UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C.  20549
 
 FORM
10-K/A
 (Amendment
No. 1)
 
 x           ANNUAL
REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the fiscal year ended December 31,
2007.
 
  ̈           TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the transition period from ________ to ________.
 
 Commission File Number 1-34020
 
 MICREL,   INCORPORATED
 (Exact
name of Registrant as specified in its charter)
 
 California
              94-2526744(State
      or other jurisdiction of
              (I.R.S.
      Employer Identification No.)incorporation
      or organization)
 
 2180
Fortune Drive, San Jose,
CA       95131
 (Address
of principal executive offices)   (Zip Code)
 
 Registrant's
telephone number, including area code: (408) 944-0800
 
 Securities
registered pursuant to Section 12(b) of the
Act:                Preferred
Stock Purchase Rights
 Securities
registered pursuant to Section 12(g) of the
Act:                Common
Stock, no par value
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes xNo  ̈
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes  ̈No x
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.  Yes x   No  ̈
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   ̈
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of
the Exchange Act. Large accelerated filer  ̈  Accelerated
filer x  Non-accelerated
filer  ̈  Smaller
reporting company  ̈
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes  ̈No x
 
 As of
June 30, 2007, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $592 million based upon
the closing sales price of the Common Stock as reported on the Nasdaq National
Market on such date. Shares of Common Stock held by officers, directors and
holders of more than ten percent of the outstanding Common Stock have been
excluded from this calculation because such persons may be deemed to be
affiliates. The determination of affiliate status is not necessarily a
conclusive determination for other purposes.
 
 As of
April 28, 2008, the Registrant had outstanding 71,393,428 shares of Common
Stock.
 
 DOCUMENTS
INCORPORATED BY REFERENCE:
 
 None
  1
 Table of Contents
  
 Explanatory
note
 
 This
Amendment No. 1 on Form 10-K/A amends the Annual Report on Form 10-K of Micrel,
Inc. (the “Company”) for the year ended December 31, 2007 as originally filed
with the Securities and Exchange Commission on February 28, 2008 (the “Original
Report”). This Form 10-K/A amends and restates and replaces in its entirety the
information previously expected to be incorporated by reference in Part III of
the Original Report from the Company’s 2008 Proxy Statement with the actual text
for Part III of the Form 10-K, as the Company will not file its definitive proxy
statement within 120 days of the end of its fiscal year ended December 31,
2007.
 
 Except
for the additions and modifications described above, the Company has not
modified or updated disclosures presented in the Original Report in this Form
10-K/A.  Accordingly, this Form 10-K/A does not reflect events
occurring after the filing of the Original Report or modify or update those
disclosures affected by subsequent events. Information not affected by this
amendment remains unchanged and reflects the disclosures made at the time the
Original Report was filed.
 
 In
addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), new certifications by our principal executive
officer and principal financial officer are filed as exhibits to this Annual
Report on Form 10-K/A under Item 15 of Part IV hereof.
 
 
 
 INDEX TO FORM 10-K/A
 Page
 
 PART
      IIIItem
      10.
              Directors, Executive Officers and Corporate
      Governance
              3Item
      11.
              Executive Compensation
              10Item
      12.
              Security Ownership of Certain Beneficial Owners and
      Management and Related Shareholder Matters
              25Item
      13.
              Certain Relationships and Related Transactions, and
      Directors Independence
              26Item
      14.
              Principal Accounting Fees and Services
              27PART
      IVItem
      15.
              Exhibits and Financial Statement
    Schedules
              28Signatures
              28Exhibit Index
              28Certifications
              29
 
 
 
  2
 Table of Contents
  PART
III
 
 ITEM 10.
              DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
 
 Board
of Directors
 
 The following
table sets forth information with respect to the Company’s current Board of
Directors as of March 31, 2008.
  Name
              Age
              Position
              Director
                SinceRaymond
      D. Zinn
              70
              President,
      Chief Executive Officer and Chairman of the Board
              1978Michael
      J. Callahan
              72
              Director
              2005David  W.
      Conrath
              73
              Director
              2005Neil
      J. Miotto
              61
              Director
              2007Frank
      W. Schneider
              66
              Director
              2007
 
 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.
 
 Michael J. Callahanjoined
Micrel's Board of Directors in 2005.  Mr. Callahan is the Chairman
Emeritus of Teknovus, Inc., and serves on the Board of Directors of Quick Logic
Corporation.  Prior to these roles, he served as Chairman of the
Board, President and Chief Executive Officer of WaferScale Integration,
Inc.  He was also the President of Monolithic Memories,
Inc.  During his tenure at Monolithic Memories, the company became a
subsidiary of Advanced Micro Devices, Inc., where Mr. Callahan then served in
the capacity of Senior Vice President of Programmable Products.  Mr.
Callahan serves as a member of the Audit Committee, the Compensation Committee
and the Nominating and Corporate Governance Committee of the Board of
Directors.  Mr. Callahan holds a B.S.E.E. from the Massachusetts
Institute of Technology.
 
 David W. Conrathwas elected
to Micrel's Board of Directors in 2005.  From 2000 until July 2005, Dr.
Conrathwas the
Dean of the College of Business at San Jose State University.   From
1994 until 1999, Dr. Conrath was Professor of Management Science/Information
Systems and Dean of the Michael G. DeGroote School of Business, McMaster
University, Canada.  He has held permanent positions at the Wharton School,
University of Pennsylvania and the Faculty of Engineering at the University of
Waterloo (Canada).  Dr. Conrath has worked for many years in the area of
information systems, consulting with a number of governments and Fortune 500
companies.  He has been on the Board of Directors of three privately held
telecommunications companies.    Dr. Conrath serves as a member
of the Audit Committee and is Chair of the Nominating and Corporate Governance
Committee of the Board of Directors.  Dr. Conrath holds a Master of Arts in
economics and a doctorate in business administration from the University of
California, Berkeley, a Master of Science in industrial administration from
Carnegie-Mellon University and a Bachelor of Arts degree from Stanford
University.
  3
 Table of Contents
  
 Neil J. Miottojoined the
Company’s Board of Directors in February 2007.  Mr. Miotto is a
retired assurance partner of KPMG LLP where he was a partner for twenty-seven
years until his retirement in September 2006.  While at KPMG, Mr.
Miotto also served as an SEC reviewing partner.   He is a member
of the American Institute of Certified Public Accountants and the New York State
Society of Certified Public Accountants.  He holds a Bachelor of
Business Administration degree from Baruch College, of The City University of
New York.  Mr. Miotto serves as chairman of the Audit Committee and a
member of the Nominating/Corporate Governance Committee of the Board of
Directors.
 
 Frank W. Schneider joined the
Company’s Board of Directors in May 2007.  Mr. Schneider previously
served as President and CEO of ION Systems, Inc., a privately-held manufacturer
of electrostatic management systems.  In January 2006, ION Systems was
acquired by MKS Instruments, Inc.  Mr. Schneider is currently a
vice-president of MKS and General Manager of ION Systems
products.  Prior to these roles, Mr. Schneider was the President and
CEO of GHz Technology, Inc., until its merger with Advanced Power Technology,
Inc.  During the merger transition period, Mr. Schneider served as the
Chief Operating Officer for the Radio Frequency business.  Mr.
Schneider also served as a member of the advisory Board of Neomagic, Inc. and
held various management and executive positions with Sharp Electronics
Corporation, Philips Semiconductor and Corning Electronics.  He holds
a Bachelor of Science degree in Electrical Engineering from West Virginia
University and a Master of Business Administration degree from Northwestern
University.
 
 
 Executive
Officers
 
 Information regarding each of our
executive officers as of March 30, 2008 is set forth below.
 
 Name
              Age
              PositionRaymond
      D. Zinn
              70
              President,
      Chief Executive Officer and Chairman of the BoardRobert
      J. Barker
              62
              Vice
      President, Corporate Business DevelopmentAndrew
      Cowell
              42
              Vice
      President, Analog MarketingRichard
      D. Crowley, Jr.
              51
              Vice
      President, Finance and Chief Financial OfficerJames
      G. Gandenberger
              47
              Vice
      President, Worldwide OperationsJung-Chen
      Lin
              54
              Vice
      President, Ethernet ProductsMark
      Lunsford
              50
              Vice
      President, Worldwide SalesDavid
      C. Schie
              36
              Vice
      President, Analog Engineering and R&DJ.
      Vincent Tortolano
              58
              Vice
      President, General Counsel and SecretaryScott
      Ward
              53
              Vice
      President, Analog Business UnitThomas
      Wong
              52
              Vice
      President, High Bandwidth ProductsRichard
      Zelenka
              52
              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 “Board of
Directors,” are as follows:
  4
 Table of Contents
  
 Mr. Barker has served as Vice
President, Corporate Business Development since October 1999.  In
August 2007, Mr. Barker took on the added responsibility of Interim Vice
President of Human Resources.  In February 2008, Mr. Barker was
appointed Vice President of Human Resources.  He retains his
responsibilities as Vice President, Corporate Business
Development.  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 Engineering (Electrical emphasis) and
a M.B.A. from University of California at Los Angeles.
 
 Mr. Cowell has served as Vice
President, Analog Marketing since November 2007.  From December 2002 until
November 2007, he served as the head of Strategic Applications with
responsibility for new product definition for power products.  Mr. Cowell
joined the Company in April 1998 as Marketing and Applications Manager for the
power product line.  Prior to joining Micrel, Mr. Cowell worked for
Siliconix Semiconductor for five years in various technical positions throughout
the world.  Prior to Siliconix, he was a power supply designer for Advanced
Power Supplies in the United Kingdom.  Mr. Cowell holds a first class
honors degree in electronics from Middlesex University.
 
