UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ý Filed by a Party other than the Registrant ¨
Check the appropriate box:
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| ¨ | | Preliminary Proxy Statement |
| ¨ | | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ý | | Definitive Proxy Statement |
| ¨ | | Definitive Additional Materials |
| ¨ | | Soliciting Material under Rule 14a-12 |
| Xilinx, Inc. |
| (Name of Registrant as Specified in Its Charter) |
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
| Payment of Filing Fee (Check the appropriate box): |
| ý | | No fee required |
| ¨ | | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
| | | (1) | | Title of each class of securities to which transaction applies: |
| | | (2) | | Aggregate number of securities to which transaction applies: |
| | | (3) | | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): |
| | | (4) | | Proposed maximum aggregate value of transaction: |
| | | (5) | | Total fee paid: |
| ¨ | | Fee paid previously with preliminary materials. |
| ¨ | | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| | | (1) | | Amount Previously Paid: |
| | | (2) | | Form, Schedule or Registration Statement No.: |
| | | (3) | | Filing Party: |
| | | (4) | | Date Filed: |
June 30, 20142015
Dear Xilinx Stockholder:
You are cordially invited to attend the 20142015 Annual Meeting of Stockholders to be held on Wednesday, August 13, 201412, 2015 at 11:00 a.m., Pacific Daylight Time, at the headquarters of Xilinx, Inc. (Xilinx, the Company, we or our) located at 2050 Logic Drive, San Jose, California 95124. We look forward to your attendance either in person or by proxy. At this meeting, the agenda includes:
the annual election of directors;
a proposal to approve an amendment to our 1990 Employee Qualified Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares;
a proposal to approve an amendment to our 2007 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 3,000,000 shares;
an advisory vote on executive compensation as described in the attached proxy statement;statement; and
a proposal to ratify the appointment of the Company’s external auditors, Ernst & Young LLP.
The foregoing matters are more fully described in the attached proxy statement. The agenda will also include any other business that may properly come before the meeting or any adjournment or postponement thereof. The Board of Directors recommends that you vote FOR the election of each of the director nominees nominated by the Board of Directors, FOR the increase in the number of shares available for issuance under our 1990 Employee Qualified Stock Purchase Plan, FOR the increase in the number of shares available for issuance under our 2007 Equity Incentive Plan, FOR the approval of the compensation of our named executive officers, and FOR the ratification of appointment of Ernst & Young LLP as external auditors of the Company for the fiscal year ending March 28, 2015.April 2, 2016. Please refer to the proxy statement for detailed information on each of the proposals.
You may vote your shares in one of the following ways: (1) via the Internet, by visiting the website shown on the Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 13, 201412, 2015 (Internet Notice) or proxy card and following the instructions; (2) telephonically by calling the telephone number shown in the Internet Notice or proxy card; (3) by voting in person at the annual meeting;Annual Meeting; or (4) by requesting, completing and mailing in a paper proxy card, as outlined in the Internet Notice.
The Xilinx 20142015 Annual Meeting will be held solely to tabulate the votes cast and report the results of voting on the matters described in the attached proxy statement and any other business that may properly come before the meeting. Certain senior executives of Xilinx will be in attendance to answer questions following the Annual Meeting; however, there will be no formal presentation concerning the business of Xilinx.
Whether or not you plan to attend, please take a few minutes now to vote online or via telephone or, alternatively, request a paper proxy card and mark, sign and date your proxy and return it by mail so that your shares will be represented.
Thank you for your continuing interest in Xilinx.
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| Very truly yours, |
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| /s/ Moshe N. Gavrielov |
Moshe N. Gavrielov President and Chief Executive Officer |
IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO VOTE YOUR PROXY ONLINE OR BY TELEPHONE, OR, IN THE ALTERNATIVE, REQUEST, COMPLETE AND MAIL IN A PAPER PROXY CARD.
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TABLE OF CONTENTS
XILINX, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Wednesday, August 13, 201412, 2015
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Xilinx, Inc., a Delaware corporation (Xilinx, the Company, we or our), will be held on Wednesday, August 13, 201412, 2015 at 11:00 a.m., Pacific Daylight Time, at the Company’s headquarters located at 2050 Logic Drive, San Jose, California 95124 for the following purposes:
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| 1. | to elect the following eightseven nominees for director to serve on the Board of Directors for the ensuing year or until their successors are duly elected and qualified: Philip T. Gianos, Moshe N. Gavrielov, John L. Doyle, William G. Howard, Jr., J. Michael Patterson, Albert A. Pimentel, Marshall C. Turner, and Elizabeth W. Vanderslice; |
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| 2. | to approve an amendment to our 1990 Employee Qualified Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares;
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3. | to approve an amendment to our 2007 Equity Incentive Plan to increase the number of shares reserved for issuance thereunder by 3,000,000 shares;
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4. | to hold an advisory vote on executive compensation as described in the attached proxy statement; |
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5.3. | to ratify the appointment of Ernst & Young LLP, an independent registered public accounting firm, as external auditors of Xilinx, for the fiscal year ending March 28, 2015;April 2, 2016; and |
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6.4. | to transact such other business as may properly come before the meeting or any adjournment or postponement thereof. |
The foregoing items of business are more fully described in the proxy statement accompanying this notice. Only stockholders of record at the close of business on June 16, 201415, 2015, are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person. Certain senior executives of Xilinx will be in attendance to answer questions following the Annual Meeting; however, there will be no formal presentation concerning the business of Xilinx.
In order to ensure your representation at the meeting, you are urged to vote as soon as possible.
You may vote your shares in one of the following ways: (1) via the Internet, by visiting the website shown on the Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 13, 201412, 2015 (Internet Notice) or proxy card and following the instructions; (2) telephonically by calling the telephone number shown in the Internet Notice or proxy card; (3) by voting in person at the annual meeting;Annual Meeting; or (4) by requesting, completing and mailing in a paper proxy card, as outlined in the Internet Notice.If you have Internet access, we encourage you to record your vote on the Internet.
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| FOR THE BOARD OF DIRECTORS |
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| /s/ Scott R. Hover-Smoot |
Scott R. Hover-Smoot Secretary |
San Jose, California
June 30, 20142015
THIS PROXY STATEMENT AND THE ACCOMPANYING PROXY ARE BEING PROVIDED ON OR ABOUT JUNE 30, 20142015 IN CONNECTION WITH THE SOLICITATION OF PROXIES ON BEHALF OF THE BOARD OF DIRECTORS OF XILINX, INC. IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO VOTE YOUR PROXY ONLINE OR BY TELEPHONE, OR, IN THE ALTERNATIVE, REQUEST, COMPLETE AND MAIL IN A PAPER PROXY CARD.
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PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
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Q: | Why am I receiving these materials? |
XILINX, INC.
| TABLE OF CONTENTS FOR THE 2015 ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT |
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| | This proxy statement, the enclosed proxy card and1 |
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Q: | How much did this proxy solicitation cost and who will pay for the cost? |
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A: | The cost of preparing, assembling and delivery of | |
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Meeting?
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XILINX, INC. TABLE OF CONTENTS FOR THE 2015 ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT |
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XILINX, INC.
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS
ABOUT THE ANNUAL MEETING
Q: Who is soliciting my vote?
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| A: | In accordance withThe Board of Directors of Xilinx, Inc., a Delaware corporation (Board), is soliciting your vote at the rules2015 Annual Meeting of Stockholders (Annual Meeting). Xilinx, Inc. is referred to in this proxy statement as Xilinx, the Company, we, us or our. |
Q: When is the Annual Meeting?
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| A: | The Annual Meeting will take place on August 12, 2015, at 11:00 a.m., Pacific Daylight Time. |
Q: Where will the Annual Meeting be held?
A: The Annual Meeting, including any adjournment or postponement of the meeting, will be held at our corporate headquarters located at 2050 Logic Drive, San Jose, California 95124.
Q: How do I gain admittance to the Annual Meeting?
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| A: | Each stockholder must present valid picture identification such as a driver’s license or passport and proof of stock ownership as of the Securitiesrecord date for entrance to the Annual Meeting. |
Q: What proposals are being presented for my vote?
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| A: | You will be asked to vote on: |
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| 1. | the election of the following seven nominees to serve as a director on the Board for the ensuing year: Philip T. Gianos, Moshe N. Gavrielov, William G. Howard, Jr., J. Michael Patterson, Albert A. Pimentel, Marshall C. Turner, and Exchange Commission (SEC)Elizabeth W. Vanderslice; |
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| 2. | an advisory vote on the compensation for our named executive officers; |
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| 3. | the ratification of the appointment of Ernst & Young LLP, an independent registered public accounting firm, to serve as external auditors of Xilinx for the fiscal year ending April 2, 2016; and |
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| 4. | any other business that may properly come before the Annual Meeting. |
Q: What are the Board’s recommendations?
A: The Board recommends that you vote your shares:
FOR each of the Board’s seven nominees for director, who are Philip T. Gianos, Moshe N. Gavrielov, William G. Howard, Jr., J. Michael Patterson, Albert A. Pimentel, Marshall C. Turner, and Elizabeth W. Vanderslice;
FOR the advisory vote on the compensation for our named executive officers; and
FOR the ratification of the appointment of Ernst & Young LLP as our independent public accounting firm for the fiscal year ending April 2, 2016.
Q: What is the quorum requirement for the Annual Meeting?
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| A: | The required quorum to transact business at the Annual Meeting is a majority of the shares of our common stock outstanding on the record date. Shares of common stock entitled to vote and represented at the Annual Meeting by proxy or in person, as well as shares represented by abstentions and broker non-votes, will be counted towards the quorum. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting to another date. |
Q: What is the record date?
A: The record date for determiningshares outstanding and eligible to vote at the Annual Meeting is June 15, 2015.
Q: How many shares are outstanding?
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| A: | As of the close of business on May 8, 2015, there were 258,678,362 shares of our common stock outstanding. The closing price of our common stock on May 8, 2015, as reported by the NASDAQ Global Select Market (NASDAQ), was $44.20 per share. |
ABOUT PROXY MATERIALS AND VOTING
Q: Why did I receive a one-page notice in the mail regarding Internet availability of proxy materials instead of a full set of proxy materials?
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| A: | Instead of mailing a printed copy of our proxy materials to stockholders and as permitted by rules of the Securities and Exchange Commission (SEC), we mailed an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 13, 201412, 2015 (Internet Notice) to most of our stockholders to instruct you on how to access and review our proxy materials on the Internet. We believe that it is in the best interests of our stockholders to take advantage of these rules and reduce the expenses associated with printing and mailing proxy materials to all of our stockholders. In addition, as a corporate citizen, we want to reduce the use of natural resources and the environmental impact of printing and mailing the proxy materials. As a result, you will not receive paper copies of the proxy materials unless you specifically request them. |
The Internet Notice provides instructions on how you can: (1) access the proxy materials on the Internet, (2) access your proxy, and (3) vote on the Internet. If you would like to receive paper copies of the proxy materials, please follow the instructions on the Internet Notice. If you share an address with another stockholder and received only one Internet Notice, you may write or call us to request a separate copy of the proxy materials at no cost to you. We anticipate that the Internet Notice will be mailed on or about June 30, 20142015 to all stockholders entitled to vote at the meeting.
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Q: | Who is entitled to vote? |
Q: How many copies of the proxy materials will be delivered to stockholders sharing the same address?
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| A: | OnlyStockholders who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Internet Notice unless one or more of these stockholders of record atnotifies us that they wish to continue receiving individual copies. We adopted this “householding” practice, which is approved by the close of business (5:00 p.m., Eastern Daylight Time) on June 16, 2014 (the Record Date) are entitledSEC, in an effort to notice ofconserve natural resources and to vote at the Annual Meetingreduce printing costs and at any adjournment or postponement thereof.
postage fees. |
If you share an address with another stockholder and received only one Internet Notice and would like to request a copy of the proxy materials, please send your request to: Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, Attn: Investor Relations; call Investor Relations at (408) 879-6911; or visit the Company’s website at www.investor.xilinx.com. We will deliver a separate copy of these materials promptly upon receipt of your written or verbal request. Similarly, you may also contact us if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
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Q: | How many votes are allowed for each share of my Xilinx common stock? |
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A: | Each stockholder is entitled to one vote for each share of Xilinx common stock (Common Stock) held by such stockholder as of the Record Date with respect to all matters presented at the Annual Meeting. Stockholders do not have the right to cumulate their votes in the election of directors. |
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Q: | How many shares are outstanding? |
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A: | As of the close of business on May 9, 2014, there were 268,296,602 shares of Common Stock outstanding. The closing price of our Common Stock on May 9, 2014, as reported by the NASDAQ Global Select Market (NASDAQ), was $46.64 per share.
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Q: How do I vote?
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Q: | How will my shares be voted and what happens if I do not give specific voting instructions? |
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A: | Shares of Common Stock for which proxy cards are properly voted via the Internet or by telephone or are properly executed and returned, will be voted at the Annual Meeting in accordance with the directions given or, in the absence of directions, will be voted “FOR” the election of each of the nominees to the Board named herein, “FOR” the approval of the amendment increasing the number of shares authorized under the Company’s 1990 Employee Qualified Stock Purchase Plan, “FOR” the approval of the amendment increasing the number of shares authorized under the Company’s 2007 Equity Incentive Plan, “FOR” the approval of the compensation of our named executive officers, and “FOR” the ratification of the appointment of Ernst & Young LLP, an independent registered public accounting firm, as the Company’s external auditors for fiscal 2015. It is not expected that any other matters will be brought before the Annual Meeting. If, however, other matters are properly presented, the persons named as proxies in the proxy card will vote in accordance with their discretion with respect to such matters. |
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Q: | What is the difference between a registered stockholder and a beneficial stockholder? |
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A: | Registered Stockholder or Stockholder of Record: Shares Registered in Your Name |
A: The way in which you may vote by proxy depends on how you hold your shares.
If on the Record Date, your shares were registered directly in your name with the Company’sour transfer agent, Computershare Trust Company, N.A., then you hold your shares directly and are a registered stockholder or a stockholder of record. As a stockholder of record,In this case, you may vote by proxy in person atone of three ways:
Vote by telephone (instructions are on the Annual Meetingproxy card);
Vote over the Internet (instructions are on the proxy card); or vote by proxy. Shares held
Fill out the enclosed proxy card, date and sign it, and return it in a brokerage or bank account are not generally registered directly in your name. the enclosed postage pre-paid envelope.
If you plan on attending the Annual Meeting, please see the question below titled “How do I gain admittance to the Annual Meeting?”
Beneficial Stockholder: Shares Registered in the Name of a Broker or Bank
If on the Record Date,hold your shares were held in an account atXilinx stock through a brokerage firm, bank, dealer,broker-dealer, trust or other similar organization then you are the beneficial stockholder of shares held(that is, in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Annual Meeting. As a beneficial stockholder, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent. If you plan on attending the Annual Meeting, please see the question below titled “How do I gain admittance to the Annual Meeting?”
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A: | Whether you hold your shares directly as the stockholder of record or beneficially in “street name”street name), you may vote your shares by proxy without attending the Annual Meeting. Depending on how you hold your shares, you may vote your shares in one of the following ways: |
Stockholders of Record: If you are a stockholder of record, there are several ways for you to vote your shares.
By telephone or over the Internet. You may vote your shares by telephone or via the Internet by following the instructions provided in the Internet Notice. If you vote by telephone or via the Internet, you do not need to return a proxy card by mail. If you have Internet access, we encourage you to record your vote on the Internet. It is convenient, reduces the use of natural resources and saves significant postage and processing costs. In addition, when you vote via the Internet or by phone prior to the meeting date, your vote is recorded immediately and there is no risk that postal delays will cause your vote to arrive late and therefore not be counted.
By Mail. If you received printed proxy materials, you may submit your vote by completing, signing and dating each proxy card received and returning it in the prepaid envelope. Sign your name exactly as it appears on the proxy card.
In person at the Annual Meeting. You may vote your shares in person at the Annual Meeting. Even if you plan to attend the Annual Meeting in person, we recommend that you also submit your proxy card or voting instructions or vote by telephone or via the Internet by the applicable deadline so that your vote will be counted if you later decide not to attend the meeting. For more information on the documentation necessary to attend the Annual Meeting in person, please see the question below titled “How do I gain admittance to the Annual Meeting?”
Beneficial Stockholders: If you are a beneficial owner of your shares youand should have received an Internet Notice from the broker or other nominee holding your shares. You should follow the instructions in the Internet Notice or voting instructions provided by your broker or nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and Internet voting will depend on the voting process of the broker or nominee. Shares held beneficially
Regardless how you hold your Xilinx stock, you may be votedvote in person at the Annual Meeting onlyMeeting; however, if you contact the brokerhold your Xilinx stock in street name, i.e., through a brokerage firm, bank, broker-dealer, trust or nominee givingother similar organization, you the right to vote the shares andmust obtain a legal proxy from suchyour broker or nominee.nominee and bring that proxy to the Annual Meeting.
Q: How many votes do I have?
A: You have one vote for every share of Xilinx common stock you owned on the record date, which is June 15, 2015.
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Q: | How do I gain admittance to the Annual Meeting? |
Q: Who will count my votes?
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| A: | Each stockholder must present valid picture identification such as a driver’s license or passport and proof of stock ownership as of the Record Date for entrance to the Annual General Meeting. |
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Q: | How many copies of the proxy materials will be delivered to stockholders sharing the same address? |
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A: | In an effort to conserve natural resources and reduce printing costs and postage fees, the Company has adopted a practice approved by the SEC called “householding.” Under this practice, stockholders who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of the Internet Notice unless one or more of these stockholders notifies the Company that they wish to continue receiving individual copies. |
If you share an address with another stockholder and received only one Internet Notice and would like to request a copy of the proxy materials, please send your request to: Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, Attn: Investor Relations; call Investor Relations at (408) 879-6911; or visit the Company’s website at www.investor.xilinx.com. Xilinx will deliver a separate copy of these materials promptly upon receipt of your written or verbal request. Similarly, you may also contact the Company if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
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Q: | What is the quorum requirement for the Annual Meeting? |
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A: | A quorum of stockholders is necessary to hold a valid meeting. The required quorum for the transaction of business at the Annual Meeting is a majority of the outstanding shares of Common Stock as of the Record Date. Shares of Common Stock entitled to vote and represented at the Annual Meeting by proxy or in person will be tabulated by the inspector of elections appointed for the Annual Meeting and counted towards the quorum. Abstentions and broker non-votes will also be counted towards the quorum requirement. If there is no quorum, a majority of the votes present at the meeting may adjourn the meeting to another date. |
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Q: | Who will count my votes? |
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A: | Votes will be counted by the inspector of elections appointed for the meeting, who will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes. |
Q: How will my shares be voted and what happens if I do not give specific voting instructions?
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| A: | Shares of common stock for which proxy cards are properly voted via the Internet or by telephone or are properly executed and returned, will be voted at the Annual Meeting in accordance with the directions given or, in the absence of directions, will be voted “FOR” the election of each of the nominees to the Board named herein, “FOR” the advisory approval of the compensation for our named executive officers, and “FOR” the ratification of the appointment of Ernst & Young LLP, an independent registered public accounting firm, as the Company’s external auditors for fiscal 2016. It is not expected that any other matters will be brought before the Annual Meeting. If, however, other matters are properly presented, the persons named as proxies in the proxy card will vote in accordance with their discretion with respect to such matters. |
Q: Which ballot measures are considered “non-routine” or “routine”?
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| A: | Brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on “routine” matters but have no discretion to vote them on “non-routine matters.” Therefore, if you hold your shares through a broker or nominee, it is critical that you cast your vote if you want it to count for “non-routine” matters. |
Proposal One (election of directors) and Proposal Two (advisory vote on executive compensation) are “non-routine” matters. If you hold your shares through a broker or nominee and you do not instruct your bank or broker how to vote on “non-routine” matters, such as Proposals One and Two, no votes will be cast on your behalf.
Proposal Three (ratification of external auditors) is a “routine” matter. Brokers or nominees may generally vote on “routine” matters, and therefore no broker non-votes are expected to exist in connection with Proposal Three.
Q:
What is the effect of a “broker non-vote”? |
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| A: | A “broker non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that proposal and has not received instructions with respect to that proposal from the beneficial owner, despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions. Broker non-votes have no effect and will not be counted towards the vote total for any proposal. |
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Q: | Which ballot measures are considered “routine” or “non-routine”? |
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A: | Brokers who do not receive voting instructions from their clients have the discretion to vote uninstructed shares on “routine” matters but have no discretion to vote them on “non-routine matters.” Proposal One (election of directors), Proposal Two (amendment to the 1990 Employee Qualified Stock Purchase Plan), Proposal Three (amendment to the 2007 Equity Incentive Plan), and Proposal Four (advisory vote on executive compensation) are “non-routine” matters. If you hold your shares in street name and you do not instruct your bank or broker how to vote on “non-routine” matters such as Proposals One, Two, Three, and Four, no votes will be cast on your behalf. Therefore, if you hold your shares in street name, it is critical that you cast your vote if you want it to count for “non-routine” matters. Proposal Five (ratification of external auditors) is a “routine” matter. Brokers or other nominees may generally vote on “routine” matters, and therefore no broker non-votes are expected to exist in connection with Proposal Five. |
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Q: | Q: How are abstentions treated? |
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| A: | Abstentions are counted for purposes of determining whether a quorum is present. For the purpose of determining whether the stockholders have approved a matter, abstentions are treated as represented and entitled to vote for purposes of determining a quorum, and therefore, have the same effect on the outcome of a matter being voted on at the Annual Meeting as a vote “Against” or “Withheld”“Withheld,” except in elections of directors where abstentions have no effect on the outcome. |
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Q: | Q: How many votes are needed to approve each proposal? |
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| A: | The following table sets forth the voting requirement with respect to each of the proposals: |
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| PROPOSAL | | VOTE REQUIRED | | BROKER DISCRETIONARY VOTE ALLOWED |
Proposal One –- Election of eight (8)seven (7) directors | | Majority of votes cast, except in contested elections, Directorsdirectors will be elected by the plurality standard whereby those Directorsdirectors with the highest number of votes cast are elected | | No |
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Proposal Two – Amendment to the 1990 Employee Qualified Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 2,000,000 shares | | Majority of shares entitled to vote and present in person or represented by proxy | | No |
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Proposal Three – Amendment to the 2007 Equity Incentive Plan to increase the number of shares to be reserved for issuance thereunder by 3,000,000 shares | | Majority of shares entitled to vote and present in person or represented by proxy | | No |
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Proposal Four –- Annual advisory vote to approve the compensation of our named executive officers | | Advisory vote; Majority of shares entitled to vote and present in person or represented by proxy | | No |
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Proposal Five –Three - The ratification of Ernst & Young LLP as our independent registered public accounting firm | | Majority of shares entitled to vote and present in person or represented by proxy | | Yes |
In the absence of instructions, shares of Common Stockcommon stock represented by valid proxies shall be voted in accordance with the recommendations of the Board as shown on the proxy.
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| Q: | What is the advisory vote to approve the compensation of our named executive officers? |
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| A: | At our 2011 Annual Meeting, a majority of our stockholders approved holding an advisory vote on our executive compensation program (also known as “say-on-pay”) at each annual meeting of stockholders. Therefore, we have included Proposal Four in this proxy statement to allow our stockholders to provide us aThe non-binding advisory vote on the compensation of our named executive officers as disclosed in this proxy statement. Your vote on this itemProposal Two will provide us insight into our stockholders’ viewviews on our compensation practices pertaining to our named executive officers. |
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Q: | How can I change my vote or revoke my proxy? |
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| A: | A stockholder of record giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of the Company, at 2100 Logic Drive, San Jose, California 95124, a written notice of revocation or a duly executed proxy bearing a later date, or by appearing at the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, by itself, be sufficient to revoke a proxy. Any beneficial stockholder wishing to revoke his or her voting instructions must contact the bank, brokerage firm or other custodian who holds his or her shares and obtain a legal proxy from such bank or brokerage firm to vote such shares in person at the Annual Meeting. |
Table of ContentsQ: How much did this proxy solicitation cost and who will pay for the cost?
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Q:A: | We have retained the services of Alliance Advisors, LLC to assist in obtaining proxies from brokers and nominees of stockholders for the Annual Meeting. We will pay the cost of these solicitation services, which is estimated to be approximately $9,000, plus out-of-pocket expenses. We will also pay brokers or other persons holding stock in their names or the names of their nominees for costs to forward soliciting materials to their principals. In addition, we pay the cost of preparing, assembling and delivery of the notice of Annual Meeting, proxy statement and form of proxy. Proxies may also be solicited in person, by telephone or electronically by Xilinx personnel who will not receive any additional compensation for such solicitation. |
Q: How and when may I submit proposals for consideration at next year’s Annual Meeting of stockholders?
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| A: | Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (Exchange Act), to be eligible for inclusion in the Company’s proxy statement for the Company’s 2015our 2016 Annual Meeting of Stockholders, stockholder proposals must be received by the Secretary of the Company at our principal executive offices at 2100 Logic Drive, San Jose, California, 95124 no later than March 2, 2015.2016. In order for stockholder proposals made outside of Rule 14a-8 under the Exchange Act to be considered timely within the meaning of Rule 14a-4(c) under the Exchange Act, such proposals must be received by the Secretary of the Company at our principal executive offices no later than May 16, 2015.2016. In addition, the Company’s Prior Notice For Inclusion on Agenda Bylaw provision requires that stockholder proposals made outside of Rule 14a-8 under the Exchange Act must be submitted in accordance with the requirements of the Company’s Bylaws, not later than April 15, 201514, 2016, and not earlier than March 16, 2015;15, 2016; provided however, that if the Company’s 2015our 2016 Annual Meeting of Stockholders is called for a date that is not within 25 days before or after the anniversary of the Annual Meeting, then to be considered timely, stockholder proposals must be received by the Secretary of the Company at our principal executive offices not later than the close of business on the tenth day following the day on which notice of the Company’s 2015our 2016 Annual Meeting of Stockholders was mailed or publicly disclosed, whichever occurs first. The full text of the Company’s Prior Notice for Inclusion on Agenda Bylaw provision described above may be obtained by writing to the Secretary of the Company. |
PROPOSAL ONEDIRECTORS AND CORPORATE GOVERNANCE
ELECTION OF DIRECTORS
Nominees
Board Leadership
The Company’s Board of Directors has nominated thecurrently consists of eight (8) individuals named below,who are elected at each of whom is currently serving as a director (Director) of the Company, to be elected as a Director at the Annual Meeting. The term ofannual meeting and hold office of each person elected as a Director will continue until the next annual meeting of stockholders or until his or her successor has been elected and qualified. Unless otherwise instructed,
Mr. John Doyle notified the proxy holders will vote the proxies received by them for eachCompany in February 2015 of the Company’s eight (8) nominees named below. In the event that any nomineehis decision to retire as a director of the Company is unable or declinesat the end of his current term. He will continue to serve as a Director at the time of thedirector until our Annual Meeting the proxiesscheduled for August 12, 2015, but will be votednot stand for any nominee who shall be designated by the Board to fill the vacancy. The Company is not awarereelection. We thank Mr. Doyle for his twenty-one years of any nominee who will be unable to serveoutstanding and dedicated service as a Director.
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| Name of Nominee | | Age | | Director Since |
| Philip T. Gianos | | 64 | | 1985 |
| Moshe N. Gavrielov | | 60 | | 2008 |
| John L. Doyle | | 82 | | 1994 |
| William G. Howard, Jr. | | 72 | | 1996 |
| J. Michael Patterson | | 68 | | 2005 |
| Albert A. Pimentel | | 59 | | 2010 |
| Marshall C. Turner | | 72 | | 2007 |
| Elizabeth W. Vanderslice | | 50 | | 2000 |
The Board seeks to have members with a variety of backgroundsbackground and experiences. Set forth below isare the names and a brief description of the experience, qualifications, attributes or skills of each of our Director nomineesdirectors that led the Board to conclude that the Directordirector should servebe on the Board. There are no family relationships among any of our directors or executive officers. Each of the following is a nominee up for reelection at the Annual Meeting, except for Mr. Doyle, who is retiring from the Board.
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| Name of Director | | Age | | Director Since |
| Philip T. Gianos | | 65 | | 1985 |
| Moshe N. Gavrielov | | 61 | | 2008 |
| John L. Doyle | | 83 | | 1994 |
| William G. Howard, Jr. | | 73 | | 1996 |
| J. Michael Patterson | | 69 | | 2005 |
| Albert A. Pimentel | | 60 | | 2010 |
| Marshall C. Turner | | 73 | | 2007 |
| Elizabeth W. Vanderslice | | 51 | | 2000 |
Mr. Gianos joined the Company’s Board in December 1985. Mr. Gianos has served as Chairman of the Board since February 2009. Mr. Gianos has been an investor with InterWest Partners, a venture capital firm focused on information technology and life sciences, since 1982 and a General Partner since 1984. Prior to joining InterWest Partners, from 1973 to 1980 inclusive, Mr. Gianos was with IBM Corporation, an information technology company, in engineering and engineering management roles.
Mr. Gianos brings to the Board over 30 years of experience as an investor in multiple areas of information technology, including semiconductors, at a venture capital firm, as well as six years of experience in engineering management. Such experience has proved valuable to the Board in considering and evaluating strategic investments for the Company, as well as in overseeing the operational and R&D aspects of the Company’s business.
Mr. Gavrielov joined the Company in January 2008 as President and CEO and was appointed to the Board in February 2008. Prior to joining the Company, Mr. Gavrielov served at Cadence Design Systems, Inc., an electronic design automation company, as Executive Vice President and General Manager of the Verification Division from April 2005 through November 2007. Mr. Gavrielov served as CEO of Verisity Ltd., an electronic design automation company, from March 1998 to April 2005 before its acquisition by Cadence Design Systems, Inc. Prior to joining Verisity, Mr. Gavrielov spent nearly 10 years at LSI Corporation (formerly LSI Logic Corporation), a semiconductor manufacturer, in a variety of executive management positions, including Executive Vice President of the Products Group, Senior Vice President and General Manager of International Marketing and Sales and Senior Vice President and General Manager of LSI Logic Europe plc. Additionally, Mr. Gavrielov held various engineering and engineering management positions at Digital Equipment Corporation and National Semiconductor Corporation.
With extensive experience in executive management and engineering with semiconductor and software companies, Mr. Gavrielov understands the Company and its competitors, customers, operations and key business drivers. From this experience, Mr. Gavrielov has developed a broad array of skills, particularly in the areas of building and developing semiconductor and software businesses, and providing leadership and a clear vision to the Company’s employees. As the CEO of the Company, Mr. Gavrielov also brings his strategic vision for the Company to the Board and creates a critical link between the management and the Board, enabling the Board to perform its oversight function with the benefit of management’s perspective on the business.
Mr. Doyle joined the Company’s Board in December 1994. Mr. Doyle held numerous technical and managerial positions at Hewlett-Packard Company from 1957 to 1991. Mr. Doyle is an independent consultant.
Mr. Doyle has developed a wide breadth of experience since 1991 as an independent technical and business strategy consultant. Prior to that, Mr. Doyle spent nearly 35 years at Hewlett-Packard Company including time as VP of Personnel, VP of Research and Development, Director of HP Labs and Executive VP of the Computer Systems, Networks and Peripherals businesses which included their integrated circuits operations. Mr. Doyle’s executive experience at Hewlett-Packard brings deep leadership and operational experience to our Board. In addition, Mr. Doyle has extensive knowledge of the Company’s business, in particular, gained from his service as a Directordirector of the Company since 1994. Mr. Doyle has also served on the boards of directors of multiple public and private technology companies which provide him with insights into how boards of other companies have addressed issues similar to those faced by the Company.
Dr. Howard joined the Company’s Board in September 1996. Dr. Howard has worked as an independent consultant for various semiconductor and microelectronics companies since December 1990. From October 1987 to December 1990, Dr. Howard was a senior fellow at the National Academy of Engineering conducting studies of technology management. Dr. Howard held various management positions at Motorola, Inc., a wireless and broadband communications company, between 1969 and 1987 including Senior Vice President and Director of Research and Development. Dr. Howard serves as a member of Sandia National Laboratories’ board of directors, and also served as Chairman of the Board of Ramtron International Corporation, a manufacturer of memory products, from 2003 to 2013.
Dr. Howard’s more than 20 years of experience as an independent consultant for various semiconductor and microelectronics companies, including SEMATECH, the Semiconductor Industry Association and Dow Corning, provides the Board with valuable insights into the industry in which the Company competes. Dr. Howard’s 18 years of experience in various management positions at a leading wireless and broadband communications company, including as its Senior Vice President and Director of Research and Development, has also proved to be valuable as the Company evaluates its own development efforts. Through Dr. Howard’s involvement with several scientific and engineering organizations, including as a member of the National Academy of Engineering and a fellow of the Institute of Electrical Engineers and of the American Association for the Advancement of Science, he has also gained valuable knowledge of the most recent developments in engineering. Dr. Howard has also gained a broad range of skills from his service on multiple boards of directors of public and private technology companies.
Mr. Patterson joined the Company’s Board in October 2005. Mr. Patterson was employed by PricewaterhouseCoopers (PWC), a public accounting firm, from 1970 until retirement in 2001. The positions he held during his 31-year career at PWC include chair of the national high tech practice, chair of the semiconductor tax practice, department chair for PWC’s Silicon Valley tax practice and managing partner of PWC’s Silicon Valley office. Mr. Patterson serves on a few boards of private companies and advises charitable organizations.
Mr. Patterson’s qualifications to sit on our Board include his extensive experience with public and financial accounting matters for complex global organizations. Mr. Patterson’s extensive financial background, including specifically advising companies in the semiconductor industry, has enabled him to play a meaningful role in the oversight of our financial reporting and accounting practices and executive compensation practices.
Mr. Pimentel joined the Company’s Board in August 2010. In October 2013, Mr. Pimentel was appointed President, Global Markets and Customers for Seagate Technology LLC, a manufacturer of hard drives and storage solutions, where he had previously served as their Executive Vice President, Chief Sales and Marketing Officer since April 2011. From May 2008 until August 2010, Mr. Pimentel served as COO and CFO of McAfee, Inc., a security technology company. Prior to that, Mr. Pimentel served as Executive Vice President and CFO of Glu Mobile, Inc., a publisher of mobile games, since 2004. Prior to joining Glu Mobile, Mr. Pimentel served as Executive Vice President and CFO of Zone Labs, Inc., an end-point security software company, from 2003 until it was acquired in 2004 by Checkpoint Software, Inc. From 2001 to 2003, he served as a partner of Redpoint Ventures. Prior to joining Redpoint, he served as CFO for WebTV Networks, Inc., a provider of set-top Internet access devices and services acquired by Microsoft Corporation, and LSI Logic Corporation, a semiconductor and storage systems developer. Mr. Pimentel also serves on the board of directors of Imperva, Inc., a security software company and Lifelock, Inc., an identity theft protection company.
Mr. Pimentel’s strong financial background, particularly through his work as the CFO at three different publicly-traded companies, provides financial expertise to the Board, including an understanding of financial statements, corporate finance and accounting. As an executive of a publicly-traded company, Mr. Pimentel also brings deep leadership and operational experience to our Board.
Mr. Turner joined the Company’s Board in March 2007. Mr. Turner chairs the board of directors of the Alliance BernsteinAB Funds, a family of 116 mutual fund portfolios advised by AllianceBernstein LP,LP. Mr. Turner served as CEO of Dupont Photomasks, Inc., a manufacturer of photomasks for semiconductor chip fabricators between 2003 and is also2006, as Chairman from 2003 until the company’s acquisition in 2005 — as well as interim Chairman and CEO in 1999-2000. In addition, from 2007 to 2014, Mr. Turner served as a member of the board of directors of SunEdison, Inc., a solar power solutions provider and manufacturer of silicon wafers for semiconductor and solar power applications. Mr.
Turner served as CEO of Dupont Photomasks, Inc., a manufacturer of photomasks for semiconductor chip fabricators between 2003 and 2006. He was appointed to the position of Chairman in 2003, a position he held until its acquisition in 2005. Prior to that Mr. Turner served as interim Chairman and CEO for 11 months in 1999-2000.
Mr. Turner has been involved in the semiconductor and software industries, among others, for 3940 years, in a variety of roles including as the CEO of two companies in the semiconductor industry, chairman of two software companies, and a venture capital investor. From these experiences, Mr. Turner has developed a broad range of skills that contribute to the Board’s oversight of the operational, financial and risk management aspects of our business. Mr. Turner has also served on 24 corporate boards of directors and has chaired five of them, giving him meaningful perspective with respect to the various business issues faced by the Board.
Ms. Vanderslice joined the Company’s Board in December 2000. Ms. Vanderslice serves as a consultant for the KC Group, a financial advisory firm focused on the Chinese market, and has been on the Board of Trustees of Boston College since 2010. From 1999 to 2001, Ms. Vanderslice served as a General Managergeneral manager of Terra Lycos, Inc., an Internet access through its acquisition and interactive content provider, from Julysubsequent reorganization. From 1996 to 1999, until July 2001. Prior to joining Terra Lycos, Ms. Vanderslice was a Vice PresidentCEO of Wired Digital, Inc., an online services company, beginning in 1995the online-media division of Wired Ventures, Inc., and served as its Presidenta member of the Board of both Wired Digital, Inc. and CEO from 1996 through June 1999 when she led itsWired Ventures, Inc. before leading the company’s acquisition by Terra Lycos.Lycos, Inc. Prior to joining Wired Digital in early 1995, Ms. Vanderslice served as a principal in the investment banking firm Sterling Payot Company, where she helped raise the capital to launch Wired Magazine, and in 1994 became aas Vice President at H. W. Jesse & Co., a San Francisco investment banking and business strategy-consulting firm spun offfirm. She also worked with the IBM Corporation before earning her MBA from Sterling Payot. Ms. Vanderslice holds an MBA fromthe Harvard Business School. Ms. Vanderslice is also onan Aspen Institute Henry Crown Fellow and was a member and officer of the Board of Trustees of Boston College.Young Presidents’ Organization and the World Presidents’ Organization.
Ms. Vanderslice brings a broad range of skills to the Board from her experience as a general managerthe CEO and board member of an innovative internet access and interactiveoriginal content provider CEO of an online services company and as an investment banker at two investment banking firms.banker. In particular, in addition to her academic and professional background in computer science and systems engineer background,engineering, Ms. Vanderslice contributes to the Board’s understanding of the Company’s sales and marketing efforts and engineering management, and her experience in mergers and acquisitions is valuable to the Board in evaluating strategic transactions.
Board Independence
There are no family relationships among the executive officersThe NASDAQ listing standards require that a majority of the Companymembers of a listed company’s board of directors must qualify as “independent” as affirmatively determined by its board of directors. Our Board annually reviews information relating to the members of our Board to ensure that a majority of our Board is independent under the NASDAQ Marketplace Rules and the rules of the SEC.
After review of all relevant transactions and relationships between each director nominee, his or her family members and entities affiliated with each director nominee and Xilinx, our senior management and our independent registered public accounting firm, our Board has determined that seven of our eight directors are independent directors as defined in the NASDAQ Marketplace and SEC rules. Mr. Gavrielov, our President and CEO, is not an independent director within the meaning of the NASDAQ Marketplace Rules or the Board.rules of the SEC because he is a current employee of Xilinx.
In making a determination of the independence of each director, the Board reviewed relationships and transactions occurring since the beginning of fiscal 2013 between each director, his or her family members and entities affiliated with each director and Xilinx, our senior management and our independent registered public accounting firm. In making its determination, the Board applied the standards for independence set forth by NASDAQ and the SEC. In each case, the Board determined that, because of the nature of the relationship or the amount involved in the transaction, the relationship did not impair the director’s independence. The following transactions were considered by the Board in its independence determinations.
Required Vote
Mr. Pimentel serves as a director of Xilinx and also is employed as an executive officer of Seagate Technology LLC (Seagate). During fiscal 2015, Seagate paid Xilinx $433,145 to purchase our products in the normal course of business. Our Audit Committee in the absence of Mr. Pimentel reviewed the relevant facts and circumstances of the transactions and approved the amounts spent in fiscal 2015.
