31/01	22	26	10-K, 11-K, 5
	5/23/02	19		DEF 14A
	6/30/02	26		10-Q
	8/30/02	25
	9/6/02	26		8-K
	12/31/02	13	27	10-K, 11-K, 5
	2/12/03	16		5, SC 13G/A
	2/13/03	16		SC 13G/A
	3/3/03	18
	4/1/03	2	16
	4/2/03	6
	4/15/03	2	27
Filed On / Filed As Of / Effective As Of	4/16/03
For The Period Ended	5/22/03	2	29
	12/18/03	27
	12/31/03	2	28	10-K, 10-K/A, 11-K, 8-K
	3/1/04	27
	11/16/10	15
	3/26/13	10

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Micrel Inc · DEF 14A · For 5/22/03

Filed On 4/16/03 9:10am ET · SEC File 0-25236 · Accession Number 1188112-3-223

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