 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.  Mr. Crowley is a member of the Board of Directors of
Open-Silicon, Inc.  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. Gandenberger has served as Vice
President, Worldwide Operations since November 2007.  From July 2002
to November 2007, he served as Vice President of Wafer Fab
Operations.  Mr. Gandenberger joined the Company in October 2000 as
Managing Director of Wafer Fab Operations.  Prior to joining the
Company, Mr. Gandenberger was employed by National Semiconductor Corporation
from 1997 to 2000 as the Managing Director of Santa Clara Wafer
Fabs.  From 1994 to 1997, he was employed by Asyst Technologies where
he held the position of Vice President, Sales and Marketing.  From
1984 to 1994, Mr. Gandenberger served in a variety of positions at LSI Logic,
where his last position was Director of Operations of the VLSI CMOS
Division.  He holds a B.S. in Business Administration from Saint
Mary’s College and a M.B.A from Golden Gate University.
 
 Mr. Lin has served as Vice president of
Ethernet Group since April 2003.  He joined the Company through the
acquisition of Kendin Communications Inc. in May 2001 as Vice President of
Design of Kendin Operations. Prior to the acquisition, he served as Vice
President of Engineering at Kendin from 1996 to 2001.  Prior to
Kendin, Mr. Lin was employed by Pericom Semiconductors Corp as Design Manager of
data communication group from April 1995 to April 1996.  He
worked for Hitachi Micro Systems, Inc. as Principle Engineer from August 1993 to
April 1995.  From 1990 to 1993, he was employed by Vitesse
Semiconductor Corp., where he held a design manager
position.  From 1986 to 1990, he worked for Philips Components at
various locations as Senior Member of Technical Staff in Mixed
Signal Circuit Design area.  Mr. Lin holds a Ph.D. and M.S.E.E.
degrees from University of Cincinnati, and B.S.E.E. degree from National
Taiwan University.
  5
 Table of Contents
  
 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. Schie joined Micrel in May 2007 as
Vice President of Analog Engineering and R&D.  Before joining
Micrel, Mr. Schie was an Executive Director at Maxim Integrated
Products.  Prior to that, he was Vice President of Supertex,
Inc.  Prior to Supertex, Mr. Schie was a founder of various companies
including the ESG group of companies and Linear Dimensions Semiconductor, where
he worked from 1998 to 2000.  Mr. Schie holds a Bachelor of Applied
Science (B.A.Sc.) degree in Engineering Science (Electrical Option) from the
University of Toronto.
 
 Mr. Tortolano joined the Company in
August 2000 as its Vice President, General Counsel.  Mr. Tortolano has
also served as the Company’s Secretary since May 2001.  From 1999
until he joined the Company, Mr. Tortolano was employed by Lattice Semiconductor
Corporation, where he held the position of Vice President, Co-General
Counsel.  From 1983 to 1999, Mr. Tortolano was employed by Advanced
Micro Devices, Inc., where his last position was Vice President, General Counsel
of AMD’s Vantis subsidiary.  Mr. Tortolano holds a B.S.E.E. from Santa
Clara University and a Juris Doctor degree from University of California at
Davis.
 
 Mr. Ward has served as Vice President,
Analog Business Unit since November 2007.  Mr. Ward joined the Company
in August 1999 as Vice President, Test Division and served in that capacity
until November 2007. 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.
 
 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.
 
  6
 Table of Contents
  
 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 other equity
securities and any subsequent changes in that ownership, and to furnish the
Company with copies of all these reports they file.  As a matter of
practice, an administrative staff member assists our executive officers and
directors in preparing initial ownership reports and reporting ownership
changes, and typically files these reports on their behalf. 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 2007, all Reporting Persons complied
with all applicable filing requirements, except for the following late reports
filed since the beginning of the fiscal year ended December 31, 2007, and the
transactions reflected therein, covering executive and director stock option
grants, one stock purchase, and one stock sale.  Mr. Lunsford filed
one late report which covered a stock option grant of 52,000 shares; Mr. Miotto
filed one late report which covered a stock option grant of 15,000 shares; Mr.
Schneider filed one late report which covered a purchase of 1,000 shares; and
Mr. Ward filed one late report which covered a sale of 7067 shares of the
Company’s stock in Mr. Ward’s 401(k) retirement plan account.  The
exercise price for the stock option grant to Mr. Lunsford and the stock option
grant to Mr. Miotto was the fair market value on the date each grant was
approved, respectively.
 
 
 Corporate
Governance
 
 Committees
and Meetings of the Board of Directors
 
 The Board
of Directors held four regularly scheduled meetings and one electronic meeting
during the fiscal year ended December 31, 2007, and acted four times
by unanimous written consent.  Each member of the Board of Directors
who served during 2007 attended at least 75% of the total number of meetings of
the Board of Directors and of the Committees on which he served during the
year.
 
 The
Company has standing Audit, Compensation, and Nominating and Corporate
Governance Committees of the Board of Directors.
 
 Board
Committees
 
 Audit
Committee. The Audit Committee is responsible for the appointment, compensation
and oversight of the Company’s independent registered public accounting firm,
directing and monitoring the Company’s internal audit function, reviewing and
monitoring the annual audit of the Company’s financial statements, internal
controls, accounting practices and policies and related tasks as specified in
its charter or required by the applicable NASDAQ rules. The members of the Audit
Committee presently are Messrs. Miotto (chair), Conrath, and Callahan, each
an independent director as determined in accordance with Rule 10A-3(b)(1)
of the Exchange Act and in accordance with the listing standards of the NASDAQ
Stock Market.  Messrs. Miotto, Conrath and Callahan qualify as audit
committee financial experts within the definition adopted by the Securities and
Exchange Commission in Item 407(d)(5)(ii) of Regulation S-K.  In
2007, the Audit Committee met in person five times, with each member of the
audit committee attending at least 75% of those meetings, and acted once by
unanimous written consent.  Please see the information under the
caption “Audit Committee Report” for further information regarding the Audit
Committee.  A copy of the Audit Committee’s Charter is available at
www.micrel.com.
  7
 Table of Contents
  
 Compensation
Committee.  See Item 11. “Executive Compensation” below.
 
 Nominating
and Corporate Governance Committee.  The Nominating and Corporate
Governance Committee makes recommendations to the Board of Directors regarding
nominees for the Board, monitors the size and composition of the Board, assists
the Board with review and consideration of developments in corporate governance
practices and performs such other duties as the Board of Directors shall from
time to time prescribe.  The Nominating and Corporate Governance
Committee consists of Messrs. Conrath (interim chair) and Callahan, each an
independent director as defined by the listing standards of the NASDAQ Stock
Market.  The Nominating and Corporate Governance Committee met three
times in 2007 and acted once by unanimous written consent. A copy of the
Nominating and Corporate Governance Committee Charter is available at
www.micrel.com.
 
 Nomination
Process
 
 The
Nominating and Corporate Governance Committee identifies director nominees by
first evaluating the current members of the Board of Directors willing to
continue in service.  Current members with skills and experience that
are relevant to our business and are willing to continue in service are
considered for re-nomination, balancing the value of continuity of service by
existing members of the Board of Directors with that of obtaining a new
perspective.  If any member of the Board of Directors does not wish to
continue in service or the committee or Board of Directors decides not to
re-nominate a member for re-election, the Committee identifies the desired
skills and experience of a new nominee consistent with the Committee’s criteria
for Board of Directors service.  Current members of the Board of
Directors and management are polled for their
recommendations.  Research may also be performed or third parties
retained to identify qualified individuals.  To date, the Company has
not engaged third parties to identify or evaluate potential nominees; however,
the Company may in the future choose to do so.  The Nominating and
Corporate Governance Committee will not recommend a candidate unless that
candidate has indicated a willingness to serve as a director and has agreed to
comply, if elected, with the expectations and requirements of service on the
Board of Directors.
 
 The
Nominating and Corporate Governance Committee will consider nominees recommended
by shareholders, and any such recommendations should be forwarded to the
Nominating and Corporate Governance Committee in writing at our executive
offices. The Nominating and Corporate Governance Committee evaluates director
candidates based upon a number of criteria, including:
 
 ·
              a
      high level of personal and professional
  integrity;
 ·
              commitment
      to promoting the long term interests of the Company’s security holders and
      independence from any particular
constituency;
 ·
              professional
      and personal reputations that are consistent with the Company’s
      values;
 ·
              broad
      general business experience and acumen, which may include experience in
      management, finance, marketing and accounting, across a broad range of
      industries with particular emphasis on the semiconductor industry
      generally, along with experience operating at a policy-making level in an
      appropriate business, financial, governmental, educational, non-profit,
      technological or global field;
 ·
              adequate
      time to devote attention to the affairs of the
  Company;
 ·
              such
      other attributes, including independence, relevant in constituting a Board
      or committee that also satisfies the requirements imposed by the
      Securities and Exchange Commission and the NASDAQ Stock Market;
      and
 ·
              Board
      balance in light of the Company’s current and anticipated needs and the
      attributes of the other directors and
  executives.
  8
 Table of Contents
  
 
 Security
Holder Communication with Board Members
 
 Any
holder of the Company’s securities may contact the Board of Directors or a
specified individual director by writing to the attention of the Board of
Directors or a specified individual director and sending such communication to
the Company’s General Counsel at our executive offices.  Each
communication from a security holder should include the following information in
order to permit security holder status to be confirmed and to provide an address
to forward a response if deemed appropriate:
 
 ·
              the
      name, mailing address and telephone number of the security holder sending
      the communication;
 ·
              the
      number and type of our securities owned by such security holder;
      and
 ·
              if
      the security holder is not a record owner of our securities, the name of
      the record owner of our securities beneficially owned by the security
      holder.
 