Each nominee receivingof Mr. Gianos and Dr. Howard is, or was, during any of the previous three (3) fiscal years, a non-management director of one or more votes “FOR” than “AGAINST” shall be electedother companies that has done business with Xilinx. All of the transactions with these organizations occurred in the normal course of business in the purchase or supply of goods or services. In addition, Mr. Gianos served as a Director. If you do not wish your shares to be voted with respect tonon-management director of a nominee, you may “ABSTAIN,”private company in which case your shares will have no effect onXilinx made certain investments prior to the electioncompany being acquired by another public company. Such investments were made by Xilinx in the ordinary course of that nominee.
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.its business pursuant to Xilinx investment policies.
BOARD MATTERS
Board Meetings and Committee Composition
Committees
The Company’s Board held a total of four (4)seven (7) meetings during the fiscal year ended March 29, 2014.28, 2015. All Directorsdirectors are expected to attend each meeting of the Board and the Committees on which he or she serves and are also expected to attend the Annual Meeting. All Directorsdirectors attended the 20132014 annual meeting of stockholders. Each Directordirector attended over 75% of the aggregate of all meetings of the Board or its Committees on which such Directordirector served during the fiscal year. The Board holds four (4) pre-scheduled meetings per fiscal year.
The following table reflectsBoard has four standing committees, which include the current composition of the Company’s standing Audit Committee, Compensation Committee, Nominating and Governance Committee, and Committee of Independent Directors.Directors (the Committees). The Board and its Committees have authority to engage independent advisors and consultants and have used such services. Each of the Audit Committee, the Compensation Committee, and the Nominating and Governance Committee is subject to charters approved by the Board, which are posted on the investor relations page of our website located at www.investor.xilinx.com under “Corporate Governance.”
Set forth below are the directors serving on each of the Board’s four standing committees as well as a description of each committee. |
| | | | | | | | |
| | | Audit Committee | | Compensation Committee | | Nominating and Governance Committee | | Committee of Independent Directors |
| Non-Employee Directors: | | | | | | | | |
| Philip T. Gianos (Chairman) | | | | | | X | | X |
| John L. Doyle | | Chair | | | | | | X |
| William G. Howard, Jr. | | | | | | X | | X |
| J. Michael Patterson | | X | | Chair | | | | X |
| Albert A. Pimentel | | X | | | | | | X |
| Marshall C. Turner | | X | | X | | | | X |
| Elizabeth W. Vanderslice | | | | X | | Chair | | X |
| Employee Director: | | | | | | | | |
| Moshe N. Gavrielov | | | | | | | | |
Committees
The Board has a standing Audit Committee Compensation Committee, Nominating and Governance Committee and Committee of Independent Directors (the Committees). The Board has determined that each Director currently serving on these Committees and who served on the Committees in fiscal 2014 meets the applicable tests for independence under the applicable rules and regulations of the SEC, NASDAQ, and the Internal Revenue Service.
The Board and its Committees have authority to engage independent advisors and consultants and have used such services. Each of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee is subject to charters approved by the Board, which are posted on the investor relations page of the Company’s website at www.investor.xilinx.com under “Corporate Governance.”
Audit Committee
The members of the Audit Committee are John L. Doyle, J. Michael Patterson, Albert A. Pimentel, and Marshall C. Turner. During fiscal 2014,2015, the Audit Committee held seven (7)eight (8) meetings. The Audit Committee assists the Board in fulfilling its oversight responsibilities to the stockholders relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, and the audit process. The Board has determined that each Audit Committee member meets the independence and financial knowledge requirements under the SEC rules and the corporate governance listing standards of NASDAQ. The Audit Committee operates in accordance with a written charter adopted by the Board, which complies with NASDAQ listing standards and SEC listing standards.
rules.
The Board has further determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined by SEC rules. Stockholders should understand that this designation is a disclosure requirement of the SEC related to the Audit Committee members’ individual experience and understanding with respect to certain accounting and auditing matters. The designation does not impose upon any of the Audit Committee members any duties, obligations or liabilities that are greater than those generally imposed on each of them as members of the Board nor does it alter the duties, obligations or liability of any other member of the Board.
Compensation Committee
The members of the Compensation Committee are J. Michael Patterson, Marshall C. Turner, and Elizabeth W. Vanderslice. During fiscal 2014,2015, the Compensation Committee met eight (8) times during fiscal 2014.thirteen (13) times. The Compensation Committee has responsibility for establishing theour compensation policies of the Company.policies. The Compensation Committee determines the compensation of the Company’sfor our Board members and executive officers and has exclusive authority to grant equity-based awards, including options and restricted stock units (RSUs), to suchour executive officers under theour 2007 Equity Incentive Plan. The Compensation Committee together with the Board, evaluates the CEO’s performance and the Compensation Committee determines CEO compensation, including base salary, incentive pay and equity. The CEO is not present during the Compensation Committee’s or Board’s deliberations or Compensation Committee voting on CEO compensation, but may be present during voting and deliberations related to compensation of other executive officers. For further information about the processes and procedures for the consideration and determination of executive compensation, please refer to the section of this proxy statement entitled “EXECUTIVE COMPENSATION—COMPENSATION DISCSSION AND ANALYSIS.COMPENSATION-Compensation Discussion and Analysis.”
Nominating and Governance Committee
The members of the Nominating and Governance Committee are Elizabeth W. Vanderslice, Philip T. Gianos, and William G. Howard, Jr. During fiscal 2014,2015, the Nominating and Governance Committee met four (4)five (5) times. The Nominating and Governance Committee has responsibility for identifying, evaluating, and recommending to the Board individuals to serve as members of the Board, and to establishestablishing policies affecting corporate governance. The Nominating and Governance Committee, among other things, makes suggestions regarding the size and composition of the Company’sour Board, recommends nominees for election as directors, and ensures that the Board reviews the Company’sour management organization, including the management succession plans, and the adequacy of the Company’s strategic planning process and recommends nominees for election as Directors. For further information about the director nomination criteria and process, please refer to the section of this proxy statement entitled “BOARD MATTERS—Nomination Criteria and Board Diversity.”
plans.
Committee of Independent Directors
All independent Directorsdirectors are members of the Committee of Independent Directors. This Committee met four (4)five (5) times during fiscal 2014.2015. The Committee’s principal focus is succession planning but it also addresses other topics as deemed necessary and appropriate. The Committee of Independent Directors typically meets outside the presence of management.
Nomination Criteria and Board Diversity
The Board believes in bringing a diversity of backgrounds and viewpoints to the Board and desires that its Directorsdirectors and nominees possess critical skills and experience in the areas of semiconductor design and marketing, manufacturing, software and finance. These factors, and any other qualifications considered useful by the Board, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. As a result, the priorities and emphasis of the Nominating and Governance Committee may change from time to time to take into account changes in business and other trends, and the portfolio of skills and experience of current and prospective Board members. Therefore, while focused on the achievement and the ability of potential candidates to make a positive contribution with respect to such factors, the Nominating and Governance Committee has not established any specific minimum criteria or qualifications that a director or nominee must possess. The Board remains apprised of qualified individuals who may be considered as Board candidates in the future.
As necessary and as part of its annual evaluation of current Board members, and as otherwise necessary, the Nominating and Governance Committee considers theeach director’s skills, experience, and viewpoints previously mentioned as desirable director qualifications, independence, any job changes, theif any, amount of time each Director spendsspent on Xilinx matters and to what extent, if any, other commitments the Directorsdirector may have outside of Xilinx that impact the Director’sdirector’s service to Xilinx. In connection with its evaluation of Board composition, the Nominating and Governance Committee also considers rotating Directors’directors’ positions on the Committees.
Consideration of new Board candidates typically involves a series of internal discussions, review of information concerning candidates and interviews with selected candidates. In fiscal 2014,2015, the Company did not employBoard engaged a search firm or pay fees to other third partiesassist the Nominating and Governance Committee in connection with seeking or evaluating Board nomineeidentifying and assessing director candidates. The Nominating and Governance Committee will consider candidates proposed by stockholders using the same process it uses for a candidate recommended by a member of the Board, an employee, or a search firm, should one be engaged.firm. A stockholder seeking to recommend a prospective nominee for the Nominating and Governance Committee’s consideration should submit the candidate’s name and qualifications by mail addressed to the Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, by email to corporate.secretary@xilinx.com, or by fax to the Corporate Secretary at (408) 377-6137.
Director Independence
The NASDAQ listing standards require that a majority of the members of a listed company’s board of directors must qualify as “independent” as affirmatively determined by its board of directors. Our Board annually reviews information relating to the members of our Board to ensure that a majority of our Board is independent under the NASDAQ Marketplace Rules and the rules of the SEC. After review of all relevant transactions and relationships between each Director nominee, his or her family members and entities affiliated with each Director nominee and Xilinx, our senior management and our independent registered public accounting firm, our Board has determined that seven of our eight nominees for Director are independent directors as defined in the NASDAQ Marketplace Rules and in Rule 10A-3 of the Exchange Act. Mr. Gavrielov, our President and CEO, is not an independent director within the meaning of the NASDAQ Marketplace Rules or the rules of the SEC because he is a current employee of Xilinx.
In making a determination of the independence of the nominees for Director, the Board reviewed relationships and transactions occurring since the beginning of fiscal 2012 between each Director nominee, his or her family members and entities affiliated with each Director nominee and Xilinx, our senior management and our independent registered public accounting firm. In making its determination, the Board applied the standards for independence set forth by NASDAQ and the SEC. In each case, the Board determined that, because of the nature of the relationship or the amount involved in the transaction, the relationship did not impair the Director nominee’s independence. The transactions listed below were considered by the Board in its independence determinations.
Mr. Pimentel serves as a Director of Xilinx and also is employed as an executive officer of Seagate Technology LLC (Seagate). During fiscal 2014, Seagate paid Xilinx $177,569 to purchase our products in the normal course of business. Our Audit Committee in the absence of Mr. Pimentel reviewed the relevant facts and circumstances of the transactions and approved the amounts spent in fiscal 2014.
Each of Messrs. Doyle and Gianos is, or was during any of the previous three (3) fiscal years, a non-management director of one or more other companies that has done business with Xilinx. All of the transactions with these organizations occurred in the normal course of business in the purchase or supply of goods or services. In addition, Mr. Gianos serves as a non-management director of a private company in which Xilinx has made certain investments. Such investments were made by Xilinx in the ordinary course of its business pursuant to Xilinx investment policies.
Board’s Role in Risk Oversight
Our Board has overall responsibility for risk oversight at the Company and may delegate particular risk areas to the appropriate Committees of the Board. The Board’s role in risk oversight builds upon management’s risk management process. The Company conducts a formal annual risk assessment as well as coordinates on-going risk management activities throughout the year to identify, analyze, respond to, monitor and report on risks. Risks reviewed by the Company include operational risks, financial risks, legal and compliance risks, IT risks and strategic risks. The management team then reviews with the Board any significant risks identified during the process, together with plans to mitigate such risks. In response, the Board or the relevant Committee may request that management conduct additional review of or reporting on select enterprise risks. The process and risks are reviewed at least annually with the Board and additional review or reporting of significant enterprise risks will be conducted as needed or as requested by the Board or any of its Committees.
CORPORATE GOVERNANCE PRINCIPLES
Corporate Governance Principles
The Company and the Board, through its Nominating and Governance Committee, regularly review and evaluate the Company’sour corporate governance principles and practices. TheOur Significant Corporate Governance Principles, the Company’s Code of Conduct, the Director'sDirectors’ Code of Ethics, and charters for each of the following Board Committees are posted on our website at www.investor.xilinx.com: Audit Committee, Compensation Committee, and Nominating and Governance Committee. Printed copies of these documents are also available to stockholders upon written request addressed to the Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124 or by email at corporate.secretary@xilinx.com.
Board Leadership Structure and Independence
The Board believes there should be a substantial majority of independent Directorsdirectors on the Board. The Board also believes that it is useful and appropriate to have members of management as Directors,directors, including the CEO. Independent Directorsdirectors are given an opportunity to meet outside the presence of members of management, and hold such meetings regularly.
It is the written policy of the Board that if the Chairman is not “independent” in accordance with NASDAQ Marketplace Rules and the Exchange Act, the Board will designate an independent Directordirector to serve as Lead Independent Director. We believe that having an independent Chairman or a Lead Independent Director, either of whom is responsible for coordinating the activities of the independent Directors,directors, as well as other duties, including chairing the meetings of the Committee of Independent Directors, allows the Company’s CEO to better focus on the day-to-day management and leadership of the Company, while better enabling the Board to advise and oversee the performance of the CEO. The Nominating and Governance Committee reviews the position of Lead Independent Director and identifies the Directordirector who serves as Lead Independent Director in the absence of an independent Chairman. For fiscal 2014,2015, Philip T. Gianos, an independent director, served as Chairman of the Board, so there was no Lead Independent Director.
Majority Vote Standard
All Directorsdirectors are elected annually at the annual stockholder meeting. In response to a successful stockholder proposal for election ofAs set forth in our Bylaws, directors by majority vote standard, in May 2006, the Board amended the Company’s Bylaws to provide for the election of Directors in an uncontested election byare elected based on the majority of votes cast regardingfor each nominee.nominee, unless the number of nominees exceeds the number of directors to be elected. In contested elections, Directors willwhere the number of nominees exceeds the number of directors to be elected, directors are elected by the plurality standard, wherebywhich means those Directorsdirectors with the highest number of votes cast are elected. Any existing Director thatdirector who receives more “AGAINST” votes than “FOR” votes will tender his or her resignation to the Board. The Board will announce its decision with regard to the resignation within 120 days following the certification of election results.
Board Evaluation
The Board conducts an annual evaluation of its performance. The process varies from year-to-year, including self-evaluations and/or one-on-one meetings with each Board member and the chairperson of the Nominating and Governance Committee. Results of the evaluation are formally presented to the Board. The Board has made changes in Board procedures based on feedback from the process.
Board Service Limits and Terms
The Board has set a limitation on the number of public boards on which a Directordirector may serve to three (3) for any CEO and four (4) for all other Directors.directors. This limitation is inclusive of service on the Xilinx Board.
The Board believes that term limits on Directors’directors’ service and a mandatory retirement age do not serve the best interests of the Company. While such policies could help ensure that fresh ideas and new viewpoints are addressed by the Board, such limits have the disadvantage of losing the contribution of Directorsdirectors who over time have developed increased insight and knowledge into the Company’s operations and who remain active and contributing members of the Board. The Board evaluation process plays a significant role in determining our Nominating and Governance Committee’s recommendation regarding Board tenure.
Change of Principal Occupation or Association
When a Director’sdirector’s principal occupation or business association changes substantially during his or her tenure as Director,director, that Directordirector shall tender his or her resignation for consideration by the Nominating and Governance Committee. The Nominating and Governance Committee will recommend to the Board the action, if any, to be taken with respect to the resignation.
Director Education
The Company offers internal and external course selections for new-Directornew-director orientation as well as continuing education. On a rotating basis, Directorsdirectors will attend director education programs and report back to the entire Board on key learnings.
Stock Ownership Requirements
Directors
The Board has established minimum stock ownership guidelines for Directors.directors. Under these guidelines, Directorsdirectors are required to own our Common Stockcommon stock having a value equal to at least five (5) times their annual cash retainer. At the time these ownership guidelines were adopted, theThe annual cash retainer for Directors wasdirectors is $60,000, and therefore Directorsdirectors are required to own our Common Stockcommon stock with a value of at least $300,000. For example, based on $46.64,$44.20, the closing price of our Common Stockcommon stock on May 9, 2014,8, 2015, $300,000 would purchase 6,4326,787 shares of our Common Stock. Previously, the stock ownership requirement for Directors was 4,000 shares.common stock.
Directors are required to retain half of the shares of our Common Stockcommon stock derived from awards of RSUs until this ownership requirement is met. Half of the RSUs that are vested but are not settled pursuant to a pre-arranged deferral program will count toward the ownership requirement. Based on $46.64,$44.20, the closing price of our Common Stockcommon stock on May 9, 2014,8, 2015, all of our Directorsdirectors have met the stock ownership requirements.
Executive Officers
In August 2011,May 2014, our Board approved amendments to the stock ownership guidelines shifting ownership requirement from a share-based model to a value-based model. Additionally in May 2014, our Board approved amendments to the guidelines to increase the ownership requirement for the CEO and to create a new ownership requirement for executive vice presidents. Under the revised guidelines, theThe CEO is now required to own shares of our Common Stockcommon stock having a value of at least $4.5 million. Executive vice presidents who are Section 16 officers are required to own shares of our Common Stockcommon stock having a value of at least $1.0 million. Senior vice presidents who are Section 16 officers are required to own shares of our Common Stockcommon stock having a value of at least $750,000 and corporate vice presidents who are Section 16 officers are required to own shares of our Common Stockcommon stock having a value of at least $500,000. In addition, until their stock ownership requirements are met, the CEO and all other Section 16 officers must retain half of the shares of our Common Stockcommon stock derived from awards of time-based RSUs that were granted beginning in July 2011 and 45%45 percent of the shares of our Common Stockcommon stock derived from awards of performance-based RSUs that were granted beginning in July 2013.
Succession Planning
The Board plans for succession to the position of the Chairman of the Board, the position of CEO, and other senior management positions. To assist the Board, the CEO annually provides the Board with an assessment of senior managers and of their potential to succeed him. He also provides the Board with an assessment of considered potential successors to certain senior management positions.
Internal Audit
The Company’s Internal Audit function reports to the Audit Committee of the Board and administratively to the Company’s CFO.
Codes of Conduct and Ethics
TheOur Board has adopted a Code of Conduct applicable to the Company’s Directorsour directors and employees, including the Company’sour CEO, CFO and its principalall accounting personnel. The Code of Conduct includes protections for employees who report violations of the Code of Conduct and other improprieties and includes an anonymous reporting process to provide employees with an additional channel to report any perceived violations. Independent Directorsdirectors receive complaints and reports of violations regarding accounting, internal accounting controls, auditing, legal and other matters reported through the anonymous reporting process, if any. The Chief Compliance Officer provides a quarterly report to the Audit Committee of incident reports identified through the anonymous reporting process and otherwise. The Code of Conduct is available on the investor relations page of our website at www.investor.xilinx.com. Printed copies of these documents are also available to stockholders upon written request directed to Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124.
The Board has adopted a separate Code of Ethics pertaining particularly to the Board which covers topics including insider trading, confidentiality, conflicts of interests, financial reporting and compliance with other laws.
A waiver of any violation of the Code of Conduct by an executive officer or Directordirector and a waiver of any violation of the Directors’ Code of Ethics may only be made by the Board. The Company will post any such waivers, on its website under the Corporate Governance page at www.investor.xilinx.com. Amendmentsas well as amendments to the Code of Conduct, will also be posted on the Xilinxour website under the Corporate Governance page at www.investor.xilinx.com. No waivers were requested or granted in the past year. The Code of Conduct was last amended in May 2012.
November 2014.
Anonymous Reporting and Whistleblower Protection
The Company’sOur Code of Conduct includes protections for employees who report violations of the Code of Conduct, other policies, laws, rules and regulations. The Company hasWe have implemented an Internet-based anonymous reporting process for employees to report violations they do not otherwise bring directly to management. The site can be accessed from the Company’sour intranet as well as from any Internet connection around the world.
Internet.
Stockholder Value
The Board is cognizant of the interests of the stockholders and accordingly:
All employee stock plans will be submitted to the stockholders for approval prior to adoption;
The 2007 Equity Incentive Plan includes a provision that prohibits repricing of options whether by directly lowering the exercise price, through cancellation of the option or stock appreciation right (SAR) in exchange for a new option or SAR having a lower exercise price, or by the replacement of the option or SAR with a full value award (i.e., an award of restricted stock or RSUs); and
The Company is committed to keeping dilution under its stock plans for employees under industry standards.
Stockholder Communications to the Board
Stockholders may initiate any communication with the Board in writing and send them addressedsent in care of the Company’s Corporate Secretary atto Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, by e-mail to corporate.secretary@xilinx.com, or by fax to the Corporate Secretary at (408) 377-6137. The name of any specific intended recipient, group or committee should be noted in the communication. The Board has instructed the Corporate Secretary to forward such correspondence only to the intended recipients; however, the Board has also instructed the Corporate Secretary, prior to forwarding any correspondence, to review such correspondence and, in his discretion, not to forward certain items if they are deemed of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration. In such cases, and as necessary for follow up at the Board’s direction, correspondence may be forwarded elsewhere in the Company for review and possible response. This centralized process will assist the Board in reviewing and responding to stockholder communications in an appropriate manner.
COMPENSATION OF DIRECTORS
Non-Employee Directors
Directors who are not actively employed as executives of the Company receive compensation for their service. Directors who are actively employed as executives by the Company receive no additional compensation for their service as directors. Mr. Gavrielov is currently the only employee director of the Company.
Cash Compensation
In fiscal 2014, the Company2015, we paid each of itsour non-employee Directorsdirectors serving on itsthe Board aan annual cash retainer of $60,000 per year for service as a Director, with the exception of the Chairman of the Board.director. The Chairman of the Board is entitled toreceived an additional $60,000 in cash compensation for service as Chairman.
In May 2014, after reviewing competitive market data, the Board approved increases in the annual cash retainer equal to twice the amountcompensation paid to each non-employee director serving as a chairperson or member of a Board Committee. Beginning on the other non-employee Directors, or $120,000. Thedate of our 2014 Annual Meeting, the chairperson of the Audit Committee receivedreceives an additional $22,500$25,000 per year (up from $22,500), the chairperson of the Compensation Committee receivedreceives an additional $17,500$20,000 per year (up from $17,500), and the chairperson of the Nominating and Governance Committee receivedreceives an additional $12,500$15,000 per year.year (up from $12,500). Other than the chairpersons, members of the Audit Committee receivedreceive an additional $12,500 per year (up from $10,000), members of the Compensation Committee receive an additional $10,000 per year members of the Compensation Committee received an additional $7,500 per year(up from $7,500) and members of the Nominating and Governance Committee receivedreceive an additional $5,000$7,500 per year except for Mr. Gianos who elected not to receive $5,000 for his service(up from $5,000). All payments are made in installments on the Nominating and Governance Committee in fiscal 2014. a quarterly basis.
If applicable, the Lead Independent Director is also eligible to receive an additional $10,000 per year. All payments were made in installments on a quarterly basis. As noted above, forFor fiscal 2014,2015, Mr. Gianos, an independent Director,director, served as Chairman of the Board, so there was no Lead Independent Director.
In May 2014, after reviewing competitive market data, the Board approved increases to the annual cash compensation paid to each of its non-employee Directors who serve as a chairperson or member of a Board Committee. Beginning in fiscal 2015, the additional annual cash compensation for service as a chairperson or member on our Board Committees is as follows: Audit Committee (chairperson, $25,000; member $12,500); Compensation Committee (chairperson, $20,000; member, $10,000); and Nominating and Governance Committee (chairperson, $15,000; member, $7,500.). The Board did not make any changes to the annual cash retainer for serving solely as a non-employee Director or Chairman of the Board. As in fiscal 2014, all fiscal 2015 payments will be made in installments on a quarterly basis.
Equity Compensation
Non-employee Directorsdirectors participate in an equity compensation program under the Company’sour 2007 Equity Incentive Plan.Plan (2007 Equity Plan). Under this program, eligible non-employee Directorsdirectors are eligible to receive automatic restricted stock unit awards (RSUs). The terms of those automatic RSU grants are as follows:
Annual Grant
Each eligible non-employee Directordirector is eligible for an annual RSU award. For fiscal 2014,2015, each eligible non-employee Directordirector was automatically granted $165,000$185,000 worth of RSUs on the date of the 20132014 Annual Meeting of Stockholders, or August 14, 2013,13, 2014, and such RSUs shall vest in full on the day immediately preceding the subsequent annual meeting of stockholders. Accordingly, on August 14, 2013,13, 2014, on which date the closing fair market value of our Common Stockcommon stock was $45.08,$41.30, each non-employee Directordirector received a grant of 3,6604,479 RSUs, which will vest in full on August 12, 2014,11, 2015, the day prior to the 2014our 2015 Annual Meeting of Stockholders.
In May 2014, after its review of competitive market data, the Board amended the automatic equity compensation program for eligible non-employee Directors under our 2007 Equity Incentive Plan. Beginning with the 2014 Annual Meeting, each non-employee Director will be automatically awarded $185,000 worth of RSUs on the date of each annual meeting of stockholders. The vesting schedule will remain the same, with the RSU shares vesting in full on the day immediately preceding the subsequent annual meeting of stockholders.
Initial Grant
A non-employee Directordirector joining the Board between annual meetings of stockholders and who has not previously served as an employee director, will receive a pro-rated numbergrant of RSUs on or about the tenth day of the month following the Director’sdirector’s initial appointment or election to the Board. The new non-employee director will receive RSUs worth $185,000 on the date of grant, prorated based on the number of days from the initial appointment or election until the anniversary of the most recently held annual meeting over 365 days. The RSUs vest in full on the day immediately preceding the subsequent annual meeting of stockholders.
Stock Ownership Guidelines
Under the Company’sour stock ownership guidelines, non-employee Directorsdirectors are required to own shares of our Common Stockcommon stock having a value equal to at least $300,000, which is equal to five (5) times their annual retainer in effect at the time the new equity compensation program for Directors was adopted.retainer. Non-employee Directorsdirectors are required to retain half of the shares of our Common Stockcommon stock derived from awards of RSUs until their ownership requirements are met. Half of the RSUs that are vested but are not settled
pursuant to a pre-arranged deferral program will count toward the ownership requirement. For more information about stock ownership guidelines for Directors,directors, please see “CORPORATE GOVERNANCE PRINCIPLES—the section above entitled “DIRECTORS AND CORPORATE GOVERNANCE—Corporate Governance Principles—Stock Ownership Requirements.”
Employee Directors
Directors who are actively employed as executives by the Company receive no additional compensation for their service as Directors. Mr. Gavrielov is currently the only employee DirectorTable of the Company.Contents
Deferred Compensation
We also maintain a nonqualified deferred compensation plan which allows each Directordirector as well as eligible employees to voluntarily defer receipt of a portion or all of their cash compensation until the date or dates elected by the participant, thereby allowing the participating Directordirector or employee to defer taxation on such amounts. For a discussion of this plan, see “EXECUTIVE COMPENSATION—Nonqualified Deferred Compensation Plan.”
Director Compensation for Fiscal 2014
2015
The following table provides information on Directordirector compensation in fiscal 2014:
2015:
| | | Name | Fees Earned or Paid in Cash ($) | | Stock Awards(1) ($) | | Option Awards(2) ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | | | All Other Compensation ($) | | Total ($) | Fees Earned or Paid in Cash ($) | | Stock Awards(1) ($) | | Option Awards(2) ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) |
| Philip T. Gianos (Chairman) | 120,000 |
| | 161,333 |
| | — | | — | | — (3) | | — | | 281,333 | 124,728 |
| | 179,787 |
| | — | | — | | (3) | | — | | 304,515 |
| John L. Doyle | 82,500 |
| | 161,333 |
| | — | | — | | — | | | | — | | 243,833 | 84,073 |
| | 179,787 |
| | — | | — | | — | | — | | 263,860 |
| William G. Howard, Jr. | 65,000 |
| | 161,333 |
| | — | | — | | — (3) | | — | | 226,333 | 66,572 |
| | 179,787 |
| | — | | — | | (3) | | — | | 246,359 |
| J. Michael Patterson | 87,500 |
| | 161,333 |
| | — | | — | | — | | | | — | | 248,833 | 90,645 |
| | 179,787 |
| | — | | — | | — | | — | | 270,432 |
| Albert A. Pimentel | 70,000 |
| | 161,333 |
| | — | | — | | — | | | | — | | 231,333 | 71,573 |
| | 179,787 |
| | — | | — | | — | | — | | 251,360 |
| Marshall C. Turner | 76,573 |
| | 161,333 |
| | — | | — | | — | | — | | 237,906 | 80,645 |
| | 179,787 |
| | — | | — | | — | | — | | 260,432 |
| Elizabeth W. Vanderslice | 80,000 |
| | 161,333 |
| | — | | — | | — (3) | | — | | 241,333 | 83,145 |
| | 179,787 |
| | — | | — | | (3) | | — | | 262,932 |
| |
| (1) | Amounts shown do not reflect compensation actually received by the Director.director. Instead, the amounts shown reflect the grant date fair value for stock awards granted in fiscal 20142015 as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 20142015 filed with the SEC on May 16, 2014.13, 2015. |
| |
| (2) | No option awards were granted to Directorsdirectors during fiscal 2014.2015. The following aggregate number of option awards was outstanding as of March 29, 201428, 2015, for each of the Directors:non-employee directors: Mr. Gianos, 54,000;24,000; Mr. Doyle, 42,000;12,000; Dr. Howard, 54,000;24,000; Mr. Patterson, 31,000;12,000; Mr. Pimentel, 0; Mr. Turner, 26,000; and Ms. Vanderslice, 49,000.24,000. |
| |
| (3) | This Directordirector participated in the Company’s nonqualified deferred compensation plan in fiscal 2014.2015. For more information about this plan see the section below entitled “EXECUTIVE COMPENSATION—Nonqualified Deferred Compensation Plan.” |
PROPOSAL TWO
AMENDMENT TO THE 1990 EMPLOYEE QUALIFIED
STOCK PURCHASE PLAN
The Company’s 1990 Employee Qualified Stock Purchase Plan (ESPP) provides eligible employees of the Company and its participating subsidiaries with the opportunity to purchase shares of Common Stock at a discounted price through payroll deductions. During the fiscal year ended March 29, 2014, the Company issued 1,165,678 shares of Common Stock under the ESPP. As of March 29, 2014, a total of 9,726,132 shares remained available for issuance under the ESPP, not including the 2,000,000 additional shares of Common Stock that would be authorized if the amendment described below is approved.
Proposal
At the Annual Meeting, the stockholders will be asked to approve an amendment to the ESPP to increase by 2,000,000 the maximum number of shares of Common Stock that may be issued under the ESPP.
Unless a sufficient number of shares is authorized and reserved under the ESPP at the beginning of each offering period (August 1 and February 1) to cover the number of shares purchased throughout its entire 24-month term, the Company may incur additional compensation expense for financial statement purposes for each period in which the sale of shares is dependent on obtaining stockholder approval of an additional share authorization. The Board believes an additional 2,000,000 shares will be necessary to provide for offering periods commencing before the next annual meeting of stockholders.
On May 14, 2014, subject to stockholder approval, the Board adopted an amendment to the ESPP to increase the number of shares authorized for issuance under the plan by 2,000,000. If the amendment is approved by the stockholders, the total number of shares available for issuance under the ESPP immediately following such approval will be 11,726,132.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Board believes that participation byfollowing table sets forth the Company’s employees inbeneficial ownership of our common stock as of May 8, 2015, including the ESPP promotesright to acquire beneficial ownership within 60 days of May 8, 2015, except as noted below, by: (i) each stockholder known to the successCompany to be a beneficial owner of more than 5% of our common stock, (ii) each of the Company’s business through broad-based equity ownership among the employees. The Board further believes that the ESPP is an integral componentdirectors and director nominees, (iii) each of the Company’s benefits programnamed executive officers identified in the section entitled “Executive Compensation” and (iv) all current directors and executive officers as a group. We believe that is intended to provide employees with an incentive to exert maximum effort for the successeach of the Companybeneficial owners of our common stock listed below, based on information furnished by such beneficial owners, has sole voting power and sole investment power with respect to participate in that success through acquisition of the Company’s Common Stock.
As longsuch shares, except as the ESPP remains in effect, the Company anticipates that it will ask the stockholders each year for the number of additional shares required to meet the Company’s projected share commitments for offering periods beginning before the next annual meeting of stockholders.
Subject to the eligibility requirements described below, most of the Company’s 3,500 employees (as of March 29, 2014) are eligible to participate in the ESPP. As of March 29, 2014, approximately 78% of the Company’s employees were participating in the ESPP.
Summary of the 1990 Employee Qualified Stock Purchase Plan, as Amended
A summary of the material terms of the ESPP, as amended, is set forth below and is qualified, in its entirety, by the full text of the planotherwise set forth in Appendix Athe footnotes below and subject to our 2014 proxy statement as filed with the SEC and available for viewing without charge at its website at www.sec.gov. A copy of the ESPP can be obtained from us at no charge upon request.applicable community property laws.
Purpose |
| | | | | | | |
| Beneficial Owners | | Amount and Nature of Beneficial Ownership | | | Percent of Class(1) |
| Greater than 5% Stockholders | | | | | |
| Blackrock, Inc. | | 14,927,769 |
| (2) | | 5.8 |
|
55 East 52nd Street New York, NY 10022 | | | | | |
| The Vanguard Group, Inc. | | 19,892,538 |
| (3) | | 7.7 |
|
100 Vanguard Blvd. Malvern, PA 19355 | | | | | |
| Directors | | | | | |
| Philip T. Gianos | | 131,398 |
| (4) | | * |
|
| Moshe N. Gavrielov | | 406,108 |
| (5) | | * |
|
| John L. Doyle | | 30,784 |
| (6) | | * |
|
| William G. Howard, Jr. | | 50,605 |
| (7) | | * |
|
| J. Michael Patterson | | 26,060 |
| (8) | | * |
|
| Albert A. Pimentel | | 13,550 |
| (9) | | * |
|
| Marshall C. Turner | | 55,655 |
| (10) | | * |
|
| Elizabeth W. Vanderslice | | 29,059 |
| (11) | | * |
|
| Named Executive Officers | | | | | * |
|
| Jon A. Olson | | 417,286 |
| (12) | | * |
|
| Victor Peng | | 156,667 |
| (13) | | * |
|
| Krishna Rangasayee | | 120,805 |
| (14) | | * |
|
| Vincent L. Tong | | 202,523 |
| (15) | | * |
|
| Raja Petrakian | | 37,333 |
| (16) | | * |
|
| Frank. A. Tornaghi | | 15,871 |
| (17) | | * |
|
| All current directors and executive officers as a group (16 persons) | | 1,864,617 |
| (18) | | * |
|
* Less than 1%
The purpose of the ESPP is to provide employees of the Company and its designated subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions.
Administration
The ESPP may be administered by the Board or a committee appointed by the Board. All questions of interpretation of the ESPP are determined by the Board or its committee, whose decisions are final and binding upon all participants. Currently, the Compensation Committee administers the ESPP.
| |
| (1) | The beneficial ownership percentage of each stockholder is calculated on the basis of 258,678,362 shares of common stock outstanding as of May 8, 2015. Any additional shares of common stock that a stockholder has the right to acquire within 60 days after May 8, 2015 that are not already outstanding at such time are deemed to be outstanding and beneficially owned for the purpose of calculating that stockholder’s percentage beneficial ownership. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Xilinx, Inc., 2100 Logic Drive, San Jose, California 95124. |
| |
| (2) | Based on information contained in a Schedule 13G/A, reflecting stock ownership information as of December 31, 2014, which was filed by this stockholder pursuant to Section 13(d) of the Exchange Act (Section 13(d)), on February 2, 2015 reporting beneficial ownership of 14,927,769 shares of common stock consisting of 12,683,226 shares as to which it has sole voting power. Blackrock, Inc. has sole dispositive power as to all 14,927,769 shares. |
Authorized Shares
As of March 29, 2014, a maximum of 50,540,000 shares of our Common Stock was authorized for issuance under the ESPP, of which 9,726,132 shares of our Common Stock remained available for future issuance, subject to appropriate adjustments in the event of any stock dividend, stock split, reverse stock split, recapitalization or similar change in the capital structure of the Company, or in the event of any merger, sale of assets or other reorganization of the Company. The Board has amended the ESPP, subject to stockholder approval, to authorize an additional 2,000,000 shares for issuance under the ESPP, which would result in a total of 52,540,000 shares authorized for issuance, of which 11,726,132 shares of our Common Stock would be available for future purchases.
Eligibility
Subject to certain limitations imposed by Section 423(b) of the Tax Code, any person who is employed by the Company (or any designated subsidiary) as of the commencement of an offering period under the ESPP and is customarily employed for at least 20 hours per week and more than five months in a calendar year is eligible to participate in the offering period. Eligible employees may become participants in the ESPP by delivering to the Company a subscription agreement authorizing payroll deductions on or before the first day of the applicable offering period. As of March 29, 2014, most of the Company’s 3,500 employees, including nine (9) current executive officers, were eligible to participate in the ESPP.
Offering Periods
The ESPP is implemented by consecutive and overlapping 24-month offering periods, with a new offering period commencing on or about the first day of February and August of each year. The Board may generally change the duration of any offering period without stockholder approval, provided that no offering period may exceed 27 months in duration. In addition, the Board may establish separate, simultaneous or overlapping offering periods applicable to one or more subsidiaries of the Company and having different terms and conditions, for example, to comply with the laws of the applicable jurisdiction.
Purchase Price
Each 24-month offering period consists of four exercise periods of six months’ duration. The last day of each exercise period, which occurs on or about January 31 and July 31 of each year, is an exercise date on which each participant in the offering period acquires shares. The purchase price of the shares offered under the ESPP in a given exercise period is the lower of 85% of the fair market value of the Common Stock on the first date of the offering period containing that exercise period or 85% of the fair market value of the Common Stock on the exercise date. The fair market value of the Common Stock on a given date is the closing sale price of the Common Stock on such date as reported by NASDAQ. On March 28, 2014, the last trading day of the 2014 fiscal year, the closing price of our Common Stock as reported on NASDAQ was $53.84 per share.
Payroll Deductions
The purchase price for the shares is accumulated through payroll deductions during each offering period. Payroll deductions commence on the first payday following the commencement of an offering period and end on the last exercise date of the offering period, unless sooner terminated as provided in the ESPP. A participant may not authorize deductions of more than 15% or less than 2% of the participant’s eligible compensation, which is defined by the ESPP to include all regular straight time earnings and any payments for overtime, shift premiums, incentive compensation, bonuses, commissions or other compensation for a given offering period. The Company may limit a participant’s payroll deductions in any calendar year as necessary to avoid accumulating an amount in excess of the maximum amount the Tax Code permits to be applied toward the purchase of shares in any offering under the ESPP. A participant may discontinue participating in the ESPP, or may decrease the rate of payroll deductions during the offering period. Upon withdrawal from the ESPP, the Company will refund, without interest, the participant’s accumulated payroll deductions not previously applied to the purchase of shares.
Grant and Exercise of Purchase Right
In general, the maximum number of shares subject to purchase by a participant in an exercise period is that number determined by dividing the amount of the participant’s total payroll deductions accumulated prior to the relevant exercise date by 85% of the lower of the fair market value of the Common Stock at the beginning of the offering period or on the exercise date. However, the maximum number of shares a participant may purchase in any offering period is a number determined by dividing $50,000 by the fair market value of a share of Common Stock on the first day of the offering period. Unless a participant withdraws from the ESPP, the participant’s right to purchase shares is exercised automatically on each exercise date for the maximum number of whole shares that may be purchased at the applicable price.
No employee will be permitted to subscribe for shares under the ESPP if, immediately after the grant of a purchase right, the employee would own and/or hold purchase rights to acquire 5% or more of the voting securities of the Company. Further, no employee may be granted a purchase right which would permit the employee to accrue a right to purchase more than $25,000 worth of stock (determined by the fair market value of the shares at the time the purchase right is granted) for each calendar year in which the purchase right is outstanding at any time.
Automatic Transfer to Low Price Offering Period
In the event that the fair market value of the Company’s Common Stock on any exercise date (other than the last exercise date of an offering period) is less than on the first day of the offering period, all participants will be withdrawn from the offering period after the exercise of their purchase right on such exercise date and enrolled as participants in a new offering period commencing on or about the day following such exercise date. A participant may elect to remain in the previous offering period by filing a written statement declaring such election prior to the time of the automatic change to the new offering period.