 The
Company’s General Counsel will forward all appropriate communications to the
Board of Directors or individual members of the Board of Directors as specified
in the communication.  The Company’s General Counsel may (but is not
required to) review all correspondence addressed to the Board of Directors, or
any individual member of the Board of Directors, for any inappropriate
correspondence more suitably directed to management. Communications may be
deemed inappropriate for this purpose if it is reasonably apparent from the face
of the correspondence that it relates principally to a customer dispute
involving the purchase of goods or services from the Company or any of its
operating units. The Company’s policies regarding the handling of security
holder communications were approved by the Board of Directors, including a
majority of our independent directors.
 
 Annual
Meeting Attendance
  The policy of
the Board of Directors is that all directors attend the Annual Meeting of
Stockholders, absent circumstances that prevent attendance.  All
directors attended the Annual Meeting of Shareholders held in 2007.
 
 Code
of Ethics
 
 The Company has adopted a code of
ethics that applies to the principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions. The Company's code of ethics was filed as Exhibit 14 to the
Company's Annual Report on Form 10-K for the year ended December 31, 2003 and is
incorporated herein by reference.  The Company’s code of ethics can
also be viewed at www.micrel.com.
 
  9
 Table of Contents
  
 ITEM 11.
              EXECUTIVE
      COMPENSATION
 
 
 Compensation
Committee.
 
 The
Compensation Committee makes recommendations to the Board of Directors regarding
all forms of compensation to executive officers and directors, reviews all
salary increase, bonus and stock compensation programs for other employees,
administers the Company’s incentive award plans and performs such other duties
as may from time to time be determined by the Board of Directors.  The
Compensation Committee has delegated to Mr. Zinn the authority to approve grants
of stock options or Restricted Stock Units (RSUs) to non-officer employees
covering no greater than 100,000 shares.  The Compensation Committee
consists of Messrs. Schneider (chair) and Callahan, each an independent
director as defined by the listing standards of the NASDAQ Stock
Market.  The Compensation Committee met two times in 2007, and acted
five times by unanimous written consent.  A copy of the Composition
Committee Charter is available at www.micrel.com.
 
 The Compensation Committee meets at
least twice during the year, generally in February and August.  A few
days prior to the February meeting, the Vice President of Human Resources
presents to the Compensation Committee the proposed incentive award and bonus
compensation for each Named Executive Officer (“NEO”) and all other executive
officers for review and analysis in the context of all the components of total
compensation.  In or around July of each year, the Vice President of
Human Resources presents to the Compensation Committee the proposed base salary
compensation for each NEO and other executive officer for review and analysis,
again in the context of all the components of total compensation.  In
each case, Compensation Committee members have time prior to the upcoming
meetings to ask for additional information and to raise further questions and
have further discussions.  The compensation structure for the CEO is
decided upon and approved by the Compensation Committee members prior to the
scheduled Compensation Committee meeting.  Compensation decisions
regarding the other executive officers are made at the scheduled Compensation
Committee meeting.  In the process of reviewing each compensation
component, the Company provides the Compensation Committee with internal
information showing the relationship between each executive level of
compensation within the Company.
 
 Compensation
Discussion and Analysis
 
 Compensation
Objectives
 
 The Compensation Committee believes
that compensation paid to executive officers should be closely aligned with the
performance of the Company on both a short-term and long-term basis, linked to
specific, measurable results intended to create value for shareholders,
recognize and reward individual contributions to Company performance, and assist
the Company in attracting and retaining key executives critical to its long-term
success.
  10
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 In establishing compensation for
executive officers, the following are the Compensation Committee’s
objectives:
 
 ·
              Attract
      and retain executives of superior ability and managerial talent to drive
      the Company’s success;
 ·
              Align
      executive compensation with the Company’s corporate strategies, business
      objectives and the long-term interests of the Company’s
      shareholders;
 ·
              Motivate
      our leaders to deliver strong business results and achieve key strategic
      and financial performance measures by linking incentive award
      opportunities to the achievement of performance goals in these
      areas;
 ·
              Differentiate
      compensation so that it varies based on individual and team
      performance;
 ·
              Balance
      rewards for executive roles between short-term results and the long-term
      strategic decisions needed to ensure sustained success for the Company and
      its shareholders over time;
 ·
              Enhance
      executives’ incentive to increase the Company’s stock price and maximize
      shareholder value, as well as promote retention of key people, by
      providing a portion of total compensation opportunities for executives in
      the form of direct ownership in the Company through stock
      options;
 ·
              Allow
      executives to share in our financial success;
  and
 ·
              Reflect
      a total rewards perspective by balancing fixed and variable pay and cash
      and equity awards.
 
 The Company’s overall compensation
program is structured to achieve these objectives by compensating our executives
competitively, and tying their compensation to the Company’s success and their
contribution to that success.  The Company believes compensation
should be structured to ensure that a significant portion of compensation
opportunity will be directly related to Company stock performance and other
factors that directly and indirectly influence shareholder
value.  Accordingly, the Company sets goals designed to link each
NEO’s compensation to the Company’s performance and his or her own performance
within the Company in achieving corporate priorities.  The Company’s
compensation program will change from time to time, as necessary to support
corporate objectives and as those objectives change.  The specific
principles, components and decisions used in 2007 to set executive compensation
are discussed below.
 
 Components
of Executive Compensation
 
 The Company’s compensation program is
comprised of the following components for NEOs to meet the above
objectives:
 
 ·
              Base
      salary;
 ·
              Annual
      cash incentive bonus payments;
 ·
              Discretionary
      annual stock option grants;
 ·
              401(k)
      plan, including the Deferred Profit Sharing portion;
  and
 ·
              Medical,
      life and disability insurance and other
  benefits.
  11
 Table of Contents
  
 Consistent with our performance-based
compensation philosophy, and because executive officers are in a position to
directly influence the overall performance of the Company, our executive
compensation includes a significant incentive-based component.  The
Company reserves the largest potential compensation awards for performance- and
incentive-based programs for the Company’s senior management team, comprised of
the Chief Executive Officer and other officer-vice-presidents.  Those
programs include annual and long-term at-risk awards based on the financial
performance of the Company.  Those programs largely provide
compensation in the form of both cash and equity, to provide incentives to
reward both short-term and long-term performance of the Company.  The
Compensation Committee allocates total compensation between cash and equity
compensation based on benchmarking to the Peer Group, discussed below under the
heading “Compensation Benchmarking and Peer Group,” while considering the
balance between providing short-term incentives and long-term investment
parallel with shareholders, to align the interests of management with
shareholders, in light of the officer’s current equity holdings.  The
Compensation Committee balances the individual compensation elements for each
executive officer individually, and the balance between equity and cash
compensation among NEOs, and among other members of the senior management team,
is evaluated annually using the above criteria.
 
 To tie compensation to performance,
there is no minimum award of compensation required by the performance-based
compensation program or the Company’s stock option program.
 
 Determination
of Compensation Awards
 
 The Compensation Committee has primary
authority to determine and recommend to the Board of Directors for approval, the
compensation awards available to the Company’s executive
officers.  The Compensation Committee may engage independent
consultants to provide comparative information on compensation and benefits as
well as to advise the Compensation Committee on compliance issues involving
federal and state laws and regulations concerning compensation of
executives.  The Compensation Committee is comprised entirely of
independent directors.  The Compensation Committee operates under a
written charter adopted by our Board which can be found on our website at
www.micrel.com.  All decisions relating to the compensation of the CEO
are made by the Compensation Committee in executive session, without management
present.  In assessing the compensation of the CEO and each of the
other NEOs, the Compensation Committee considers the performance of the Company,
the executive’s contribution to that performance, comparisons to other executive
officers holding similar positions and responsibilities at other companies in
the Peer Group, management recommendations and other factors (including tenure
and experience, retention concerns, historical compensation).
 
 The Compensation Committee uses several
analytic tools when making compensation decisions, which include Company
performance reviews, Peer Group compensation data, the recommendations of the
CEO and the Vice President of Human Resources, individual performance reviews
and internal pay equity.  Consistent with prior years, Peer Group
compensation data is compiled by the Human Resources Department and provided to
the Compensation Committee.  The Compensation Committee uses the Peer
Group data as a factor in its determination of key elements of the compensation
programs.  The Compensation Committee also uses senior management
staff as needed to gather, prepare, and advise in the use of compensation
data.
 
 The Peer Group data provides
information to the Compensation Committee with respect to competitive practices
and the amounts and nature of compensation paid to executive officers, and
provides one of the bases for the Compensation Committee’s analysis of the
structure of the Company’s various compensation programs and the appropriate
levels of salary, bonus and other awards payable to the Company’s executive
officers.  Based upon this analysis, the Company’s executive
compensation package consists of a fixed base salary and variable cash and
stock-based incentive awards, with a significant portion weighted towards
variable components to ensure that total compensation reflects the overall
success or failure of the Company and to motivate executive officers to meet
appropriate performance measures, thereby maximizing total return to the Company
and its shareholders.
  12
 Table of Contents
  In addition to Peer Group data, the
Company participates in an industry compensation survey, and subscribes to a
service provided by Radford Advisory Services.  Information provided
in Radford’s Benchmark and Executive Surveys (the “Benchmark Survey”) is
reviewed and compared with Peer Group data. The Benchmark Survey captures base
salary, incentive and equity data for full-time, US-based employees, including
executives, categorized by job classification.  The Benchmark Survey
data is used by the Compensation Committee in conjunction with the Peer Group
data to determine appropriate executive compensation packages.
 
 The Compensation Committee also reviews
management recommendations and Company and individual performance evaluations in
setting executive compensation.  The CEO and Vice President of Human
Resources provide recommendations annually to the Compensation Committee
regarding the compensation of all executive officers, except with respect to
their own respective compensation.  The Vice President of Human
Resources provides recommendations regarding the compensation of the CEO and
other NEOs, based on the Peer Group data and Benchmark Survey data. Each
executive officer in the Company participates in an annual performance review of
the CEO to provide input about the CEO’s contributions to the Company’s
performance for the period being assessed.  Each NEO other than the
CEO, participates in an annual performance review with the CEO to provide and
receive input about their contributions to the Company’s success for the period
being assessed.  The performance of each NEO other than the CEO is
reviewed annually by the CEO and the Compensation Committee.
 
 The Compensation Committee reviews
summaries of the major components of the CEO’s and other NEO’s compensation,
including annual base salary, bonuses based on corporate and individual
performance,  and equity compensation.  These summaries
reflect the annual compensation for the NEO (both target and actual), as well as
the potential payments under selected performance scenarios. The compensation
summaries are prepared by the Human Resources Department and are presented at
Compensation Committee meetings by the Vice President of Human
Resources.  With regard to the performance scenarios, these summaries
demonstrate the amounts of compensation that would be payable under minimum,
target and maximum payout scenarios under our cash incentive compensation plan.
The overall purpose of this review is to identify elements of actual and
potential future compensation of our named executive officers, so that the
Compensation Committee may analyze both the individual elements of compensation
(including the compensation mix) as well as the aggregate total amount of actual
projected compensation.  The Compensation Committee bases its analysis
on the Peer Group data and compensation summary information provided by the Vice
President of Human Resources in consideration of the management team’s
compensation and internal pay equity.
 
 
 Compensation
Benchmarking and Peer Group
 
 One
of the tools we use in determining compensation for our NEOs is a comparison of
the compensation of our CEO and the other named executive officers relative to
the compensation paid to similarly-situated executives at companies that we
consider to be in our peer group of semiconductor companies.  This
approach ensures that our cost structures will allow us to remain competitive in
our markets.  An important component of setting and structuring
compensation for the Company’s executive officers is reviewing the compensation
packages offered by the leading semiconductor companies in order for the Company
to offer competitive compensation within that group of
companies.  Each year we survey the compensation practices of a peer
group of companies in the United States, as well as other countries in which we
have significant employee populations, to assess our
competitiveness.  In determining the level of compensation provided to
our executive officers, the Company evaluates the financial performance of those
companies, in addition to evaluating the Company’s performance, to gauge the
Company’s comparative performance within its peer group.   We
review each element of compensation within the peer group, including base
salary, target annual cash incentives, and long-term equity
incentives.  That peer group consists of ten to twelve leading
semiconductor companies, including Micrel.  We believe that the Peer
Group is representative of the sector in which we operate, and the group was
chosen because of each of the companies’ relative leadership position
in our sector, their relative size as measured by sales volume, and the relative
complexity of the business and the role and responsibilities of the Company’s
NEOs.  In 2007, this “Peer Group” of companies included Advanced
Analogic Technologies, Incorporated; Applied Micro Circuits Corporation; Exar
Corporation; Intersil Corporation; Linear Technology Corporation; Maxim
Integrated Products, Incorporated; Microsemi Corporation; Monolithic Power
Systems, Incorporated; Power Integrations, Incorporated; Semtech Corporation;
and Supertex, Incorporated.
  13
 Table of Contents
  For 2007, we
targeted the aggregate value of our total compensation at approximately the
median level for the Peer Group for most executive officer
positions.  The Compensation Committee believes that our overall pay
positioning will allow us to attract and retain the appropriate level of
executive talent, while appropriately rewarding high performance through
performance objectives.  The actual target compensation for each
individual executive may be higher or lower than the targeted market position
based on such factors as individual skills, experience, contribution and
performance, internal equity, or other factors that the Compensation Committee
may take into account that are relevant to the individual executive. In
addition, actual compensation results (e.g., amounts earned and paid each year)
may be higher or lower than target based on corporate and individual
performance.  We strongly believe in retaining the best talent among
our senior executive management team.  To retain and motivate these
key individuals, the Compensation Committee may determine that it is in the best
interests of the Company to negotiate total compensation packages with the
Company’s senior executive management that may deviate from the general
principle of targeting total compensation at the median level for our Peer
Group.  Actual pay for each NEO is determined around this structure,
driven by the performance of the executive over time, as well as the annual
performance of the Company.  Equity grant guidelines are then set by
job level, using Peer Group data and current guidelines to determine the
appropriate annual grant levels for the upcoming year.  Using this
methodology, for 2007, the compensation for our NEOs was at approximately the
50th percentile of our Peer Group.
 
 The Company’s approach to benchmarking
is two-fold.  First, in setting annual cash compensation, the Company
aims to provide market compensation that approximates the median annual cash
compensation of executive officers performing similar job functions at companies
in the Peer Group.  To determine that level of compensation, the
Company annually reviews salary surveys of the Peer Group and actual salary
amounts provided in Peer Group proxy statements.  Our annual review
indicates that we are providing to our NEOs annual cash compensation at or below
the median of the Peer Group.  The Company believes that its design of
base and incentive annual cash compensation provides market-competitive annual
cash compensation to the Company’s NEOs.  Second, equity grant
guidelines are set by job level, using current Company guidelines, Peer Group
data, and internal equity compensation comparisons to determine the appropriate
annual grant level for each NEO for the upcoming year.  For 2007, as
with total compensation, we targeted the aggregate value of our equity incentive
compensation at approximately the median level of our Peer Group for our
NEOs.
 
 Internal
Pay Equity
  Our core
compensation approach is to pay our executive officers competitive levels of
compensation that best reflect their individual responsibilities and
contributions to the Company, while providing incentives to achieve our business
and financial objectives.  While comparisons to compensation levels at
companies in our Peer Group are helpful in assessing the overall competitiveness
of our compensation program, we believe that our executive compensation program
also must be internally consistent and equitable in order for the Company to
achieve our corporate objectives as outlined at the beginning of this
Compensation Discussion and Analysis.
  In
implementing this philosophy, the Compensation Committee analyzed the
relationship between our CEO’s total compensation and the total compensation of
the other executive officers of the Company.  For this purpose, total
compensation includes base salary, bonus payouts and the value of equity
awards.
   14
 Table of Contents
  
  The
Compensation Committee evaluated the mix of the individual elements of
compensation paid to the CEO and the other executive officers as well as the
changes in the overall composition of the management team and the overall
accountabilities of the individual executive officers and the
CEO.  The Compensation Committee also analyzed the change in the
responsibilities of each member of the management team over the measurement
period, calendar year 2007.  In addition, the Compensation Committee
also considered the internal pay equity between the other executive officers in
relation to the next lower tier of management, in order to maintain compensation
levels that are consistent with the individual contributions and
responsibilities of those executive officers.  Based on this analysis,
the Compensation Committee determined that compensation in 2007 reflected an
appropriate target differential for executive compensation, given the different
accountabilities for the CEO and the other named executive officers and no
changes were necessary to maintain consistency with our internal pay equity
policy.
 
 Base
Compensation
  The
Company provides its NEOs with a base salary that is structured around the
median of the Peer Group.  Base salaries provide consistent cash flow
to employees assuming sufficient levels of performance and continued
employment.  Salaries for the Company’s NEOs and other executive
officers are determined primarily on the basis of the executive officer’s
responsibility, Company budgets, general salary practices of companies within
the Peer Group, the officer’s individual performance and experience, internal
pay equity and retention concerns.  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 ongoing duties, (iv) general changes in base salary by
companies in the Peer Group, and (v) the Company’s financial performance
generally.  In 2007, all executive officers received a pay increase,
in line with merit increase targets approved by the Compensation Committee for
all employees for 2007.  The 2007 target salary increase for executive
officers was 4.5%, compared with a target of 4.65% for non-executive exempt and
salaried non-exempt employees.  The CEO received a pay increase of
3.88%.  The other executive officers received increases ranging from
4.0% to 5.2%.  No formulaic base salary increases are provided to the
NEOs.
  Performance-Based
Compensation
  Annual Incentive Program
  The
Company structures its compensation programs to reward executive officers based
on the Company’s performance and the individual executive’s contribution to that
performance, as well as align executive officer compensation with the
achievement of strategic initiatives in the short-term. Executive officers are
eligible to receive bonus compensation in the event certain specified corporate
performance measures are achieved.  In determining the
performance-based compensation awarded to each executive officer, the Company
evaluates the Company’s and executive’s performance in a number of
areas.
  Compensation
pursuant to the annual incentive program is made in the form of
cash.  The general criteria for evaluating the performance of the
Company and executive officers are the Company’s financial performance as
measured by earnings per share and individual performance metrics such as
progress in research and development, increase in manufacturing productivity, or
significant improvement in product quality, legal or financial matters, measured
on an annual basis.  Performance criteria are evaluated against
objectives set prior to the commencement of the applicable bonus measurement
period.
   15
 Table of Contents
  
  The
amounts payable under the Company’s annual performance-based program for
executive officers in 2007 were determined initially based upon the Company’s
actual performance measured against the following performance
criterion:
  Corporate
                Performance
      Criterion
              Relative
      Weight
              Threshold
      Performance Level
              100%
      Target Performance Level
              Maximum
      Payment Performance LevelAnnual
      Earnings per Common Share (“EPS”)(1)
              100%
              $0.50
              $0.65
              $1.025
 
 (1)
      Non-GAAP EPS results, which exclude the impact of revenue and cost of
      revenues related to intellectual property settlements, equity-based
      compensation, certain third party legal expenses associated with
      litigation settlements, other unusual operating income and expense items,
      restructuring charges and related tax
effects.
 