Withdrawal; Termination of Employment
A participant may withdraw all, but not less than all, payroll deductions credited to his or her account but not yet used to exercise a purchase right under the ESPP at any time by signing and delivering to the Company a notice of withdrawal from the ESPP. Any withdrawal by the participant of accumulated payroll deductions for a given offering period automatically terminates the participant’s interest in that offering period. The failure of a participant to remain in the continuous employment of the Company for at least 20 hours per week during an offering period will be deemed to be a withdrawal from that offering period and accumulated payroll deductions will be returned to the participant.
Transferability
No rights or accumulated payroll deductions of a participant under the ESPP may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or pursuant to the ESPP) and any attempt to so assign or transfer may be treated by the Company as an election to withdraw from the ESPP.
Adjustments upon Changes in Capitalization
In the event any change is made in the Company’s capitalization pursuant to a stock split or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company, proportionate adjustments will be made by the Board to the number of shares authorized for issuance under the ESPP and subject to each outstanding purchase right and in the purchase price per share.
In the event of a sale of all or substantially all of the assets of the Company or a merger of the Company with another corporation, the acquiring or successor corporation or its parent may assume the purchase rights outstanding under the ESPP or substitute equivalent purchase rights for the acquiror’s stock, provided that the Board may instead shorten an offering period and accelerate the exercise date of all offering periods then in progress to a date prior to the transaction.
Amendment or Termination
The Board may at any time and for any reason amend or terminate the ESPP, except that (other than in limited circumstances set forth in the ESPP) termination will not affect purchase rights previously granted, and no amendment may make any change in any purchase right previously granted that adversely affects the participant’s rights. Stockholder approval must be obtained for any amendment to the extent necessary to comply with applicable law. Under its current terms, the ESPP will expire on January 26, 2030.
Federal Tax Information
The following summary of the effect of United States federal income taxation upon the participant and the Company with respect to the purchase of shares under the ESPP does not purport to be complete, and reference should be made to the applicable provisions of the Tax Code. In addition, this summary does not discuss the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside.
The ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 421 and 423 of the Tax Code. Under these provisions, no income will be taxable to a participant at the time of grant of the purchase right or purchase of shares. Upon disposition of the shares, the participant will generally be subject to tax, and the amount of the
tax will depend upon the length of time the shares have been held by the participant. If the shares have been held by the participant for more than two years after the date of grant of the purchase right and more than one (1) year after the date on which the shares were purchased, then the purchaser will recognize ordinary income equal to the lesser of (a) the excess of the fair market value of the shares at the time of such disposition over the purchase price of such shares or (b) 15% of the fair market value of the shares on the first day of the offering period. Any further gain upon such disposition will be treated as long-term capital gain. If the shares are disposed of before the expiration of these holding periods, the participant will recognize ordinary income generally equal to the excess of the fair market value of the purchased shares on the date of the purchase over the purchase price. Any additional gain or loss on the sale will be a capital gain or loss, which will be either long-term or short-term depending on the actual period for which the shares were held. The Company is entitled to a deduction for amounts taxed as ordinary income reported by participants upon disposition of shares within two years from date of grant or one year from the date of acquisition.
New Plan Benefits
The number of shares that may be purchased under the ESPP will depend on each participant’s voluntary election to participate and on the fair market value of the Common Stock of the Company on future purchase dates, and therefore the actual number of shares that may be purchased by any individual is not determinable. No purchase rights have been granted, and no shares of Common Stock of the Company have been issued with respect to the 2,000,000 additional shares for which stockholder approval is being sought.
Number of Shares Purchased by Certain Individuals and Groups
The following table sets forth for each of the listed persons and groups (i) the aggregate number of shares of Common Stock of the Company purchased under the ESPP during fiscal 2014, and (ii) the market value of those shares on the date of such purchase, minus the purchase price of such shares:
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| | | | | | |
| Name and Position | | Dollar Value ($) | | Number of Shares |
| Moshe N. Gavrielov | | 3,690 |
| | 530 |
|
| President and Chief Executive Officer | | | | |
| Jon A. Olson | | 3,746 |
| | 538 |
|
| Executive Vice President, Finance and Chief Financial Officer | | | | |
| Victor Peng | | 14,121 |
| | 762 |
|
| Executive Vice President and General Manager of Products | | | | |
| Vincent L. Tong | | 3,690 |
| | 530 |
|
| Senior Vice President, Worldwide Quality and New Product Introductions | | | | |
| Frank Tornaghi | | 3,690 |
| | 530 |
|
| Senior Vice President, Worldwide Sales | | | | |
| All current executive officers, as a group | | 55,684 |
| | 5,082 |
|
All current directors who are not executive officers, as a group (l) | | N/A |
| | N/A |
|
| All employees who are not executive officers, as a group | | 16,286,184 |
| | 1,160,596 |
|
| |
(1)(3) | Non-employee Directors are not eligible to participateBased on information contained in the ESPP. |
Required Vote
Affirmative votes constituting a majoritya Schedule 13G/A, reflecting stock ownership information as of the shares present or represented by proxy and entitled to vote on this proposal will be required to approve this proposal. Abstentions will have the same effect as a negative vote, while broker non-votes will have no effect on the outcome of this proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE COMPANY’S 1990 EMPLOYEE QUALIFIED STOCK PURCHASE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER BY 2,000,000 SHARES.
PROPOSAL THREE
AMENDMENT TO THE 2007 EQUITY INCENTIVE PLAN
Proposal
At the Annual Meeting, the stockholders are being requested to approve an amendment to the 2007 Equity Incentive Plan (2007 Equity Plan), to increase by 3,000,000 shares the number of shares of Common Stock authorized for issuance under the 2007 Equity Plan to a new total of 41,500,000 shares.
We make stock grants in connection with new hires and promotions and in connection with our annual “Focal Review.” Our Focal Review is a process in which we evaluate the performance and compensation of each Company employee. Following this evaluation, we make appropriate adjustments to the compensation of a substantial number of Company employees, including through equity grants. These compensation adjustments are typically made in July and the majority of our annual stock budget is used during this period. Our fiscal 2015 Focal Review will occur in July 2014, and our fiscal 2016 Focal Review will occur in July 2015. This means that we would go through two Focal Review periods, with corresponding equity grants, before having the opportunity at our next annual meeting to obtain stockholder approval of additional shares under the 2007 Equity Plan.
The 2007 Equity Plan was adopted by the Company’s Board on May 3, 2006, approved by stockholders at the annual stockholders meeting in July 2006, and became effective on January 1, 2007.
Key Terms of the 2007 Equity Plan
The following is a summary of the key provisions of the 2007 Equity Plan.
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Plan Term: | | January 1, 2007 to December 31, 2023. |
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Eligible Participants: | | Employees, consultants and non-employee directors2014, which was filed by this stockholder pursuant to Section 13(d), on February 10, 2015 reporting beneficial ownership of Xilinx and its subsidiaries are eligible to receive awards under the 2007 Equity Plan. |
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Shares Authorized: | | Currently, a total of 38,500,00019,892,538 shares of Common Stock are authorized for issuance under the 2007 Equity Plan,common stock consisting of 464,079 shares as to which approximately 15,037,378it has sole voting power, no shares remained available for future grant as of March 29, 2014, subject to adjustmentwhich it has shared voting power, 19,448,662 shares as to reflect stock splitswhich it has sole dispositive power and similar events. If the stockholders approve the proposed amendment, a total of 41,500,000443,876 shares will be authorized for issuance under the 2007 Equity Plan, ofas to which 18,037,378 shares will be available for future grants, subject to adjustment to reflect stock splits and similar events. |
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Award Types: | | • Non-qualified and incentive stock options |
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| | • Restricted stock awards |
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| | • Restricted stock units (RSUs) |
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| | • Stock appreciation rights (SARs) |
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Award Limits: | | A participant may receive in any calendar year: |
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| | • No more than 4,000,000 shares subject to options or SARs, in the aggregate |
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| | • No more than 2,000,000 shares subject to awards other than options and SARs |
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| | • No more than $6,000,000 subject to awards that may be settled in cash |
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Award Terms: | | Stock options and SARs must expire no more than seven years from the date of grant. |
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Exercise Price: | | The exercise price of stock options or SARs may not be less than 100% of the fair market value of our Common Stock on the date of grant. |
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Repricing: | | Repricing of out-of-money options or SARs, whether by directly lowering the exercise price, by canceling an option or SAR in exchange for a new option or SAR having a lower exercise price, or by substituting a full value award in place of the option or SAR is not permitted without stockholder approval. |
The Board believes that participation in the 2007 Equity Plan by the employees, consultants, and non-employee directors of the Company and its designated subsidiaries worldwide promotes the success of the Company’s business by providing them with an incentive to exert their maximum effort toward achieving that success. Therefore, the Board unanimously adopted on May 14,
2014, subject to stockholder approval, an amendment to increase the maximum number of shares of Common Stock authorized under the 2007 Equity Plan by 3,000,000 shares to a total of 41,500,000 shares to ensure that the Company will continue to have available a reasonable number of shares for its equity award program.
Key Equity Award Metrics
Share Usage
In the past two years, we have used an average of 3,208,000 shares during the course of each year. As of March 29, 2014 there were 15,037,378 shares available for grant. Given the timing of when we issue this proxy statement and when we hold our annual meetings, we are seeking stockholder approval of a 3,000,000 share increase in the number of shares authorized and thereby available under the 2007 Equity Plan at the 2014 Annual Meeting, resulting in 18,037,378 shares available for future grants, in order to ensure that we will have a sufficient number of shares available to meet the requirements of our equity compensation program over the next two years.
Dilution
We are committed to effectively managing the Company’s equity compensation program while minimizing stockholder dilution. For this reason, we carefully manage the Company’s use of shares of Common Stock available for equity-based compensation each year and aim to keep dilution from our stock plans for employees below industry standards.The requested share increase represents approximately 1.13% of the weighted average outstanding shares of the Company as of March 29, 2014. Because this share reserve increase does not contemplate the amount or timing of specific equity awards in the future, it is not possible to calculate with certainty the amount of subsequent dilution that may ultimately result from such awards. In evaluating the share reserve increase, the Company also considered the guidelines of a leading proxy advisory firm, as well as the guidelines of our major institutional shareholders.
Grant Practices
Beyond the annual automatic grants to eligible non-employee Directors of the Board described below, the Company did not review specific projections of stock grants to individuals in connection with its recommendation to increase the share reserve by 3,000,000 shares.
Equity Utilization Rate
Over the past three fiscal years, the Company has had an ISS average equity utilization rate, sometimes also referred to as a “burn rate,” of approximately 3.56%. The Company’s three-year average ISS adjusted burn rate was below the 2013 ISS allowable cap for the applicable ISS industry grouping.
The following table shows key equity award metrics:
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| | | | | | |
| Key Metrics | | FY2014 | | 3-Year Average (FY2012-2014) |
Shares subject to awards granted(1) | | 3.3 million |
| | 3.2 million |
|
Gross burn rate(2) | | 1.24 | % | | 1.21 | % |
ISS adjusted burn rate(3) | | 3.72 | % | | 3.56 | % |
Dilution at Fiscal Year End(4) | | 10.22 | % | | 12.61 | % |
Overhang at Fiscal Year End(5) | | 4.57 | % | | 6.81 | % |
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(1) | Reflects total number of shares subject to equity awards granted during fiscal 2014 and the average for the prior three fiscal years, including fiscal 2014.it has shared dispositive power. |
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(2) | Gross burn rate is calculated by dividing the total number of shares subject to equity awards granted during the applicable fiscal period by the total weighted-average number of shares outstanding during the applicable fiscal period. |
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(3) | ISS adjusted burn rate is calculated by dividing the total number of shares subject to equity awards granted during the applicable fiscal period, adjusted to address the dilutive effect of stock-based awards other than stock options and stock appreciation rights, by the total weighted-average number of shares outstanding during the applicable fiscal period. Assumes |
an ISS Full Value Multiplier of 3.0 for each of fiscal year 2012, fiscal year 2013 and fiscal year 2014 and also for the three year average. In our 2013 proxy statement, an ISS Full Value Multiplier of 2.5 was applied for each of fiscal year 2011, fiscal year 2012 and fiscal year 2013 and also for the three year average.
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| (4) | Dilution is calculatedConsists of 85,398 shares held directly, 21,980 shares held in a family trust, 20 shares held by dividing the sumMr. Gianos’ son and 24,000 shares issuable upon exercise of (x) the number ofoptions. Does not include 7,625 shares subjectthat are vested but not settled pursuant to equity awards outstanding at the end of the applicable fiscal period and (y) the number of shares available for future equity awards under the 2007 Equity Plan as of the end of the applicable fiscal period, by the weighted-average number of shares outstanding during the applicable fiscal period.a pre-arranged deferral program. |
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| (5) | Overhang is calculated by dividingConsists of 217,845 shares held directly, 37,500 shares issuable upon exercise of options and 150,763 shares issuable upon settlement of RSUs, which represents 62,900 shares, 60,125 shares, and 27,738 shares issuable upon settlement of RSUs granted in fiscal years 2013, 2014, and 2015, respectively. The 27,738 shares included for the number of shares subject to equity awards outstanding atfiscal 2015 grant represents the end of the applicable fiscal period by the weighted-average number of shares outstanding during the applicable fiscal period. |
We believe that the proposed amendment to the 2007 Equity Plan is vital to our continued success. If we do not increase the shares of Common Stock available for issuance under the 2007 Equity Plan, then based on historical usage rates of shares under the 2007 Equity Plan, we would expect to significantly exhaust the number of shares available for issuance under the 2007 Equity Plan by the time of our next annual meeting, thereby potentially limiting our use of an important compensation tool aligned with stockholder interests to attract, motivate and retain highly qualified talent.
Summary of the 2007 Equity Plan, as Amended
A summary of the material terms of the 2007 Equity Plan, as amended, is set forth below and is qualified, in its entirety, by the full text of the 2007 Equity Plan set forth in Appendix B to our 2014 proxy statement as filed with the SEC and available for viewing without charge at its website at www.sec.gov. A copy of the 2007 Equity Plan can be obtained from us at no charge upon request.
Purpose
The purpose of the 2007 Equity Plan is to attract and retain the services of employees, consultants, and non-employee directors of the Company and its subsidiaries, and to provide such persons with a proprietary interest in the Company.
Administration
The Compensation Committee of the Board administers the 2007 Equity Plan, unless otherwise determined by the Board. The Compensation Committee consists of at least two directors of the Company who are both “outside directors” under Section 162(m) of the Tax Code, and “non-employee directors” under Rule 16b-3 promulgated under the Exchange Act. The Compensation Committee, in its sole discretion, will interpret the 2007 Equity Plan and prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of the 2007 Equity Plan, including the creation of sub-plans to take advantage of favorable tax-treatment, comply with local law, or reduce administrative burdens for grants of awards in non-U.S. jurisdictions.
Eligibility
The Compensation Committee determines the employees, consultants, and non-employee directors of the Company or a subsidiary who are eligible to receive awards under the 2007 Equity Plan. As of March 29, 2014, there were 3,500 employees, including nine (9) current executive officers, ninety (90) consultants and seven (7) non-employee directors eligible to participate in the 2007 Equity Plan.
Authorized Shares
Subject to adjustment in the event of certain corporate events (as described below), the maximum number of shares of the Company’s Common Stock currently authorized under the 2007 Equity Plan is 38,500,000, of which 15,037,378 remained available for future issuance as of March 29, 2014, all of which may be granted under the terms of the 2007 Equity Plan as incentive stock options. However, the Board has amended the 2007 Equity Plan, subject to stockholder approval, to authorize an additional 3,000,000 shares for issuance under the plan, which would result in a total of 41,500,000 authorized shares, of which 18,037,378 shares would be available for future grants. If any award granted under the 2007 Equity Plan expires or otherwise terminates in whole or in part for any reason, or if shares issued pursuant to an award are forfeited or otherwise reacquired by the Company because of the participant’s failure to comply with the conditions of the award or for any other reason, any such shares subject to a terminated award or reacquired by the Company will again become available for issuance under the 2007 Equity Plan. Shares will not be treated as having been issued under the 2007 Equity Plan and will therefore not reduce the number of shares available for issuance to the extent an award is settled in cash. The Compensation Committee is authorized to adopt such procedures for counting shares against the maximum number of authorized shares as the Compensation Committee deems appropriate.
Types of Awards
The 2007 Equity Plan allows the Compensation Committee to grant incentive stock options, non-qualified stock options, RSUs, restricted stock and SARs. Subject to the limits set forth in the 2007 Equity Plan, the Compensation Committee has the discretionary authority to determine the amount and terms of awards granted under the 2007 Equity Plan.
Automatic Non-employee Director Awards
The 2007 Equity Plan provides for the periodic automatic grant of RSU awards to non-employee directors. Each non-employee director continuing in office will automatically be granted on the day of each annual meeting of stockholders an award consisting of a number of RSUs determined by dividing $185,000 by the closing price of the Company's Common Stock on the grant date. These awards vest in full on the day immediately preceding the subsequent annual meeting. A non-employee director joining the Board between annual meetings of stockholders will receive a prorated RSU award on or about the tenth day of the month following the director's initial appointment or election to the Board.
Limitations on Awards
Awards under the 2007 Equity Plan are subject to the following limitations:
An option’s exercise price cannot be less than 100% of the fair market value of each share underlying the option on the date of option grant. A SAR’s base level price cannot be less than 100% of the fair market value of each share underlying the SAR on the date of grant of such SAR.
Section 162(m) of the Tax Code requires, among other things, that the maximum number of shares for which an award may be granted or the maximum amount of compensation that could be paid to an individual during a specified period must be set forth in the plan and approved by stockholders in order for the awards to be eligible for treatment as performance-based compensation that will not be subject to the $1,000,000 limitation on tax deductibility for compensation paid to each “covered employee.” Covered employees are the Company’s chief executive officer and its three highest compensated executive officers (excluding the chief executive and chief financial officers) holding office on the last day of the Company’s taxable year. Accordingly, the 2007 Equity Plan limits awards granted to an individual participant in any calendar year. The aggregate awards granted under the 2007 Equity Plan to any participant during any calendar year may not exceed (i) 4,000,000 shares of the Company’s Common Stock subject to stock options or SARs and (ii) 2,000,000 shares of the Company’s Common Stock subject to awards other than stock options and SARs. In addition, no participant may receive during any calendar year an award under the 2007 Equity Plan settled in cash exceeding $6,000,000 in the aggregate.
Without stockholder approval, the Company cannot reprice options or SARs, whether by directly lowering the exercise price, through cancellation of the option or SAR in exchange for a new option or SAR having a lower exercise price, or by the replacement of the option or SAR with a full value award (i.e., an award of restricted stock or RSUs).
Performance Goals
The Compensation Committee has the sole discretion to condition awards granted to those employees subject to Section 162(m) of the Tax Code on the attainment of objective performance goals. The Compensation Committee will establish the performance goals in writing. Such performance goals shall be based on one or more or on a combination of the following criteria in either absolute or relative terms: (i) increased revenue; (ii) net income measures (including, but not limited to, income after capital costs and income before or after any one or more of the share-based compensation expense, interest, taxes, appreciation or amortization); (iii) stock price measures (including, but not limited to, growth measures and total stockholder return); (iv) market segment share; (v) earnings per share (actual or targeted growth); (vi) cash flow measures (including, but not limited to, net cash flow and net cash flow before financing activities); (vii) return measures (including, but not limited to, return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity); (viii) operating measures (including operating income, gross margin, operating margin, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes and production efficiency); (ix) expense measures (including, but not limited to, overhead cost, research and development expense and general and administrative expense); (x) product technology leadership metrics; and (xi) product quality leadership metrics.
Transferability
Awards granted under the 2007 Equity Plan may not be transferred other than by will or the laws of descent and distribution, and may be exercised during the lifetime of a participant only by the participant or the participant’s legally authorized representative.
However, the Compensation Committee, in its sole discretion, may allow for the transfer or assignment of a participant’s award pursuant to a divorce decree or domestic relations order, but only if such participant is a U.S. resident.
Adjustments upon Changes in Capitalization
In the event any change is made in the Company’s capitalization pursuant to a stock split, stock dividend, recapitalization or any other increase or decrease in the Company’s shares effected without receipt of consideration by the Company, equitable adjustments will be made to the number of shares of Common Stock available for grant under the 2007 Equity Plan, the exercise price of options, the SAR base level price, and the number of shares underlying outstanding awards, including restricted stock and RSU awards.
Merger or Change of Control
In the event of a merger, consolidation, or share exchange pursuant to which the Company is not the surviving or resulting corporation: (i) the shares or equivalent cash or property of the surviving or resulting corporation shall be substituted for any unexercised portions of outstanding awards under the 2007 Equity Plan; or (ii) all awards may be canceled by the Company immediately prior to the effective date of such event and each stockholder may be permitted to purchase all or any portion of the shares of Common Stock underlying his or her vested and unvested award(s) within 30 days before such effective date. In the event of a change in control of the Company, among other actions, the Compensation Committee may provide that thepro-rata vesting and exercisability of all or any portion of the outstanding awards will be accelerated and exercisable in full and all restriction periods, if any, will expire.
Amendment or Termination
The Board may at any time and for any reason amend, alter, revise, suspend or terminate the 2007 Equity Plan, subject to the written consent of any participant whose rights would be adversely affected. Unless sooner terminated by the Board, the 2007 Equity Plan will terminate on December 31, 2023. Without stockholder approval, the Board may not amend the 2007 Equity Plan in any manner that would require stockholder approval under applicable law.
Federal Tax Information
The following summary of the effect of United States federal income taxation upon the participant with respect to the 2007 Equity Plan does not purport to be complete and reference should be made to the applicable provisions of the Tax Code. In addition, this summary does not discuss the provisions of the income tax laws of any municipality, state or foreign country in which the participant may reside.
Incentive Stock Options
An individual residing in the U.S. who is granted an incentive stock option is not taxed on the date of grant or vesting of such option. If the shares underlying the option are held for at least two years from the date of grant, and at least one year from the date of option exercise (the “holding periods”), then upon the sale of the shares, the individual will generally recognize a long-term capital gain or loss on the difference between the exercise price of the option and the fair market value of the Common Stock underlying the option on the date of sale. If either of the holding periods is not satisfied, the individual will generally recognize as ordinary income on the date of the disposition (a “disqualifying disposition”) of the shares an amount equal to the difference between the option’s exercise price and the fair market value of the Common Stock underlying the option determined as of the date of exercise (not to exceed the gain realized upon the disposition if the disposition is a transaction with respect to which a loss, if sustained, would be recognized). Any further gain or loss upon the disqualifying disposition of the shares constitutes a capital gain or loss.
In general, the difference between the option exercise price and the fair market value of the shares on the date of exercise of an incentive stock option is treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to participants subject to the alternative minimum tax.
Non-Qualified Stock Options
An individual who is granted a non-qualified stock option generally is not taxed on the date of grant or vesting of such option. Rather, the individual will generally recognize as ordinary income on the date of option exercise an amount equal to the difference between the option’s exercise price and the fair market value of the stock underlying the option on the date of option exercise. Any further gain or loss upon the subsequent sale or disposition of the shares underlying the option constitutes a capital gain or loss.
Stock Appreciation Rights
An individual who is granted a SAR will generally recognize ordinary income on the date the SAR is exercised in an amount equal to the difference between the SAR’s exercise price and the fair market value of the shares underlying the SAR on the date of exercise.
Restricted Stock
Unless an individual makes a timely election under Section 83(b) of the Tax Code (as described below), an individual will recognize ordinary income in an amount equal to the excess of the fair market value of the restricted stock on the date of vesting of the shares over the purchase price, if any, paid for the shares. Any further gain or loss from the subsequent sale of such restricted stock constitutes capital gain or loss. If the individual makes a timely election under Section 83(b), the individual is taxed, at ordinary income rates, on the excess of the fair market value of the restricted stock on the date of grant over the purchase price, if any, paid for the shares, and any further gain or loss on the subsequent sale of the stock constitutes a capital gain or loss.
Restricted Stock Units
An individual generally will recognize no income upon the receipt of an award of RSUs. Upon the settlement of RSUs, the participant generally will recognize ordinary income in the year of receipt in an amount equal to the cash received and/or the fair market value of any substantially vested shares received in respect of vested RSUs. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above under “Restricted Stock.” Any further gain or loss on a subsequent sale of any shares received will be taxed as capital gain or loss.
In general, the Company is entitled to a deduction in an amount equal to the ordinary income recognized by the individual.
Plan Benefits
The number, amount and type of awards to be granted in the future to eligible persons under the 2007 Equity Plan cannot be determined at this time. With the exception of the RSUs to be automatically granted to non-employee Directors, awards under the 2007 Equity Plan will be granted at the discretion of the Compensation Committee or the Board of Directors, and accordingly cannot be determined at this time. See the above section “Automatic Non-employee Director Awards” for a discussion of the automatic grant of RSU awards to our non-employee directors under the 2007 Equity Plan.
The table below sets forth the RSUs awards that will be granted under the “Automatic Non-employee Director Awards” component of the 2007 Equity Plan on the date of the Annual Meeting to certain individuals and groups. This table is furnished pursuant to the rules of the SEC. Only non-employee directors are eligible to receive automatic non-employee Director awards.
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| | | | |
Name and Position | | Dollar Value
($)
| | Number of
Units
|
Moshe N. Gavrielov | | — | | — |
President and Chief Executive Officer | | | | |
Jon A. Olson | | — | | — |
Executive Vice President, Finance and Chief Financial Officer | | | | |
Victor Peng | | — | | — |
Executive Vice President and General Manager of Products | | | | |
Vincent L. Tong | | — | | — |
Senior Vice President, Worldwide Quality and New Product Introductions | | | | |
Frank A. Tornaghi | | — | | — |
Senior Vice President, Worldwide Sales | | | | |
All current executive officers, as a group | | — | | — |
All current directors who are not executive officers, as a group | | —(1)
| | —(1)
|
All employees who are not executive officers, as a group | | — | | —result of actual (not target) performance achievement under an RSU granted in fiscal 2015. |
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(1)(6) | On the dateConsists of the 2014 Annual Meeting, each non-employee Director continuing18,784 shares held in office following the meeting automatically will be granted a numberfamily trust and 12,000 shares issuable upon exercise of options. |
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| (7) | Consists of 26,605 shares held in a family trust and 24,000 shares issuable upon exercise of options. |
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| (8) | Consists of 14,060 shares held directly and 12,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. |
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| (9) | Consists of 13,550 shares held in a family trust. |
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| (10) | Consists of 28,905 shares held directly, 750 shares held by Mr. Turner’s spouse and 26,000 shares issuable upon exercise of options. |
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| (11) | Consists of 14,073 shares held directly, 2,986 shares held in joint tenancy and 12,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. |
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| (12) | Consists of 78,074 shares held in a family trust, 290,000 shares issuable upon exercise of options and 49,212 shares issuable upon settlement of RSUs, determined by dividing $185,000 bywhich represents 23,624 shares, 17,875 shares, and 7,713 shares issuable upon settlement of RSUs granted in fiscal years 2013, 2014, and 2015, respectively. The 7,713 shares for the closing pricefiscal 2015 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
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| (13) | Consists of 57,455 shares held directly, 50,000 shares issuable upon exercise of options, and 49,212 shares issuable upon settlement of RSUs, which represents 23,624 shares, 17,875 shares, and 7,713 shares issuable upon settlement of RSUs granted in fiscal years 2013, 2014, and 2015, respectively. The 7,713 shares for the Company’s Common Stockfiscal 2015 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
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| (14) | Consists of 21,828 shares held directly, 65,000 shares issuable upon exercise of options, and 33,977 shares issuable upon settlement of RSUs, which represents 16,154 shares, 12,187 shares, and 5,636 shares issuable upon settlement of RSUs granted in fiscal years 2013, 2014, and 2015, respectively. The 5,636 shares for the fiscal 2015 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
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| (15) | Consists of 38,546 shares held directly, 130,000 shares issuable upon exercise of options, and 33,977 shares issuable upon settlement of RSUs, which represents 16,154 shares, 12,187 shares, and 5,636 shares issuable upon settlement of RSUs granted in fiscal years 2013, 2014, and 2015, respectively. The 5,636 shares for the fiscal 2015 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
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| (16) | Reflects beneficial ownership of our common stock as of March 27, 2015, the last day of Mr. Petrakian’s employment with the Company, which consisted of 37,333 shares held directly. For more information on that date.Mr. Petrakian’s separation agreement, see the section entitled “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Employment and Post-Employment Agreements.” |
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| (17) | Reflects beneficial ownership of our common stock as of March 27, 2015, the last day of Mr. Tornaghi’s employment with the Company, which consisted of 12,537 shares held directly, and 3,334 shares issuable upon exercise of options. For more information on Mr. Tornaghi’s retirement agreement, see the section entitled “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Employment and Post-Employment Agreements.” |
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| (18) | Includes an aggregate of 1,144,638 shares issuable upon exercise of options or settlement of RSUs. |
Options Granted to Certain Persons
The aggregate number of shares of Common Stock subject to options granted toFor certain persons under the 2007 Equity Plan since its inception is reflected in the table below. Since its inception, no option has been granted under the 2007 Equity Plan to any other nominee for election as a Director, or any associate of any such director, nominee or executive officer, and no other person has been granted 5% or moreinformation concerning our Executive Officers, see “Executive Officers of the total amountRegistrant” in Item 1 of options granted under the 2007 Equity Plan.
|
| | |
Name and Position | Amount of
Options
|
Moshe N. Gavrielov | 1,450,000 |
|
President and Chief Executive Officer | |
Jon A. Olson | 326,250 |
|
Executive Vice President, Finance and Chief Financial Officer | |
Victor Peng | 355,000 |
|
Executive Vice President and General Manager of Products | |
Vincent L. Tong | 246,250 |
|
Senior Vice President, Worldwide Quality and New Product Introductions | |
Frank A. Tornaghi | 271,000 |
|
Senior Vice President, Worldwide Sales | |
All current executive officers, as a group | 3,256,550 |
|
All current Directors who are not executive officers, as a group | 108,000 |
|
All employees who are not executive officers, as a group | 6,990,029 |
|
Required Vote
Affirmative votes constituting a majorityPart I of the shares present or represented by proxy and entitled to vote on this proposal will be required to approve this proposal. Abstentions will have the same effect as a negative vote, while broker non-votes will have no effect on the outcome of this proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE COMPANY’S 2007 EQUITY INCENTIVE PLAN TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK TO BE RESERVED FOR ISSUANCE THEREUNDER BY 3,000,000 SHARES.
our Form 10-K.
Equity Compensation Plan Information
The table below sets forth certain information as of fiscal year ended March 29, 201428, 2015 about the Company’sour common stock that may be issued upon the exercise of options, RSUs, warrants and rights under all of our existing equity compensation plans including the ESPP:
| | | | | A | | B | | C | | | A | | B | | C | |
| Plan Category | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | | | | Weighted-average Exercise Price of Outstanding Options, Warrants and Rights | | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in Column A) | | | | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | | | | Weighted-average Exercise Price of Outstanding Options, Warrants and Rights | | | | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in Column A) | | |
Equity Compensation Plans Approved by Security Holders | | 1997 Stock Plan | | 2,573,178 |
| | | | $ | 25.36 |
| | | | — |
| | (1) | | 1,661,353 |
| | | | $24.35 | | | | — |
| | (1) |
| 2007 Equity Plan | | 9,630,726 |
| | (2) | | $ | 25.08 |
| | (3) | | 15,037,487 |
| | (4) | | 8,485,086 |
| | (2) | | $25.29 | | (3) | | 15,372,882 |
| | (4) |
| Employee Stock Purchase Plan | | N/A |
| | | | N/A |
| | | | 9,726,132 |
| | | | N/A |
| | | | N/A | | | | 10,545,454 |
| | |
| Total-Approved Plans | | 12,203,904 |
| | | | $ | 25.22 |
| | | | 24,763,619 |
| | | | 10,146,439 |
| | | | $24.81 | | | | 25,918,336 |
| | |
Equity Compensation Plans NOT Approved by Security Holders | Supplemental Stock Option Plan (5) | | 1,000 |
| | | | $ | 25.77 |
| | | | — |
| | | | 1,000 |
| | | | $25.77 | | | | — |
| | |
| Total-All Plans | | 12,204,904 |
| | | | $ | 25.22 |
| | | | 24,763,619 |
| | | | 10,147,439 |
| | | | $24.81 | | | | 25,918,336 |
| | |
| |
| (1) | The Company ceased issuing options under the 1997 Stock Plan as of April 1, 2007. The 1997 Stock Plan expired on May 8, 2007 and all available but unissued shares under this plan were cancelled. |
| |
| (2) | Includes approximately 6,901,5286,876,669 shares issuable upon vesting of RSUs that the Companywere granted under the 2007 Equity Plan, and assumes 100% performance achievement for performance-based RSUs granted in fiscal 2014.2015. In May 2014,2015, the Compensation Committee determined the actual number of RSUs earned based on performance achievement for performance-based RSUs awarded in fiscal 2014.2015. For more information on the number of RSUs at 100% performance achievement and the actual performance achievement for performance-based RSUs awarded in fiscal 2014,2015, see the table under “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Compensation Components—Long-Term Equity Incentive Compensation.” |
| |
| (3) | The weighted-average exercise price does not take into account shares issuable upon vesting of outstanding RSUs, which have no exercise price. |
| |
| (4) | On July 26, 2006, the stockholders approved the adoption of the 2007 Equity Plan and authorized 10,000,000 shares to be reserved for issuance thereunder. The 2007 Equity Plan, which became effective on January 1, 2007, replaced both the Company’s 1997 Stock Plan (which expired on May 8, 2007) and the Supplemental Stock Option Plan. On August 9, 2007, August 14, 2008, August 12, 2009, August 11, 2010, August 10, 2011, August 8, 2012, and August 14, 2013, and August 13, 2014, our stockholders authorized the reserve of an additional 5,000,000 shares, 4,000,000 shares, 5,000,000 shares, 4,500,000 shares, 4,500,000 shares, 3,500,000 shares, 2,000,000 shares and 2,000,0003,000,000 shares respectively. All of the shares reserved for issuance under the 2007 Equity Plan may be granted as stock options, stock appreciation rights, restricted stock or RSUs. |
| |
| (5) | Under the Supplemental Stock Option Plan, options were granted to employees and consultants of the Company, however neither officers nor members of our Board were eligible for grants under the Supplemental Stock Option Plan. Only non-qualified stock options were granted under the Supplemental Stock Option Plan (that is, options that do not entitle the optionee to special U.S. income tax treatment) and such options generally expire not later than 12 months after the optionee ceases to be an employee or consultant. Upon a merger of the Company with or into another company, or the sale of substantially all of the Company’s assets, each option granted under the Supplemental Stock Option Plan may be assumed or substituted with a similar option by the acquiring company, or the outstanding options will become exercisable in connection with the merger or sale. |
PROPOSAL FOUR
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules.
Our executive officer compensation program is designed to attract and retain talented and qualified senior executives to manage and lead our Company and to motivate them to pursue and meet our corporate objectives. Under this program, our named executive officers are rewarded for individual and collective contributions to our success consistent with our “pay for performance” orientation. Furthermore, the executive officer total compensation program is aligned with the nature and dynamics of our business, which focuses management on achieving the Company’s annual and long-term business strategies and objectives. Additional details about our executive compensation programs are described under the section titled “EXECUTIVE COMPENSATION—COMPENSATION DISCUSSION AND ANALYSIS.”
Our Compensation Committee regularly reviews the executive officer compensation program to ensure that it achieves the desired goals of emphasizing long-term value creation and aligning the interests of management and stockholders through the use of equity-based awards.
We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2014 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”
Required Vote
The “say-on-pay” vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board of Directors. However, the affirmative vote of holders of a majority of the votes cast in person or by proxy for this Proposal would indicate stockholder approval of the resolution. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC.
PROPOSAL FIVE
RATIFICATION OF APPOINTMENT OF EXTERNAL AUDITORS
The Audit Committee has selected Ernst & Young LLP, an independent registered public accounting firm, to audit the consolidated financial statements of Xilinx for the fiscal year ending March 28, 2015 and recommends that stockholders vote for ratification of such appointment. Although we are not required to submit to a vote of the stockholders the ratification of the appointment of Ernst & Young LLP, the Company, the Board and the Audit Committee, as a matter of good corporate governance, have determined to ask the stockholders to ratify the appointment. If the appointment of Ernst & Young LLP is not ratified, the Audit Committee will take the vote under advisement in evaluating whether to retain Ernst & Young LLP.
Representatives of Ernst & Young LLP attend meetings of the Audit Committee of the Board including executive sessions of the Audit Committee at which no members of Xilinx management are present. Ernst & Young LLP has audited the Company’s financial statements for each fiscal year since the fiscal year ended March 31, 1984. Representatives of Ernst & Young LLP are expected to be present at the Annual Meeting. In addition, they will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders.
Fees Paid to Ernst & Young LLP
The following table shows the fees billed or to be billed for audit and other services provided by Ernst & Young LLP for fiscal 2014 and 2013.
|
| | | | | | | | | |
| | 2014 | | 2013 | |
| Audit Fees | $ | 2,870,800 |
| | $ | 2,610,000 |
| (1 | ) |
| Audit-Related Fees | — |
| | — |
| |
| Tax Fees | 296,000 |
| | 170,000 |
| |
| All Other Fees | — |
| | — |
| |
| Total | $ | 3,166,800 |
| | $ | 2,780,000 |
| |
| (1) Includes $8,000 and $57,000 previously included under Audit-Related Fees and All Other Fees, respectively. |
Audit Fees
This category includes fees for the audit of the Company’s annual financial statements and internal control over financial reporting, review of the Company’s interim financial statements on Form 10-Q and services that are typically provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years. This category also includes, but is not limited to, statutory audits required by non-U.S. jurisdictions, consultation and advice on new accounting pronouncements, technical advice on various accounting matters related to the consolidated financial statements or statutory financial statements that are required to be filed by non-U.S. jurisdictions and comfort letters and consents issued in connection with SEC filings.
Audit-Related Fees
This category consists of assurance and related services that are reasonably related to the performance of the annual audit or interim financial statement review and are not reported under “Audit Fees.” No such services were provided by Ernst & Young LLP during fiscal 2014 and fiscal 2013.
Tax Fees
This category consists of fees for tax compliance, tax advice and tax planning services, including preparation of tax returns and assistance and representation in connection with tax audits and appeals.
All Other Fees
This category consists of services that are not included in the category descriptions defined above under “Audit Fees,” “Audit-Related Fees,” or “Tax Fees.” No such services were provided by Ernst & Young LLP during fiscal 2014 and fiscal 2013.
Audit Committee’s Pre-approval Policy and Procedures
The Audit Committee has adopted policies and procedures for approval of financial audit (and audit-related), non-financial audit, tax consulting and other work performed by Ernst & Young LLP. Pursuant to its charter and those policies, the policy of the Audit Committee is that any and all services to be provided to the Company by Ernst & Young LLP are subject to pre-approval by the Audit Committee. The Audit Committee pre-approves annual audit fees, quarterly reviews and tax compliance fees at the beginning of the fiscal year. In its review of non-financial audit, tax consulting and other services, the Audit Committee considers whether the provision of such services are consistent with SEC guidance, and whether the service facilitates the performance of the financial audit, improves the Company’s financial reporting process, and is otherwise in the Company’s best interests and compatible with maintaining Ernst & Young LLP’s independence.
The Audit Committee did not waive its pre-approval policies and procedures during the fiscal year ended March 29, 2014.
All of the services described in the fee table above were approved pursuant to the Audit Committee’s pre-approval policy.
Required Vote
Approval of this proposal requires the affirmative vote of a majority of the shares present and entitled to vote either in person or by proxy. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum. Abstentions will be counted as “AGAINST” votes with respect to the proposal, but broker non-votes will have no effect on the outcome of this proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY’S EXTERNAL AUDITORS FOR FISCAL 2015.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. It assists the Board in fulfilling its oversight responsibilities to the stockholders relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, and the audit process. While the Audit Committee sets the overall corporate tone for quality financial reporting, management has the primary responsibility for the preparation, presentation and integrity of the Company’s financial statements and implementation of the reporting process including the systems of internal controls and procedures designed to reasonably assure compliance with accounting standards, applicable laws and regulations. In accordance with the law, the Audit Committee has ultimate authority and responsibility to select, compensate, evaluate and, when appropriate, replace the Company’s independent auditors. The Charter of the Audit Committee can be found at www.investor.xilinx.com under “Corporate Governance.”
The Company’s external auditors, Ernst & Young LLP, are responsible for performing an independent audit of the Company��s consolidated financial statements in accordance with generally accepted auditing standards and expressing opinions on the conformity of the Company’s audited financial statements to generally accepted accounting principles in the United States and the effectiveness of the Company’s internal control over financial reporting. In carrying out its responsibilities, the Audit Committee has the power to retain outside counsel or other experts and is empowered to investigate any matter with full access to all books, records, facilities and personnel of the Company. The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or certify the activities of management and the independent auditors.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited consolidated financial statements for the fiscal year ended March 29, 2014 with management and Ernst & Young LLP, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also discussed with Ernst & Young LLP, matters required to be discussed under standards published by the Public Company Accounting Oversight Board (PCAOB), including, among other things, matters related to the conduct of the audit of the Company’s consolidated financial statements and other required communications with audit committees. In addition, the Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with them their independence from the Company and its management.
The Audit Committee reviewed and discussed with management its assessment and report on the effectiveness of the Company’s internal control over financial reporting as of March 29, 2014. The Audit Committee has also reviewed and discussed with Ernst & Young LLP its audit of and report on the Company’s internal control over financial reporting. The Company published these reports in its Annual Report on Form 10-K for the fiscal year ended March 29, 2014.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2014 for filing with the SEC.
The Audit Committee of the Board of Directors
—John L. Doyle, Chairman
—J. Michael Patterson
—Albert A. Pimentel
—Marshall C. Turner
The foregoing Report of the Audit Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of the Company as of May 9, 2014, including the right to acquire beneficial ownership within 60 days of May 9, 2014, except as noted below, by: (i) each stockholder known to the Company to be a beneficial owner of more than 5% of the Company’s Common Stock, (ii) each of the Company’s Directors and Director nominees, (iii) each of the named executive officers identified in the section entitled “Executive Compensation” and (iv) all current Directors and executive officers as a group. The Company believes that each of the beneficial owners of the Common Stock listed below, based on information furnished by such beneficial owners, has sole voting power and sole investment power with respect to such shares, except as otherwise set forth in the footnotes below and subject to applicable community property laws.
|
| | | | | | | |
| Beneficial Owners | | Amount and Nature of Beneficial Ownership | | | Percent of Class(1) |
| Greater than 5% Stockholders | | | | | |
| Blackrock, Inc. | | 15,268,347 |
| (2) | | 5.6 |
|
40 East 52nd Street New York, NY 10022 | | | | | |
| JPMorgan Chase & Co. | | 17,660,086 |
| (3) | | 6.6 |
|
270 Park Ave. New York NY 10017 | | | | | |
| The Vanguard Group, Inc. | | 18,355,802 |
| (4) | | 6.8 |
|
100 Vanguard Blvd. Malvern, PA 19355 | | | | | |
| Directors | | | | | |
| Philip T. Gianos | | 150,400 |
| (5) | | * |
|
| Moshe N. Gavrielov | | 332,065 |
| (6) | | * |
|
| John L. Doyle | | 57,124 |
| (7) | | * |
|
| William G. Howard, Jr. | | 71,945 |
| (8) | | * |
|
| J. Michael Patterson | | 39,400 |
| (9) | | * |
|
| Albert A. Pimentel | | 14,890 |
| (10) | | * |
|
| Marshall C. Turner | | 51,995 |
| (11) | | * |
|
| Elizabeth W. Vanderslice | | 62,399 |
| (12) | | * |
|
| Named Executive Officers | | | | | |
| Jon A. Olson | | 474,179 |
| (13) | | * |
|
| Victor Peng | | 328,559 |
| (14) | | * |
|
| Vincent L. Tong | | 213,004 |
| (15) | | * |
|
| Frank. A. Tornaghi | | 134,308 |
| (16) | | * |
|
| All current Directors and executive officers as a group (16 persons) | | 2,296,534 |
| (17) | | |
* Less than 1%
| |
(1) | The beneficial ownership percentage of each stockholder is calculated on the basis of 268,296,602 shares of common stock outstanding as of May 9, 2014. Any additional shares of common stock that a stockholder has the right to acquire within 60 days after May 9, 2014 that are not already outstanding at such time are deemed to be outstanding and beneficially owned for the purpose of calculating that stockholder’s percentage beneficial ownership. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Xilinx, Inc., 2100 Logic Drive, San Jose, California 95124.
|
| |
(2) | Based on information contained in a Schedule 13G/A, reflecting stock ownership information as of December 31, 2013, which was filed by this stockholder pursuant to Section 13(d) of the Exchange Act (Section 13(d)), on February 10, 2014 reporting beneficial ownership of 15,268,347 shares of Common Stock consisting of 12,593,838 shares as to which it has sole voting power. Blackrock, Inc. has sole dispositive power as to all 15,268,347 shares. |
| |
(3) | Based on information contained in a Schedule 13G/A, reflecting stock ownership information as of December 31, 2013, which was filed by this stockholder pursuant to Section 13, on February 4, 2014 reporting beneficial ownership of 17,660,086 shares of Common Stock consisting of 15,963,942 shares as to which it has sole voting power, 563,463 shares as to which it has shared voting power, 17,073,788 shares as to which it has sole dispositive power and 586,297 shares as to which it has shared dispositive power. |
| |
(4) | Based on information contained in a Schedule 13G/A, reflecting stock ownership information as of December 31, 2013, which was filed by this stockholder pursuant to Section 13(d), on February 12, 2014 reporting beneficial ownership of 18,355,802 shares of Common Stock consisting of 437,184 shares as to which it has sole voting power, no shares as to which it has shared voting power, 17,954,001 shares as to which it has sole dispositive power and 401,801 shares as to which it has shared dispositive power. |
| |
(5) | Consists of 78,060 shares held directly, 18,320 shares held in a family trust, 20 shares held by Mr. Gianos’ son and 54,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. |
| |
(6) | Consists of 96,380 shares held directly, 87,500 shares issuable upon exercise of options and 148,185 shares issuable upon settlement of RSUs, which represents 63,661 shares, 24,399 shares, and 60,125 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 60,125 shares included for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under an RSU granted in fiscal 2014. |
| |
(7) | Consists of 15,124 shares held in a family trust and 42,000 shares issuable upon exercise of options. |
| |
(8) | Consists of 17,945 shares held in a family trust and 54,000 shares issuable upon exercise of options. |
| |
(9) | Consists of 8,400 shares held directly and 31,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. |
| |
(10) | Consists of 14,890 shares held in a family trust. |
| |
(11) | Consists of 25,245 shares held directly, 750 shares held by Mr. Turner’s spouse and 26,000 shares issuable upon exercise of options. |
| |
(12) | Consists of 10,413 shares held directly, 2,986 shares held in joint tenancy and 49,000 shares issuable upon exercise of options. Does not include 7,625 shares that are vested but not settled pursuant to a pre-arranged deferral program. |
| |
(13) | Consists of 52,914 shares held in a family trust, 370,000 shares issuable upon exercise of options and 51,263 shares issuable upon settlement of RSUs, which represents 24,265 shares, 9,123 shares, and 17,875 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 17,875 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
| |
(14) | Consists of 32,296 shares held directly, 245,000 shares issuable upon exercise of options and 51,263 shares issuable upon settlement of RSUs, which represents 24,265 shares, 9,123 shares, and 17875 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 17,875 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
| |
(15) | Consists of 38,578 shares held directly, 140,000 shares issuable upon exercise of options and 34,426 shares issuable upon settlement of RSUs, which represents which represents 16,086 shares, 6,153 shares, and 12,187 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 12,187 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
| |
(16) | Consists of 4,882 shares held directly, 95,000 shares issuable upon exercise of options and 34,426 shares issuable upon settlement of RSUs, which represents which represents 16,086 shares, 6,153 shares, and 12,187 shares issuable upon settlement of RSUs granted in fiscal years 2012, 2013, and 2014, respectively. The 12,187 shares for the fiscal 2014 grant represents the pro-rata vesting as a result of actual (not target) performance achievement under that RSU. |
| |
(17) | Includes an aggregate of 1,831,851 shares issuable upon exercise of options or settlement of RSUs. |
For certain information concerning our Executive Officers, see “Executive Officers of the Registrant” in Item 1 of Part I of our Form 10-K.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Discussion and Analysis
This section of the proxy statement explains our compensation programs in general, and how they operate with respect to our named executive officers in particular. This year, our “named executive officers” are our CEO, CFO, and the threefive other most highly compensated executive officers serving atduring the end of fiscal 2014,year, as follows:
Moshe N. Gavrielov, President and Chief Executive Officer
Jon A. Olson, Executive Vice President Finance and Chief Financial Officer
Victor Peng, Executive Vice President and General Manager of Products
Krishna Rangasayee, Senior Vice President and General Manager, Global Sales and Markets
Vincent L. Tong, Senior Vice President, Global Operations and Quality
Raja Petrakian, Former Senior Vice President, Worldwide Quality and New Product IntroductionsOperations
Frank A. Tornaghi, Former Senior Vice President, Worldwide Sales
In accordance with the rules of the SEC and in the interest of more full disclosure, Messrs. Petrakian and Tornaghi, who terminated employment effective on March 27, 2015 (the day before the last day of fiscal 2015), are included as named executive officers.
Executive Summary
Financial Performance for Fiscal 20142015
Xilinx achieved record revenueXilinx’s revenues were flat for fiscal 2015, while our net income in fiscal 2014 coupled with2015 increased over the prior fiscal year as a result of our record high gross margin. The Company'sOur results were driven by theour focus on improving overall profitability and continued successsales growth of itsour 28nm product portfolio.family. Following are some major product and financial highlights infrom fiscal 2014:
2015:
Overall net revenues were $2.38 billion, flat compared to $2.17 billion in the prior fiscal year
Net income increased 29% to $630$648 million, compared to $488a 3% increase over net income of $630 million in the prior fiscal year
Gross margin for the full fiscal year reached a record 68.8%70%, compared to 66%69% in the prior fiscal year
| |
| • | Net revenuesSales from our new products increased 85% in fiscal 2014, compared to28nm product portfolio, which includes the prior fiscal year. Products in this category are our KintexTM Ultrascale, Virtex®-7, Kintex-7, ArtixTM-7,7 series FPGAs and ZynqTM-7000 Virtex-6 and SpartanTM-6 productsfamily, surpassed $580 million in fiscal 2015, compared to $380 million in the prior fiscal year
|
Sales from our 28nm product portfolio, which includes the 7 series FPGAs and the Zynq-7000 family, surpassed $380 million in fiscal 2014, compared to surpassing $100 million for the first time in fiscal 2013
We increased our dividend by $0.04$0.02 per share, bringing our quarterly dividend to $0.29$0.31 per share and paying a record $267$306 million in dividends in fiscal 20142015. This was the tenth consecutive year of dividend increases since initiating our dividend in 2004
We returned $242$650 million to our stockholders through our stock buyback program
Our total stockholder return on an annualized basis over the prior 1-, 3-, and 5-year periods was 44%-19%, 22%8%, and 26%13%, respectively
We, in close partnership with TSMC, shipped the industry’s first 20nm device, Kintex UltraScale
Key Elements of Our Compensation Strategy and Program
Our executive compensation program is designed to motivate, engage and retain a talented leadership team and to appropriately reward them for their contributions to our business. Our performance measurement framework consists of a combination of financial, operational, and strategic/individual performance metrics that provide a balance between short-term results and drivers of long-term value.
We provide our named executive officers with three primary elements of pay: base salary, cash incentive compensation and long-term equity compensation. The performance-based incentives, consisting of cash incentive compensation and equity compensation, together constitute the largest portion of potential compensation for the named executive officers. Our long-term equity awards are 100% performance-based. The following charts show the pay mix for (i) our CEO, and (ii) allthe other six named executive officers, for fiscal 2014:2015:
The percentages above were calculated using salary, cash incentive compensation, grant date fair value of equity awards, and all other compensation as reported for fiscal 2015 in the Summary Compensation Table.
Fiscal 20142015 Performance Measurement Framework
Our annual and long-term incentives together provide a balanced and comprehensive view of performance and drive the Compensation Committee'sCommittee’s executive compensation decisions. The components of our executive compensation program are illustrated in the chart below and more fully discussed throughout this Compensation Discussion and Analysis section:
Fiscal 20142015 Performance Measurement Framework
As noted above, the Revenue Growth Component is determined and paid annually. The Operating Profit Component, which is operating profit as a percentage of revenue, excluding expenses related to bonus payments under our non-sales incentive compensation plans and, with Compensation Committee approval, other non-recurring adjustments or expenses that are not associated with currently planned or on-going business operations such as litigation and restructuring expenses, is determined and paid semi-annually. The Individual Performance Component is determined and paid semi-annually for all named executive officers, except for the CEO, whose Individual Performance Component is determined and paid annually. The Individual Performance Component weighting for all named executive officers is 40%; however, the weighting for the underlying product, sales/marketing, operational and organizational objectives varies among executives.
Fiscal 20142015 Key Compensation Actions
Base salary: NoneFive of our named executive officers received a base salary increaseincreases in fiscal 2014, except for2015, as follows: Mr. Peng, whoseGavrielov’s base salary increased by $10,000, to $480,000$800,000 from $470,000.$750,000; Mr. Rangasayee’s base salary increased to $395,000 from $355,000; Mr. Tong’s base salary increased to $405,000 from $370,000; Mr. Petrakian’s base salary increased to $365,000 from $355,000, and Mr. Tornaghi’s base salary increased to $390,000 from $385,000. The Compensation Committee approved these base salary increases after reviewing certain factors, including the executive’s scope of responsibility and deliverables, and market comparables. In particular, Mr. Gavrielov’s base salary was increased based on his performance and comparative market data, Mr. Tong’s base salary was increased primarily when he became responsible for our operations organization due to the departure of Mr. Petrakian, and Mr. Rangasayee’s base salary was increased primarily when he became responsible for our sales organization upon the retirement of Mr. Tornaghi.
Annual incentive target: In fiscal 2014,2015, the Compensation Committee increased the annual cash incentive target as a percent of salary for Mr. Gavrielov, our CEO,Messrs. Olson and Peng to 140%100% from 125%80%, and for our other named executive officersin connection with their promotions to 80%Executive Vice President from 75%.Senior Vice President. This increase both maintained the competitiveness of our target pay levels and increased the proportion of total pay that is performance-based. None of our other named executive officers received an increase in their annual cash incentive target as a percent of salary.
Annual incentive payout: We paid cash incentive compensation consistent with our financial results and strategic/individual performance goals set for each named executive officer. As indicated in the framework chart above, our cash incentive compensation program is designed around three components: two corporate financial components of revenue growth and operating profit, and individual performance. The achievement of these components for fiscal 20142015 was as follows:
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| ◦ | We exceeded ourdid not meet the threshold for payout under the Revenue Growth Component, annual target, resulting a 160% payoutand therefore no bonus was paid for this measure.metric. |
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| ◦ | We exceeded our Operating Profit Component target in the first and second halveshalf of the fiscal year, resulting in 180%a 130% payout for the first half of fiscal 2014,2015, and 150%we met our Operating Profit Component target in the second half of the fiscal year, resulting in a 100% payout for the second half of the year. |
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| ◦ | The payouts under the Individual Performance Component for our named executive officers (other than our CEO) in the first half of the year ranged from 100%80% to 105%113% of target, and in the second half of the year ranged from 95%50% to 120% of target. The payout for Mr. Gavrielov, our CEO, under the individual performance component as a percent of target for the year was 115%100%. |
As a result of these performance outcomes, annual cash incentive compensation paid to our named executive officers for fiscal 2014 exceeded2015 was less than each executive'sexecutive’s annual target cash incentive opportunity.
Long-term equity incentive payout: In fiscal 2014,2015, the equity grants to our named executive officers consisted of only performance-based restricted stock units (RSUs) that require achievement of specific companyCompany performance objectives, as well as continued employment to become earned and vested, as compared to a mix of time-based and performance-based RSUs in prior fiscal years.vested. In fiscal 2014,2015, the Company exceeded the payout thresholds of allthree of the four performance measures indicated on the framework chart above. The Company did not meet the payout threshold for the Share of PLD Revenue metric. As a result, each named executive officer earned 162.5%89% of the target number of shares granted, and one third of such earned shares will vest in each of July 2014,2015, July 2015,2016, and July 2016.2017. Although Messrs. Petrakian and Tornaghi were each granted performance-based RSUs in fiscal 2015, these RSUs were forfeited on March 27, 2015, the date of employment separation for each executive officer, and never vested. For more information, please see the section below entitled “Employment and Post-Employment Agreements with Named Executive Officers.”
The following table summarizes these key fiscal 20142015 decisions for our named executive officers:
Compensation Elements for Named Executive Officers for Fiscal 2014
| | Compensation Elements for Named Executive Officers for Fiscal 2015 | | Compensation Elements for Named Executive Officers for Fiscal 2015 |
| | | | Performance-Based Incentive Compensation | | | | Performance-Based Incentive Compensation |
| | | Cash Incentive Award | | Long-term Equity Incentive Award | | | | Cash Incentive Award | | Long-term Equity Incentive Award |
| Name | | 2014 Salary(1) ($) | | Salary Increase From Prior Year(1) (%) | | Target Award(2) ($) | | Actual Award ($) | | Actual Award as a Percent of Target (%) | | Target RSU Award (Shares) | | Actual RSU Award (Shares) | | Actual RSUs Earned as a Percent of Target (%) | | 2015 Salary(1) ($) | | Salary Increase From Prior Year(1) (%) | | Target Award(2) ($) | | Actual Award ($) | | Actual Award as a Percent of Target (%) | | Target RSU Award (Shares)(3) | | Actual RSU Award (Shares)(3) | | Actual RSUs Earned as a Percent of Target (%) |
| Moshe N. Gavrielov | | 750,000 | | — | | 1,050,000 |
| | 1,506,750 |
| | 143.5 | | 111,000 | | 180,375 | | 162.5 | | 800,000 |
| | 6.7% | | $1,102,500 | | $820,575 | | 74 | | 93,500 | | 83,215 | | 89 |
| Jon A. Olson | | 480,000 | | — | | 384,000 |
| | 531,840 |
| | 138.5 | | 33,000 | | 53,625 | | 162.5 | | 480,000 |
| | — | | $480,000 | | 367,200 |
| | 77 | | 26,000 | | 23,140 | | 89 |
| Victor Peng | | 480,000 | | 2.1 | | 382,000 |
| | 528,960 |
| | 138.5 | | 33,000 | | 53,625 | | 162.5 | | 480,000 |
| | — | | $480,000 | | 362,400 |
| | 76 | | 26,000 | | 23,140 | | 89 |
| Krishna Rangasayee | | | 395,000 |
| | 11.3% | | $296,334 | | 205,730 |
| | 69 | | 19,000 | | 16,910 | | 89 |
| Vincent L. Tong | | 370,000 | | — | | 296,000 |
| | 421,800 |
| | 142.5 | | 22,500 | | 36,562 | | 162.5 | | 405,000 |
| | 9.5% | | $305,334 | | 247,460 |
| | 81 | | 19,000 | | 16,910 | | 89 |
| Raja Petrakian | | | 365,000 |
| | 2.8% | | $289,064 | | 180,532 |
| | 62 | | — | | — | | — |
| Frank A. Tornaghi | | 385,000 | | — | | 308,000 |
| | 420,420 |
| | 136.5 | | 22,500 | | 36,562 | | 162.5 | | 390,000 |
| | 1.3% | | $310,000 | | 187,550 |
| | 61 | | — | | — | | — |
| (1) Salary represents the amount approved by the Compensation Committee for the applicable fiscal year, which may be different than the actual salary paid in a given fiscal year due to various factors, including timing of a salary increase. | |
| (2) Target awards are determined by multiplying the named executive officer's actual salary earned during fiscal 2014 by the executive's target bonus percentage, which was 140% for Mr. Gavrielov, our CEO, and 80% for all of the other named executive officers. Mr. Peng’s actual salary earned for fiscal 2014 was $477,500, which is less than the salary rate approved by the Compensation Committee, because his salary increase was effective after the beginning of the fiscal year. | |
| (1) Salary represents the amount approved by the Compensation Committee in fiscal 2015. The actual salary earned during fiscal 2015 for the executives who received salary increases, namely Messrs. Gavrielov, Rangasayee, Tong, Petrakian and Tornaghi, was less than the annual base salary approved by the Compensation Committee for these executives, because the salary increases were effective after the beginning of the fiscal year. | | (1) Salary represents the amount approved by the Compensation Committee in fiscal 2015. The actual salary earned during fiscal 2015 for the executives who received salary increases, namely Messrs. Gavrielov, Rangasayee, Tong, Petrakian and Tornaghi, was less than the annual base salary approved by the Compensation Committee for these executives, because the salary increases were effective after the beginning of the fiscal year. |
| (2) Target awards are determined by multiplying the named executive officer’s actual salary earned during fiscal 2015 by the executive’s target bonus percentage, which was 140% for Mr. Gavrielov, our CEO, 100% for Messrs. Olson and Peng, and 80% for all of the other named executive officers. | | (2) Target awards are determined by multiplying the named executive officer’s actual salary earned during fiscal 2015 by the executive’s target bonus percentage, which was 140% for Mr. Gavrielov, our CEO, 100% for Messrs. Olson and Peng, and 80% for all of the other named executive officers. |
| (3) Messrs. Petrakian and Tornaghi each were granted performance-based RSUs for 19,000 shares in fiscal 2015. These RSUs were forfeited on March 27, 2015, in connection with their employment separation, and never vested. For more information, please see the section below entitled “Employment and Post-Employment Agreements with Named Executive Officers.” | | (3) Messrs. Petrakian and Tornaghi each were granted performance-based RSUs for 19,000 shares in fiscal 2015. These RSUs were forfeited on March 27, 2015, in connection with their employment separation, and never vested. For more information, please see the section below entitled “Employment and Post-Employment Agreements with Named Executive Officers.” |
CEO Performance and Pay Alignment
Each year, the Compensation Committee assesses our CEO’s actual compensation relative to the Company’s performance. The following graphs show a five-year history of our financial results and the CEO’s annual cash incentive compensation as a percent of his target cash incentive compensation for the applicable fiscal year:
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(1) | Operating profit as a percent of revenue and revenue are based on Generally Accepted Accounting Principles (GAAP). | |
The charts above show that as our GAAP operating profit and revenue have fluctuated, our CEO’s cash incentive award has correspondingly changed.
Governance Practices
We maintain several practices to help ensure our overall program reflects sound governance standards. These practices include the following:
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| What We Do | | What We Don’t Do |
| þ | Maintain a Completely Independent Compensation Committee. The Compensation Committee determines our compensation strategy for executive officers and consists solely of independent directors. | | ý | No Excise Tax Gross-Ups related to a Change in Control. We do not provide excise tax gross-ups related to a change in control of the Company. |
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| þ | Maintain Independent Compensation Advisor. The Committee has engaged Semler Brossy Consulting Group LLC (Semler Brossy) as its independent compensation consultant to provide independent analysis, advice and guidance on executive compensation. | | ý | Permit Hedging or Short Sales. We prohibit employees, including our executive officers, from engaging in transactions or arrangements that are intended to increase in value based on any decrease in value of any Company securities, such as short sales or put options. |
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| þ | Annual Executive Compensation Review. The Committee performs an annual review of our executive compensation strategy, including a review of our compensation peer group and a review of our compensation-related risk profile. | | ý | Permit Pledging. We prohibit our employees, including executive officers, from holding Company securities in a margin account or pledging Company securities. |
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| þ | Pay-for-Performance Philosophy. Our cash incentive compensation and long-term equity programs for executives are based on the Company’s and individual executive’s performance. | | ý | No SERP or Defined Benefit Plans. We do not provide a Supplemental Executive Retirement Plan (SERP) or a defined benefit plan. |
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| þ | Compensation at Risk. A significant portion of compensation for our executives is based on the performance of both the Company and the individual executive. | | ý | No Dividends or Dividend Equivalents Payable on Unvested Equity Awards. We do not pay dividends or dividend equivalents on unvested RSU awards. |
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| þ | Performance-Based Equity Awards. Since fiscal 2014, our executive officers receive only performance-based restricted stock units (RSUs). | | ý | No Special Perquisites. We do not generally provide perquisites to our executive officers, other than benefits with broad-based employee participation that are standard in the technology sector, such as our employee stock purchase plan. |
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| þ | Stock Ownership Guidelines.We have executive stock ownership guidelines and holding requirements that cover our Section 16 executive officers. | | ý | No Stock Option Repricing. Our 2007 Equity Incentive Plan does not permit repricing of out-of-the-money options or stock appreciation rights for shares of our common stock to a lower exercise or strike price without approval of our stockholders. |
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| þ | Claw-Back Policy. We have a claw-back, or recoupment, policy that covers all elements of our incentive compensation program. | | | |
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| þ | Annual Stockholder Advisory Votes on Executive Compensation. We conduct an annual stockholder advisory vote on our executive compensation program. | | | |
We do not provide any excise tax gross-ups related to a change in control of the Company.
We do not provide a Supplemental Executive Retirement Plan (SERP) or a defined benefit plan.
We have a claw-back, or recoupment, policy that covers all elements of the Company's incentive compensation program.
We have anti-hedging and pledging policies.
We engage the services of an independent compensation consultant that is retained solely by our Compensation Committee.
Impact of 20132014 Stockholder Advisory Vote on Compensation
At our Annual Meeting of Stockholders in August 2013,2014, we conducted a non-binding advisory vote on compensation of our named executive officers, commonly referred to as a “say on pay” vote. Our stockholders overwhelmingly approved the compensation of the named executive officers, with approximately 94%96% of stockholder votes cast in favor of our executive compensation program.
The Compensation Committee was mindful of this strong stockholder support of our compensation philosophy and objectives when evaluating our executive compensation policies and practices throughout fiscal 2014.2015. Accordingly, and as a result of the favorable say-on-pay vote, the Company continued its general approach to executive compensation, emphasizing performance-based compensation. In fiscal 2014,2015, the Committee awarded only performance-based RSUs to our executive officers, including our named executive officers, in order to tie all of the executive’sexecutives’ equity compensation to Company performance and increase the executive’sexecutives’ focus on key long-term drivers of value.
The Board of Directors has adopted a policy providing for an annual advisory vote on the compensation of our named executive officers. This policy is consistent with our stockholders'stockholders’ preference in August 2011 on the frequency of future advisory votes on compensation for our named executive officers.
Compensation Philosophy and Objectives
Role of the Compensation Committee
The Compensation Committee, in consultation with the CEO for individuals other than the CEO, is responsible for establishing our compensation and benefits philosophy and strategy. The Compensation Committee also oversees our general compensation policies and sets specific compensation levels for corporate officers, including the named executive officers. The Compensation Committee, together with the independent Directors,directors, evaluates the CEO’s performance, and the Compensation Committee determines CEO compensation. In determining compensation strategy, the Compensation Committee reviews market competitive data to ensure that we are able to attract, motivate, reward and retain quality employees, including the named executive officers. The Compensation Committee has the authority to engage its own independent advisors to assist in carrying out its responsibility and has done so, but may not delegate its authority to such advisors.
CompensationConsultant
In fiscal 2014,2015, the Compensation Committee continued to retain the services of Semler Brossy Consulting Group LLC (Semler Brossy) to act as its independent compensation consultant. Semler Brossy reported directly to the Compensation Committee and not to management. Semler Brossy provided the Compensation Committee with general advice on compensation matters, including reviewing the composition of the peer group, providing compensation data related to executives at the selected companies in the peer group and providing advice on our executive officers’ compensation generally. Based on the above and its review of the factors set forth under Rule 10C-1 of the Exchange Act and in the NASDAQ listing requirements, the Compensation Committee assessed the independence of Semler Brossy and concluded that no conflict of interest exists that would prevent Semler Brossy from independently representing the Compensation Committee. In fiscal 2014,2015, the Compensation Committee met regularly in executive session with its independent compensation consultant without management present. Semler Brossy did not provide any additional services to the Company other than the services for which it was retained by the Compensation Committee, and the
Compensation Committee is not aware of any conflict of interest that exists that would otherwise prevent Semler Brossy from being independently engaged. The Company pays the cost for Semler Brossy’s services.
Compensation Philosophy andPrimary Objectives
The primary objectives of the Compensation Committee with respect to determining executive compensation are to attract, motivate and retain talented employees and to align executives’ interests with those of stockholders, with the ultimate objective of improving stockholder value. It is the philosophy of the Compensation Committee that the best way to achieve this is to align executives’provide executives with compensation withthat is based on their level of performance against specific goals, which are aligned with our overall strategy, thereby compensating executives on a “pay for performance” basis.
To achieve these objectives, the Compensation Committee has implemented compensation plans that tie a significant portion of executives’ overall compensation to our financial and product-related performance, including operating profit, revenue growth, share of revenue, technology leadership and quality leadership. Overall, the total compensation opportunity is intended to create an executive compensation program that is competitive with comparable companies. The comparable companies considered by the Compensation Committee are described more fully below.
For fiscal 2014,2015, the Compensation Committee approved the 20142015 Executive Incentive Plan (2015 Incentive Plan), which is described in greater detail below. Bonus payments to executives varied with the Company’s performance during the fiscal year, as well as with their individual performance. This design was intended to accomplish the Company’s goal of aligning executives’ interests with those of stockholders by encouraging the executives to work diligently toward the success of the Company, and to reward, as appropriate, achievement of semi-annual and annual objectives.
The Company also advances its objectives of aligning executives’ interests with the interests of stockholders through its 2007 Equity Incentive Plan (2007 Equity Plan). In May 2014, the Compensation Committee approved an amendment to the 2007 Equity Plan to increase the number of shares reserved for issuance by 3,000,000 shares, as further discussed under Proposal Three.Plan. The purpose of the 2007 Equity Plan is to promote the success of our business by encouraging equity ownership in the Company. In particular, the 2007 Equity Plan provides officers with incentive to exert maximum effort toward the success of the Company and to participate in such success through acquisition and retention of our Common Stock.
common stock.
Procedural Approaches to Accomplish Compensation Objectives
The Compensation Committee believes that the compensation provided to our executives, including the named executive officers, should include both cash and stock-based compensation that rewards performance as measured against established goals.
Peer Group Data
The Compensation Committee instructed Semler Brossy to prepare a report of peer companies for purposes of examining, determining and setting compensation for our executives. In preparing its report, Semler Brossy reviewed data from Radford Surveys + Consulting (Radford), specifically the Radford Global Technology Survey, as well as the proxy statements for each of the peer group companies. The criteria for determining which companies to include in the peer group included all or some of the following criteria: (i) they operate in a similar industry as the Company; (ii) they are of roughly similar size (as measured by revenues and aggregate market capitalization) as the Company; (iii) they have growth expectations similar to those of the Company; and (iv) they are companies against whom the Company competes for talent. For fiscal 2014,
After receiving and discussing Semler Brossy’s report, the Compensation Committee consideredapproved the following peer group companies:companies for fiscal 2015. The Compensation Committee removed Applied Materials from the peer group for fiscal 2015 because Applied Materials would no longer fit the peer group criteria upon completion of its then-anticipated merger with Tokyo Electron, which merger was called off in late April 2015. Following are the peer group companies for fiscal 2015:
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• Advanced Micro Devices, Inc.
• Altera Corporation
• Analog Devices, Inc.
• Applied Materials, Inc.
• Atmel Corporation
• Autodesk, Inc.
• Avago Technologies Limited
• Broadcom Corporation | |
• Brocade Communications Systems Inc.
| | • Cadence Design Systems, Inc.
• Cypress Semiconductor Corporation
• Fairchild Semiconductor International Inc.
• KLA-Tencor Corporation
• LAM Research Corporation
• Linear Technology Corporation
• LSI Corporation | |
• Marvell Technology Group Ltd.
| | • Maxim Integrated Products Inc.
• Microchip Technology Inc.
• Nvidia Corporation
• ON Semiconductor Corporation
• Sandisk Corporation
• Skyworks Solutions, Inc.
• Synopsys, Inc. |
A summary of the four quarter trailing revenue by quartile and market capitalization of peer group companies at the time the Compensation Committee finalized the peer group of companies in the third quarter of fiscal 2013 for its fiscal 2014 compensation decisions, is as follows:
Peer Group Four-Quarter Revenue and Market Capitalization for Fiscal 2014 Compensation Decisions
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| | | Peer Group Financials(1) |
| Quartile | | Four Quarter Trailing Revenue ($ in millions) | | Market Capitalization ($ in millions) |
| 75th Percentile | | 3,193 | | 8,506 |
| 50th Percentile | | 2,380 | | 6,367 |
| 25th Percentile | | 1,579 | | 3,771 |
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| Xilinx, Inc. | | 2,208 | | 8,849 |
| (1) Data is based on available market information in October 2012. |
Based on the chart above, our revenue approximated the 50th percentile of the peer group companies and our market capitalization was above the 75th percentile of the peer group companies at the time the peer group was selected for fiscal 2014 compensation decisions.
After receiving and discussing Semler Brossy’s report, the Compensation Committee approved the addition of two new companies to the peer group in 2014 to ensure the peer group remained relevant. Avago Technologies Limited and Skyworks Solutions, Inc. were added to the peer group, because these comparator companies met the criteria enumerated above. Data on the compensation practices of the above-mentioned peer group is generally gathered through searches of publicly available information, including publicly available databases. Peer group data is gathered with respect to base salary, bonus targets and equity awards. The Radford survey reflects more current information than the information found through publicly available sources. In fiscal 2014,2015, all of the peer group companies identified above participated in the Radford survey.survey, except for Maxim Integrated Products, Inc.
As noted above,A summary of the four quarter trailing revenue by quartile and market capitalization of peer group companies at the time the Compensation Committee retainsfinalized the servicespeer group of Semler Brossycompanies in the third quarter of fiscal 2014 for its fiscal 2015 compensation decisions is as follows:
| Peer Group Four-Quarter Revenue and Market Capitalization for Fiscal 2015 Compensation Decisions |
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| | | Peer Group Financials(1) |
| Quartile | | Four Quarter Trailing Revenue ($ in millions) | | Market Capitalization ($ in millions) |
| 75th Percentile | | 2,970 | | 9,654 |
| 50th Percentile | | 2,382 | | 7,949 |
| 25th Percentile | | 1,714 | | 3,719 |
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| Xilinx, Inc. | | 2,165 | | 12,406 |
| (1) Data is based on available market information in October 2013. |
Based on the chart above, our revenue approximated the 50th percentile of the peer group companies and our market capitalization was above the 75th percentile of the peer group companies at the time the peer group was selected for fiscal 2015 compensation decisions.
In determining adjustments to provideexecutive compensation, the Compensation Committee not only reviews and considers the independent compensation advice and analysis. In addition, the Compensation Committee reviews the Radford surveyanalysis by Semler Brossy and publicly available information of compensation offered by the applicable market comparables. The Compensation Committee took the results ofcomparables, but also reviews the Radford reportsurvey and Semler Brossy’s analysistakes into account, along withconsideration other relevant considerationsfactors as described in this Compensation Discussion and Analysis, in determining adjustments to executive compensation. The Compensation Committee ensures that our compensation policies for the named executive officers are designed to attract, motivate, and retain talented executive officers and are aligned with the long-term interests of our stockholders.Analysis. While the Compensation Committee reviewslooks at the external market data (both the Radford survey data and peer company data), it does not target any specific pay percentile within those companies for purposes of setting cash and equity compensation levels nor does the Compensation Committee consider the total stockholder return of any company in the peer group in making compensation decisions. Rather, the Compensation Committee uses the peer group information merely as a guide to determine whether we are generally competitive in the market.
CEO Evaluation and Compensation Determination
The Compensation Committee together with the independent Directors, annually reviews the performance of the CEO in light of the goals and objectives of our executive compensation plans, and approves CEO compensation. The review of the performance and compensation of the CEO and all other named executive officers is conducted annually during the period commencing around the middle of May, which is called our “Focal Review Period.” The Compensation Committee uses both objective data from peer group companies, including comparing compensation paid to CEOs in the peer group, and subjective policies and practices, including assessment of the CEO’s achievements and contribution to the Company, to determine compensation of the CEO. In determining the long-term incentive component of the CEO’s compensation, the Compensation Committee considers all relevant factors, including the Company’s performance and relative stockholder return, the value of similar awards to CEOs of the peer group companies, the awards given to the CEO in prior years, and formal feedback from the independent directors. To provide further assurance of independence, the Compensation Committee’s independent compensation consultant, Semler Brossy, provides its recommendation for CEO
compensation. The compensation consultant prepares analysis showing competitive CEO compensation among the peer group for the individual elements of compensation and total direct compensation. Then, itthe compensation consultant provides the Compensation Committee with a range of recommendations for any change in the CEO’s base salary, annual incentive target, and equity grant value. The recommendations take into account the peer group competitive pay analysis, expected future pay trends, and importantly, the position of the CEO in relation to other senior executives and proposed pay actions for all key employees of the Company. The range allows the Compensation Committee to exercise its discretion based on the CEO’s individual performance and other factors.
Evaluation of Other Named Executive Officers and Compensation Determination
The CEO works with the Compensation Committee in establishing the compensation and benefits philosophy and strategy for our executives and also makes specific recommendations to the Compensation Committee with respect to the individual compensation for each of the executive officers, including the named executive officers other than himself. With respect to the named executive officers, the Compensation Committee annually reviews, with the CEO, the executives’ performance in light of the Company’s goals and objectives, and approves their compensation. The Compensation Committee also considers other relevant factors in approving the level of such compensation, including each executive officer’s performance during the year, specifically an officer’s accomplishments, areas of strength and areas of development, the executive’s scope of responsibility and contributions to the Company, and the executive’s experience and tenure in the position. During the Focal Review Period, the CEO and members of our human resources department evaluate each named executive officer’s performance during the year based on the CEO’s
knowledge of each named executive officer’s performance, individual self-assessment and feedback provided by the named executive officer’s peers and direct reports. The CEO also reviews compensation data gathered from Radford as well as from publicly available information such as SEC filings and identifies trends and competitive factors to consider in adjusting compensation levels of the named executive officers. The CEO then makes a recommendation to the Compensation Committee as to each element of each named executive officer’s compensation.
Compensation Components
Our executive compensation is divided into three components: base salary, incentive cash compensation, and long-term equity compensation. The following table summarizes these elements of compensation:
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Compensation
Element
| | Objectives | | Key Features |
Base Salary | | Provides a fixed, baseline level of compensation for services rendered during the fiscal year. | | Fixed cash compensation is based on scope of responsibility, breadth of knowledge, experience and tenure in the position and individual performance.
In addition, in determining base salaries for executive officers, we review the base salaries being paid to executive officers in comparable positions in our peer group companies and conduct an internal review of the executive’s compensation, both individually and relative to other executive officers.
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Performance-Based
Incentive Cash
Compensation
| | Rewards participants for achieving or exceeding corporate and individual performance objectives and serves to compensate, attract and retain highly qualified executives. | | The incentive cash bonus is calculated as a percentage of the named executive officer’s annual base earnings. Cash incentive awards are payable based on the achievement of the pre-established corporate objectives, including revenue growth, operating profit, and individual performance goals. The operating profit component and individual performance component are paid on a semi-annual basis for all named executive officers except the CEO whose operating profit component is paid on a semi-annual basis but whose individual performance is paid on an annual basis. The revenue growth component is paid on an annual basis for all named executive officers.
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Long-Term Equity
Incentive
Compensation
| | Establishes a corporate culture that supports strong long-term corporate performance by encouraging our named executive officers to take a long-term outlook.