  The
threshold level of $0.50 annual earnings per common share is intended to set a
level of corporate performance below which no executive bonus payments would be
made.  The non-GAAP EPS achieved by the Company for the previous three
years - 2004, 2005 and 2006 - was $0.36, $0.36, and $0.55,
respectively.  Thus, the Compensation Committee considers $0.50 annual
EPS to be a substantial threshold for executive bonus payments, requiring
substantial effort and commitment by the executive in order to attain any annual
bonus payment.  In the event the threshold performance level is
exceeded but the target level is not achieved, the executive officers will earn
a proportional award.  In the event the financial performance of the
Company exceeded the earnings per share targets shown in the Performance
Criterion table above, the NEOs and other executive officers were eligible to
earn cash bonuses of up to 2.5 times their respective target
amounts.    Incentive amounts to be paid under the
performance-based programs may be adjusted by the Compensation Committee to
account for unusual events such as extraordinary transactions, asset
dispositions and purchases, and mergers and acquisitions if, and to the extent,
the Compensation Committee does not consider the effect of such events
indicative of Company performance.  Payments under each of the
programs are contingent upon continued employment, though pro rata bonus
payments may be paid in the event of death or disability based on actual
performance at the date relative to the targeted performance measures for each
program.
  In
February 2007, the Compensation Committee and the Board established total bonus
pool target amounts based on the Company’s achievement of non-GAAP earnings per
share across a range of possible outcomes. The Compensation Committee and the
Board also established profiles and payout targets for the individual Executive,
Discretionary Exempt and Profit Sharing pools within the overall bonus pool
target amounts.
  Under the
cash incentive bonus program in 2007, based upon the performance criteria set
forth above, the Company’s executive officers were eligible to earn up to an
aggregate of $4,302,000, with the Chief Executive Officer eligible to earn a
target bonus amount of $400,000 and each of the other NEOs eligible to earn a
target bonus amount of $100,000.  The Compensation Committee set the
target bonus amount for the Chief Executive Officer higher than other NEO’s
based on the CEO’s contribution to the Company and relative amounts of executive
bonuses at the Peer Group companies.
  16
 Table of Contents
  
 Based on
the Company’s achievement of non-GAAP earnings per share of $0.59 for 2007
(which exclude the impact of revenue and cost of revenues related to
intellectual property settlements, equity-based compensation, certain third
party legal expenses associated with litigation settlements, other unusual
operating income and expense items, restructuring charges and related tax
effects), the Compensation Committee subsequently established, and the Board
approved, a target bonus payout for the CEO and executive officers of 72% which
was above the minimum threshold for payout, but less than 100% of the
pre-determined target.  The bonus payouts for executives other than
the CEO were based on the targets described in the performance criterion table
set forth above, with some discretion exercised by the CEO in recommending
modifications to certain individual payouts.  Actual bonus payouts
ranged from 25% below target to 23% above target, based on individual
performances during the bonus period (2007.)
 
 The
Compensation Committee believes that the payment of the annual incentive bonus
in cash provides incentives necessary to retain executive officers and reward
them for short-term company performance.  The incentive bonus paid to
the CEO and each NEO are set forth in the Summary Compensation Table
below.
 
  Discretionary
Long-Term Equity Incentive Awards
  Long-term
incentives are the most significant element of total executive officer
compensation.  Performance-based components of compensation comprise
much of this element, consistent with our philosophy of driving performance and
thereby aligning the interests of executives with other
shareholders.  These incentives are designed to motivate executive
officers to improve financial performance and shareholder value.  The
Company’s executive officers, along with a significant portion of the Company’s
employees, are eligible to receive awards of stock options as part of the
Company’s annual equity award program, under the Company’s 2003 Incentive Award
Plan (the “2003 Plan”).  The Company’s 2003 Plan, which is
administered by the Compensation Committee, also allows for other incentive and
performance-based awards such as restrictive stock unit grants, stock
appreciation rights, dividend equivalents, stock payments and deferred
stock.  In October 2007, the Compensation Committee approved a program
to implement the granting of restricted stock units to any eligible employee who
chooses to receive such an award in lieu of a stock option grant.
  Grants of
options to purchase shares of our common stock represent the high-risk and
potential high-return component of our total long-term incentive program, as the
realizable value of each option can fall to zero if the stock price is lower
than the exercise price established on the date of grant.  Guidelines
for the number of stock options and other performance-based equity awards, if
any, granted to each executive officer are determined using a procedure approved
by the Compensation Committee with reference to the Peer Group data and based
upon other considerations, including the executive officer’s salary grade,
performance and the value of the stock option at the time of
grant.  In addition to the annual stock option grant that an executive
officer is eligible to receive, the Compensation Committee, in its sole
discretion, may approve additional grants from time to time, to reflect, for
example, a significant change in job responsibility or in recognition of a
significant achievement, or reconsideration of Peer Group data.
   17
 Table of Contents
  Stock
option grants to executive officers are approved by the Compensation Committee
at a meeting in February or March of each year.  The Vice President of
Human Resources presents to the Compensation Committee Peer Group data regarding
stock option awards.  Based on such data, and the Compensation
Committee’s assessment of the annual performance of the Company and individual
executive officers, internal pay equity considerations and recommendations by
the CEO and the Vice President of Human Resources, the Compensation Committee
determines the amount of any award of stock options to executive
officers.  Except for grants made to the CEO, the exercise price of
any options awarded is set at the “fair market value” of the option on the grant
date.  The fair market value of an option as of a given date will be
equal to the closing price of a share of the Company’s common stock on the
NASDAQ Stock Market, on such given date, or if shares were not traded on such
given date, then on the next preceding date on which a trade
occurred.  Because the exercise price of these options is equal to the
fair market value of our common stock on the date of grant, these stock options
will deliver a reward only if the stock price appreciates from the price on the
date the stock options were granted.  This design is intended to focus
the executive officers on the long-term enhancement of shareholder
value.  Because of the CEO’s ownership of greater than ten percent of
the total combined voting power of the Company’s common stock, the exercise
price of options granted to the CEO under the stock plans is 110% of the fair
market value of the underlying stock on the date of grant, in accordance with
the Company’s 2003 Incentive Award Plan.
  
 Stock
option awards approved by the Compensation Committee are awarded with a grant
date that is the date of the Compensation Committee meeting on which the option
awards are determined and approved.
  Stock
options granted under the Company’s stock plans generally have a five-year
vesting schedule, with vesting occurring on the anniversary of the grant date,
in order to provide an incentive for continued employment.  Stock
options generally expire ten years from the date of the grant.  This
provides a reasonable time frame in which to align the executive officer with
the price appreciation of the Company’s stock.
 
 In 2007,
the NEOs and other executive officers were eligible for, and received,
individual stock option awards under the Company’s 2003 Incentive Award
Plan.  The stock options awards in 2007 for NEOs are set forth in
column (j) of the Grants of Plan-Based Awards table below.
  
 
 Other
Elements of Compensation and Perquisites
 
 Medical
Insurance.  The Company provides to each NEO, the NEO’s spouse
and dependents such health, dental and optical insurance as the Company may from
time to time make available to its other executive officers and all full-time,
regular employees.
  Life and Disability
Insurance.  The Company provides each NEO such disability
and/or life insurance as the Company in its sole discretion may from time to
time make available to its other executive employees of the same level of
employment.   The premiums paid for term life insurance for each
NEO are set forth in Column (i) of the Summary Compensation Table.
  Automobile
Allowance.  The Company provides the CEO with an automobile
allowance of $14,583 per year during the term of the CEO’s employment with the
Company.
   18
 Table of Contents
  Policies
      with Respect to Equity Compensation
Awards
  The
Company evaluates the potential allocation of equity awards among stock option
grants, restricted stock grants, stock appreciation rights, and the various
other forms of equity and incentive compensation available under the Company’s
2003 Incentive Award Plan by reference to the Peer Group discussed
above.  The Company grants or vests all equity incentive awards based
on the fair market value as of the date of grant.  The Company does
not have a policy of granting equity-based awards at other than the fair market
value, except for stock options granted to the CEO, for which the exercise price
is 110% of the fair market value of the underlying stock on the date of grant,
due to the CEO’s ownership of greater than ten percent of the total combined
voting power of the Company’s common stock.  The exercise price for
stock option grants and similar awards is determined by looking at the fair
market value of the last quoted price per share on the NASDAQ Stock Market on
the date of grant.
  Stock
option awards to the CEO and other executive officers are generally made under
the compensation program discussed above at a meeting of the Compensation
Committee early in the calendar year, with the effective date for such grant
occurring on the date of such meeting.  The Company may also grant an
equity incentive award at the discretion of the Compensation Committee or the
Board in connection with the hiring of an executive
officer.  Notwithstanding the foregoing, the Company will not make
grants of equity-based compensation while in possession of material non-public
information, or otherwise in violation of the Company’s Worldwide Standards of
Business Conduct.
  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, 2008 will exceed the $1 million
limit per officer.  Overall, the Compensation Committee seeks to
balance its objective of ensuring an effective compensation package for the
named executive officers with the need to maximize the immediate deductibility
of compensation, while enduring an appropriate (and transparent) impact on
reported earnings and other closely followed financial measures.  As a
result, the Compensation Committee has designed much of the total compensation
packages for the named executive officers to qualify for the exemption of
“performance-based” compensation from the deductibility
limit.  However, the Compensation Committee does have the discretion
to design and use compensation elements that may be not deducible within Section
162(m), if the Committee considers the tax consequences and determines that
nevertheless those elements are in our best interests.  Option grants
under the 2003 Incentive Award Plan are intended to qualify as performance-based
compensation not subject to the $1 million limitation.
   ********************************
  The
Compensation Committee has reviewed all components of each NEO’s and executive
officer’s compensation, including base salary, performance-based cash
compensation, and long-term equity incentive compensation and utilized the Peer
Group data to perform competitive peer compensation analysis.  Based
on this review, the Compensation Committee determined that the NEOs’ and all
other executive officers’ compensation is consistent with the Company’s Peer
Group and is consistent with the Company’s financial performance and the
individual performances of each NEO and executive officer.  The
Compensation Committee believes that the NEOs’ and all other executive officers’
total compensation in the aggregate is reasonable, competitive, and not
excessive.  The Compensation Committee specifically considered that
the Company does not maintain any employment contracts, change of control
agreements or deferred compensation plans with its executive officers and,
except as stated otherwise herein for the Chief Executive Officer, does not
provide perquisites to such individuals.
   19
 Table of Contents
  