Provides an important retention tool for named executive officers to the extent that equity awards are subject to vesting over an extended period of time.
| | The performance-based RSUs have several performance-based components, including share of programmable logic device (PLD) revenue, share of 28nm revenue, technology leadership and quality leadership. The number of performance-based RSUs earned is dependent on the level of achievement under these performance metrics, aligning pay with performance. Following determination of the number of performance-based RSUs earned, the RSUs will be subject to further time-based vesting. The performance-based RSUs will vest in three equal annual installments, starting one year from the date of grant.
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Base Salary
In May 2013, as part of the annual Focal Review Period,During fiscal 2015, the Compensation Committee reviewed the base salaries of our named executive officers focusing on the competitiveness of salaries. Based on comparing current salaries to the base salary levels at the companies in our peer group, as well as considering the roles and responsibilities and potential performance of the named executive officers, the Compensation Committee did not increaseincreased the base salaries of anyfive of theour named executive officers except for Mr. Peng, whose base salary increased to $480,000 from $470,000.in fiscal 2015, as set forth in the following table:
The following table is a summary of the changes to base salary for our named executive officers in fiscal 2014:
Named Executive Officer Salary Adjustments
| | | Named Executive Officer | | Fiscal 2013 Salary(1) ($) | | Fiscal 2014 Salary(1) ($) | | Percent Change
(%) | | Fiscal 2015 Salary(1) ($) | | Fiscal 2014 Salary(1) ($) | | Percent Change(2) (%) |
| Moshe N. Gavrielov | | 750,000 | | 750,000 | | — | | 800,000 | | 750,000 | | 6.7% |
| Jon A. Olson | | 480,000 | | 480,000 | | — | | 480,000 | | 480,000 | | — |
| Victor Peng | | 470,000 | | 480,000 | | 2.1 | | 480,000 | | 480,000 | | — |
| Krishna Rangasayee | | | 395,000 | | 355,000 | | 11.3% |
| Vincent L. Tong | | 370,000 | | 370,000 | | — | | 405,000 | | 370,000 | | 9.5% |
| Raja Petrakian | | | 365,000 | | 355,000 | | 2.8% |
| Frank A. Tornaghi | | 385,000 | | 385,000 | | — | | 390,000 | | 385,000 | | 1.3% |
| (1) These amounts reflect the base salaries approved for a particular fiscal year, and not the actual earnings for the respective named executive officer, which earnings may be different due to certain factors, such as the timing of the approved salary increase. | |
| (1) These amounts reflect the base salaries approved for a particular fiscal year, and not the actual earnings for the respective named executive officer, which earnings may be different due to certain factors, such as the timing of approved salary increases. | | (1) These amounts reflect the base salaries approved for a particular fiscal year, and not the actual earnings for the respective named executive officer, which earnings may be different due to certain factors, such as the timing of approved salary increases. |
| (2) Mr. Gavrielov’s base salary was increased based on his performance and comparative market data, Mr. Rangasayee’s base salary was increased primarily when he became responsible for our sales organization upon the retirement of Mr. Tornaghi, and Mr. Tong’s base salary was increased primarily when he became responsible for our operations organization due to the departure of Mr. Petrakian. | | (2) Mr. Gavrielov’s base salary was increased based on his performance and comparative market data, Mr. Rangasayee’s base salary was increased primarily when he became responsible for our sales organization upon the retirement of Mr. Tornaghi, and Mr. Tong’s base salary was increased primarily when he became responsible for our operations organization due to the departure of Mr. Petrakian. |
Incentive Cash Compensation
In fiscal 2014,2015, the Compensation Committee adopted the 20142015 Incentive Plan. The cash incentive target for our CEOMessrs. Olson and Peng was increased to 140%100% of histheir annual base earnings, up from 125%80% in fiscal 2013.2014, in connection with their promotions to Executive Vice President. The cash incentive target for all other named executive officers remained the same as in fiscal 2014, which was increased to 80%140% of their annual base earnings up from 75% in fiscal 2013. Thesefor Mr. Gavrielov, our CEO, and 80% of annual base earnings for Messrs. Rangasayee, Tong, Petrakian, and Tornaghi. The cash incentive target increases for Messrs. Olson and Peng maintained the competitiveness of our target pay levels and increased the proportion of total pay that is performance-based. Under the 20142015 Incentive Plan, the cash bonuses for the named executive officers were based on each executive’s earnings and then determined using three different components, each with a different weighting: (1) our operating profit as a percentage of revenue determined in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, but excluding payments under our non-sales incentive plans and, with Compensation Committee approval, other unusual charges (OP Component), weighted at 30%; (2) our annual revenue growth (Growth Component), weighted at 30%; and (3) the individual performance component (Individual Performance Component) based on individualthe achievement of performance goals pertaining to such officer’s position and responsibilities, weighted at 40%. For fiscal 2014,2015, the three components and weighting of those components were the same as for fiscal 2013.2014. The OP Component is paid on a semi-annual basis, the Growth Component is paid on an annual basis, and the Individual Performance Component is paid on a semi-annual basis for all named executive officers, except our CEO, whose Individual Performance Component is paid on an annual basis.
We exceeded the operating profit objective in the first and second halveshalf of the year, resulting in an 180%a 130% payout for the first half of the year under the OP Component, and 150%we met the operating profit objective in the second half of the year, resulting in a 100% payout for the second half of the year under the OP Component. Payouts to the named executive officers (other than the CEO) under the Individual Performance Component for the first half of the fiscal year ranged from 100%80% to 105%113% of target. In the second half of the fiscal year, the payouts to the named executive officesofficers (other than our CEO) under the Individual Performance Component ranged from 95%50% to 120% of target. The payout to Mr. Gavrielov, our CEO, under the Individual Performance Component was 115%100% of target, which was measured annually rather than semi-annually. The Company also exceededdid not meet the revenue growth objectivethreshold for fiscal 2014 resulting in a 160% payout forunder the Growth Component.Component, and therefore no bonus was paid for this metric. The following table shows the annual performance achievement as a percentage of target by our named executive officers under the 20142015 Incentive Plan:
Named Executive Officer Actual Incentive Cash Compensation as a Percent
| | Named Executive Officer Actual Incentive Cash Compensation as a Percent of Target | | Named Executive Officer Actual Incentive Cash Compensation as a Percent of Target |
| | Name | | Target Incentive Award ($) | | Actual Incentive Award ($) | | Actual Incentive Award as a Percent of Target (%) | | Target Incentive Award(1) ($) | | Actual Incentive Award ($) | | Actual Incentive Award as a Percent of Target (%) |
| Moshe N. Gavrielov | | 1,050,000 |
| | 1,506,750 |
| | 143.5 | | 1,102,500 | | 820,575 | | 74 |
| Jon A. Olson | | 384,000 |
| | 531,840 |
| | 138.5 | | 480,000 | | 367,200 | | 77 |
| Victor Peng | | 382,000 |
| | 528,960 |
| | 138.5 | | 480,000 | | 362,400 | | 76 |
| Krishna Rangasayee | | | 296,334 | | 205,730 | | 69 |
| Vincent L. Tong | | 296,000 |
| | 421,800 |
| | 142.5 | | 305,334 | | 247,460 | | 81 |
| Raja Petrakian | | | 289,064 | | 180,532 | | 62 |
| Frank A. Tornaghi | | 308,000 |
| | 420,420 |
| | 136.5 | | 310,000 | | 187,550 | | 61 |
(1) Amount is based on the executive’s actual earnings, which, due to the timing of salary increases, may be less than the annual base salary approved by the Compensation Committee in fiscal 2015. | | (1) Amount is based on the executive’s actual earnings, which, due to the timing of salary increases, may be less than the annual base salary approved by the Compensation Committee in fiscal 2015. |
Each component is described in more detail under the sections entitled “Operating Profit Component,” “Revenue Growth Component,” and “Individual Performance Component.”
Operating Profit Component
The OP Component is defined as our operating profit as a percent of revenue, excluding expenses related to bonus payments made under our non-sales incentive compensation plans and, with Compensation Committee approval, other non-recurring adjustments or expenses that are not associated with currently planned or on-going business operations, such as litigation and restructuring expenses. The goal in the OP Component is to continually manage and reduce costs and enhance profitability. For purposes of the 20142015 Incentive Plan, the OP Component is calculated on a semi-annual basis using the financial results for the fiscal six-month period, and is weighted 30%. In connection withAlthough the calculationCompany incurred approximately $24 million in restructuring charges in fiscal 2015, the Compensation Committee did not exclude these charges for purposes of calculating the OP Component for executives under the first half of fiscal 2014, the Compensation Committee exercised its discretion to exclude up to $30 million of a judgment against the Company resulting from a patent infringement lawsuit filed by PACT XPP Technologies AG.
2015 Incentive Plan.
The OP Component is subject to a threshold range for any payout and contains a multiplier that increases payout under this component depending on Company performance. For fiscal 2014,2015, the maximum multiplier was 2.0. The maximum multiplier and operating margin percentage targets for the OP Component remained unchanged from fiscal 2013. The table below outlines the general progression of the OP Component Multiplier for fiscal 2014:
OP Component Scale (Abbreviated)
2015:
|
| | |
Operating Profit % (FY2013) | | OP Component Multiplier |
| <13 | | 0.0 |
| 13 - 19 | | 0.2 |
| 20 | | 0.3 |
| 27 - 29 | | 1.0 |
| 30 | | 1.1 |
| 34 | | 1.5 |
| 39 | | 2.0 |
| OP Component Scale (Abbreviated) |
| | |
Operating Profit % (FY2015) | | OP Component Multiplier |
| <21 | | 0.0 |
| 22 | | 0.1 |
| 23 | | 0.2 |
| ... | | ... |
| 30 | | 0.9 |
| 31 - 33 | | 1.0 |
| 34 | | 1.1 |
| 35 | | 1.2 |
| 36 | | 1.3 |
| ... | | ... |
| 42 | | 1.9 |
| 43 | | 2.0 |
The chart above indicates that once the Company reached 13%22% operating profit, then the OP Component Multiplier equaled 0.2. The OP Component Multiplier remained at 0.20.1. Then, for each full percentage point increase in operating profit untilfrom 22% up to 30%, the Company achieved 20% operating profit. Once the Company’sOP Component Multiplier increased by 0.1. Operating profit of 31% and up to 33% would result in an OP Component Multiplier of 1.0. Thereafter, for each full percentage increase in operating profit reached 20%over 33%, then the OP Component Multiplier increased by 0.1, for each full percentage point increase over 20% operating profit until the Company reaches 27% operating profit. The Company would then pay 100% of the OP Component of the target bonus for operating profit between 27% and 29%. Thereafter, the OP Component Multiplier increased by 0.1 for each full percentage point increase of operating profit over 29% until a total operating profit of 39%43%, at which point the multiplier is capped at 2.0.
In fiscal 2014,2015, we exceeded our OP Component target in the first half of the year, resulting in a 1.81.3 multiplier based on an operating profit of 36%, and we also exceededmet the target for the second half of the year, resulting in 1.5a 1.0 multiplier based on an operating profit of 33%, as follows:
OP Component Multipliers for Fiscal 2014
| | OP Component Multipliers for Fiscal 2015 | | OP Component Multipliers for Fiscal 2015 |
| | Period | | Actual OP Component (%) | | OP Component Multiplier | | Actual OP Component (%) | | OP Component Multiplier |
| First Half | | 37 | | 1.8 | | 36 | | 1.3 |
| Second Half | | 34 | | 1.5 | | 33 | | 1.0 |
Revenue Growth Component
The Growth Component measures increases in the Company’s revenue growth year-over-year and rewards increases over a certain minimum threshold. The Growth Component is measured and paid on an annual basis and is weighted 40%30%. In fiscal 2014,2015, the minimum increase in year-over-year revenue growth for payment was 1%. Once the Company achieved a full 1% year-over-year revenue growth, then the Growth Component multiplier (Growth Component Multiplier) equaled 0.16.0.11. At 6%9% year-over-year revenue growth, the Growth Component Multiplier equaled 1.0. Then, for every full percentage point increase above 6%9%, the Growth Component Multiplier increased by 0.2, until reaching 11%14% year-over-year revenue growth, at which point the multiplier was capped at 2.0. The table below outlines the general progression of the Growth Component multiplier for fiscal 2014:
|
| | |
Revenue Growth (Year-over-Year in FY2014)
| | Growth Component Multiplier |
| 0% | | 0.00 |
| 1% | | 0.16 |
| 2% | | 0.33 |
| 3% | | 0.50 |
| 4% | | 0.67 |
| 5% | | 0.83 |
| 6% | | 1.00 |
| 7% | | 1.20 |
| 8% | | 1.40 |
| 9% | | 1.60 |
| 10% | | 1.80 |
| 11% | | 2.00 |
The actual revenue growth percentage and corresponding Growth Component Multiplier for fiscal 2014 was as follows:
Revenue Growth Component Multiplier for Fiscal 20142015:
|
| | | | |
| Period | | Actual Revenue Growth (%) | | Growth Component Multiplier |
| Fiscal 2014 | | 9.9 | | 1.6 |
| Growth Component Scale (Abbreviated) |
| | |
Revenue Growth (Year-over-Year in FY2015) | | Growth Component Multiplier |
| 0% | | 0.00 |
| 1% | | 0.11 |
| ... | | ... |
| 8% | | 0.88 |
| 9% | | 1.00 |
| 10% | | 1.20 |
| ... | | ... |
| 14% | | 2.00 |
In fiscal 2015, the Company did not meet its Growth Component threshold for payout, and therefore no bonus was paid for that performance metric.
Individual Performance Component
Under the Individual Performance Component, each named executive officer received up to a maximum of ten individual goals for each performance period, each goal with a weighting depending on the value of the goal. The performance period for the named executive officers, except the CEO, is each semi-annual period, and for the CEO, the performance period is the full fiscal year. The threshold for any payout under the Individual Performance Component is 50% overall achievement and the maximum performance is capped at 150% (Individual Performance Multiplier).
Each individual goal under the Individual Performance Component (1) was directly related to the Company’s business objectives and (2) corresponded to such executive’s position and responsibilities. The management goals for the named executive officers related to the broader corporate goals within the following categories:
Product objectives. Goals related to product innovation and development, product quality and product schedules fell within this category.
Sales and marketing objectives. Goals related to revenue, design wins, marketing strategies and product launches fell within this category.
Operational objectives. Goals related to fiscal discipline, cost reductions, business efficiencies and profitability fell within this category.
Organizational objectives. Goals related to the implementation of employee performance and compensation programs, succession planning and compliance fell within this category.
For the named executive officers other than the CEO, the CEO, in consultation with each executive, assigned a weight to each goal which was measured in proportion to how that goal corresponded to the importance of the business objective involved. These goals and assigned weightings for the non-CEO named executive officers were provided to the Compensation Committee for its review at the beginning of each semi-annual period. At the end of each semi-annual period, the CEO reviewed his determination
of the executive’s performance for each goal along with the executive’s self- assessment on a scale of 0% to 150%. Based on the CEO’s determination of the executive’s level of goal achievement, the CEO then recommended to the Compensation Committee an Individual Performance Multiplier, on a scale of 0.0 to 1.5, for each named executive officer. After reviewing the CEO’s semi-annual assessment and recommendation, the Compensation Committee determined and approved the multiplier and semi-annual payout for each named executive officer.
For the CEO, the Compensation Committee, in consultation with the CEO, set forth each of the CEO’s goals, which were measured in proportion to the importance of that goal to the business. At the end of the annual period, the CEO self-assessed his achievement of each goal on the same 0% to 150% scale and submitted the self-assessment to the Compensation Committee. After reviewing the CEO’s self-assessment and making its own evaluation of the CEO’s performance, the Compensation Committee discussed its recommendation of the CEO’s multiplier and annual payout with the Board of Directors outside the presence of the CEO. The Compensation Committee determined and then approved the CEO’s payout amount. In assessing the CEO’s achievements and approving his compensation, the Compensation Committee and independent Directorsdirectors considered his achievements within a broader set of expectations including strategic leadership, organizational quality and effectiveness, management abilities and responsiveness to economic conditions.
The table below reflects a hypothetical example of how particular goals would be weighted based on their achievement level, resulting in the calculation of the Individual Performance Multiplier for an individual executive participating in the 20142015 Incentive Plan.
Individual Performance Component Multiplier (Example Only)
| | Individual Performance Component Multiplier (Example Only) | | Individual Performance Component Multiplier (Example Only) |
| | Goal | | Weighting (%) | | Achievement Level (%) | | Multiplier | | Weighting (%) | | Achievement Level (%) | | Multiplier |
| #1 | | 20 | | 100 | | 0.20 | | 20 | | 100 | | 0.20 |
| #2 | | 30 | | 50 | | 0.15 | | 30 | | 50 | | 0.15 |
| #3 | | 30 | | 100 | | 0.30 | | 30 | | 100 | | 0.30 |
| #4 | | 20 | | 150 | | 0.30 | | 20 | | 150 | | 0.30 |
| Individual Performance Multiplier | | 0.95 | | 0.95 |
The Individual Performance Component, which was weighted 40%, was paid semi-annually for all named executive officers, except the CEO, in fiscal 2014.2015. The Individual Performance Component was paid annually for the CEO in fiscal 2014.2015. A summary of each named executive officer'sofficer’s individual performance goals is set forth in the footnotes in the table below titled “Named Executive Officer Incentive Cash Bonus Awards for Fiscal 2014.2015.”
Calculations of Payouts for Named Executive Officers
The cash incentive bonus payouts are calculated slightly differently for our CEO compared to our other named executive officers, because the Individual Performance Component is determined on an annual basis for our CEO, but is determined on a semi-annual basis for all other named executive officers.
Cash Incentive Payout for Named Executive Officers, except our CEO
The calculation to determine the cash incentive bonus payout for our named executive officers, except our CEO, is shown below:
Named Executive Officer (Other than CEO) Cash Incentive Bonus Calculation
As shown in the chart above, the cash incentive bonus payout for our named executive officers, except our CEO, for the first half of the fiscal year was determined by multiplying the multipliers for the OP Component and the Individual Performance Component by their weights, 30% and 40%, respectively, and then by the named executive officer’s target bonus percentage, then by the named executive officer'sofficer’s salary earned in the first half of the year.
As also shown in the chart above, the cash incentive bonus for the second half of the year was calculated the similar to the first half of the year for our named executive officers (other than our CEO), except in the second half ofthat the Growth Component, which is measured and paid on an annual basis, was added to the overall second half calculation, as follows:
[OP Component Weighting (30%) x OP Component Multiplier x Target Bonus % x Second Half Fiscal Year Earnings] + [Individual Performance Component Weighting (40%) x Individual Performance Component Multiplier x Target Bonus % x Second Half Fiscal Year Earnings] + [Growth Component Weighting (30%) x Growth Component Multiplier x Target Bonus % x Annual Earnings] = Second Half Payout for Non-CEO Named Executive Officers
Cash Incentive Payout for our CEO
The calculation to determine the cash incentive bonus payout for our CEO is shown below:
CEO Cash Incentive Bonus Calculation
Unlike the other named executive officers and as shown in the chart above, our CEO’s cash incentive bonus calculation in the first half of the year did not include his Individual Performance Component, which, for the CEO, is calculated on an annual basis.
The CEO’s first half incentive bonus included only the OP Component and was calculated by multiplying the OP Component multiplier by the weighting (30%), by the CEO’s target bonus percentage and then by the CEO’s earnings in the first half of the fiscal year. The CEO’s cash incentive bonus for the first half of the fiscal year was paid shortly after the end of the first half of the fiscal year.
Because the Growth Component and the CEO’s Individual Performance are determined on an annual, rather than on a semi-annual, basis, the CEO’s payout for the second half of the fiscal year was calculated similar to the first half of the year, except in the second half of the year, the Growth Component and the CEO’s Individual Performance Component were added to the overall second half of the year calculation, as follows:
[OP Component Weighting (30%) x OP Component Multiplier x Target Bonus % x Semi-AnnualSecond Half Fiscal Year Earnings] + [Individual Performance Component Weighting (40%) x Individual Performance Component Multiplier x Target Bonus % x Annual Earnings] + [Growth Component Weighting (30%) x Growth Component Multiplier x Target Bonus % x Annual Earnings] = CEO Second Half Payout
Incentive Cash Bonus Amounts for Fiscal 2014
2015
The target and actual incentive bonus amounts for fiscal 20142015 for our named executive officers, based on the achievement against financial goals (discussed above) and achievement against the individual performance goals (as discussed in the footnotes below) were as follows:
Named Executive Officer Incentive Cash Bonus Awards for Fiscal 2014
| | Named Executive Officer Incentive Cash Bonus Awards for Fiscal 2015 | | Named Executive Officer Incentive Cash Bonus Awards for Fiscal 2015 |
| | | | | | | | Bonus Actually Paid ($) | | | | | | | | Bonus Actually Paid ($) | | |
Named Executive Officer | | Base Salary ($) | | Target Incentive Bonus as a Percentage of Base Salary (%) | | Target Incentive Bonus ($) | | First Half Financial Metrics ($) | | First Half Individual Performance ($) | | | | Second Half Financial Metrics ($) | | Second Half (Annual for CEO) Individual Performance ($) | | | | Total Incentive Bonus Actually Paid ($) | | Bonus Actually Paid as Percentage of Target Incentive Bonus (%) | | Base Salary(1) ($) | | Target Incentive Bonus as a Percentage of Base Salary (%) | | Target Incentive Bonus ($) | | First Half Financial Metrics(2) ($) | | First Half Individual Performance ($) | | | | Second Half Financial Metrics(3) ($) | | Second Half (Annual for CEO) Individual Performance ($) | | | | Total Incentive Bonus Actually Paid ($) | | Bonus Actually Paid as Percentage of Target Incentive Bonus (%) |
Moshe N. Gavrielov | | 750,000 |
| | 140 | | 1,050,000 |
| | 283,500 |
| | — |
| | | | 740,250 |
| | 483,000 |
| | (1) | | 1,506,750 |
| | 143.5 | | 787,500 |
| | 140 | | 1,102,500 |
| | 211,575 |
| | — |
| | | | 168,000 |
| | 441,000 |
| | (4) | | 820,575 |
| | 74 |
| Jon A. Olson | | 480,000 |
| | 80 | | 384,000 |
| | 103,680 |
| | 80,640 |
| | (2) | | 270,720 |
| | 76,800 |
| | (3) | | 531,840 |
| | 138.5 | | 480,000 |
| | 100 | | 480,000 |
| | 93,600 |
| | 96,000 |
| | (5) | | 72,000 |
| | 105,600 |
| | (6) | | 367,200 |
| | 77 |
| Victor Peng | | 477,500 |
| | 80 | | 382,000 |
| | 102,600 |
| | 79,800 |
| | (4) | | 269,760 |
| | 76,800 |
| | (5) | | 528,960 |
| | 138.5 | | 480,000 |
| | 100 | | 480,000 |
| | 93,600 |
| | 96,000 |
| | (7) | | 72,000 |
| | 100,800 |
| | (8) | | 362,400 |
| | 76 |
| Krishna Rangasayee | | | 370,417 |
| | 80 | | 296,334 |
| | 56,550 |
| | 49,300 |
| | (9) | | 45,400 |
| | 54,480 |
| | (10) | | 205,730 |
| | 69 |
| Vincent L. Tong | | 370,000 |
| | 80 | | 296,000 |
| | 79,920 |
| | 62,160 |
| | (6) | | 208,680 |
| | 71,040 |
| | (7) | | 421,800 |
| | 142.5 | | 381,667 |
| | 80 | | 305,334 |
| | 58,500 |
| | 67,800 |
| | (11) | | 46,600 |
| | 74,560 |
| | (12) | | 247,460 |
| | 81 |
| Raja Petrakian | | | 361,330 |
| | 80 | | 289,064 |
| | 56,160 |
| | 51,840 |
| | (13) | | 43,519 |
| | 29,013 |
| | (14) | | 180,532 |
| | 62 |
Frank A. Tornaghi | | 385,000 |
| | 80 | | 308,000 |
| | 83,160 |
| | 61,600 |
| | (8) | | 217,140 |
| | 58,520 |
| | (9) | | 420,420 |
| | 136.5 | | 387,500 |
| | 80 | | 310,000 |
| | 60,450 |
| | 49,600 |
| | (15) | | 46,500 |
| | 31,000 |
| | (16) | | 187,550 |
| | 61 |
| |
| (1) | Represents the actual base salaries earned during 2015, which for all named executive officers, except Messrs. Olson and Peng, are less than the amount approved by the Compensation Committee, because the salary increases were approved after the beginning of the fiscal year. All salaries are evenly split between the first half and the second half of the year, except for Messrs. Gavrielov (1H: $387,500; 2H: $400,000), Rangasayee (1H: $181,250; 2H: $189,167), Tong (1H: $187,500; 2H: $194,167), and Petrakian (1H: $180,000; 2H: $181,330). |
| |
| (2) | The first half financial metric included only the OP Component, which was scored at 36% and resulted in a multiplier of 1.3. For more information on the OP Component, see the section above entitled “Operating Profit Component,” and for more information on the calculation of cash incentive bonuses for the first half of fiscal 2015, see the section above entitled “Calculations of Payouts for Named Executive Officers.” |
| |
| (3) | The second half financial metric included the OP Component and Growth Component. The OP Component for the second half was scored at 33%, which resulted in a multiplier of 1.0. The Growth Component multiplier was zero, because the Company did not achieve year-over-year revenue growth in fiscal 2015. For more information on the OP Component and Growth Components, see the sections above entitled “Operating Profit Component” and “Revenue Growth Component.” |
For more information on the calculation of the cash incentive bonuses for the second half of fiscal 2015, see the section above entitled “Calculations of Payouts for Named Executive Officers.”
| |
| (4) | Represents the actual bonus paid to Mr. Gavrielov for fiscal 20142015 based on achievement against his specific individual performance goals. For fiscal 2014,2015, Mr. Gavrielov earned 115%100% of his target bonus attributable to the Individual Performance Component by successfully: (1) meeting certain organizational goals, including product development, product delivery, product mix, and gross margin goals; (2) achieving strategic product and portfolio goals; and (3) attaining leadership effectiveness goals, including responsiveness to market demands (external leadership) and creating a performance-based culture (internal leadership). |
| |
(2)(5) | Represents the actual bonus paid to Mr. Olson for the first half of fiscal 20142015 based on achievement against his specific individual performance goals. For the first half of fiscal 2014, Mr. Olson earned 105% of his target bonus attributable to the Individual Performance Component by successfully: (1) driving the Company’s efforts on gross margin improvements; (2) implementing various programs to improve the Company’s profitability and financial decision making process; (3) implementing programs to maintain and improve Company controls and processes; and (4) implementing an action plan based on employee survey results. |
| |
(3) | Represents the actual bonus paid to Mr. Olson for the second half of fiscal 2014 based on achievement against his specific individual performance goals. For the second half of fiscal 2014,2015, Mr. Olson earned 100% of his target bonus attributable to the Individual Performance Component by successfully: (1) driving the Company’s efforts on gross margin improvements; (2) completing key strategic initiatives and implementing various programs to improve the Company’s profitability and financial decision making processes;profitability; (3) implementing programscompleting goals to maintain and improve Companythe Company’s controls, compliance, and processes; and (4) communicating and implementing tools and encouraging participation in career development programs.systems that support the Company’s workforce leadership strategy. |
| |
(4)(6) | Represents the actual bonus paid to VictorMr. Olson for the second half of fiscal 2015 based on achievement against his specific individual performance goals. For the second half of fiscal 2015, Mr. Olson earned 110% of his target bonus attributable to the Individual Performance Component by successfully: (1) completing key strategic initiatives and implementing various programs to improve the Company’s profitability; (2) achieving specific milestones related to improving the Company’s gross margin; (3) completing goals to improve Company controls, compliance, and processes; and (4) completing and finalizing goals related to the Company’s workforce leadership strategy. |
| |
| (7) | Represents the actual bonus paid to Mr. Peng for the first half of fiscal 20142015 based on achievement against his specific individual performance goals. For the first half of fiscal 2014, Mr. Peng earned 105% of his target bonus attributable to the Individual Performance Component by successfully: (1) meeting product delivery and production goals; (2) meeting certain design scheduling goals; (3) achieving certain business marketing goals; (4) achieving gross margin goals; and (5) implementing an action plan based on employee survey results. |
| |
(5) | Represents the actual bonus paid to Victor Peng for the second half of fiscal 2014 based on achievement against his specific individual performance goals. For the second half of fiscal 2014,2015, Mr. Peng earned 100% of his target bonus attributable to the Individual Performance Component by successfully: (1) attaining certainmeeting product developmentdelivery, production, and customer shipment goals; (2) meeting certain design scheduling goals; (3) achieving certain business, marketing, and design and product deliverables on time; (3) attaining certain marketingwin revenue goals; (4) achieving certain gross margin goals; and (5) communicating and implementing tools and encouraging participation in career development programs.systems that support the Company’s workforce leadership strategy. |
| |
(6)(8) | Represents the actual bonus paid to Vincent L. TongMr. Peng for the firstsecond half of fiscal 20142015 based on achievement against his specific individual performance goals. For the firstsecond half of fiscal 2014,2015, Mr. TongPeng earned 105% of his target bonus attributable to the Individual Performance Component by successfully: (1) attaining certain product pricingproduction and customer shipment goals; (2) achievingmeeting certain manufacturing goals;design and product milestones; (3) achieving certain product deliverables on time;business, marketing, and design win revenue goals; (4) achieving certain quality productiongross margin goals; and (5) implementing an action plan based on employee survey results.completing and finalizing goals related to the Company’s workforce leadership strategy. |
| |
(7)(9) | Represents the actual bonus paid to Vincent L.Mr. Rangasayee for the first half of fiscal 2015 based on achievement against his specific performance goals. For the first half of fiscal 2015, Mr. Rangasayee earned 85% of his target bonus attributable to the Individual Performance Component by successfully: (1) achieving certain strategic business milestones; (2) attaining gross margin goals; (3) meeting certain product, design win, and revenue goals; (4) achieving certain marketing segment revenue and design win goals; and (5) communicating and implementing tools and systems that support the Company’s workforce leadership strategy. |
| |
| (10) | Represents the actual bonus paid to Mr. Rangasayee for the second half of fiscal 2015 based on achievement against his specific performance goals. For the second half of fiscal 2015, Mr. Rangasayee earned 90% of his target bonus attributable to the Individual Performance Component by successfully: (1) achieving certain product revenue and design win goals; (2) meeting certain marketing segment revenue and design win goals; (3) achieving certain gross margin goals; (4) completing certain business objectives to align with other organizations within the Company; (5) achieving certain project, design win, and planning goals; and (6) completing and finalizing goals related to the Company’s workforce leadership strategy. |
| |
| (11) | Represents the actual bonus paid to Mr. Tong for the first half of fiscal 2015 based on achievement against his specific individual performance goals. For the first half of fiscal 2015, Mr. Tong earned 113% of his target bonus attributable to the Individual Performance Component by successfully: (1) achieving certain product supply and shipment goals; (2) achieving certain overall quality goals; (3) attaining certain gross margin goals; (4) achieving certain team work improvement goals; and (5) communicating and implementing tools and systems that support the Company’s workforce leadership strategy. |
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| (12) | Represents the actual bonus paid to Mr. Tong for the second half of fiscal 20142015 based on achievement against his specific individual performance goals. For the second half of fiscal 2014,2015, Mr. Tong earned 120% of his target bonus attributable to the Individual Performance Component by successfully: (1) achievingattaining certain gross marginoverall quality goals; (2) attaining certain product supply goals; (3) attaining certain product readiness and assessment goals; (4) achieving certain product revenue goals; (5) achieving certain product quality goals; and (6) implementing and encouraging participation in career development programs. |
product production goals; (3) achieving certain gross margin goals; (4) completing certain operational goals in the Asia Pacific region; and (5) completing and finalizing goals related to the Company’s workforce leadership strategy.
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(8)(13) | Represents the actual bonus paid to Frank A. TornaghiMr. Petrakian for the first half of fiscal 20142015 based on achievement against his specific individual performance goals. For the first half of fiscal 2014,2015, Mr. TornaghiPetrakian earned 100%90% of his target bonus attributable to the Individual Performance Component by successfully: (1) achieving certain gross marginoperations infrastructure goals; (2) attaining certain design winsupply chain goals; (3) meeting certain operational goals; (4) achieving certain revenuegross margin goals; and (4)(5) communicating and implementing an action plan based on employee survey results.tools and systems that support the Company’s workforce leadership strategy. |
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(9)(14) | Represents the actual bonus paid to Frank A. TornaghiMr. Petrakian for the second half of fiscal 20142015 based on achievement against his specific individual performance goals. For the second half of fiscal 2014,2015, Mr. TornaghiPetrakian earned 95%50% of his target bonus attributable to the Individual Performance Component by successfully: (1) achievingattaining certain designsupply chain goals; (2) achieving certain product revenueoperations infrastructure goals; (3) meeting certain product pricingoperational goals; (4) achieving certain gross margin goals; and (4) implementing(5) completing and encouraging participation in career development programs.finalizing goals related to the Company’s workforce leadership strategy. |
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| (15) | Represents the actual bonus paid to Mr. Tornaghi for the first half of fiscal 2015 based on achievement against his specific individual performance goals. For the first half of fiscal 2015, Mr. Tornaghi earned 80% of his target bonus attributable to the Individual Performance Component by successfully: (1) attaining certain key design wins; (2) attaining certain first half revenue goals; (3) achieving certain gross margin goals; (4) achieving a worldwide design win revenue goal; and (5) communicating and implementing tools and systems that support the Company’s workforce leadership strategy. |
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| (16) | Represents the actual bonus paid to Mr. Tornaghi for the second half of fiscal 2015 based on achievement against his specific individual performance goals. For the second half of fiscal 2015, Mr. Tornaghi earned 50% of his target bonus attributable to the Individual Performance Component by successfully: (1) attaining a certain overall revenue goal; (2) achieving a certain product revenue goal; (3) achieving certain key design wins; (4) achieving certain gross margin goals; (5) achieving certain design win revenue goals; and (6) completing and finalizing goals related to the Company’s workforce leadership strategy. |
Long-Term Equity Incentive Compensation
The Compensation Committee regularly monitors the environment in which we operate and reviews and makes changes to our equity program as necessary to help us meet our goals, including achieving long-term stockholder value and attracting, motivating and retaining talent. In fiscal 2014,2015, the Compensation Committee granted long-term equity incentive compensation in the form of performance-based restricted stock units (RSUs) to the named executive officers. The Compensation Committee believes that performance-based RSUs align the executives’ interests with the stockholders’ interests, focus attention on key drivers of long-term value and provide a stronger retention tool for our executives as compared to stock options that maybemay be unpredictable during turbulent economic times. Additionally, because of their intrinsic value, RSUs allow us to issue fewer shares of Common Stockcommon stock thereby reducing dilution to our stockholders.
For fiscal 2014,2015, the Compensation Committee granted only performance-based RSUs to our named executive officers, and not a mix of performance-based and time-based RSUs to these executives as it had in fiscal 2013. Time-based RSUs had been granted to our named executive officers in fiscal 2013 primarily as a retention tool.prior years. The Compensation Committee believes that performance-based RSUs are better aligned with our business strategy to pay for performance, and serve as a sufficient retention tool because of the three-year vesting schedule tied to performance-based RSUs.
In connection with the change to awarding only performance-based RSUs to our executive officers in fiscal 2014, the Compensation Committee revised our stock ownership guidelines, requiring named executive officers, as well as all other Section 16 officers, to retain the following shares until their stock ownership requirements are met: (1) 50% of the shares of Company stock derived from awards of time-based RSUs made beginning in July 2011, and (2) 45% of the shares of Company stock derived from awards of performance-based RSUs made beginning in July 2013. Prior to this change, executive officers were required to retain half of the shares of Common Stock derived from only time-based RSUs until meeting their respective stock ownership requirements and we did not have any holding requirements attached to performance-based RSUs.
The number of performance-based RSUs granted (viewed in the aggregate by value) was based on individual performance, peer group data, the pay mix between cash compensation and equity compensation, the equity mix between options and RSUs, and the Compensation Committee’s assessment of the retention value of existing and new equity grants. Additionally, further differentiation was made between the named executive officers based on competitive market data for the peer group for their respective positions and the Compensation Committee’s assessment of each executive’s potential future contributions to the Company.
The amount of performance-based RSUs that become earned is based on achievement of certain goals at the end of a one-year performance cycle that corresponds with our fiscal year. Following the end of the fiscal year, the performance goals are evaluated and the degree of achievement between 0%-162.5%, is determined. The number of earned performance-based RSUs may increase with overachievement of the applicable performance goals, including up to a maximum of 162.5%165% of the target number of performance-based RSUs. The number of RSUs earned may also decrease for underachievement of the performance goals, including no performance-based RSUs being earned. Once the number of earned RSUs is determined, the shares will vest in three equal annual installments, commencing with the first anniversary of the date of grant.
The four performance components applicable to the 20142015 performance-based RSUs which are more fully described below, are: (1) share of PLD revenue, weighted at 25%30% (SOR-PLD Component), (2) share of 28nm revenue, weighted at 25%30% (SOR-28nm Component), (3) technology leadership weighted at 35%30% (Technology Component), and (4) quality leadership, weighted at 15%10% (Quality Component). These four components are more fully described below.
In May 2013,2014, the Compensation Committee determined the target number of performance-based RSUs that can be earned by our named executive officers for fiscal 2014.2015. The target number of RSUs was determined for each named executive officer based on a tentative total grant value, which was then divided by the average closing price of our Common Stockcommon stock during the three-month period from April 1, 20132014 to July 1, 2013,2014, and then rounded up to the closest 500 underlying RSUs. The tentative total value of the RSUs granted effective July 1, 20132014 for each of our named executive officers was as follows: Mr. Gavrielov, $4,250,000;$4,500,000; Mr. Olson, $1,250,000; Mr. Peng, $1,250,000; Mr. Rangasayee, $900,000; Mr. Tong, $850,000;$900,000; Mr. Petrakian, $900,000; and Mr. Tornaghi, $850,000.$900,000. The average closing price of our Common Stockcommon stock from April 1, 20132014 to July 1, 2013,2014, was $38.44.
$48.13. Because Messrs. Petrakian and Tornaghi terminated employment before the end of the one-year performance cycle for fiscal 2015, they forfeited the RSUs that were granted to them effective July 1, 2014, resulting in the value of fiscal 2015 RSUs granted to them being zero; however, in connection with their termination of employment, they each received accelerated vesting of certain RSUs previously granted to them upon their delivery of a general release in favor of the Company and certain related parties. For more information, see the section below entitled “Employment and Post-Employment Agreements With Named Executive Officers.”
In May 2014,2015, the data on achievement of the four (4) fiscal 20142015 performance goals was presented to the Compensation Committee. After analyzing and reviewing the results, the Committee certified both the degree of goal accomplishment for each of the four (4) performance-based components for fiscal 20142015 and the total number of RSUs earned and to be issued pursuant to each award based on the degree of goal achievement. The RSUs earned under each performance-based RSU awarded pursuant to the grant on July 1, 20132014 will vest in three equal annual installments, beginning on the anniversary of the date of grant, which is July 1 of each of 2014, 2015, 2016, and 2016.
2017.