  SUMMARY
COMPENSATION TABLE 2007 and 2006
 
 The following
table sets forth the total annual compensation earned for the years ended
December 31, 2007 and 2006 by each of the Company’s Named Executive
Officers:
 
 Name
      and Principal Position
              Year
              Salary
                ($)(1)
              Bonus
                ($)
              Stock
      Awards
                ($)
              Option
      Awards
                ($)(2)
              Non-Equity
      Incentive Plan Compen-sation ($)(3)
              Change
      in Pension Value and Nonqualified Deferred Compensation Earnings
      ($)
              All
      Other Compen-sation ($)(4)
              Total
      ($)(a)
              (b)
              (c)
              (d)
              (e)
              (f)
              (g)
              (h)
              (i)
              (j)Raymond
      D. Zinn,
                President,
      Chief Executive Officer  and Chairman of the Board
              2007
                2006
              359,658
                333,273
              −
                −
              −
                −
              496,808
                467,035
              272,312
                159,185
              −
                −
              18,560
                19,547
              1,147,338
                979,040Richard
      D. Crowley, Jr.,
                Vice
      President, Finance and Chief Financial Officer
              2007
                2006
              230,968
                219,065
              −
                −
              −
                −
              229,733
                275,162
              88,889
                54,700
              −
                −
              4,487
                5,475
              554,077
                554,402James
      G. Gandenberger,
                Vice
      President, Worldwide Operations
              2007
                2006
              229,658
                217,952
              −
                −
              −
                −
              189,057
                253,155
              88,889
                49,555
              −
                −
              4,310
                5,298
              511,914
                525,960Scott
      Ward,
                Vice
      President, Analog Business Unit
              2007
                2006
              222,089
                211,460
              −
                −
              −
                −
              190,100
                250,163
              70,926
                48,555
              −
                −
              4,487
                5,475
              487,602
                515,653J.
      Vincent Tortolano,
                Vice
      President, General Counsel and Secretary
              2007
                -
              202,712
                -
              −
                −
              −
                −
              155,537
                -
              83,171
                -
              −
                −
              4,931
                -
              446,351
                -
 
 
 (1)  Employee
      contributions to defined contribution plans are included in salary amounts
      because such contributions are deferred at the election of the
      NEO.
 (2)  Amounts
      shown do not reflect compensation actually received by the NEO. Instead,
      the dollar value of these awards is the compensation cost recognized for
      financial statement reporting purposes for the fiscal year ended December
      31, 2007 and 2006 in accordance with the provisions of Statement of
      Financial Accounting Standards No. 123R, “Share-Based Payments,” (SFAS
      123R), but excluding any estimate of future forfeitures and reflecting the
      effect of any actual forfeitures. These compensation costs reflect equity
      awards granted in 2001 through 2007. See Note 7 of the consolidated
      financial statements in the Company’s Annual Report on Form 10-K for the
      year ended December 31, 2007 regarding the assumptions underlying the
      valuation of equity awards.
 (3)  The
      amounts indicated in this column represent cash incentive bonuses earned
      by each executive officer based on the Company’s performance and each
      executive officer’s performance relative to specific individual
      criteria.  All bonuses for a particular year reflect amounts
      earned in that year whether or not paid in that or the following
      year.  The 2007 annual incentive program is discussed in further
      detail under the heading “Performance-Based
  Compensation.”
 (4)  Represents
      automobile allowances for Mr. Zinn of $14,583 for 2007 and 2006,
      contributions by the Company to the Company’s defined contribution plan
      for each named executive in the amount of $3,977 in 2007 and $4,964 in
      2006 and term life insurance premiums paid for Messrs. Crowley,
      Gandenberger, Ward and
Tortolano.
  20
 Table of Contents
  
 
 GRANTS
OF PLAN-BASED AWARDS DURING FISCAL YEAR 2007
 
 The following
table provides certain information with respect to the grant of plan-based
awards to each of the Named Executive Officers during the fiscal year ended
December 31, 2007.
 
 Name
              Grant
      Date
              Estimated
      Future Payouts Under Non-Equity Incentive Plan Awards (1)
              Estimated
      Future Payouts Under Equity Incentive Plan Awards
              All
      Other Stock Awards: Number of Shares of Stock or Units (#)
              All
      Other Option Awards: Number of Securities Underlying Options
      (#)
              Exercise
      or Base Price of Option Awards ($/Sh) (2)
              Grant
      Date Fair Value of Stock and Option Awards ($) (3)Threshold
                ($)
              Target
                ($)
              Maximum
                ($)
              Threshold
                (#)
              Target
                (#)
              Maximum
                (#)(a)
              (b)
              (c)
              (d)
              (e)
              (f)
              (g)
              (h)
              (i)
              (j)
              (k)
              (l)Raymond
      D. Zinn
              2/23/07
              0
              400,000
              1,000,000
              
              
              
              
              112,500
              13.26
              836,089Richard
      D. Crowley, Jr.
              2/23/07
              0
              100,000
              250,000
              
              
              
              
              31,500
              12.05
              212,902James
      G. Gandenberger
              2/23/07
                11/29/07
              0
              100,000
              250,000
              
              
              
              
              23,000
                55,000
              12.05
                8.65
              155,452
                207,555Scott
      Ward
              2/23/07
                11/29/07
              0
              100,000
              250,000
              
              
              
              
              18,000
                50,000
              12.05
                8.65
              121,658
                207,555J.
      Vincent Tortolano
              2/23/07
              0
              100,000
              250,000
              
              
              
              
              22,500
              12.05
              152,073
 
 
 (1)  The
      amounts shown in column (c) reflect estimated payouts of bonus
      compensation at threshold levels of non-GAAP earnings per
      share.  The amount shown in column (e) is 250% of target
      incentive compensation, which is the estimated maximum amount that could
      be earned under our 2007 cash incentive bonus program.  These
      amounts are the same as the individual’s 2007 target incentive
      compensation
 (2)  The
      exercise price for all stock option grants is the fair market value of our
      common stock on the date of grant, with the exception of grants to Mr.
      Zinn which exercise price is equal to 110% of the fair market value of our
      common stock on the date of grant.
 (3)  Calculated
      in accordance with SFAS 123(R). For a discussion of the assumptions made
      in the valuation, please see Note 7 to the Consolidated Financial
      Statements in our Annual Report on Form 10-K for the year ended December
      31, 2007.
 21
 Table of
Contents
 OUTSTANDING
EQUITY AWARDS AT FISCAL 2007 YEAR-END
 
 The following
table shows grants of stock options outstanding on December 31, 2007, the last
day of our fiscal year, to each of our named executive officers.  None
of our NEOs had grants of unvested stock awards outstanding on December 31,
2007.  .
 Option
      Awards
              Stock
      AwardsName
              Number
      of Securities Underlying Unexercised Options (#)
    Exercisable
              Number
      of Securities Underlying Unexercised Options (#) Unexercisable
      (1)
              Equity
      Incentive Plan Awards: Number of Securities Underlying Unexercised
      Unearned Options (#)
              Option
      Exercise Price ($)
              Option
      Expiration Date
              Number
      of Shares or Units of Stock That Have Not Vested (#)
              Market
      Value of Shares or Units of Stock That Have Not Vested ($)
              Equity
      Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
      That Have Not Vested (#)
              Equity
      Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
      Other Rights That Have Not Vested ($)(a)
              (b)
              (c)
              (d)
              (e)
              (f)
              (g)
              (h)
              (i)
              (j)Raymond
      D. Zinn
              500,000
                2,476
                75,000
                32,000
                16,000
                --
              --
                619
      (2)
                50,000
      (3)
                48,000
      (4)
                64,000
      (5)
                112,500
      (6)
              --
                --
                --
                --
                --
                --
              13.30
                12.71
                16.39
                10.76
                16.21
                13.25
              2/22/09
                5/27/13
                3/11/14
                3/9/15
                3/2/16
                2/23/17Richard
      D. Crowley, Jr.
              490,000
                1,433
                24,000
                18,000
                30,000
                10,000
                7,000
                --
              --
                359
      (2)
                6,000
      (7)
                12,000
      (3)
                20,000
      (8)
                15,000
      (4)
                28,000
      (5)
                31,500
      (6)
              --
                --
                --
                --
                --
                --
                --
                --
              20.44
                10.50
                13.09
                13.55
                10.10
                9.78
                14.74
                12.05
              9/24/09
                5/27/13
                8/27/13
                3/11/14
                10/25/14
                3/9/15
                3/2/16
                2/23/17James
      G. Gandenberger
              25,000
                6,000
                84,185
                12,000
                8,000
                16,000
                4,000
                --
                --
              --
                --
                318
      (9)
                8,000
      (3)
                12,000
      (4)
                24,000
      (10)
                16,000
      (5)
                23,000
      (6)
                50,000
      (11)
              --
                --
                --
                --
                --
                --
                --
                --
                --
              18.15
                22.86
                10.72
                13.55
                9.78
                11.43
                14.74
                12.05
                8.65
              10/2/11
                3/14/12
                6/13/13
                3/11/14
                3/9/15
                9/26/15
                3/2/16
                2/23/17
                11/29/17Scott
      Ward
              400,000
                1,379
                16,000
                12,000
                8,000
                16,000
                4,000
                --
                --
              --
                345
      (2)
                4,000
      (7)
                8,000
      (3)
                12,000
      (4)
                24,000
      (10)
                16,000
      (5)
                18,000
      (6)
                50,000
      (11)
              --
                --
                --
                --
                --
                --
                --
                --
                --
              19.13
                10.50
                13.09
                13.55
                9.78
                11.43
                14.74
                12.05
                8.65
              8/23/09
                5/27/13
                8/28/13
                3/11/14
                3/9/15
                9/26/15
                3/2/16
                2/23/17
                11/29/17J.
      Vincent Tortolano
              25,000
                70,604
                30,000
                10,000
                5,000
                --
              --
                334
      (9)
                20,000
      (3)
                15,000
      (4)
                20,000
      (5)
                22,500
      (6)
              --
                --
                --
                --
                --
                --
              22.86
                10.72
                13.55
                9.78
                14.74
                12.05
              3/14/12
                6/13/13
                3/11/14
                3/9/15
                3/2/16
                2/23/17
 
 
 (1)  Unless
      otherwise noted, these options vest over five years in equal installments
      on the anniversary date of the
grant.
 (2)  100%
      of options vest on May 27, 2008.
 (3)  50%
      of options vested on March 11, 2008 and the remaining options vest on
      March 11, 2009.
 (4)  33%
      of options vested on March 9, 2008 and the remaining options vest as to
      33% of the total number of shares subject to the option on each of March
      9, 2009 and 2010.
 (5)  25%
      of options vested on March 2, 2008 and the remaining options vest as to
      25% of the total number of shares subject to the option on each o f March
      2, 2009, 2010 and 2011.
 (6)  20%
      of options vested on February 23, 2008 and the remaining options vest as
      to 20% of the total number of shares subject to the option on each of
      February 23, 2009, 2010, 2011 and
2012.
 (7)  100%
      of options vest on August 28, 2008.
 (8)  50%
      of options vest on each of October 25, 2008 and
  2009.
 (9)  100%
      of options vest on June 13, 2008.
 (10)  33%
      of options vest on each of September 26, 2008, 2009 and
    2010.
 (11)  20%
      of the options vest on each of November 29, 2008, 2009, 2010, 2011 and
      2012
  22
 Table of Contents
  OPTION
EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2007
 
 In 2007,
no option awards were exercised by any of our NEOs, and no NEO held stock
awards.
 
 Pension
      Plan; Deferred Compensation
 
 The
Company has no pension plan.  The Company does not have a deferred
compensation program.  Neither the Company nor any executive officer
made any contributions to, or received any earnings from, a deferred
compensation program in 2007.
 
 Employment
Agreements, Change of Control, Severance, Tax Provisions
 
 None of
the NEOs, or any other employee, has an employment agreement with the
Company.  The Company has no change-of-control, severance or tax
provisions that are not applicable to all employees on a non-discriminatory
basis.
  
 DIRECTOR
COMPENSATION FOR FISCAL YEAR 2007
 
 The following
table sets forth information regarding compensation earned by our non-employee
directors during the fiscal year ended December 31, 2007.
 
 Name
              Fees
      Earned or Paid in Cash ($) (1)
              Stock
      Awards ($)
              Option
      Awards ($) (2)
              Non-Equity
      Incentive Plan Compensation ($)
              Change
      in Pension Value and Nonqualified Deferred Compensation Earnings
      ($)
              All
      Other Compensation ($)
              Total
      ($)(a)
              (b)
              (c)
              (d)
              (e)
              (f)
              (g)
              (h)Michael
      J. Callahan
              10,000
              --
              53,049
              --
              --
              --
              63,049David
      W. Conrath
              7,500
              --
              47,010
              --
              --
              --
              54,510Neil
      J. Miotto
              8,750
              --
              21,479
              --
              --
              --
              30,229Frank
      W. Schneider
              5,000
              --
              14,160
              --
              --
              --
              19,160Donald
      H. Livingstone (3)
              3,750
              --
              --
              --
              --
              --
              3,750
 
 
 (1)  Represents
      cash payments for annual retainer, meeting and committee
    fees.
 (2)  Represents
      the dollar amount associated with the named director's option grants that
      is recognized as compensation for financial statement reporting purposes
      with respect to the fiscal year 2007 in accordance with SFAS 123(R). For a
      discussion of the assumptions made in the valuation, please see Note 7 to
      the Consolidated Financial Statements in our Annual Report on Form 10-K
      for the year ended December 31, 2007. Includes 2007 compensation expense
      associated with stock options granted in 2002 through 2007.  The
      full grant date fair value of options granted in 2007 computed in
      accordance with SFAS 123(R), totaled $62,161 for Mr. Callahan and Mr.
      Conrath, $98,438 for Mr. Miotto, $93,242 for Mr. Schneider and $0 for Mr.
      Livingstone.  At December 31, 2007, the aggregate number of
      options held by each director is as follows: Mr. Callahan, 35,000 shares;
      Mr. Conrath, 35,000 shares; Mr. Miotto, 15,000 shares; Mr. Schneider
      15,000 shares; and Mr. Livingstone, zero (0)
  shares.
 (3)  Mr.
      Livingstone retired from the Board of Directors on May 24,
      2007.
 
 
  23
 Table of Contents
  
 Non-employee
directors of the Company receive $1,250 compensation for each meeting of the
Board of Directors attended and $1,250 for each committee meeting not held in
conjunction with a Board meeting.
  In May
2006, the Compensation Committee and the Board approved an annual retainer of
$5,000 to be paid to each non-employee director, commencing with the 2006-2007
Board year.  The $5,000 annual retainer for 2007 was paid to each
non-employee director in quarterly installments, commencing on the date of the
Annual Meeting of Shareholders in May 2007.
  The
Company’s 2003 Incentive Award Plan, as amended, provides for annual automatic
grants of nonqualified stock options to continuing non-employee
directors.  In accordance with the 2003 Plan, new Board members
receive an initial option grant to purchase 15,000 shares of the Company’s
Common Stock upon commencement of Board service.  Furthermore, on the
date of each annual shareholders’ meeting, each individual who is at the time
continuing to serve as a non-employee director will automatically be granted an
option to purchase 10,000 shares of the Company’s Common Stock.  All
options granted to non-employee directors will have an exercise price equal to
100% of the fair market value, defined as the closing price of a share of the
Company’s Common Stock on the NASDAQ Stock Market on the date of grant, and
become exercisable at the rate of 25% per year.
  Compensation
Committee Interlocks and Insider Participation
  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.
  COMPENSATION
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,  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.
  The
undersigned members of the Compensation Committee have thoroughly reviewed the
foregoing Compensation Discussion and Analysis (CD&A) and have discussed it
with management.  Following its review of the CD&A and discussion
with management, the Compensation Committee recommended to management that the
CD&A be included in the Company’s annual report and proxy
statement.
  
 COMPENSATION COMMITTEE
 
 Frank Schneider, Chairman
 Michael Callahan
  24
 Table of Contents
  
 ITEM
      12.
              SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT AND RELATED SHAREHOLDER
MATTERS
 
 
  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 3, 2008
(except as otherwise noted), 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 and nominees for directors, (iii) the Chief
Executive Officer, the Chief Financial Officer, and each of the three other most
highly compensated officers (collectively, the “Named Executive Officers” or
“NEOs”) and (iv) all executive officers and directors of the Company as a
group.  Unless otherwise indicated below, the address for each
beneficial owner listed is c/o Micrel, Incorporated, 2180 Fortune Drive, San
Jose, California 95131.
  Number
      of Shares
                Beneficially
      Owned(1)Name
              
              Number
              PercentRaymond
      D. Zinn (3)
              
              11,893,542
              16.5Warren
      H. Muller (2)
                427
      Richlee Drive
                Campbell,
      CA 95008
              
              10,120,321
              14.2Obrem
      Capital Management (4)
                733
      3rd Avenue, 11th
      Floor
                New
      York, NY 10017
              
              10,735,690
              15.0Wasatch
      Advisors, Inc. (5)
                150
      Social Hall Avenue
                Salt
      Lake City, UT 84111
              
              4,683,000
              6.6Richard
      D. Crowley (6)
              
              612,942
              *J.
      Vincent Tortolano (7)
              
              172,427James
      G. Gandenberger (8)
              
              180,573
              *Scott
      Ward (9)
              
              481,542
              *David
      W. Conrath (10)
              
              19,750
              *Michael
      J Callahan (11)
              
              15,000
              *Neil
      J. Miotto  (12)
              
              8,750
              *Frank
      W. Schneider (13)
              
              5,750
              *All
      executive officers and directors as a group (14)
              
              14,691,718
              19.7
 ____________________
 *Less
than 1%
  (1)  Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission.  In computing the number of shares
      beneficially owned by a person and the percentage ownership of that
      person, shares of common stock subject to options held by that person that
      are currently exercisable or exercisable within 60 days of April 3,
      2008 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)  Based
      on a Form 4 filed October 16, 2007.
 (3)  Includes
      705,595 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (4)  Based
      on a Schedule 13D/A filed on April 10,
2008.
 (5)  Based
      on a Schedule 13G filed February 14,
2008.
 (6)  Includes
      605,092 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (7)  Includes
      165,104 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (8)  Includes
      171,785 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (9)  Includes
      473,324 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (10)  Includes
      18,750 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (11)  Includes
      15,000 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (12)  Includes
      3,750 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (13)  Includes
      3,750 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
 (14)  Includes
      3,334,609 shares subject to stock options exercisable within 60 days of
      April 3, 2008.
  25
 Table of Contents
  
 The
following table sets forth information as of December 31, 2007 for all of our
current equity compensation plans, including our 1989 Stock Option Plan, our
1994 Stock Option Plan, our 2000 Non-Qualified Stock Incentive Plan (“2000
Plan”), and our 2003 Incentive Award Plan (the “2003 Plan”).
 