The following table sets forth the number of targeted and actual RSUs awarded to each of our named executive officers in fiscal 2014,2015, based on the considerations described above:
Named Executive Officer RSU Awards for Fiscal 2014 | | Named Executive Officer RSU Awards for Fiscal 2015 | | Named Executive Officer RSU Awards for Fiscal 2015 |
| | Name | | Performance-Based RSUs (Target)(1) | | Performance-Based RSUs (Actual)(2) | | Performance-Based RSUs (Target)(1) | | Performance-Based RSUs (Actual)(2) |
| Moshe N. Gavrielov | | 111,000 | | 180,375 | | 93,500 | | 83,215 |
| Jon A. Olson | | 33,000 | | 53,625 | | 26,000 | | 23,140 |
| Victor Peng | | 33,000 | | 53,625 | | 26,000 | | 23,140 |
| Krishna Rangasayee | | | 19,000 | | 16,910 |
| Vincent L. Tong | | 22,500 | | 36,562 | | 19,000 | | 16,910 |
| Raja Petrakian | | | — | | — |
| Frank A. Tornaghi | | 22,500 | | 36,562 | | — | | — |
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| (1) | Only performance-based RSUs were granted in fiscal 2014.2015. This column represents the number of RSUs for fiscal 20142015 based on achievement of the performance goals at 100% of target. Actual earned RSUs for 20142015 may range from 0% to 162.5%165% of target depending on the level of performance. Because Messrs. Petrakian and Tornaghi terminated employment before the end of the one-year performance cycle for fiscal 2015, they forfeited the RSUs that were granted to them effective July 1, 2014, resulting in the value of fiscal 2015 RSUs granted to them being zero; however, in connection with their termination of employment, they each received accelerated vesting of certain RSUs previously granted to them upon their delivery of a general release in favor of the Company and certain related parties. For more information, see the section below entitled “Employment and Post-Employment Agreements With Named Executive Officers.” |
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| (2) | This column represents the actual number of RSUs earned based on performance achievement for fiscal 2014.2015. The Compensation Committee determined the RSU multiplier was 1.6250.89 for fiscal 2014.2015. This RSU multiplier was based on the following multipliers: Share of PLD Revenue Component (1.5)(0.0); Share of 28nm Revenue Component (2.0)(1.1); Technology Component (1.5)(1.4); and Quality Component (1.5)(1.4). |
Performance Components
The performance-based RSUs, which are granted subject to terms and conditions of the 2007 Equity Plan and applicable RSU agreement, include the following four performance components:
Share of PLD Revenue Component (SOR-PLD Component)
The SOR-PLD Component was designed to measure and reward increases in our share of revenue as compared to certain benchmark PLD companies identified by the Compensation Committee, which for fiscal 20142015 were Altera Corporation and Lattice Semiconductor (collectively the SOR-PLD Comparator Companies). The SOR-PLD Component was selected as a goal because we sought to improve our market position relative to our chief PLD competitors in fiscal 2014,2015, and the Compensation Committee
identified the SOR-PLD Comparator Companies as such chief competitors. The SOR-PLD Component was weighted 25%30% of the four performance components for performance-based RSUs.
To determine our share of revenue as compared to the SOR-PLD Comparator Companies, we measured our actual revenue and the revenue of the SOR-PLD Comparator Companies on an annual basis. Our share of revenue (the Company SOR-PLD) was determined by dividing our total annual revenue by the total revenue generated by the Company and the SOR-PLD Comparator Companies during our fiscal year. The SOR-PLD Component was subject to a percent of revenue threshold and a multiplier of up to 1.5 that increased depending on our share of revenue above the threshold. In fiscal 2014,2015, the Company SOR-PLD revenue threshold was 51%52.75%, and any revenue percentage below this threshold resulted in no shares being earned. At the threshold of 51%52.75%, the SOR-PLD Component payout multiplier was 0.2.0.1. For each 0.10.05 percentage point increase in our share of revenue above 51%52.75%, the multiplier increased by 0.2, until the Company SOR-PLD reached 51.4%, at which point the multiplier was 1.0. Thereafter, for each 0.05 percentage point increase in our revenue share, the multiplier increased by 0.1, until the Company SOR-PLD reached 51.65%53.45%, at which point the multiplier was capped at 1.5. At 53.2%, the multiplier was 1.0. Our share of PLD revenue in fiscal 20142015 was 52.7%,less than the 52.75% threshold, resulting in a multiplier of 1.5zero for this component.
Share of 28nm Revenue Component (SOR-28nm Component)
The SOR-28nm Component was designed to measure and reward increases in our share of 28nm revenue as compared to a benchmark 28nm company identified by the Compensation Committee, which for fiscal 20142015 was Altera Corporation (the SOR-28nm Comparator Company). The SOR-28nm Component was selected as a goal because of its importance to our technology and product strategy and our objective to improve our market position relative to Altera Corporation, our chief 28nm competitor in fiscal 2014.2015. The SOR-28nm Component was weighted 25%30% of the four performance components for performance-based RSUs.
To determine our share of 28nm revenue as compared to 28nm revenues for Altera Corporation, we measured our actual revenue and the Company’s estimate of Altera’s revenue for its reported 28nm products on an annual basis. Our share of revenue (the Company SOR-28nm) was determined by dividing our total 28nm annual revenue by the total 28nm revenue generated by the Company and Altera Corporation during our fiscal year. The SOR-28nm Component was subject to a percent of revenue threshold and a multiplier of up to 2.0 that increased depending on our share of revenue above the threshold. In fiscal 2014,2015, the Company SOR-28nm revenue threshold was 51%, and any revenue percentage below this threshold resulted in no shares being earned. At the threshold of 51%, the SOR-28nm Component payout multiplier was 0.1. For each full percentage point increase in our share of revenue above 51% until 65%, the multiplier increased by 0.1. At 65% share of revenue, the multiplier was 1.5. Then, for each two full percentage point increases in our share of revenue above 65%, the multiplier increased by 0.1, until reaching a maximum of 70%75%, at which point the multiplier was capped at 2.0. For fiscal 2014,2015, the SOR-28nm Component resulted in a multiplier of 2.0.
1.1.
Technology Component
The Technology Component was designed to measure and reward significant achievements in our technology roadmap. The Technology Component measures a number of factors in assessing our competitiveness and status of leadership across our entire portfolio of products. Such factors include, but are not limited to, use of power, process node achievements, integration, product cost efficiency, performance of high speed transceiver technology and ease of use of software. The Technology Component score is subject to a minimum threshold, at which the multiplier is 0.30.2 up to a maximum multiplier of 1.5 of the target number of shares. If the performance score is below the minimum, no shares will be earned. The Technology Component was weighted 35%30% of the four performance components for performance-based RSUs In fiscal 2014,2015, the Technology Component resulted in a multiplier of 1.5.
1.4.
Quality Component
The Quality Component was designed to measure and reward significant achievements in the quality of our products. The Quality Component is measured by both customer experience and internal quality systems monitoring. The Quality Component score is subject to a minimum threshold, at which the multiplier is 0.2 up to a maximum multiplier of 1.5 of the target number of shares.
If the performance score is below the minimum, no shares will be earned. The Quality Component was weighted 15%10% of the four performance components for performance-based RSUs. For fiscal 2014,2015, the Quality Component resulted in a multiplier of 1.5.1.4.
Generally Available Benefit Programs
We also maintain generally available benefit programs in which our executives may participate. Under our ESPP,employee stock purchase plan, generally all employees are able to purchase our Common Stockcommon stock through payroll deductions at a discounted price. We also maintain a tax-qualified 401(k) Plan for employees in the U.S., which provides for broad-based employee participation. Under the 401(k) Plan, we match up to 50% of an employee’s first 8% of compensation that the employee contributes to his or her 401(k) account, up to a maximum per calendar year of $4,500 per employee. We also provide a “true-up” for participants who did not receive their maximum matching contribution during a 401(k) plan year as a result of meeting their contribution limits early in the year. We make matching contributions to help attract and retain employees, and to provide an additional incentive for our employees to save for their retirement in a tax-favored manner.
The Company also offers a number of other benefits to the named executive officers pursuant to benefits programs that provide for broad-based employee participation which includes medical, dental and vision insurance, disability insurance, various other insurance programs, health and dependent care flexible spending accounts, educational assistance, employee assistance and certain other benefits. The terms of these benefits are essentially the same for all eligible employees.
We also maintain an unfunded, nonqualified deferred compensation plan which allows eligible participants, including executive officers and members of the Board, to voluntarily defer receipt of a portion or all of their salary, cash bonus payment or directorship fees, as the case may be, until the date or dates elected by the participants, thereby allowing the participating employees and directors to defer taxation on such amounts. Refer to the section below entitled “Deferred“Nonqualified Deferred Compensation Plan” for more information about this benefit plan. We do not maintain a “SERP” or similar defined benefit deferred compensation plan for any of our employees.
Consistent with our compensation philosophy, we intend to continue to maintain market-competitive benefits for all employees, including our named executive officers; provided, however, that the Compensation Committee may revise, amend, or add to the officer’s executive benefits and perquisites if it deems advisable in order to remain competitive with comparable companies and/or retain individuals who are critical to the Company. We believe the benefits and perquisites we offer are currently at competitive levels with comparable companies. We do not provide any other perequisites to our named executive officers that are not made available to other employees.
Fiscal 2015 Compensation Actions
On May 14, 2014, the Compensation Committee approved an executive incentive plan effective for fiscal 2015 (2015 Incentive Plan). Similar to the 2014 Incentive Plan, the 2015 Incentive Plan provides for a cash bonus calculated as a percentage of the executive officer’s base salary. The 2015 Incentive Plan has the same three (3) performance components with the same weightings as the 2014 Incentive Plan, as follows: the operating profit component, weighted at 30%, the revenue growth component, weighted at 30%,Employment and the individual performance component, weighted at 40%. For all the named executive officers, the operating profit component is paid on a semi-annual basis and the revenue growth component is paid on an annual basis. The individual performance component is paid on a semi-annual basis for all named executive officers, except the CEO, whose individual performance component is paid on an annual basis. For fiscal 2015, based on comparing base salary levels at the companies in our peer group, as well as considering the roles and responsibilities and potential performance of the named executive officers, the Compensation Committee increased the base salary for Mr. Gavrielov to $800,000 from $750,000, for Mr. Tong to $380,000 from $370,000 and for Mr. Tornaghi to $390,000 from $385,000. The bonus percentages remained the same for each of the named executive officers, except for Messrs. Olson and Peng whose target bonus percentage increased to 100% from 80% of their respective annual base salary earned in fiscal 2015.
In May 2014, the Compensation Committee also determined the target number of RSUs for our named executive officers for fiscal 2015. The target number of RSUs is based on a tentative total grant value, which is then divided by the average closing price of our Common Stock during the three-month period from April 1, 2014 to July 1, 2014. The tentative total value for RSUs granted to each of our named executive officers that will be granted effective July 1, 2014 is as follows: Mr. Gavrielov, $4,500,000; Mr. Olson, $1,250,000; Mr. Peng, $1,250,000; Mr. Tong, $900,000; and Mr. Tornaghi, $900,000. The number of RSUs that are ultimately earned, as determined by the Compensation Committee based on the achievement of the performance components, will vest in three (3) equal annual installments, beginning on the anniversary of the date of grant. which is July 1 of each of 2015, 2016 and 2017.
EmploymentPost-Employment Agreements with Named Executive Officers
Employment Letter Agreements with Moshe N. Gavrielov and Jon A. Olson
The Company maintains employment letter agreements with Messrs. Gavrielov and Olson. Mr. Gavrielov’s employment letter agreement, entered into with Mr. Gavrielov on January 4, 2008, andwhich has since been amended, on June 13, 2012, entitles him to certain payments and benefits in the event his employment is terminated at any time due to disability or other than for cause, or if Mr. Gavrielov voluntarily terminates his employment for good reason. Mr. Gavrielov’s agreement was initially entered into with him as part of an arm’s length negotiation with the Compensation Committee when he joined the Company.
The employment letterCompany in 2008. Mr. Olson’s agreement, that we entered into with Mr. Olson on June 2, 2005, andwhich has also been amended, on February 14, 2008, and June 13, 2012, provides Mr. Olson with certain payments and benefits in the event he is terminated without cause within one year following a change in control of the Company. This arrangement was entered into with Mr. Olson to retain Mr. Olson and ensure his cooperation with, and continued commitment to the success of, the Company.
A description ofIn addition, in fiscal 2015, the terms of Messrs. Gavrielov’s and Olson’s employment agreements, as amended,Company entered into a separation agreement and a quantification of the potential paymentsretirement agreement with Messrs. Petrakian and benefits under theseTornaghi, respectively. The agreements are provided belowwith Messrs. Petrakian and Tornaghi were entered into in the section entitled “Potential Payments Upon Termination or Change in Control.”
Equity Grant Procedures and Guidelines
We have conducted an internal review of our equity granting procedures to ensure that our procedures satisfy both our objectives and all applicable compliance requirements. To this end, we have adopted written procedures for the grant of equity awards. With respect to grants to employees and officers, including named executive officers, the Compensation Committee reserves the authority to make grants at such time and with such terms as it deems appropriate in its discretion, subject to the terms of the 2007 Equity Plan. Generally, grants of equity awards are made to officers based on andMarch 2015 in connection with the annual review during the Focal Review Period. The Compensation Committee determines individual grants to each named executive officer based on a varietytheir separation of factors that the Compensation Committee determines to be relevant and appropriate at the time of grant. These factors typically have included the size and value of unvested equity awards held by the named executive officer, the named executive officer’s job performance, skill set, prior experience, and time in the position, as well as external market data, internal equity, pressures to attract and retain talent, dilutive effect of grant size and business conditions. The Compensation Committee also periodically grants equity awards at its scheduled meetings or by unanimous written consent for new hires and promotions. Grants approved during scheduled meetings become effective and are priced as of the date of approval or a pre-determined future date. Grants approved by unanimous written consent become effective and are priced as of the date the last signature is obtained or a predetermined future date. The Compensation Committee has made certain exceptions to these procedures in order to grant an equity award on an executive’s start date, as it did in the case of the initial option grant to Mr. Gavrielov. We have not granted, nor do we intend in the future to grant, equity awards to executives in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our Common Stock, such as a significant positive or negative earnings announcement. Similarly, the Compensation Committee has not timed, nor does it intend in the future to time, the release of material non-public information based on equity grant dates. In any event, because equity compensation awards typically vest over three or four-year periods, the effect of any immediate increase in the price of our Common Stock following grant is minimal.
The Board has delegated to the CEO and CFO limited authority to approve equity award grants to non-officer employees pursuant to the terms of the 2007 Equity Plan, and subject to the provisions of pre-determined guidelines. Specifically, with respect to non-officer employees, our annual focal awards will be granted on or about the first business day of our second fiscal quarter of each year, and other equity awards will generally be granted on the 10th day of the month, or if on such date our stock is not traded, the first business day thereafter that our stock is traded. The Compensation Committee is responsible for determining and granting all equity awards to executive officers.
Under the 2007 Equity Plan, the exercise price of options and stock appreciation rights may not be less than 100% of the closing price of the shares underlying such options and stock appreciation rights on the date of grant.
Claw-Back Policy
The Board has adopted a policy for seeking the return (claw-back) from executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated, subject to the terms described below. The policy provides that to the extent the Board, or any Committee thereof, and the Company, in their discretion, determine appropriate, the Company may require reimbursement of all or a portion of any bonus, incentive payment, commission, equity-based award or other compensation granted to and received by or for an executive officer beginning in fiscal 2009, where: (1) the compensation was
predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of our financial statements filed with the SEC; (2) the Board (or a Committee thereof), in its sole discretion, determines the executive officer engaged in intentional misconduct that was directly responsible for the substantial restatement; and (3) a reduced amount of compensation would have been paid to the executive officer based upon the restated financial results.
Stock Ownership Guidelines
We have adopted stock ownership guidelines for our officers, to align more closely the interests of our officers with those of our stockholders. Under these guidelines, our CEO is required to own Company stock having a value of at least $4.5 million. Executive vice presidents are required to own Company stock having a value of at least $1.0 million. Senior vice presidents who are Section 16 officers are required to own Company stock having a value of at least $750,000 and corporate vice presidents who are Section 16 officers are required to own Company stock having a value of at least $500,000. In addition, the CEO and all other Section 16 officers must retain the following shares until their respective stock ownership requirements are met:
50% of shares of Company stock delivered from awards of time-based RSUs made beginning in July 2011.
45% of shares of Company stock delivered from awards of performance-based RSUs made beginning in July 2013 (prior to fiscal 2014, we did not have any holding requirements on performance-based RSUs; we only had holding requirements on time-based RSUs that vested 100% after three years).
Policy Against Short Sales, Other Put-Equivalent Investment and Margin Accounts
All employees, including the named executive officers, are subject to our Insider Trading Policy. Our Insider Trading Policy prohibits any employee from hedging, engaging in short sales or entering into any transaction, investment or arrangement that is intended or may be expected to increase in value on the basis of any decrease in value of any of our shares of Common Stock (such as buying “put” options). In addition, the policy prohibits any employee from holding shares of our Common Stock in a margin account or pledging shares of our Common Stock. We have a corporate policy regarding 10b5-1 trading plans, and pursuant to such policy, key terms of the 10b5-1 trading plans of Directors and executive officers are disclosed on our website at www.investor.xilinx.com.
Tax and Accounting Treatment of Compensation
In our review and establishment of compensation programs and payments, we consider, but do not place great emphasis on, the anticipated accounting and tax treatment of our compensation programs. While we do consider the accounting and tax treatment, these factors alone are not dispositive. Among other factors that receive greater consideration are the net costs to the Company and our ability to effectively administer executive compensation arrangements which are in the short and long-term interests of stockholders. The Compensation Committee seeks to maintain flexibility and judgment in compensating executive officers in a manner designed to promote varying corporate goals and therefore has not adopted a policy with respect to the tax or accounting treatment of compensation.
It is our policy generally to qualify compensation paid to the named executive officers for deductibility under Section 162(m) of the Tax Code. Section 162(m) of the Tax Code places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to each of its CEO and the next three most highly paid executive officers (other than its CFO, referred to in the Tax Code as “covered persons”). Our stockholder-approved equity plan is qualified so that the awards of stock options and performance-based RSUs under this plan may constitute performance-based compensation not subject to the limit under Section 162(m) of the Tax Code, provided they otherwise satisfied the requirements under Section 162(m) of the Tax Code. A portion of the cash payments we make under the 2014 Incentive Plan may not be deductible under Section 162(m) of the Tax Code. The Compensation Committee intends to continue to evaluate the effects of the Tax Code and related U.S. Treasury regulations and the advisability of qualifying its executive compensation for deductibility of such compensation. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, however, the Compensation Committee has not adopted a policy that all compensation payable to a covered person must be deductible on the Company’s federal income tax returns.
We account for equity compensation paid to our employees and non-employee directors in accordance with FASB ASC Topic 718, which requires us to estimate and record expense for each award of equity compensation over the service period of the award.
Risk Analysis of Compensation Programs
The Compensation Committee considers potential risks when reviewing and approving compensation programs. The Compensation Committee, in cooperation with management, reviewed our existing compensation programs and believes that the mix and design of the elements of such programs does not encourage management to assume excessive risks and accordingly are not reasonably likely to have a material adverse effect on the Company. Our programs have been balanced to focus on both short-term and long-term financial and operational performance through prudent business judgment and appropriate, measured risk-taking.
Our incentive cash compensation program is designed to reward financial and management performance in areas considered critical to short- and long-term success of the Company. The cash incentive plan for our named executive officers is based on a combination of corporate financial metrics and individualized strategic goals. The financial metric component is based on multiple financial metrics which counterbalance each other, decreasing the likelihood that executives will pursue any one metric to the detriment of overall financial performance. The OP Component is designed to reward improvements in our operating profit and the Growth Component is designed to measure and reward increases in our revenue growth year over year. These metrics limit the ability of an executive to be rewarded for taking excessive risk on behalf of the Company by, for example, seeking revenue enhancing opportunities at the expense of profitability. In addition, there are caps on bonus payments in all the components of the cash incentive plan. The OP Component and Growth Component multipliers are each capped at 2.0 and the Individual Performance Component multiplier is capped at 1.5. These limitations and caps eliminate the risk of uncapped cash bonus opportunities and unjustified bonus payments. Finally, the Board has also adopted a claw-back policy (as discussed above) whereby the Company would seek a return (claw-back) from executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated. The individual strategic goals established at the beginning of the fiscal year for the CEO are reviewed and discussed with the Board and approved by the Compensation Committee; the individual strategic goals established at the beginning of the fiscal year for each of the named executive officers are reviewed and discussed with the Compensation Committee and approved by the CEO. Furthermore, payment for the cash incentive bonus for our named executive officers is approved by the Compensation Committee. This multi-layer approval process in the goal-setting and payment approval process reduces the risk of improper awards.
Our equity incentive program is designed to promote long-term performance. During fiscal 2014, our equity incentive program contained a mix of time-based RSUs and performance-based RSUs, except for executive officers who only received performance-based RSUs. Time-based RSUs for employees vest annually over a four-year vesting schedule. Performance-based RSUs for executive officers vest in three equal annual installments, beginning on the first anniversary of the grant date. Because restricted stock retains its value even in a depressed market, employees are usually incentivized to enhance its value.
In prior years, our equity incentive program also included awards of stock options that vest monthly over a period of four years. Some of these stock options remain outstanding. Since options generate value if stock price appreciates from the date of grant, these awards also provide incentives to promote behavior that is aligned with stockholder interests over the long term.
As previously discussed, the Company has also adopted stock ownership guidelines that further align executives with stockholder interests and promote long-term focus on Company growth. Therefore, the Compensation Committee believes that these equity awards do not encourage unnecessary or excessive risk taking since equity awards are subject to long-term vesting schedules and the ultimate value of the awards is tied to the appreciation of the Company’s stock price. The stock ownership guidelines combined with our long-term vesting schedule help ensure that executives have significant value tied to long-term stock price performance.
The Company has also adopted corporate policies to encourage diligence, prudent decision-making and oversight during the goal-setting and review process. The processes that are in place to manage and control risk include:
The Compensation Committee approves the payout scale for the OP Component and Growth Component.
The Compensation Committee sets the financial metrics at reasonable levels in light of past performance and market conditions.
Payments under the incentive cash compensation program for executives are subject to approval of the Compensation Committee.
The Compensation Committee retains discretion in administering all awards and in determining performance achievement.
The Company has implemented a number of effective controls such as the Code of Conduct, a claw-back policy and quarterly sub-certification process for all executives in order to mitigate the risk of any unethical behavior.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the management of the Company and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and, through incorporation by reference from this proxy statement, the Company’s Annual Report on Form 10-K for the fiscal year ended March 29, 2014.
The Compensation Committee
—J. Michael Patterson, Chairman
—Marshall C. Turner
—Elizabeth W. Vanderslice
The following non-employee members of the Board participated in the review, discussions and recommendations with respect to the compensation of the CEO.
—Philip T. Gianos
—John L. Doyle
—William G. Howard, Jr.
—J. Michael Patterson
—Albert A. Pimentel
—Marshall C. Turner
—Elizabeth W. Vanderslice
The foregoing Report of the Compensation Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act of 1933, as amended (the “Securities Act,”) or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.
Summary Compensation Table
The following table provides compensation information for the named executive officers.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Position | | Year | | Salary(1) ($) | | Bonus ($) | | Stock Awards(2) ($) | | Option Awards(2) ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | All Other Compensation ($) | | Total ($) |
| Moshe N. Gavrielov | | 2014 | | 750,000 |
| | — |
| | 4,210,230 |
| | — |
| | 1,506,750 |
| | — |
| | 4,500 |
| | 6,471,480 |
|
| President and Chief | | 2013 | | 737,500 |
| | — |
| | 3,019,200 |
| | — |
| | 732,656 |
| | — |
| | 4,437 |
| | 4,493,793 |
|
| Executive Officer | | 2012 | | 700,000 |
| | — |
| | 3,319,785 |
| | — |
| | 750,750 |
| | — |
| | 8,000 |
| | 4,778,535 |
|
| Jon A. Olson | | 2014 | | 480,000 |
| | — |
| | 1,251,690 |
| | — |
| | 531,840 |
| | — |
| | 4,500 |
| | 2,268,030 |
|
| Executive Vice President, Finance | | 2013 | | 477,500 |
| | | | 1,132,200 |
| | — |
| | 276,079 |
| | — |
| | 3,783 |
| | 1,889,562 |
|
| and Chief Financial Officer | | 2012 | | 467,500 |
| | — |
| | 1,264,680 |
| | — |
| | 337,472 |
| | | | 5,350 |
| | 2,075,002 |
|
Victor Peng(3) | | 2014 | | 477,500 |
| | — |
| | 1,251,690 |
| | — |
| | 528,960 |
| | — |
| | 3,979 |
| | 2,262,129 |
|
| Executive Vice President | | 2013 | | 455,000 |
| | | | 1,132,200 |
| | — |
| | 270,900 |
| | — |
| | 4,725 |
| | 1,862,825 |
|
| and General Manger of Products | | 2012 | | 407,500 |
| | — |
| | 1,264,680 |
| | — |
| | 278,972 |
| | — |
| | 2,788 |
| | 1,953,940 |
|
Vincent L. Tong(4) | | 2014 | | 370,000 |
| | — |
| | 853,425 |
| | — |
| | 421,800 |
| | — |
| | 291,989 |
| | 1,937,214 |
|
| Senior Vice President, | | 2013 | | 365,000 |
| | — |
| | 770,525 |
| | — |
| | 220,275 |
| | — |
| | 139,303 |
| | 1,495,103 |
|
| Worldwide Quality and New Product Introductions | | | | | | | | | | | | | | | | | | |
| Frank A. Tornaghi | | 2014 | | 385,000 |
| | — |
| | 853,425 |
| | — |
| | 420,420 |
| | — |
| | 4,500 |
| | 1,663,345 |
|
| Senior Vice President, | | 2013 | | 381,250 |
| | — |
| | 770,525 |
| | — |
| | 213,010 |
| | — |
| | 4,625 |
| | 1,369,410 |
|
| Worldwide Sales | | 2012 | | 367,500 |
| | — |
| | 843,120 |
| | — |
| | 234,253 |
| | — |
| | 5,183 |
| | 1,450,056 |
|
| |
(1) | Amounts shown reflect salary earned in fiscal 2014. In fiscal 2014, none of the named executive officer salaries were increased, except for Mr. Peng, whose salary was increased by the Compensation Committee to $480,000, effective July 1, 2013. |
| |
(2) | Amounts shown do not reflect compensation actually received by the named executive officer. Instead, the amounts shown reflect the grant date fair value for stock awards as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2014 filed with the SEC on May 16, 2014. These compensation costs as they relate to stock awards reflect costs associated with stock awards granted in fiscal 2014. For fiscal 2014, this includes the following number of performance-based RSUs based on achievement at 100% of target level performance: Mr. Gavrielov, 111,000 shares; Mr. Olson, 33,000 shares; Mr. Peng, 33,000 shares; Mr. Tong, 22,500 shares; and Mr. Tornaghi, 22,500 shares. The maximum number of performance-based RSUs that could be earned by our named executive officers based on achievement at 162.5% of target level performance is as follows: Mr. Gavrielov, 180,375 shares; Mr. Olson, 53,625 shares; Mr. Peng, 53,625 shares; Mr. Tong, 36,562 shares; Mr. Tornaghi, 36,562 shares. In May 2014, the Compensation Committee determined that the Company achieved 162.5% of target performance, which resulted in each of our named executive officers earning the maximum number of RSU shares. |
| |
(3) | Named executive officer participates in the Company’s non-qualified deferred compensation plan. For more information about this plan see the section below entitled “Deferred Compensation Plan.” |
| |
(4) | Mr. Tong became a named executive officer in fiscal 2013. As a result, information for fiscal 2012 has been omitted. In addition to Mr. Tong’s role as Senior Vice President, Worldwide Quality and New Product Introductions, Mr. Tong currently serves as the Company’s executive leader for the Asia Pacific region. In this role, Mr. Tong’s charter is to expand the Company’s presence and accelerate business development in a region that is experiencing tremendous growth. In connection with his service in this role, the Company leases an apartment and automobile for Mr. Tong, and reimburses certain costs incurred by Mr. Tong as a direct result of his work in the Asia Pacific region. Specifically, in connection with Mr. Tong’s Asia Pacific assignment, in fiscal year 2014 the Company paid $54,914 for the lease of an apartment and other housing-related expenses; $36,167 for the lease of an automobile and other transportation-related expenses; $40,613 for a cost of living allowance; $8,416 for home leave expenses, such as airfare and transportation; and $134,077 for foreign tax payments and tax-related services associated with his service abroad. Mr. Tong also received a payment of $17,802 to cash out accrued but unused vacation. |
Grants of Plan-Based Awards for Fiscal 2014
The following table provides information on equity and non-equity awards granted to our named executive officers during fiscal 2014.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Type | | | | Approval Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value/ Incremental Fair Value of Stock and Option Awards(3) ($) |
| Name | | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | |
Moshe N. Gavrielov
| | RSU | | 7/1/2013 |
| | 5/15/2013 | | — |
| | — |
| | — |
| | — |
| | 111,000 |
| | 180,375 |
| | — |
| | — |
| | — |
| | 4,210,230 |
|
| | | EIP | | — |
| | 5/15/2013 | | — |
| | 1,050,000 |
| | 1,890,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Jon A. Olson | | RSU | | 7/1/2013 |
| | 5/15/2013 | | — |
| | — |
| | — |
| | — |
| | 33,000 |
| | 53,625 |
| | | | — |
| | — |
| | 1,251,690 |
|
| | | EIP | | — |
| | 5/15/2013 | | — |
| | 384,000 |
| | 691,200 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Victor Peng | | RSU | | 7/1/2013 |
| | 5/15/2012 | | — |
| | — |
| | — |
| | — |
| | 33,000 |
| | 53,625 |
| | | | — |
| | — |
| | 1,251,690 |
|
| | | EIP | | — |
| | 5/15/2013 | | — |
| | 382,000 |
| | 687,600 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Vincent L. Tong | | RSU | | 7/1/2013 |
| | 5/15/2013 | | — |
| | — |
| | — |
| | — |
| | 22,500 |
| | 36,562 |
| | | | — |
| | — |
| | 853,425 |
|
| | | EIP | | — |
| | 5/15/2013 | | — |
| | 296,000 |
| | 532,800 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Frank A. Tornaghi | | RSU | | 7/1/2013 |
| | 5/15/2013 | | — |
| | — |
| | — |
| | — |
| | 22,500 |
| | 36,562 |
| | | | — |
| | — |
| | 853,425 |
|
| | | EIP | | — |
| | 5/15/2013 | | — |
| | 308,000 |
| | 554,400 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| |
(1) | Actual payouts have been made under the fiscal 2014 Incentive Plan, as disclosed in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.” |
| |
(2) | Represents performance-based RSU awards granted in fiscal 2014, which become earned based on performance in fiscal 2014. These columns show the number of performance-based RSU awards that may become earned at threshold, target and maximum levels of performance. In May 2014, the Compensation Committee determined the actual number of RSUs earned based on performance for fiscal 2014 was the maximum number of RSUs as listed for each named executive officer. These RSUs are subject to further time-based vesting, as described above under “EXECUTIVE COMPENSATION—COMPENSATION DISCUSSION AND ANALYSIS—Long-Term Equity Incentive Compensation – Performance-Based RSUs.” The awards were granted under our 2007 Equity Plan. |
| |
(3) | Amounts in this column represent the grant date fair value of RSUs granted in fiscal 2014 calculated in accordance with FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2014 filed with the SEC on May 16, 2014. |
Outstanding Equity Awards at Fiscal Year-End 2014
The following table provides information on outstanding stock options and RSUs held by the named executive officers as of March 29, 2014.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Grant Date | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested(1) (#) | | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) (#) |
Moshe N. Gavrielov
| | 58,333 |
| | 29,167 |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | 38,000 |
| | 2,045,920 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | — |
| | — |
| | 25,661 |
| | 1,381,588 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 38,500 |
| | 2,072,840 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 48,799 |
| | 2,627,338 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 111,000 |
| | 5,976,240 |
|
| Jon A. Olson | | 110,000 |
| | — |
| | — |
| | 25.66 |
| | 6/27/2005 | | 6/27/2015 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | 80,000 |
| | — |
| | — |
| | 22.80 |
| | 7/3/2006 | | 7/3/2016 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | 60,000 |
| | — |
| | — |
| | 24.29 |
| | 7/1/2008 | | 7/1/2015 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | 100,000 |
| | — |
| | — |
| | 20.57 |
| | 7/1/2009 | | 7/1/2016 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | 100,833 |
| | 9,167 |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | 14,500 |
| | 780,680 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | — |
| | — |
| | 9,765 |
| | 525,748 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 14,500 |
| | 780,680 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 18,247 |
| | 982,418 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 33,000 |
| | 1,776,720 |
|
| Victor Peng | | 60,000 |
| | — |
| | — |
| | 26.34 |
| | 5/12/2008 | | 5/12/2015 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | 90,000 |
| | — |
| | — |
| | 20.57 |
| | 7/1/2009 | | 7/1/2016 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | 87,083 |
| | 7,917 |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | 14,500 |
| | 780,680 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | — |
| | — |
| | 9,765 |
| | 525,748 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 14,500 |
| | 780,680 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 18,247 |
| | 982,418 |
|
Outstanding Equity Awards at Fiscal Year-End 2014 (continued)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Grant Date | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested(1) (#) | | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) (#) |
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 33,000 |
| | 1,776,720 |
|
| Vincent L. Tong | | 60,000 |
| | — |
| | — |
| | 20.57 |
| | 7/1/2009 | | 7/1/2016 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | 73,333 |
| | 6,667 |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | 9,500 |
| | 511,480 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | — |
| | — |
| | 6,586 |
| | 354,590 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 10,000 |
| | 538,400 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 12,307 |
| | 662,609 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 22,500 |
| | 1,211,400 |
|
| Frank A. Tornaghi | | 15,000 |
| | — |
| | — |
| | 20.57 |
| | 7/1/2009 | | 7/1/2016 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | 73,333 |
| | 6,667 |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (5) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | 9,500 |
| | 511,480 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/5/2011 | | — |
| | — |
| | — |
| | 6,586 |
| | 354,590 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 10,000 |
| | 538,400 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 12,307 |
| | 662,609 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 22,500 |
| | 1,211,400 |
|
| |
(1) | Time-based RSUs vest 100% on the third anniversary of the date of grant, subject to continued employment with the Company. |
| |
(2) | Market value is computed by multiplying the closing price of the Company’s stock on the last trading day of the fiscal year by the number of shares reported in the adjacent column. The closing price of the Company’s stock on March 28, 2014 was $53.84. |
| |
(3) | Performance-based RSUs vest 33.3% on the first anniversary of the date of grant, and then 33.3% on each anniversary date thereafter, subject to continued employment with the Company. The number of shares subject to RSUs in this column are based on the number of performance-based RSUs that were earned based on actual performance achievement, except for those awarded in fiscal 2014. For the performance-based RSUs awarded in fiscal 2014, this column represents the number of RSU shares assuming achievement at 100% of target level performance. In May 2014, the Compensation Committee determined that the following number of performance-based RSUs were earned based on actual performance achievement: Mr. Gavrielov, 180,375 shares; Mr. Olson, 53,625 shares; Mr. Peng, 53,625 shares; Mr. Tong, 36,562 shares; Mr. Tornaghi, 36,562 shares. |
| |
(4) | The stock option vests and becomes exercisable over a period of four years, with 25% of the shares vesting on the first anniversary of the date of grant, and the remainder of the shares vesting in equal monthly installments for the following three years, subject to continued employment with the Company. |
| |
(5) | The stock option vests and becomes exercisable over a period of four years in equal monthly installments beginning on the first monthly anniversary of the date of grant, subject to continued employment with the Company. |
Option Exercises and Stock Vested for Fiscal 2014
The following table provides information on stock option exercises and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the named executive officers during fiscal 2014.
|
| | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise(1) ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting(2) ($) |
| Moshe N. Gavrielov | | 999,025 |
| | 24,663,983 |
| | 50,059 |
| | 2,006,394 |
|
| Jon A. Olson | | 127,500 |
| | 2,352,628 |
| | 18,888 |
| | 757,112 |
|
| Victor Peng | | 110,000 |
| | 2,136,297 |
| | 18,888 |
| | 757,112 |
|
| Vincent L. Tong | | 204,250 |
| | 4,151,825 |
| | 12,737 |
| | 510,553 |
|
| Frank A. Tornaghi | | 156,000 |
| | 3,908,470 |
| | 12,737 |
| | 510,553 |
|
| |
(1) | The value realized upon exercise is the product realized by multiplying the number of shares of stock by the difference between the market value of the underlying shares on the exercise date and the exercise price applicable to the stock options. |
| |
(2) | The value realized upon vesting is the product realized by multiplying the number of shares of stock by the market value of the underlying shares on the vesting date. |
Deferred Compensation Plan
The Company maintains an unfunded, nonqualified deferred compensation plan which allows our employees in director-level and above positions, including our named executive officers, as well as our Directors, to voluntarily defer receipt of a portion or all of their salary, cash bonus payment and/or sales incentive payment or directorship fees, as the case may be, until the earliest “distribution event” (e.g., specific date, termination of employment, death or change of control) elected by the participants or provided for by the plan, thereby allowing the participating employees and Directors to defer taxation on such amounts. Distributions may be made in a lump sum payment or in installments (not to exceed 15 years). This deferred compensation plan is offered in order to allow participants to defer more compensation than they would otherwise be permitted to defer under a tax-qualified retirement plan, such as our 401(k) Plan. Further, the Company offers the deferred compensation plan as a competitive practice to enable it to attract and retain top talent by providing employees with an opportunity to save in a tax efficient manner.
Amounts credited to the deferred compensation plan consist only of cash compensation that has been earned and payment of which has been timely and properly deferred by the participant. Under the deferred compensation plan, the Company is obligated to deliver on a future date the deferred compensation credited to the relevant participant’s account, adjusted for any positive or negative notional investment results from hypothetical investment alternatives selected by the participant under the deferred compensation plan (Obligations). The Obligations are unsecured general obligations of the Company and rank in parity with other unsecured and subordinated indebtedness of the Company.
In addition, the Company, acting through the Board, may make discretionary contributions to the accounts of one or more deferred compensation plan participants. In fiscal 2014, there were no discretionary contributions made by the Company to the deferred compensation plan accounts, and we do not guarantee minimum returns to any participant in the deferred compensation plan. We incur only limited administration expenses to maintain the deferred compensation plan. The deferred compensation plan is evaluated for competitiveness in the marketplace from time to time, but the level of benefits provided is not typically taken into account in determining an executive’s overall compensation package for a particular year.
Nonqualified Deferred Compensation for Fiscal 2014
The following table provides information on non-qualified deferred compensation for the named executive officers during fiscal 2014.
|
| | | | | | | | | | | |
Name | | Executive
Contributions in
Last FY(1)
($)
| | Registrant
Contributions in
Last FY
($)
| | Aggregate
Earnings in
Last FY
($)
| | Aggregate
Withdrawals/
Distributions
($)
| | Aggregate
Balance at
Last FYE
($)
|
Moshe N. Gavrielov | | — |
| | — | | — | | — | | — |
Jon A. Olson | | — |
| | — | | — | | — | | — |
Victor Peng | | 159,090 |
| | — | | | | — | | |
Vincent Tong | | — |
| | — | | — | | — | | — |
Frank A. Tornaghi | | — |
| | — | | — | | — | | — |
| |
(1) | Mr. Peng's contributions consists of $30,000 of salary earned during fiscal 2014 and $129,090 of non-equity incentive plan compensation earned during fiscal 2013, amounts which are also reported in the Summary Compensation Table for the applicable fiscal year. |
Potential Payments upon Termination or Change in Control
The 2007 Equity Plan does not provide for automatic acceleration of vesting of stock awards upon termination or a change in control. However, as described above incontrol; however, the section entitled “EXECUTIVE COMPENSATION—COMPENSATION DISCUSSION AND ANALYSIS—Employment Agreements with Named Executive Officers,” the Company maintains employment letter agreements with certain of our named executive officers thatMessrs. Gavrielov, Olson, Petrakian and Tornaghi provide for acceleration under certain conditions, such as certain employment terminations or a change in control.conditions. The narrative and tables that follow describe potential payments and benefits to such executivesMessrs. Gavrielov and Olson under their existing employment letter agreements, including payments and benefits that would be due to them in connection with the occurrence of a change in control, assuming their employment terminated on March 29, 2014,28, 2015, the last day of the Company’s fiscal year.
The following narrative and tables also describe the payments and benefits provided to Messrs. Petrakian and Tornaghi in connection with their separation from the Company, effective March 27, 2015.