 Plan Category
              Number
      of Securities to be Issued Upon Exercise of Outstanding Options, Warrants
      and Rights
                (a)
              Weighted-average
      Exercise Price of Outstanding Options, Warrants and Rights
($)
                (b)
              Number
      of Securities Remaining Available for Future Issuance Under Equity
      Compensation Plans (Excluding Securities Reflected in Column
      (a))
                (c)Equity
      Compensation Plans Approved by Security Holders
              11,934,534
      (1)
              $12.95
              4,361,950
      (2)Equity
      Compensation Plans Not Approved by Security Holders
              78,510
      (3)
              $16.32
              118,922
      (4)Total
              12,013,044
              $12.97
              4,480,872
 __________
 (1)  Includes
      (i) 7,485,735 shares of common stock issuable upon the exercise of options
      granted under the 2003 Plan, of which 3,169,129 shares were exercisable as
      of December 31, 2007 (ii) 4,429,599 shares of common stock issuable upon
      the exercise of options granted under the 1994 Plan, of which 4,378,570
      shares were exercisable as of December 31, 2007, and (iii) 19,200 shares
      of common stock issuable upon the exercise of options granted under our
      1989 Stock Option Plan, all of which were exercisable as of December 31,
      2007.
 (2)  Represents
      2,404,348 remaining shares of common stock available for issuance under
      the 2003 Plan and 1,957,602 remaining shares available for issuance under
      the 2006 Employee Stock Purchase
Plan.
 (3)  Represents
      shares of common stock issuable upon the exercise of options granted under
      the 2000 Plan, of which 72,050 shares were exercisable as of
      December 31, 2007.
 (4)  Represents
      the remaining shares of common stock available for issuance under the 2000
      Plan.
 
 
 ITEM 13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
      INDEPENDENCE
 
 
 Certain
Transactions
 
 Our Board
of Directors monitors and reviews issues involving potential conflicts of
interest and related party transactions. In doing so, the Board of Directors
applies the Company’s code of conduct, the “Worldwide Standards of Business
Conduct,” which provides that directors, officers and all other employees are
expected to avoid any activity or interest that conflicts with, appears to
conflict with, or is inconsistent with or opposed to the best interests of the
Company.  All employees acknowledge their adherence to the Standards
of Business Conduct, and Directors and officers acknowledge their adherence
annually.  Any possible conflict of interest involving any officer or
Director must be reported to the CEO and the Board.  Furthermore,
management is required to report to the Audit Committee on all related party
transactions.  In accordance with its Charter, the Audit Committee
must review all related party transactions on an ongoing basis and all such
transactions must be approved by the Audit Committee.  During 2007, no
related person (as defined in Instruction to Item 404(a) of Regulation S-K) had
any relationships nor did it engage in any transactions as defined by Item 404
of Regulation S-K.
  26
 Table of Contents
  Director
Independence
  The NASDAQ Stock Market rules require a
majority of the Company’s Board of Directors to be independent of the Company
and its management.  The Board has a responsibility to make an
affirmative determination that such directors are independent through the
application of National Association of Securities Dealers (“NASD”) Marketplace
Rule 4200 (definition of “independent director”).  Our Board has
affirmatively determined that all of its members and nominees are independent
under these rules, except for Mr. Zinn, who is an employee of the
Company.
 
 
 ITEM 14.
              PRINCIPAL
      ACCOUNTING FEES AND SERVICES
 
 
 PricewaterhouseCoopers
LLP (“PwC”) was the Company’s independent registered public accounting firm
(“IRPAF”) for the year ended December 31, 2007. The information below represents
the aggregate fees billed by PricewaterhouseCoopers LLP for audit services
rendered in connection with the consolidated financial statements and reports
for the year ended December 31, 2007 and for other services rendered during
fiscal year 2007 on behalf of Micrel, as well as all out-of-pocket costs
incurred in connection with these services, which have been billed to
Micrel.
  2007
              2006Integrated
      Audit Fees (1)
              $
      888,700
              $
      800,000Audit
      Related Fees (2)
              –
              –Tax
      Fees (3)
              112,300
              81,300All
      Other Fees (4)
              –
              –Total
      Fees
              $1,001,000
              $   881,300
  
   (1) Integrated Audit Fees. The aggregate fees billed for professional services rendered for
the integrated audit of our annual financial statements and the effectiveness of
our internal control over financial reporting for the fiscal years ending
December 31, 2007 and December 31, 2006, and the reviews of the
financial statements included in our Forms 10-Q, or services that are normally
provided by the IRPAF in connection with statutory and regulatory filings or
engagements.
   (2) Audit Related Fees.These
are fees paid for assurance and related services reasonably related to the
performance of the audit and review of our consolidated financial statements
that are not reported under “Integrated Audit Fees.”
   (3) Tax Fees. The
aggregate fees billed in the years ending December 31, 2007 and
December 31, 2006 for professional services rendered by the IRPAF for tax
compliance, preparation of tax filings, assistance with tax audits and tax
planning and advice.
   (4) All Other Fees. No fees were billed for services rendered by the Company’s IRPAF,
other than described above, for the fiscal years ending December 31, 2007
and December 31, 2006.
  All audit
related services, tax services and other services were pre-approved by our Audit
Committee, which concluded that the provision of such services by PwC was
compatible with the maintenance of that firm’s independence in the conduct of
its auditing functions.  The Audit Committee’s pre-approval policy
provides for the pre-approval of audit, audit-related and tax services
specifically described by the committee on an annual basis, and unless a type of
service is pre-approved under the policy, it will require separate pre-approval
by the committee if it is to be provided by the IRPAF.  The policy
authorizes the committee to delegate to one or more of its members pre-approval
authority with respect to permitted services.
  27
 Table of Contents
  
 
 
 PART
IV
 
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES.
 
 (b)
Exhibits
 
 Exhibit
                Number
              Description3.3
              Amended
      and Restated Bylaws of the Registrant, as amended by the Certificate of
      Amendment to the Bylaws of Micrel, Incorporated, dated April 2, 2008 and
      the Certificate of Amendment to the Bylaws of Micrel, Incorporate, dated
      April 22, 2008(1)31
              Certification
      of the Company's Chief Executive Officer and Chief Financial Officer
      Pursuant to Section 302 of the Sarbanes-Oxley Act of 200232
              Certification
      of the Company's Chief Executive Officer and Chief Financial Officer
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
 (1)
      Incorporated by reference to exhibit 3.3 filed with the Company’s
      quarterly report on Form 10-Q for the period ended September 30, 2006,
      exhibit 3.1 filed with the Company’s report on Form 8-K, filed with the
      Securities and Exchange Commission on April 7, 2008 and exhibit 3.1 filed
      with the Company’s report on Form 8-K, filed with the Securities and
      Exchange Commission on April 28,
2008.
 
 
 
 
 SIGNATURE
 
 Pursuant to the requirements of
Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant
has duly caused this Report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 
 MICREL,
INCORPORATED
 
 Date:
April 29,
2008                                                                      By/S/
Raymond D. Zinn
 Raymond
D. Zinn
 President
and Chief Executive Officer
 
  28
 Table of Contents
  Exhibit 31
 Certification
of Chief Executive Officer
  Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
  I,
Raymond D. Zinn, certify that:
  1.           I
have reviewed this annual report on Form 10-K/A of Micrel,
Incorporated;
  2.           Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
  3.           Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
  4.           The
registrant’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
designed in the Exchange Act Rules 13a-15(d) and 15d-15(f) for the registrant
and have:
  (a)           designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
  (b)           designed
such internal control over financial reporting, or caused such internal control
over financial control to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
  (c)           evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
  (d)           disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
  5.           The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
  (a)           all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
  (b)           any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
  Date:
      April 29, 2008
              
              /S/ Raymond D.
      Zinn
                Raymond
      D. Zinn
                President,
      Chief Executive Officer and Director
                (Principal
      Executive Officer)
  29
 Table of Contents
  Certification
of Chief Financial Officer
  Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002
  I,
Richard D. Crowley, certify that:
  1.           I
have reviewed this annual report on Form 10-K/A of Micrel,
Incorporated;
  2.           Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
  3.           Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
  4.           The
registrant’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
designed in the Exchange Act Rules 13a-15(d) and 15d-15(f) for the registrant
and have:
  (a)           designed
such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this report is being prepared;
  (b)           designed
such internal control over financial reporting, or caused such internal control
over financial control to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
  (c)           evaluated
the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this
report based on such evaluation; and
  (d)           disclosed
in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
  5.           The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
  (a)           all
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
  (b)           any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
  Date:
      April 29, 2008
              
              /S/ Richard D.
      Crowley
                Richard
      D. Crowley
                Vice
      President, Finance and Chief Financial Officer
                (Principal
      Financial and Accounting Officer)
 
   30
 Table of Contents
  Exhibit 32
  Certifications
of
  Chief
Executive Officer and Chief Financial Officer
  Pursuant
to 18 U.S.C. Section 1350,
  As
Adopted Pursuant to
  Section
906 of the Sarbanes-Oxley Act Of 2002
  In
connection with the Annual Report of Micrel, Incorporated (the “Company”) on
Form 10-K/A for the period ended December 31, 2007 as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Raymond D. Zinn,
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that
to my knowledge:
  1.           The
Report fully complies with the requirements of Section 13(a) or 15(d), of the
Securities Exchange Act of 1934; and
  2.           That
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
  Date:
      April 29, 2008
              
              /S/ Raymond D.
      Zinn
                Raymond
      D. Zinn
                President,
      Chief Executive Officer and Director
                (Principal
      Executive Officer)
 
  
  In
connection with the Annual Report of Micrel, Incorporated (the “Company”) on
Form 10-K/A for the period ended December 31, 2007 as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Richard D.
Crowley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to my knowledge:
  1.           The
Report fully complies with the requirements of Section 13(a) or 15(d), of the
Securities Exchange Act of 1934; and
  2.           That
information contained in the Report fairly presents, in all material respects,
the financial condition and results of operations of the Company.
  
  Date:
      April 29, 2008
              
              /S/ Richard D.
      Crowley
                Richard
      D. Crowley
                Vice
      President, Finance and Chief Financial Officer
                (Principal
      Financial and Accounting Officer)
 
  31