Employment Letter Agreement with Moshe N. Gavrielov
Under an employment letter agreement that we entered into with Mr. Gavrielov on January 4, 2008, and amended on June 13, 2012, if the Company terminates Mr. Gavrielov’s employment at any time due to disability or other than for Cause or if Mr. Gavrielov voluntarily terminates his employment for Good Reason (in each case, as defined in his agreement and described below in the section entitled “Definitions of Good Reason, Cause and Change in Control”) then, subject to Mr. Gavrielov’s execution of a release of claims in favor of the Company, he will be eligible for: (i) one year of his base salary, (ii) one year of his target bonus, (iii) a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance, (iv) a pro rata portion of his bonus for the fiscal year during which his employment was terminated based on (a) his termination date, (b) the determination by the Compensation Committee whether Company performance objectives have been met and (c) an assumption that any individual performance objectives have been achieved at target, and (v) 24 months accelerated vesting of all equity grants received from the Company prior to his termination of employment; for determining the 24 months of accelerated vesting of (a) performance-based RSUs, the number of accelerated shares will be the actual number of RSUs earned for actual performance achievement as determined by the Compensation Committee that would have vested in the 24 months following termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis, unless his employment is terminated within one year of a Change in Control, in which case the 24 months of accelerated vesting of the performance-based RSUs will be based on the target number of RSUs determined at the time of grant, had the original vesting schedule had been based on a monthly rather than an annual basis, and (b) time-based RSUs, the number of shares that will accelerate will be the number of RSUs that otherwise would have vested in the 24 months following termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis. Mr. Gavrielov’s employment agreement was amended on June 13, 2012 to clarify this treatment relating to the accelerated vesting of RSUs and the intent to comply, to the extent applicable, with Section 409A of the TaxInternal Revenue Code.
Potential Payments upon Termination of Mr. Gavrielov’s Employment
Under his employment agreement, Mr. Gavrielov will receive certain compensation in the event we terminate his employment, as set forth above. Assuming Mr. Gavrielov'sGavrielov’s employment was terminated without Cause or Good Reason on March 29, 2014,28, 2015, Mr. Gavrielov would have received the following severance benefits under his employment agreement: (i) a lump sum payment
of $750,000,$800,000, consisting of his annual base salary for fiscal 2014;2015; (ii) a lump sum payment of $1,050,000,$1,102,500, consisting of his target bonus under the 20142015 Incentive Plan; (iii) Company paid COBRA coverage for 12 months valued at $28,588;$25,665; (iv) a lump sum payment of $1,160,250,$609,000, consisting of a pro rata portion of his bonus for fiscal 2014;2015; and (v) accelerated vesting of stock options to purchase an aggregate of 29,167257,120 shares of our Common Stock that were in-the-money as of March 29, 2014; and (vi) accelerated vesting of 311,293 shares of Common Stockcommon stock subject to RSUs, which includes 76,50038,500 shares under time-based RSUs, and 234,793218,620 shares under performance-based RSUs. Based on the difference between the weighted average exercise price of the options and $53.84,$42.32, the closing price of our Common Stockcommon stock on March 28, 201427, 2015 (the last trading day of the fiscal year), the net value of the accelerated options would be $829,801 and the value of his RSUs would be $16,760,033.
$11,143,164.
The table below calculates all payments to be made to Mr. Gavrielov in connection with such termination:
| | Annual Base Salary ($) | Annual Base Salary ($) | | Annual Target Bonus ($) | | Pro Rata Portion of Target Bonus ($) | | Medical and Dental Insurance ($) | | Value of Options ($) | | Value of RSUs(1) ($) | | Total ($) | | Annual Target Bonus ($) | | Pro Rata Portion of Target Bonus ($) | | Medical and Dental Insurance ($) | | Value of RSUs(1) ($) | | Total ($) |
| 750,000 |
| | 1,050,000 |
| | 1,160,250 |
| | 28,588 |
| | 829,801 |
| | 16,760,033 |
| | 20,578,672 |
| |
| 800,000 | | | 1,102,500 | | 609,000 | | 25,665 | | 11,143,164 | | 13,680,329 |
| |
| (1) | Includes 24-months’ acceleration of time-based RSUs and performance-based RSUs (based on actual performance of the applicable performance metrics), and assuming monthly vesting from the date of grant. In May 2014,2015, the Compensation Committee determined Mr. Gavrielov earned 180,37583,215 shares under his fiscal 20142015 performance-based RSUs based on actual performance achievement, of which 160,33373,969 shares would have accelerated upon his termination of employment. If Mr. Gavrielov'sGavrielov’s employment had been terminated within one year of a Change in Control, then the number of shares that would have accelerated under his fiscal 20142015 performance-based RSUs would have been based on the target number, which was 111,00093,500 shares, of which 98,66783,111 shares would have accelerated, reducingincreasing the total in the chart above by approximately $3,320,134.$419,263. |
Employment Letter Agreement with Jon A. Olson
Under an employment letter agreement that we entered into with Mr. Olson on June 2, 2005, and amended on February 14, 2008, and June 13, 2012, in the event the Company experiences a Change in Control and Mr. Olson is terminated without Cause (in each case, as defined in his agreement and described below in the section entitled “Definitions of Good Reason, Cause and Change in Control”) within one year of such Change in Control, and subject to Mr. Olson’s execution of a release of claims in favor of the Company, he will be eligible for: (i) one year of his base salary, (ii) one year of his target bonus, (iii) payment of one year of COBRA premium for medical and dental insurance and (iv) 12 months accelerated vesting of all equity grants received from the Company prior to such termination of employment; for determining the 12 months of accelerated vesting of (a) performance-based RSUs, the number of accelerated shares will be based on the target number of RSUs determined at the time of grant that would have vested in the 12 months following his termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis, and (b) time-based RSUs, the number of shares that accelerate will be the number of RSUs that otherwise would have vested in the 12 months following termination of employment, had the original vesting schedule been based on a monthly rather than an annual basis. Mr. Olson’s employment agreement was amended on June 13, 2012 to clarify this treatment relating to the accelerated vesting of RSUs and the intent to comply, to the extent applicable, with Section 409A of the TaxInternal Revenue Code.
Potential Payments upon Change in Control and Termination of Mr. Olson’s Employment
Under his employment agreement, Mr. Olson will receive certain compensation as set forth above. Assuming Mr. Olson'sOlson’s employment had been terminated without Cause within one year of a Change in Control on March 29, 2014,28, 2015, Mr. Olson would have received the following severance benefits under his employment agreement: (i) a lump sum payment of $480,000, consisting of his annual base salary for fiscal 2014;2015; (ii) a lump sum payment of approximately $384,000,$480,000, consisting of his target bonus 20142015 Incentive Plan; (iii) Company paid COBRA coverage for 12 months valued at $28,588;$28,932; and (iv) accelerated vesting of stock options to purchase an aggregate of 9,16767,861 shares of Common Stock that were in-the-money as of March 29, 2014; and (v) accelerated vesting of 79,816 shares of Common Stockcommon stock subject to RSUs, which includes 27,38914,500 shares under time-based RSUs, and 52,42753,361 shares under performance-based RSUs. Based on the difference between the weighted average exercise price of the options and $53.84,$42.32, the closing price of our Common Stockcommon stock on March 28, 201427, 2015 (the last trading day of the fiscal year), the net value of the accelerated stock options would be $260,801 and the value of the accelerated performance-based RSUs would be $4,297,299.$2,923,016.
The table below calculates all payments to be made to Mr. Olson in connection with such termination:
| | Annual Base Salary ($) | Annual Base Salary ($) | | Annual Target Bonus ($) | | Medical and Dental Insurance ($) | | Value of Options ($) | | Value of RSUs(1) ($) | | Total ($) | | Annual Target Bonus ($) | | Medical and Dental Insurance ($) | | Value of RSUs(1) ($) | | Total ($) |
| 480,000 |
| | 384,000 |
| | 28,588 |
| | 260,801 |
| | 4,297,299 |
| | 5,450,688 |
| | 480,000 | | 28,932 | | 2,923,016 | | 3,911,948 |
| |
| (1) | Includes 12-months’ acceleration of time-based RSUs and performance-based RSUs based on the target number of RSUs determined at the time of grant. |
Definitions of Good Reason, Cause and Change in Control
Under Mr. Gavrielov’s employment letter agreement, the following events would constitute “Good Reason”: (i) a reduction of 10% or more in his base compensation, target bonus opportunity or guaranteed bonus; (ii) a material reduction in his authority, duties or responsibilities; (iii) his no longer being CEO; or (iv) a relocation of the Company’s headquarters outside of the San Francisco Bay Area; provided that Mr. Gavrielov has given the Company notice of, and the Company has failed to cure, the event giving rise to Good Reason and Mr. Gavrielov’s employment terminates within six months of the occurrence of such event.
“Cause” under Mr. Gavrielov’s employment letter agreement includes: (i) continued neglect of, or willful failure or misconduct in the performance of, his duties; (ii) a material breach of the Company’s Proprietary Information and Inventions Agreement, Code of Conduct or other policies; (iii) fraud, embezzlement or material misappropriation; (iv) conviction of, or entry of a plea of no contest or nolo contendere, to a felony; or (v) any continued willful and wrongful act or omission that materially injures the financial condition or business reputation of the Company and its subsidiaries; subject in certain of the above cases to applicable notice and cure periods.
The Company will have “Cause” to terminate Mr. Olson’s employment if he: (i) engages in financial fraud or embezzles property of the Company or any of its subsidiaries; (ii) fails to pay an obligation owed to the Company; (iii) breaches a fiduciary duty or deliberately disregards Company policies, which results in loss to the Company; (iv) engages in any activity for any competitor of the Company or any of its subsidiaries; (v) discloses any confidential information or trade secret, or engages in the theft of any trade secret, of the Company or any of its subsidiaries; or (vi) violates securities, antitrust, unfair competition or other laws or otherwise engages in conduct that puts the Company or any of its subsidiaries at substantial risk of violating such laws.
A “Change in Control” will generally be deemed to have occurred under Messrs. Gavrielov'sGavrielov’s and Olson’s agreements in the event: (i) any person or group acquires more than 50% of the fair market value or voting power of the Company’s shares (however, if any one person or more than one person acting as a group, is considered to own more than 50% of the total fair market value or total voting power of the shares of Common Stockcommon stock of the Company, then the acquisition of additional shares by that person or persons will not be considered to cause a “Change in Control”); (ii) a change in the majority of the members of the board of directors during any 12-month period unless such change is endorsed by a majority of the board members serving prior to the change; or (iii) any person or group acquires all or substantially all of the assets of the Company.
Separation Letter Agreement with Raja Petrakian
On March 6, 2015, the Company entered into a separation agreement with Raja Petrakian pursuant to which Mr. Petrakian’s employment terminated on March 27, 2015. On the effective date of his execution of a general release in favor of the Company and certain related parties, Mr. Petrakian became eligible to receive on his employment termination date (i) a payment of $273,750 (less applicable taxes), which is equal to nine months of his base salary in effect on March 27, 2015; (ii) Company paid COBRA health care coverage for nine months, provided he remains eligible for such coverage and he does not become eligible for other health care coverage during the nine-month period; and (iii) accelerated vesting of 17,503 shares subject to RSUs granted prior to fiscal 2015. Upon his termination of employment, Mr. Petrakian forfeited all of his performance-based RSU granted in fiscal 2015.
The table below calculates all payments to be made to Mr. Petrakian in connection with his termination:
|
| | | | | | | | |
Nine Months Base Salary ($) | | | COBRA Healthcare Insurance ($) | | | Value of RSUs(1) ($) | | Total ($) |
| 273,750 | | | 22,036 | | | 710,272 | | 1,006,058 |
| (1) Represents the incremental fair value according to FASB ASC Topic 718 on March 6, 2015, the date Mr. Petrakian executed a general release in favor of the Company and certain related parties, which modified the vesting of 17,503 shares subject to RSUs granted prior to fiscal 2015. On March 6, 2015, the closing fair market value of our common stock was $40.58. |
Retirement Letter Agreement with Frank Tornaghi
On March 11, 2015, the Company entered into a retirement agreement with Frank Tornaghi pursuant to which Mr. Tornaghi’s employment terminated on March 27, 2015. On the effective date of his execution of a general release in favor of the Company and certain related parties, Mr. Tornaghi became eligible to receive on his retirement date (i) a payment of $292,500 (less applicable taxes), which is equal to nine months of base salary in effect on March 27, 2015; (ii) Company paid COBRA health care coverage for nine months, provided he remains eligible for such coverage and he does not become eligible for other health care coverage during the nine-month period; and (iii) accelerated vesting of 17,503 shares of RSUs granted prior to fiscal 2015. Upon his termination of employment, Mr. Tornaghi forfeited all of his performance-based RSU granted in fiscal 2015.
The table below calculates all payments to be made to Mr. Tornaghi in connection with his retirement:
|
| | | | | | | | |
Nine Months Base Salary ($) | | | COBRA Healthcare Insurance ($) | | | Value of RSUs(1) ($) | | Total ($) |
| 292,500 | | | 22,036 | | | 695,044 | | 1,009,580 |
| (1) Represents the incremental fair value according to FASB ASC Topic 718 on March 11, 2015, the date Mr. Tornaghi executed a general release in favor of the Company and certain related parties, which modified the vesting of 17,503 shares subject to RSUs granted prior to fiscal 2015. On March 11, 2015, the closing fair market value of our common stock was $39.71. |
Other than thosethe employment and post-employment agreements described above, none of the other named executive officers have severance or change in control agreements with the Company. The Company has not provided any named executive officer with a gross-up or other reimbursement for tax amounts the named executive officer might be required to pay pursuant to Section 280G or any related section, of the TaxInternal Revenue Code.
Indemnification Agreements
The Company has entered into an indemnification agreement with each of our directors and officers. The indemnification agreements and our bylaws requiresrequire us to indemnify our directors and officers to the fullest extent permitted by Delaware law.
Equity Grant Procedures and Guidelines
We have conducted an internal review of our equity granting procedures to ensure that our procedures satisfy both our objectives and all applicable compliance requirements. To this end, we have adopted written procedures for the grant of equity awards. With respect to grants to employees and officers, including named executive officers, the Compensation Committee reserves the authority to make grants at such time and with such terms as it deems appropriate in its discretion, subject to the terms of our 2007 Equity Plan. Generally, grants of equity awards are made to officers based on and in connection with the annual review during the Focal Review Period. The Compensation Committee determines individual grants to each named executive officer based on a variety of factors that the Compensation Committee determines to be relevant and appropriate at the time of grant. These factors typically have included the size and value of unvested equity awards held by the named executive officer, the named executive officer’s job performance, skill set, prior experience, and time in the position, as well as external market data, internal equity, pressures to attract and retain talent, dilutive effect of grant size and business conditions. The Compensation Committee also periodically grants equity awards at its scheduled meetings or by unanimous written consent for new hires and promotions. Grants approved during scheduled meetings become effective and are priced as of the date of approval or a pre-determined future date. Grants approved by unanimous written consent become effective and are priced as of the date the last signature is obtained or a predetermined future date. The Compensation Committee has made certain exceptions to these procedures in order to grant an equity award on an executive’s start date, as it did in the case of the initial option grant to Mr. Gavrielov. We have not granted, nor do we intend in the future to grant, equity awards to executives in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement. Similarly, the Compensation Committee has not timed, nor does it intend in the future to time, the release of material non-public information based on equity grant dates. In any event, because equity compensation awards typically vest over three or four-year periods, the effect of any immediate increase in the price of our common stock following grant is minimal.
The Board has delegated to the CEO and CFO limited authority to approve equity award grants to non-officer employees pursuant to the terms of the 2007 Equity Plan, and subject to the provisions of pre-determined guidelines. Specifically, with respect to non-officer employees, our annual focal awards will be granted on or about the first business day of our second fiscal quarter of each year, and other equity awards will generally be granted on the 10th day of the month, or if on such date our stock is not traded, the first business day thereafter that our stock is traded. The Compensation Committee is responsible for determining and granting all equity awards to executive officers.
Under the 2007 Equity Plan, the exercise price of options and stock appreciation rights may not be less than 100% of the closing price of the shares underlying such options and stock appreciation rights on the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONOther Compensation Policies
Stock Ownership Guidelines
We have adopted stock ownership guidelines for our officers, to align more closely the interests of our officers with those of our stockholders. Under these guidelines, our CEO is required to own Company stock having a value of at least $4.5 million. Executive vice presidents who are Section 16 officers are required to own Company stock having a value of at least $1.0 million. Senior vice presidents who are Section 16 officers are required to own Company stock having a value of at least $750,000 and corporate vice presidents who are Section 16 officers are required to own Company stock having a value of at least $500,000. In addition, the CEO and all other Section 16 officers must retain the following shares until their respective stock ownership requirements are met:
50% of shares of Company stock delivered from awards of time-based RSUs made beginning in July 2011.
45% of shares of Company stock delivered from awards of performance-based RSUs made beginning in July 2013 (prior to fiscal 2014, we did not have any holding requirements on performance-based RSUs; we only had holding requirements on time-based RSUs that vested 100% after three years).
Claw-Back Policy
The Board has adopted a policy for seeking the return (claw-back) from executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated, subject to the terms described below. The policy provides that to the extent the Board, or any Committee thereof, and the Company, in their discretion, determine appropriate, the Company may require reimbursement of all or a portion of any bonus, incentive payment, commission, equity-based award or other compensation granted to and received by or for an executive officer beginning in fiscal 2009, where: (1) the compensation was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of our financial statements filed with the SEC; (2) the Board (or a Committee thereof), in its sole discretion, determines the executive officer engaged in intentional misconduct that was directly responsible for the substantial restatement; and (3) a reduced amount of compensation would have been paid to the executive officer based upon the restated financial results.
Policy Against Short Sales, Other Put-Equivalent Investment and Margin Accounts
All employees, including the named executive officers, are subject to our Insider Trading Policy. Our Insider Trading Policy prohibits any employee from hedging, engaging in short sales or entering into any transaction, investment or arrangement that is intended or may be expected to increase in value on the basis of any decrease in value of any of our shares of common stock (such as buying “put” options). In addition, the policy prohibits any employee from holding shares of our common stock in a margin account or pledging shares of our common stock. We have a corporate policy regarding 10b5-1 trading plans, and pursuant to such policy, key terms of the 10b5-1 trading plans of directors and executive officers are disclosed on our website at www.investor.xilinx.com.
Tax and Accounting Treatment of Compensation
In our review and establishment of compensation programs and payments, we consider, but do not place great emphasis on, the anticipated accounting and tax treatment of our compensation programs. While we do consider the accounting and tax treatment, these factors alone are not dispositive. Among other factors that receive greater consideration are the net costs to the Company and our ability to effectively administer executive compensation arrangements which are in the short and long-term interests of stockholders. The Compensation Committee seeks to maintain flexibility and judgment in compensating executive officers in a manner designed to promote varying corporate goals and therefore has not adopted a policy with respect to the tax or accounting treatment of compensation.
It is our policy generally to qualify compensation paid to the named executive officers for deductibility under Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that the Company may deduct in any one year with respect to each of its CEO and the next three most highly paid executive officers (other than its CFO, referred to in the Internal Revenue Code as “covered persons”). Our stockholder-approved equity plan is qualified so that the awards of stock options and performance-based RSUs under this plan may constitute performance-based compensation not subject to the limit under Section 162(m) of the Internal Revenue Code, provided they otherwise satisfied the requirements under Section 162(m) of the Internal Revenue Code. A portion of the cash payments we make under the 2015 Incentive Plan may not be deductible under Section 162(m) of the Internal Revenue Code. The Compensation Committee intends to continue to evaluate the effects of the Internal Revenue Code and related U.S. Treasury regulations and the advisability of qualifying its executive compensation for deductibility of such compensation. To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, however, the Compensation Committee has not adopted a policy that all compensation payable to a covered person must be deductible on the Company’s federal income tax returns.
We account for equity compensation paid to our employees and non-employee directors in accordance with FASB ASC Topic 718, which requires us to estimate and record expense for each award of equity compensation over the service period of the award.
Fiscal 2016 Compensation Actions
On May 13, 2015, the Compensation Committee approved an executive incentive plan effective for fiscal 2016 (2016 Incentive Plan). Similar to the 2015 Incentive Plan, the 2016 Incentive Plan provides for a cash bonus calculated as a percentage of the executive officer’s base salary. The 2016 Incentive Plan has the same three (3) performance components with the same weightings as the 2015 Incentive Plan, as follows: the operating profit component, weighted at 30%, the revenue growth component, weighted at 30%, and the individual performance component, weighted at 40%. For all the named executive officers, the operating profit component is paid on a semi-annual basis and the revenue growth component is paid on an annual basis. The individual performance component is paid on a semi-annual basis for all named executive officers, except the CEO, whose individual performance component is paid on an annual basis. For fiscal 2016, based on comparing base salary levels at the companies in our peer group, as well as considering the roles and responsibilities and potential performance of the named executive officers, the Compensation Committee increased the base salary for Mr. Olson to $500,000 from $480,000 and Mr. Peng to $500,000 from $480,000. The bonus percentages remained the same for each of the named executive officers, except for Mr. Gavrielov whose target bonus percentage increased to 150% from 140% of his annual base salary earned in fiscal 2016.
In May 2015, the Compensation Committee also determined the target number of RSUs for our named executive officers for fiscal 2016. The target number of RSUs is based on a tentative total grant value, which is then divided by the average closing price of our common stock from April 1, 2015 to July 1, 2015. The tentative total value for RSUs granted to each of our named executive officers that will be granted effective July 1, 2015 is as follows: Mr. Gavrielov, $4,500,000; Mr. Olson, $1,250,000; Mr. Peng, $1,250,000; Mr. Rangasayee, $900,000; and Mr. Tong, $900,000. The number of RSUs that are ultimately earned, as determined by the Compensation Committee based on the achievement of the performance components, will vest in three (3) equal annual installments, beginning on the anniversary of the date of grant, which is July 1 of each of 2016, 2017 and 2018.
Risk Analysis of Compensation Programs
The Compensation Committee considers potential risks when reviewing and approving compensation programs. The Compensation Committee, in cooperation with management, reviewed our existing compensation programs and believes that the mix and design of the elements of such programs does not encourage management to assume excessive risks and accordingly are not reasonably likely to have a material adverse effect on the Company. Our programs have been balanced to focus on both short-term and long-term financial and operational performance through prudent business judgment and appropriate, measured risk-taking.
Our incentive cash compensation program is designed to reward financial and management performance in areas considered critical to short- and long-term success of the Company. The cash incentive plan for our named executive officers is based on a combination of corporate financial metrics and individualized strategic goals. The financial metric component is based on multiple financial metrics which counterbalance each other, decreasing the likelihood that executives will pursue any one metric to the detriment of overall financial performance. The OP Component is designed to reward improvements in our operating profit and the Growth Component is designed to measure and reward increases in our revenue growth year over year. These metrics limit the ability of an executive to be rewarded for taking excessive risk on behalf of the Company by, for example, seeking revenue enhancing opportunities at the expense of profitability. In addition, there are caps on bonus payments in all the components of the cash incentive plan. The OP Component and Growth Component multipliers are each capped at 2.0 and the Individual Performance Component multiplier is capped at 1.5. These limitations and caps eliminate the risk of uncapped cash bonus opportunities and unjustified bonus payments. Finally, the Board has also adopted a claw-back policy (as discussed above) whereby the Company would seek a return (claw-back) from executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated. The individual strategic goals established at the beginning of the fiscal year for the CEO are reviewed and discussed with the Board and approved by the Compensation Committee; the individual strategic goals established at the beginning of the fiscal year for each of the named executive officers are reviewed and discussed with the Compensation Committee and approved by the CEO. Furthermore, payment for the cash incentive bonus for our named executive officers is approved by the Compensation Committee. This multi-layer approval process in the goal-setting and payment approval process reduces the risk of improper awards.
Our equity incentive program is designed to promote long-term performance. During fiscal 2015, our equity incentive program contained a mix of time-based RSUs and performance-based RSUs, except for executive officers who only received performance-based RSUs. Time-based RSUs for employees vest annually over a four-year vesting schedule. Performance-based RSUs for executive officers vest in three equal annual installments, beginning on the first anniversary of the grant date. Because restricted stock retains its value even in a depressed market, employees are usually incentivized to enhance its value.
In prior years, our equity incentive program also included awards of stock options that vest monthly over a period of four years. Some of these stock options remain outstanding. Since options generate value if stock price appreciates from the date of grant, these awards also provide incentives to promote behavior that is aligned with stockholder interests over the long term.
As previously discussed, the Company has also adopted stock ownership guidelines that further align executives with stockholder interests and promote long-term focus on Company growth. Therefore, the Compensation Committee believes that these equity awards do not encourage unnecessary or excessive risk taking since equity awards are subject to long-term vesting schedules and the ultimate value of the awards is tied to the changes in value of the Company’s stock. The stock ownership guidelines combined with our long-term vesting schedule help ensure that executives have significant value tied to long-term stock price performance.
The Company has also adopted corporate policies to encourage diligence, prudent decision-making and oversight during the goal-setting and review process. The processes that are in place to manage and control risk include:
The Compensation Committee approves the payout scale for the OP Component and Growth Component.
The Compensation Committee sets the financial metrics at reasonable levels in light of past performance and market conditions.
Payments under the incentive cash compensation program for executives are subject to approval of the Compensation Committee.
The Compensation Committee retains discretion in administering all awards and in determining performance achievement.
The Company has implemented a number of effective controls such as the Code of Conduct, a claw-back policy and quarterly sub-certification process for all executives in order to mitigate the risk of any unethical behavior.
Summary Compensation Table
The following table provides compensation information for the named executive officers.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name and Position | | Year | | Salary(1) ($) | | Bonus ($) | | Stock Awards(2) ($) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | | All Other Compensation(3) ($) | | Total ($) |
Moshe N. Gavrielov President and Chief Executive Officer | | 2015 | | 787,500 |
| | — |
| | 4,287,910 |
| | — |
| | 820,575 |
| | — |
| | 4,785 |
| | 5,900,770 |
|
| | 2014 | | 750,000 |
| | — |
| | 4,210,230 |
| | — |
| | 1,506,750 |
| | — |
| | 4,500 |
| | 6,471,480 |
|
| | 2013 | | 737,500 |
| | — |
| | 3,019,200 |
| | — |
| | 732,656 |
| | — |
| | 4,437 |
| | 4,493,793 |
|
Jon A. Olson(4) Executive Vice President and Chief Financial Officer | | 2015 | | 480,000 |
| | — |
| | 1,192,360 |
| | — |
| | 367,200 |
| | — |
| | 4,889 |
| | 2,044,449 |
|
| | 2014 | | 480,000 |
| | — |
| | 1,251,690 |
| | — |
| | 531,840 |
| | — |
| | 4,500 |
| | 2,268,030 |
|
| | 2013 | | 477,500 |
| | — |
| | 1,132,200 |
| | — |
| | 276,079 |
| | — |
| | 3,783 |
| | 1,889,562 |
|
Victor Peng(4) Executive Vice President and General Manager of Products | | 2015 | | 480,000 |
| | — |
| | 1,192,360 |
| | — |
| | 362,400 |
| | — |
| | 4,893 |
| | 2,039,653 |
|
| | 2014 | | 477,500 |
| | — |
| | 1,251,690 |
| | — |
| | 528,960 |
| | — |
| | 3,979 |
| | 2,262,129 |
|
| | 2013 | | 455,000 |
| | — |
| | 1,132,200 |
| | — |
| | 270,900 |
| | — |
| | 4,725 |
| | 1,862,825 |
|
Krishna Rangasayee(5) Senior Vice President and General Manager, Global Sales and Markets | | 2015 | | 370,417 |
| | — |
| | 871,340 |
| | — |
| | 205,730 |
| | — |
| | 5,087 |
| | 1,452,574 |
|
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
Vincent L. Tong(6) Senior Vice President, Global Operations and Quality | | 2015 | | 381,667 |
| | — |
| | 871,340 |
| | — |
| | 247,460 |
| | — |
| | 356,577 |
| | 1,857,044 |
|
| | 2014 | | 370,000 |
| | — |
| | 853,425 |
| | — |
| | 421,800 |
| | — |
| | 291,989 |
| | 1,937,214 |
|
| | 2013 | | 365,000 |
| | — |
| | 770,525 |
| | — |
| | 220,275 |
| | — |
| | 139,303 |
| | 1,495,103 |
|
Raja Petrakian(4)(7) Former Senior Vice President, Worldwide Operations | | 2015 | | 361,330 |
| | — |
| | 710,272 |
| | — |
| | 180,532 |
| | — |
| | 303,399 |
| | 1,555,533 |
|
| | | | | | | | | | | | | | | | | | |
Frank A. Tornaghi(8) Former Senior Vice President, Worldwide Sales | | 2015 | | 387,500 |
| | — |
| | 695,044 |
| | — |
| | 187,550 |
| | — |
| | 353,212 |
| | 1,623,306 |
|
| | 2014 | | 385,000 |
| | — |
| | 853,425 |
| | — |
| | 420,420 |
| | — |
| | 4,500 |
| | 1,663,345 |
|
| | 2013 | | 381,250 |
| | — |
| | 770,525 |
| | — |
| | 213,010 |
| | — |
| | 4,625 |
| | 1,369,410 |
|
| |
| (1) | Amounts shown reflect salaries earned in fiscal 2015, which for Messrs. Gavrielov, Rangasayee, Tong, Petrakian and Tornaghi are less than the increased base salaries approved by the Compensation Committee during fiscal 2015, because the salary increases were approved after the beginning of the fiscal year. |
| |
| (2) | Amounts shown do not reflect compensation actually received by the named executive officer. Instead, the amounts shown reflect the grant date fair value for stock awards as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2015 filed with the SEC on May 13, 2015. These compensation costs as they relate to stock awards reflect costs associated with stock awards granted in fiscal 2015. For fiscal 2015, this includes the following number of performance-based RSUs based on achievement at 100% of target level performance: Mr. Gavrielov, 93,500 shares; Mr. Olson, 26,000 shares; Mr. Peng, 26,000 shares; Mr. Rangasayee, 19,000 shares; and Mr. Tong, 19,000 shares. The maximum number of performance-based RSUs that could be earned by these named executive officers based on achievement at 165% of target level performance is as follows: Mr. Gavrielov, 154,275 shares; Mr. Olson, 42,900 shares; Mr. Peng, 42,900 shares; Mr. Rangasayee, 31,350; and Mr. Tong, 31,350 shares. The performance-based RSUs granted in fiscal 2015 to Messrs. Petrakian and Tornaghi were forfeited on March 27, 2015, the effective date of their termination of employment. Because none of the performance-based RSUs granted in fiscal 2015 to Messrs. Petrakian or Tornaghi were vested on the forfeiture date, the grant date fair value for these grants is zero. The stock award values in the table above for Messrs. Petrakian and Tornaghi reflect the incremental fair value as determined pursuant to FASB ASC Topic 718 of certain unvested RSUs shares for which vesting accelerated on the date each former executive signed a general release in favor of the Company and certain related parties in connection with their termination of employment. On March 6, 2015, the date Mr. Petrakian signed the general release and on which the closing fair market value of our common stock was $40.58, the incremental fair value of the 17,503 shares for which vesting accelerated was $710,272. On March 11, 2015, the date Mr. Tornaghi signed the general release and on which the closing fair market value of our common stock was $39.71, the incremental fair value of the 17,503 shares for which vesting accelerated was $695,044. |
| |
| (3) | For each named executive officer includes $389 for an entertainment event, which amount is inclusive of $189 for tax reimbursement payments. |
| |
| (4) | Named executive officer participates in the Company’s non-qualified deferred compensation plan. For more information about this plan see the section below entitled “Nonqualified Deferred Compensation Plan.” |
| |
| (5) | Mr. Rangasayee first became a named executive officer in fiscal 2015. As a result, information for fiscal 2013 and 2014 has been omitted. |
| |
| (6) | In addition to Mr. Tong’s role as Senior Vice President, Global Operations and Quality, Mr. Tong currently serves as the Company’s executive leader for the Asia Pacific region. In this role, Mr. Tong’s charter is to expand the Company’s presence and accelerate business development in the region. In connection with his service in this role, the Company leases an apartment and automobile for Mr. Tong, and reimburses certain costs incurred by Mr. Tong as a direct result of his work in the Asia Pacific region. Specifically, in connection with Mr. Tong’s Asia Pacific assignment, in fiscal year 2015 the Company paid $51,836 for the lease of an apartment and other housing-related expenses; $31,511 for the lease of an automobile and other transportation-related expenses; $44,013 for a cost of living allowance; $8,216 for home leave expenses, such as airfare and transportation; and $200,850 for foreign tax payments and tax-related services associated with his service abroad. Mr. Tong also received payments of $18,283 to cash out accrued but unused vacation and $1,480 for a patent award. |
| |
| (7) | Mr. Petrakian first became a named executive officer in fiscal 2015. As a result, information for fiscal 2013 and 2014 has been omitted. Mr. Petrakian terminated employment with us effective on March 27, 2015. All Other Compensation for Mr. Petrakian includes $273,750 for severance, $23,810 to cash out accrued but unused vacation, and $5,450 in matching contributions to the 401(k) Plan. For more information about Mr. Petrakian’s severance agreement, see “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Employment and Post-Employment Agreements with Named Executive Officers” above. |
| |
| (8) | Mr. Tornaghi retired effective on March 27, 2015. All Other Compensation for Mr. Tornaghi includes $292,500 for severance, $55,781 to cash out accrued but unused vacation, and $4,542 in matching contributions to the 401(k) Plan. For more information about Mr. Tornaghi’s retirement agreement, see “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Employment and Post-Employment Agreements with Named Executive Officers” above. |
Grants of Plan-Based Awards for Fiscal 2015
The following table provides information on equity and non-equity awards granted to our named executive officers during fiscal 2015.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Type | | | | Approval Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value/ Incremental Fair Value of Stock and Option Awards(3) ($) |
| Name | | | Grant Date | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | |
| Moshe N. Gavrielov | | RSU | | 7/1/2014 |
| | 5/14/2014 | | — |
| | — |
| | — |
| | — |
| | 93,500 |
| | 154,275 |
| | — |
| | — |
| | — |
| | 4,287,910 |
|
| | | EIP | | — |
| | 5/14/2014 | | — |
| | 1,102,500 |
| | 1,984,500 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Jon A. Olson | | RSU | | 7/1/2014 |
| | 5/14/2014 | | — |
| | — |
| | — |
| | — |
| | 26,000 |
| | 42,900 |
| | — |
| | — |
| | — |
| | 1,192,360 |
|
| | | EIP | | — |
| | 5/14/2014 | | — |
| | 480,000 |
| | 864,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Victor Peng | | RSU | | 7/1/2014 |
| | 5/14/2014 | | — |
| | — |
| | — |
| | — |
| | 26,000 |
| | 42,900 |
| | — |
| | — |
| | — |
| | 1,192,360 |
|
| | | EIP | | — |
| | 5/14/2014 | | — |
| | 480,000 |
| | 864,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Krishna Rangasayee | | RSU | | 7/1/2014 |
| | 5/14/2014 | | — |
| | — |
| | — |
| | — |
| | 19,000 |
| | 31,350 |
| | — |
| | — |
| | — |
| | 871,340 |
|
| | | EIP | | — |
| | 5/14/2014 | | — |
| | 296,334 |
| | 533,400 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Vincent L. Tong | | RSU | | 7/1/2014 |
| | 5/14/2014 | | — |
| | — |
| | — |
| | — |
| | 19,000 |
| | 31,350 |
| | — |
| | — |
| | — |
| | 871,340 |
|
| | | EIP | | — |
| | 5/14/2014 | | — |
| | 305,334 |
| | 549,600 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Raja Petrakian | | RSU | | 7/1/2014 |
| | 5/14/2014 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | EIP | | — |
| | 5/14/2014 | | — |
| | 289,064 |
| | 520,315 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| Frank A. Tornaghi | | RSU | | 7/1/2014 |
| | 5/14/2014 | | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| | | EIP | | — |
| | 5/14/2014 | | — |
| | 310,000 |
| | 558,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
| |
| (1) | Actual payouts have been made under the fiscal 2015 Incentive Plan, as disclosed in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.” |
| |
| (2) | Represents performance-based RSU awards granted in fiscal 2015, which became earned based on performance in fiscal 2015. These columns show the number of performance-based RSU awards that may become earned at threshold, target and maximum levels of performance. In May 2015, the Compensation Committee determined the actual number of RSUs earned based on performance for fiscal 2015 was 89% of the number of target RSU shares listed for each named executive officer. These RSUs are subject to further time-based vesting, as described above under “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Long-Term Equity Incentive Compensation – Performance-Based RSUs.” The awards were granted under our 2007 Equity Plan. The RSUs granted to Messrs. Petrakian and Tornaghi were forfeited before any RSUs became vested in connection with their termination of employment in March 2015. |
| |
| (3) | Amounts in this column represent the grant date fair value of RSUs granted in fiscal 2015 calculated in accordance with FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2015 filed with the SEC on May 13, 2015. All of the RSU shares granted to Messrs. Petrakian and Tornaghi were forfeited in connection with their termination of employment in March 2015. Messrs. Petrakian and Tornaghi received accelerated vesting of certain RSU shares on the date each former executive signed a general release in favor of the Company and certain related parties in connection with their termination of employment. On March 6, 2015, the date Mr. Petrakian signed the general release and on which the closing fair market value of our common stock was $40.58, the incremental fair value of the 17,503 shares for which vesting accelerated was $710,272. On March 11, 2015, the date Mr. Tornaghi signed the general release and on which the closing fair market value of our common stock was $39.71, the incremental fair value of the 17,503 shares for which vesting accelerated was $695,044. |
Outstanding Equity Awards at Fiscal Year-End 2015
The following table provides information on outstanding stock options and RSUs held by the named executive officers as of March 28, 2015. Mr. Petrakian did not have any outstanding equity awards at the end of fiscal 2015.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Grant Date | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested(1) (#) | | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($) |
Moshe N. Gavrielov
| | 37,500 |
| | — |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 38,500 |
| | 1,629,320 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 24,400 |
| | 1,032,608 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 120,251 |
| | 5,089,022 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2014 | | — |
| | — |
| | — |
| | 93,500 |
| | 3,956,920 |
|
| Jon A. Olson | | 80,000 |
| | — |
| | — |
| | 22.80 |
| | 7/3/2006 | | 7/3/2016 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | 100,000 |
| | — |
| | — |
| | 20.57 |
| | 7/1/2009 | | 7/1/2016 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | 110,000 |
| | — |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 14,500 |
| | 613,640 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 9,124 |
| | 386,128 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 35,751 |
| | 1,512,982 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2014 | | — |
| | — |
| | — |
| | 26,000 |
| | 1,100,320 |
|
| Victor Peng | | 95,000 |
| | — |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 14,500 |
| | 613,640 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 9,124 |
| | 386,128 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 35,751 |
| | 1,512,982 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2014 | | — |
| | — |
| | — |
| | 26,000 |
| | 1,100,320 |
|
| Krishna Rangasayee | | 10,000 |
| | — |
| | — |
| | 20.57 |
| | 7/1/2009 | | 7/1/2016 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | 15,000 |
| | — |
| | — |
| | 24.74 |
| | 1/11/2010 | | 1/11/2017 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | 50,000 |
| | — |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 1/10/2012 | | — |
| | 1,250 |
| | 52,900 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 10,000 |
| | 423,200 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 6,154 |
| | 260,437 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 24,375 |
| | 1,031,550 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2014 | | — |
| | — |
| | — |
| | 19,000 |
| | 804,080 |
|
Outstanding Equity Awards at Fiscal Year-End 2015 (continued)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Grant Date | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested(1) (#) | | Market Value of Shares or Units of Stock That Have Not Vested(2) ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) (#) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($) |
| Vincent L. Tong | | 50,000 |
| | — |
| | — |
| | 20.57 |
| | 7/1/2009 | | 7/1/2016 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | 80,000 |
| | — |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (4) | — |
| | — |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | 10,000 |
| | 423,200 |
| | — |
| | — |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/2/2012 | | — |
| | — |
| | — |
| | 6,154 |
| | 260,437 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2013 | | — |
| | — |
| | — |
| | 24,375 |
| | 1,031,550 |
|
| | | — |
| | — |
| | — |
| | — |
| | 7/1/2014 | | — |
| | — |
| | — |
| | 19,000 |
| | 804,080 |
|
Frank A. Tornaghi(5) | | 3,334 |
| | — |
| | — |
| | 25.39 |
| | 7/6/2010 | | 7/6/2017 |
| (4) | — |
| | — |
| | — |
| | — |
|
| |
| (1) | Time-based RSUs vest 100% on the third anniversary of the date of grant, subject to continued employment with the Company. |
| |
| (2) | Market value is computed by multiplying the closing price of the Company’s stock on the last trading day of the fiscal year by the number of shares reported in the adjacent column. The closing price of the Company’s stock on March 27, 2015 was $42.32. |
| |
| (3) | Performance-based RSUs vest 33.3% on the first anniversary of the date of grant, and then 33.3% on each anniversary date thereafter, subject to continued employment with the Company. The number of shares subject to RSUs in this column are based on the number of performance-based RSUs that were earned based on actual performance achievement, except for those awarded in fiscal 2015. For the performance-based RSUs awarded in fiscal 2015, this column represents the number of RSU shares assuming achievement at 100% of target level performance. In May 2015, the Compensation Committee determined that the following number of performance-based RSUs were earned based on actual performance achievement: Mr. Gavrielov, 83,215 shares; Mr. Olson, 23,140 shares; Mr. Peng, 23,140 shares; Mr. Rangasayee, 16,910 shares; and Mr. Tong, 16,910 shares. |
| |
| (4) | The stock option vests and becomes exercisable over a period of four years in equal monthly installments beginning on the first monthly anniversary of the date of grant, subject to continued employment with the Company. |
| |
| (5) | In connection with his retirement on March 27, 2015, 17,503 shares subject to RSUs granted prior to fiscal 2015 accelerated and became fully vested. The RSUs granted to Mr. Tornaghi in fiscal 2015 were forfeited on March 27, 2015, the effective date of his retirement. |
Option Exercises and Stock Vested for Fiscal 2015
The following table provides information on stock option exercises and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the named executive officers during fiscal 2015.
|
| | | | | | | | | | | | |
| | | Option Awards | | Stock Awards |
| Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise(1) ($) | �� | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting(2) ($) |
| Moshe N. Gavrielov | | 50,000 |
| | 786,000 |
| | 148,184 |
| | 7,213,271 |
|
| Jon A. Olson | | 170,000 |
| | 3,434,299 |
| | 51,262 |
| | 2,497,911 |
|
| Victor Peng | | 150,000 |
| | 3,226,680 |
| | 51,262 |
| | 2,497,911 |
|
| Krishna Rangasayee | | 10,000 |
| | 115,543 |
| | 29,678 |
| | 1,436,590 |
|
| Vincent L. Tong | | 10,000 |
| | 215,429 |
| | 34,426 |
| | 1,677,337 |
|
| Raja Petrakian | | 30,000 |
| | 490,079 |
| | 51,929 |
| | 2,418,064 |
|
| Frank A. Tornaghi | | 91,666 |
| | 1,963,165 |
| | 51,929 |
| | 2,418,064 |
|
| |
| (1) | The value realized upon exercise is the product realized by multiplying the number of shares of stock by the difference between the market value of the underlying shares on the exercise date and the exercise price applicable to the stock options. |
| |
| (2) | The value realized upon vesting is the product realized by multiplying the number of shares of stock by the market value of the underlying shares on the vesting date. |
Nonqualified Deferred Compensation Plan
The Company maintains an unfunded, nonqualified deferred compensation plan which allows our employees in director-level and above positions, including our named executive officers, as well as our directors, to voluntarily defer receipt of a portion or all of their salary, cash bonus payment and/or sales incentive payment or directorship fees, as the case may be, until the earliest “distribution event” (e.g., specific date, termination of employment, death or change of control) elected by the participants or provided for by the plan, thereby allowing the participating employees and directors to defer taxation on such amounts. Distributions may be made in a lump sum payment or in installments (not to exceed 15 years). This deferred compensation plan is offered in order to allow participants to defer more compensation than they would otherwise be permitted to defer under a tax-qualified retirement plan, such as our 401(k) Plan. Further, we offer the deferred compensation plan as a competitive practice to enable us to attract and retain top talent by providing employees with an opportunity to save in a tax efficient manner.
Amounts credited to the deferred compensation plan consist only of cash compensation that has been earned and payment of which has been timely and properly deferred by the participant. Under the deferred compensation plan, the Company is obligated to deliver on a future date the deferred compensation credited to the relevant participant’s account, adjusted for any positive or negative notional investment results from hypothetical investment alternatives selected by the participant under the deferred compensation plan (Obligations). The Obligations are unsecured general obligations of the Company and rank in parity with other unsecured and subordinated indebtedness of the Company.
In addition, the Company, acting through the Board, may make discretionary contributions to the accounts of one or more deferred compensation plan participants. In fiscal 2015, there were no discretionary contributions made by the Company to the deferred compensation plan accounts, and we do not guarantee minimum returns to any participant in the deferred compensation plan. We incur only limited administration expenses to maintain the deferred compensation plan. The deferred compensation plan is evaluated for competitiveness in the marketplace from time to time, but the level of benefits provided is not typically taken into account in determining an executive’s overall compensation package for a particular year.
Nonqualified Deferred Compensation for Fiscal 2015
The following table provides information on non-qualified deferred compensation for the named executive officers during fiscal 2015.
|
| | | | | | | | | | | | | | |
| Name | | Executive Contributions in Last FY ($) | | Registrant Contributions in Last FY ($) | | Aggregate Earnings in Last FY ($) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($) |
| Moshe N. Gavrielov | | — |
| | — | | — |
| | — |
| | — |
|
Jon A. Olson(1) | | 94,800 |
| | — | | 148,775 |
| | — |
| | 3,334,780 |
|
Victor Peng(2) | | 302,044 |
| | — | | 102,987 |
| | — |
| | 1,460,568 |
|
| Krishna Rangasayee | | — |
| | — | | — |
| | — |
| | — |
|
| Vincent Tong | | — |
| | — | | — |
| | — |
| | — |
|
Raja Petrakian(3) | | 72,340 |
| | — | | 27,167 |
| | 16,070 |
| | 582,238 |
|
| Frank Tornaghi | | — |
| | — | | — |
| | — |
| | — |
|
| |
| (1) | Mr. Olson’s contribution consists of compensation earned during fiscal 2015, which is also reported in the applicable columns in the Summary Compensation Table. |
| |
| (2) | Mr. Peng’s contribution consists of compensation earned during fiscal 2015, which is also reported in the applicable columns in the Summary Compensation Table. |
| |
| (3) | Mr. Petrakian’s contribution consists of $50,740 of non-equity incentive plan compensation earned during fiscal 2014, and $21,600 non-equity incentive plan compensation earned during fiscal 2015, which is also reported in the applicable column in the Summary Compensation Table. |
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee are J. Michael Patterson, Marshall C. Turner and Elizabeth W. Vanderslice. No member of the Compensation Committee is, or was during fiscal 2014,2015, an officer or employee of the Company or any of its subsidiaries or was formerly an officer of the Company or any of its subsidiaries. No member of the Compensation Committee is, or was during fiscal 2014,2015, an executive officer of another company whose board of directors has a comparable committee on which one of the Company’s executive officers serves. For further discussion regarding transactions with related parties, see the section above entitled “BOARD MATTERS-Director“DIRECTORS AND CORPORATE GOVERNANCE—Board Independence.”
RELATED TRANSACTIONS
Our Audit Committee is responsible for reviewing and approving all related party transactions. Related parties include any of our directors or executive officers, certain of our stockholders and their immediate family members. This obligation is set forth in writing in the Audit Committee charter. The Audit Committee reviews related party transactions due to the potential for a conflict of interest. A conflict of interest arises when an individual’s personal interest interferes with the Company’s interests. All transactions identified through our disclosure controls and procedures as potential related party transactions, or transactions that may create a conflict of interest or the appearance of a conflict of interest, are brought to the attention of the Audit Committee for its review. In reviewing related party transactions, the Audit Committee applies the standards set forth in the Company’s Code of Conduct and the Directors’ Code of Ethics which provide that directors, officers and employees are to avoid any activity, investment or association that would cause or even appear to cause a conflict of interest. Copies of the Audit Committee Charter, the Code of Conduct and the Directors’ Code of Ethics are available on our website at http://www.investor.xilinx.com under “Corporate Governance.” For further discussion regarding transactions with related parties, see the section above entitled “DIRECTORS AND CORPORATE GOVERNANCE—Board Independence.”
In fiscal 2011, our Audit Committee pre-approved our engagement of BlackRock, Inc. (BlackRock) as an investment manager. At the time we entered into this engagement, BlackRock was the beneficial owner of more than five percent of our outstanding common stock and is currently a beneficial owner of more than five percent of our outstanding common stock. Xilinx paid BlackRock $422,933 in management fees during fiscal 2015.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company’s officers and Directors,directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership of such securities with the SEC. Officers, Directorsdirectors and greater than 10% beneficial owners are required by applicable regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company’s knowledge, based solely upon a review of the copies of such reports furnished to the Company, and written representations from certain reporting persons that no other reports were required, the Company believes that its officers, Directorsdirectors and greater-than-10% stockholders complied with all Section 16(a) filing requirements during the 20142015 fiscal year.
COMMITTEE REPORTS
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the management of the Company and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and, through incorporation by reference from this proxy statement, the Company’s Annual Report on Form 10-K for the fiscal year exceptended March 28, 2015.
The Compensation Committee
—J. Michael Patterson, Chairman
—Marshall C. Turner
—Elizabeth W. Vanderslice
The foregoing Report of the Compensation Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. It assists the Board in fulfilling its oversight responsibilities to the stockholders relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, and the audit process. While the Audit Committee sets the overall corporate tone for onequality financial reporting, management has the primary responsibility for the preparation, presentation and integrity of the Company’s financial statements and implementation of the reporting process including the systems of internal controls and procedures designed to reasonably assure compliance with accounting standards, applicable laws and regulations. In accordance with the law, the Audit Committee has ultimate authority and responsibility to select, compensate, evaluate and, when appropriate, replace the Company’s independent auditors. The Charter of the Audit Committee can be found at www.investor.xilinx.com under “Corporate Governance.”
The Company’s external auditors, Ernst & Young LLP, are responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and expressing opinions on the conformity of the Company’s audited financial statements to generally accepted accounting principles in the United States and the effectiveness of the Company’s internal control over financial reporting. In carrying out its responsibilities, the Audit Committee has the power to retain outside counsel or other experts and is empowered to investigate any matter with full access to all books, records, facilities and personnel of the Company. The Audit Committee members are not professional accountants or auditors, and their functions are not intended to duplicate or certify the activities of management and the independent auditors.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited consolidated financial statements for the fiscal year ended March 28, 2015, with management and Ernst & Young LLP, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also discussed with Ernst & Young LLP, matters required to be discussed under standards published by the Public Company Accounting Oversight Board (PCAOB), including, among other things, matters related to the conduct of the audit of the Company’s consolidated financial statements and other required communications with audit committees. In addition, the Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with them their independence from the Company and its management.
The Audit Committee reviewed and discussed with management its assessment and report on the effectiveness of the Company’s internal control over financial reporting as of March 28, 2015. The Audit Committee has also reviewed and discussed with Ernst & Young LLP its audit of and report on the Company’s internal control over financial reporting. The Company published these reports in its Annual Report on Form 410-K for the fiscal year ended March 28, 2015.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2015 for filing with the SEC.
The Audit Committee of the Board of Directors
—John L. Doyle, Chairman
—J. Michael Patterson
—Albert A. Pimentel
—Marshall C. Turner
The foregoing Report of the Audit Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
As recommended by the Nominating and Governance Committee, the Board of Directors’ nominees for election by the stockholders are the following seven (7) current members of the Board of Directors: Mr. Philip T. Gianos, Mr. Moshe N. Gavrielov, Mr. William G. Howard, Jr., Mr. J. Michael Patterson, Mr. Albert A. Pimentel, Mr. Marshall C. Turner and Ms. Elizabeth W. Vanderslice.
Unless otherwise indicated, the proxy in the form enclosed will be voted FOR the election of the nominees for election as directors to the Board of Directors. If any of the nominees should be unwilling or unable to serve as of the Annual Meeting, the proxies will be voted for the election of such other person as the Board of Directors may designated, if any, in place of such nominee.
Required Vote
Each nominee receiving more votes “FOR” than “AGAINST” shall be elected as a Director. If you do not wish your shares to be voted with respect to three (3) transactions for Dr. Howard filed one day late.a nominee, you may “ABSTAIN,” in which case your shares will have no effect on the election of that nominee. Broker non-votes will also have no effect on the outcome of this Proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.
PROPOSAL TWO
RELATED TRANSACTIONSADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with SEC rules.
Our Audit Committeeexecutive officer compensation program is responsibledesigned to attract and retain talented and qualified senior executives to manage and lead our Company and to motivate them to pursue and meet our corporate objectives. Under this program, our named executive officers are rewarded for reviewingindividual and approving all related party transactions. Related parties include anycollective contributions to our success consistent with our “pay for performance” orientation. Furthermore, the executive officer total compensation program is aligned with the nature and dynamics of our Directors orbusiness, which focuses management on achieving the Company’s annual and long-term business strategies and objectives. Additional details about our executive compensation programs are described under the section titled “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis.”
Our Compensation Committee regularly reviews the executive officer compensation program to ensure that it achieves the desired goals of emphasizing long-term value creation and aligning the interests of management and stockholders through the use of equity-based awards.
We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers certainand the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2015 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”
Required Vote
The “say-on-pay” vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board of Directors. However, the affirmative vote of holders of a majority of the votes cast in person or by proxy for this Proposal would indicate stockholder approval of the resolution. Abstentions will have the same effect on the outcome of this Proposal as a vote “AGAINST.” Broker non-votes will have no effect on the outcome of this Proposal. Our Board of Directors and our Compensation Committee value the opinions of our stockholders and their immediate family members. This obligationto the extent there is set forthany significant vote against the named executive officer compensation as disclosed in writing inthis proxy statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF EXTERNAL AUDITORS
The Audit Committee has selected Ernst & Young LLP, an independent registered public accounting firm, to audit the consolidated financial statements of Xilinx for the fiscal year ending April 2, 2016 and recommends that stockholders vote for ratification of such appointment. Although we are not required to submit to a vote of the stockholders the ratification of the appointment of Ernst & Young LLP, the Company, the Board and the Audit Committee, charter. Theas a matter of good corporate governance, have determined to ask the stockholders to ratify the appointment. If the appointment of Ernst & Young LLP is not ratified, the Audit Committee reviews related party transactions duewill take the vote under advisement in evaluating whether to the potential for a conflictretain Ernst & Young LLP.
Representatives of interest. A conflict of interest arises when an individual’s personal interest interferes with the Company’s interests. All transactions identified through our disclosure controls and procedures as potential related party transactions, or transactions that may create a conflict of interest or the appearance of a conflict of interest, are brought to the attentionErnst & Young LLP attend meetings of the Audit Committee for its review. In reviewing related party transactions,of the Audit Committee applies the standards set forth in the Company’s Code of Conduct and the Directors’ Code of Ethics which provide that Directors, officers and employees are to avoid any activity, investment or association that would cause or even appear to cause a conflict of interest. CopiesBoard including executive sessions of the Audit Committee Charter,at which no members of Xilinx management are present. Ernst & Young LLP has audited the CodeCompany’s financial statements for each fiscal year since the fiscal year ended March 31, 1984. Representatives of ConductErnst & Young LLP are expected to be present at the Annual Meeting. In addition, they will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders.
Fees Paid to Ernst & Young LLP
The following table shows the Directors’ Code of Ethics are available on our website at http://www.investor.xilinx.com under “Corporate Governance.” For further discussion regarding transactions with related parties, see the section above entitled “BOARD MATTERS—Director Independence.”
Infees billed or to be billed for audit and other services provided by Ernst & Young LLP for fiscal 2011, our Audit Committee pre-approved our engagement of BlackRock, Inc. (BlackRock) as an investment manager. At the time we entered into this engagement, BlackRock was the beneficial owner of more than five percent of our outstanding common stock2015 and is currently a beneficial owner of more than five percent of our outstanding common stock. Xilinx paid BlackRock $386,595 in management fees during fiscal 2014.
In fiscal 2012, our |
| | | | | | | | |
| | 2015 | | 2014 | |
| Audit Fees | $ | 2,640,578 |
| | $ | 2,870,800 |
| |
| Audit-Related Fees | — |
| | — |
| |
| Tax Fees | 315,195 |
| | 296,000 |
| |
| All Other Fees | — |
| | — |
| |
| Total | $ | 2,955,773 |
| | $ | 3,166,800 |
| |
Audit Committee pre-approved our engagementFees
This category includes fees for the audit of JPMorgan Chase Bank, N.A. (JPMorgan) as our sole bookrunnerthe Company’s annual financial statements and lead arranger for our $250 million credit facility (Credit Facility). In fiscal 2014, our Audit Committee pre-approved our engagementinternal control over financial reporting, review of JPMorgan as our sole book-running manager for ourthe Company’s interim financial statements on Form 10-Q and services that are typically provided by the independent registered public offering of $1.0 billion aggregate principal amount of senior unsecured notes (Offering). At the time we entered into both engagements, JPMorgan was the beneficial owner of more than five percent of our outstanding common stock and is currently a beneficial owner of more than five percent of our outstanding stock. During fiscal 2014, Xilinx paid JPMorgan $277,083 in administrative agent fees and $2,000,0000 in underwriting feesaccounting firm in connection with statutory and regulatory filings or engagements for those fiscal years. This category also includes, but is not limited to, statutory audits required by non-U.S. jurisdictions, consultation and advice on new accounting pronouncements, technical advice on various accounting matters related to the Credit Facilityconsolidated financial statements or statutory financial statements that are required to be filed by non-U.S. jurisdictions and comfort letters and consents issued in connection with SEC filings.
Audit-Related Fees
This category consists of assurance and related services that are reasonably related to the Offering, respectively.performance of the annual audit or interim financial statement review and are not reported under “Audit Fees.” No such services were provided by Ernst & Young LLP during fiscal 2015 and fiscal 2014.
Tax Fees
This category consists of fees for tax compliance, tax advice and tax planning services, including preparation of tax returns and assistance and representation in connection with tax audits and appeals.
All Other Fees
This category consists of services that are not included in the category descriptions defined above under “Audit Fees,” “Audit-Related Fees,” or “Tax Fees.” No such services were provided by Ernst & Young LLP during fiscal 2015 and fiscal 2014.
Audit Committee’s Pre-approval Policy and Procedures
The Audit Committee has adopted policies and procedures for approval of financial audit (and audit-related), non-financial audit, tax consulting and other work performed by Ernst & Young LLP. Pursuant to its charter and those policies, the policy of the Audit Committee is that any and all services to be provided to the Company by Ernst & Young LLP are subject to pre-approval by the Audit Committee. The Audit Committee pre-approves annual audit fees, quarterly reviews and tax compliance fees at the beginning of the fiscal year. In its review of non-financial audit, tax consulting and other services, the Audit Committee considers whether the provision of such services are consistent with SEC guidance, and whether the service facilitates the performance of the financial audit, improves the Company’s financial reporting process, and is otherwise in the Company’s best interests and compatible with maintaining Ernst & Young LLP’s independence.
The Audit Committee did not waive its pre-approval policies and procedures during the fiscal year ended March 28, 2015.
All of the services described in the fee table above were approved pursuant to the Audit Committee’s pre-approval policy.
Required Vote
Approval of this proposal requires the affirmative vote of a majority of the shares present and entitled to vote either in person or by proxy. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum. Abstentions will be counted as “AGAINST” votes with respect to the proposal, but broker non-votes will have no effect on the outcome of this proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF ERNST & YOUNG LLP AS THE COMPANY’S EXTERNAL AUDITORS FOR FISCAL 2016.
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If any other matters properly come before the meeting, it is the intention of the persons named in the enclosed proxy card to vote the shares they represent as the Board may recommend.
THE BOARD OF DIRECTORS
Dated: June 30, 20142015
APPENDIX A
XILINX, INC.
AMENDED AND RESTATED
1990 EMPLOYEE QUALIFIED STOCK PURCHASE PLAN
(As Amended and Restated Effective May 14, 2014)
The following constitute the provisions of the 1990 Employee Qualified Stock Purchase Plan (herein called the “Plan”) of Xilinx, Inc. (herein called the “Company”).
1.Purpose. The purpose of the Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code.
2.Definitions.
(a)“Board” shall mean the Board of Directors of the Company.
(b)“Code” shall mean the Internal Revenue Code of 1986, as amended.
(c)“Common Stock” shall mean the Common Stock, $0.01 par value per share, of the Company.
(d)“Company” shall mean Xilinx, Inc., a Delaware corporation.
(e)“Compensation” shall mean all regular straight time earnings, and all payments for overtime, shift premium, incentive compensation, incentive payments, bonuses, commissions or other compensation.
(f)“Designated Subsidiaries” shall mean the Subsidiaries which have been designated by the Board from time to time in its sole discretion as eligible to participate in the Plan.
(g)“Employee” shall mean any individual who is an employee of the Company or any Designated Subsidiary for purposes of tax withholding under the Code whose customary employment with the Company or any Designated Subsidiary is at least twenty (20) hours per week and more than five (5) months in any calendar year. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company. Where the period of leave exceeds ninety (90) days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated on the ninety-first (91st) day of such leave.
(h)“Exercise Date” shall mean the date one day prior to the date six (6) months, twelve (12) months, eighteen (18) months or twenty-four (24) months after the Offering Date of each Offering Period, provided that for the Offering Period which began on July 1, 1998 and the Offering Period which will begin on January 1, 1999, all Exercise Dates occurring after January 1, 1999 shall mean one (1) day prior to the date seven (7) months, thirteen (13) months, nineteen (19) months and twenty-five (25) months after the respective commencement dates of such Offering Periods, and provided further that if an Exercise Date would otherwise occur on a day which is not a Trading Day, such Exercise Date shall be the last Trading Day occurring prior to such day.
(i)“Exercise Period” shall mean a period commencing on an Offering Date or on the day after an Exercise Date and terminating one (1) day prior to the date six (6) months later, provided that the Exercise Period which begins January 1, 1999 shall terminate on July 31, 1999.
(j)“Offering Period” shall mean a period of twenty-four (24) months consisting of four (4) six-month Exercise Periods during which options granted pursuant to the Plan may be exercised, provided that the Offering Period which began on July 1, 1998, and the Offering Period which will begin on January 1, 1999 shall each be twenty-five (25) months long.
(k)“Offering Date” shall mean the first day of each Offering Period of the Plan.
(l)“Plan” shall mean this 1990 Employee Qualified Stock Purchase Plan, as amended.
(m)“Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.
(n)“Trading Day” shall mean a day on which national stock exchanges and the National Association of Securities Dealers Automated Quotation (NASDAQ) System are open for trading.
3.Eligibility.
(a)Any Employee as defined in Section 2 who shall be employed by the Company on the Offering Date of an Offering Period shall be eligible to participate in the Plan, subject to limitations imposed by Section 423(b) of the Code.
(b)Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding options to purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any subsidiary of the Company, or (ii) which permits his or her rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) of fair market value of such stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time.
4.Offering Periods.
(a)The plan shall be implemented by consecutive, overlapping twenty-four (24) month Offering Periods with a new Offering Period commencing on the first Trading Day occurring on or after the first day of February and August of each year. Subject to the requirements of Section 20, the Board of Directors of the Company shall have the power to change the duration of Offering Periods with respect to future offerings without stockholder approval if such change is announced at least fifteen (15) days prior to the scheduled beginning of the first Offering Period to be affected; provided, however, that no Offering Period shall have a duration of more than twenty-seven (27) months.
(b)The Board shall have the power, in its discretion, to establish separate, simultaneous or overlapping Offering Periods having different terms and conditions and to designate the Subsidiary(ies) that may participate in a particular Offering Period, provided that each Offering Period shall individually comply with the terms of the Plan and the requirements of Section 423(b)(5) of the Code that all participants granted an option pursuant to such Offering Period shall have the same rights and privileges within the meaning of such section. Alternatively and in order to comply with the laws of a foreign jurisdiction, the Board shall have the power, in its discretion, to grant options in an Offering Period to citizens or residents of a non-U.S. jurisdiction (without regard to whether they are also citizens of the United States or resident aliens) that provide terms which are less favorable than the terms of options granted under the same Offering Period to Employees resident in the United States.
5.Participation.
(a)An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions on a form provided by the Company and filing it with the Company’s payroll office on or before the Offering Date of the applicable Offering Period, unless an earlier time for filing the subscription agreement is set by the Board for all eligible Employees with respect to a given offering.
(b)Payroll deductions for a participant shall commence on the first payroll following the Offering Date and shall end on the last Exercise Date of the Offering Period to which such authorization is applicable, unless sooner terminated as provided in Section 11.
6.Payroll Deductions.
(a)At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each payday during the Offering Period in an amount not exceeding fifteen percent (15%) or less than two percent (2%) of his or her Compensation. The aggregate of such payroll deductions during any Offering Period shall not exceed fifteen percent (15%) of his or her aggregate Compensation during said Offering Period.
(b)All payroll deductions made by a participant shall be credited to his or her account under the Plan and will be withheld in whole percentages only. A participant may not make any additional payments into such account.
(c)A participant may discontinue his or her participation in the Plan as provided in Section 11, or may decrease the rate or amount of his or her payroll deductions during the Offering Period (within the limitations of Section 6(a)) by completing and filing with the Company a new subscription agreement authorizing a change in the rate or amount of payroll
deductions; provided, however, that a participant may not decrease the rate or amount of his or her payroll deductions more than once in any month in any Exercise Period. The change in rate shall be effective fifteen (15) days following the Company’s receipt of the new authorization or after such shorter period as may be permitted by the Company. Subject to the limitations of Section 6(a), a participant’s subscription agreement shall remain in effect for successive Offering Periods unless revised as provided herein or terminated as provided in Section 11.
(d)Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) herein, a participant’s payroll deductions may be decreased to 0% at such time during any Exercise Period which is scheduled to end during the current calendar year that the aggregate of all payroll deductions accumulated with respect to such Exercise Period and any other Exercise Period ending within the same calendar year equal $21,250. Payroll deductions shall recommence at the rate provided in such participant’s subscription agreement at the beginning of the first Exercise Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 11.
(e)At the time the option is exercised, in whole or in part, or at the time some or all of the Company’s Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the Company may, but will not be obligated to, withhold from the participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Employee.
7.Grant of Option.
(a)On the Offering Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on each Exercise Date during such Offering Period (at the per share option price) up to a number of shares of the Company’s Common Stock determined by dividing such Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s account as of the Exercise Date by the lower of (i) eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the Offering Date or (ii) eighty-five percent (85%) of the fair market value of a share of the Company’s Common Stock on the Exercise Date; provided, however, that the maximum number of Shares an Employee may purchase during each Offering Period shall be determined at the Offering Date by dividing $50,000 by the fair market value of a share of the Company’s Common Stock on the Offering Date, and provided further that such purchase shall be subject to the limitations set forth in Section 3(b) and 13 hereof. Exercise of each option during the Offering Period shall occur as provided in Section 8, unless the participant has withdrawn pursuant to Section 11, and each option shall expire at midnight on the last day of the applicable Exercise Period. Fair market value of a share of the Company’s Common Stock shall be determined as provided in Section 7(b) herein. Notwithstanding anything to the contrary contained in this Plan, however, the Offering Date for the Offering Period which began on July 1, 1998 shall be deemed (for tax purposes) to be October 8, 1998.
(b)The option price per share of the shares offered in a given Exercise Period shall be the lower of: (i) 85% of the fair market value of a share of the Common Stock of the Company on the Offering Date; or (ii) 85% of the fair market value of a share of the Common Stock of the Company on the Exercise Date. The fair market value of the Company’s Common Stock on a given date shall be determined by the Board in its discretion; provided, however, that where there is a public market for the Common Stock, the fair market value per share shall be the closing price of the Common Stock for such date, as reported by the NASDAQ Stock Market, or, in the event the Common Stock is listed on another stock exchange constituting the primary market for the Common Stock, the fair market value per share shall be the closing price on such exchange on such date, as reported in The Wall Street Journal. In the event the applicable date occurs on a day which is not a Trading Day, the fair market value shall be based on the closing price on the preceding Trading Day.
8.Exercise of Option. During a participant’s lifetime, a participant’s option to purchase shares hereunder is exercisable only by him or her. Unless a participant withdraws from the Plan as provided in Section 11, hereof, his or her option for the purchase of shares shall be exercised automatically on the Exercise Date, and the maximum number of full shares subject to option shall be purchased for such participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased. Any payroll deductions which remain in a participant’s account after the individual has purchased during an Offering Period the maximum number of shares allowable under Section 7 hereof, shall be returned to the participant. Notwithstanding the foregoing, if the payroll deductions remaining in a participant’s account following an Exercise Date are in an amount which was not sufficient to purchase an additional full share, then such amount shall be retained in the participant’s account to be applied during the same or the subsequent Offering Period.
9.Delivery. As promptly as practicable after the Exercise Date of each Exercise Period, the Company shall arrange the delivery to each participant, as appropriate, of a certificate representing the shares purchased upon exercise of his or her option.
10.Automatic Transfer to Low Price Offering Period. In the event that the fair market value of the Company’s Common Stock is lower on an Exercise Date of an Offering Period (other than the last Exercise Date thereof) than it was on the Offering
Date for that Offering Period, all Employees participating in such Offering Period on the Exercise Date shall be deemed to have withdrawn from the Offering Period immediately after the exercise of their option on such Exercise Date and to have enrolled as participants in a new Offering Period which begins on or about the day following such Exercise Date. A participant may elect to remain in the previous short Offering Period by filing a written statement declaring such election with the Company prior to the time of the automatic change to the new Offering Period.
11.Withdrawal; Termination of Employment.
(a)A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by giving written notice to the Company pursuant to a form to be provided by the Company. All of the participant’s payroll deductions credited to his or her account will be paid to such participant as promptly as practicable after receipt of notice of withdrawal and such participant’s remaining option or options for the Offering Period will be automatically terminated, and no further payroll deductions for the purchase of shares will be made during the Offering Period. If a participant withdraws from an Offering Period, payroll deductions will not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement.
(b)Upon a participant’s ceasing to be an Employee prior to an Exercise Date for any reason, including retirement or death, or upon termination of a participant’s employment relationship (as described in Section 2(g)), the payroll deductions credited to such participant’s account during the Exercise Period but not yet used to exercise the option will be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15, and such participant’s remaining option or options will be automatically terminated.
The preceding sentence notwithstanding, a participant who receives payment in lieu of notice of termination of employment shall be treated as continuing to be an Employee for the participant’s customary number of hours per week of employment during the period in which the participant is subject to such payment in lieu of notice.
(c)In the event an Employee fails to remain an Employee of the Company for at least twenty (20) hours per week during an Offering Period in which the Employee is a participant, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to his or her account will be returned to such participant and such participant’s remaining option or options terminated.
(d)A participant’s withdrawal from an Offering Period will not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws.
12.Interest. No interest shall accrue on the payroll deductions of a participant in the Plan.
13.Stock.
(a)The maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan shall be 52,540,000 shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 19. If on a given Exercise Date the number of shares with respect to which options are to be exercised exceeds the number of shares then available under the Plan (after deduction of all shares for which options have previously been exercised), the Company shall make a pro rata allocation to the participants on such Exercise Date of the shares remaining available in as uniform a manner as shall be practicable and as it shall determine to be equitable. In such event, the Company shall give written notice of such reduction of the number of shares subject to the option to each Employee affected thereby and shall similarly reduce the rate of payroll deductions, if necessary.
(b)The participant will have no interest or voting right in shares covered by his or her option until such option has been exercised.
(c)Shares to be delivered to a participant under the Plan will be registered in the name of the participant or in the name of the participant and his or her spouse.
14.Administration.
(a)Administrative Body. The Plan shall be administered by the Board or a committee of members of the Board appointed by the Board. The Board or its committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Board or its committee shall, to the full extent permitted by law, be final and binding upon all parties.
(b)Rule 16b-3 Limitations. Notwithstanding the provisions of Subsection (a) of this Section 14, in the event that Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any successor provision (“Rule 16b-3”) provides specific requirements for the administrators of plans of this type, the Plan shall be only administered by such a body and in such a manner as shall comply with the applicable requirements of Rule 16b-3.
15.Designation of Beneficiary.
(a)Subject to compliance with local law and procedures, a participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to the end of an Exercise Period but prior to delivery to him of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to an Exercise Date.
(b)Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant or as otherwise required by applicable law.
16.Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 11.
17.Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.
18.Reports. Individual bookkeeping accounts will be maintained for each participant in the Plan. Statements of account will be given to participating Employees annually, which statements will set forth the amounts of payroll deductions, the per share purchase price, the number of shares purchased and the remaining cash balance, if any.
19.Adjustments Upon Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised and the number of shares of Common Stock which have been authorized for issuance under the Plan but have not yet been placed under option (collectively, the “Reserves”) as well as the price per share of Common Stock covered by each option under the Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration”. Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company, the Offering Period will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each option under the Plan shall be assumed or an equivalent option shall be substituted by such successor corporation or a parent or subsidiary of such successor corporation, unless the Board determines, in the exercise of its sole discretion and in lieu of such assumption or substitution, to shorten the Offering Period then in progress by setting a new Exercise Date (the “New Exercise Date”). If the Board shortens the Offering Period then in progress in lieu of assumption or substitution in the event of a merger or sale of assets, the Board shall notify each participant in writing, at least ten (10) days prior to the New Exercise Date, that the Exercise Date for his or her option has been changed to the New Exercise Date and that his or her option will be exercised automatically on the New Exercise Date, unless prior to such date he or she has withdrawn from the Offering Period as provided in Section 11. For purposes of this Section, an option granted under the Plan shall be deemed to be assumed if, following the sale of assets or merger the option confers the right to purchase, for each share of option stock subject to the option immediately prior to the sale of assets or merger the consideration (whether stock, cash or other securities or property) received in the sale of assets or merger by holders of Common Stock for each share of Common Stock held on the effective date of the transaction (and if such holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding shares of Common Stock); provided, however, that if such consideration received in the sale of assets or merger was not solely common stock of the successor corporation or its parent (as defined in Section 424(e) of the Code), the Board may, with the consent of the successor corporation, provide for
the consideration to be received upon exercise of the option to be solely common stock of the successor corporation or its parent equal in fair market value to the per share consideration received by holders of Common Stock in the sale of assets or merger.
The Board may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per share of Common Stock covered by each outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of shares of its outstanding Common Stock, and in the event of the Company being consolidated with or merged into any other corporation.
20.Amendment or Termination.
(a)The Board of Directors of the Company may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Board of Directors on any Exercise Date if the Board determines that the termination of the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Rule 16b-3 under the Securities Exchange Act of 1934, as amended, or under Section 423 of the Code (or any successor rule or provision or any other applicable law or regulation), the Company shall obtain stockholder approval in such a manner and to such a degree as required.
(b)Without stockholder consent and without regard to whether any participant rights may be considered to have been adversely affected, the Board (or its committee) shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Board (or its committee) determines in its sole discretion advisable which are consistent with the Plan.
21.Notices. All notices or other communications by a participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
22.Conditions Upon Issuance of Shares. Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.
23.As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
24.Term of Plan. The Plan shall continue in effect until January 26, 2030 unless sooner terminated under Section 20.
APPENDIX B
2007 EQUITY INCENTIVE PLAN
(As Amended and Restated Effective May 14, 2014)
This Xilinx, Inc. 2007 Equity Incentive Plan (hereinafter called the "Plan") was adopted by the Board of Directors of Xilinx, Inc., a Delaware corporation (hereinafter called the "Company") on May 3, 2006, and approved by the Company's stockholders at its annual meeting on July 26, 2006. The Plan became effective as of January 1, 2007 with an initial term of seven (7) years until December 31, 2013. The term of the Plan was extended by the stockholders at the 2013 annual meeting for an additional ten (10) years from December 31, 2013, and the Plan terminates on December 31, 2023.
ARTICLE 1
PURPOSE
The purpose of the Plan is to attract and retain the services of able persons as Employees, Consultants, and Non-Employee Directors of the Company and its Subsidiaries, to provide such persons with a proprietary interest in the Company through the granting of Options, SARs, Restricted Stock, and RSUs, whether granted singly, or in combination, or in tandem, that will (a) increase the interest of such persons in the Company's welfare, and (b) furnish an incentive to such persons to continue their services for the Company and/or Subsidiary.
ARTICLE 2
DEFINITIONS
For purposes of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:
2.1 "Award" means the grant of any Incentive Stock Option, Non-qualified Stock Option, SAR, Restricted Stock, or Restricted Stock Unit, whether granted singly, in combination or in tandem.
2.2 "Award Agreement" means a written or electronic agreement between a Participant and the Company, which sets out the terms of the grant of an Award.
2.3 "Award Period" means the period during which one or more Awards granted under an Award Agreement may be exercised or earned.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" shall mean: (i) engaging in financial fraud; (ii) embezzling property of the Company and/or any Subsidiary; (iii) non-payment of an obligation owed to the Company; (iv) breach of fiduciary duty or deliberate disregard of Company rules, code of conduct or policies resulting in loss, damage or injury to the Company; (v) engaging in any activity for, or affiliating with, any competitor of the Company and/or any Subsidiary; (vi) theft of trade secrets or unauthorized disclosure of any confidential information or trade secret of the Company and/or any Subsidiary; or (vii) engaging in conduct that is a violation of securities laws, antitrust and unfair competition laws, the Foreign Corrupt Practices Act, other laws, or which conduct puts the Company and/or any Subsidiary at substantial risk of violating such laws. The Committee, in its sole discretion, shall determine if a Participant's termination of employment or cessation of services is for "Cause."
2.6 "Change of Control." A Change of Control shall occur if:
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(a) | Any Person, or more than one Person acting as a group, acquires ownership of Shares of the Company that, together with stock held by such Person or group, constitutes more than 50% of the total Fair Market Value or total voting power of the Shares of the Company. However, if any one Person or more than one Person acting as a group, is considered to own more than 50% of the total Fair Market Value or total voting power of the Shares of the Company, the acquisition of additional Shares by the same Person or Persons is not considered to cause a Change in Control; |
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(b) | A majority of members of the Board of Directors of the Company are replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors of the Company prior to the date of the appointment or election; or |
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(c) | Any one Person, or more than one Person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such Person or Persons) all or substantially all the assets of the Company. |
2.7 "Code" means the U.S. Internal Revenue Code of 1986, as amended, together with the published rulings, regulations, and interpretations duly promulgated thereunder.
2.8 "Committee" means the Compensation Committee of the Board or such other Committee appointed or designated by the Board to administer the Plan.
2.9 "Company" means Xilinx, Inc., a Delaware corporation, and any successor entity.
2.10 "Consultant" means each individual who performs services for the Company and/or any Subsidiary, and who is determined by the Committee to be a consultant to the Company and/or Subsidiary.
2.11 "Covered Participant" means a Participant who is a "covered employee" as defined in Section 162(m)(3) of the Code, and the regulations promulgated thereunder, and any individual the Committee determines should be treated as such a covered employee.
2.12 "Date of Grant" means "date of grant" as determined by the Committee consistent with Statement of Financial Accounting Standards 123(R).
2.13 "Director" means a member of the Board or the board of directors of any Subsidiary.
2.14 "Disability" means total and permanent disability of a Participant as described in Section 22(e)(3) of the Code.
2.15 "Employee" means each individual treated as an employee in the records of the Company and/or any Subsidiary. The Company shall determine in good faith and in the exercise of its discretion whether an individual has become or has ceased to be an Employee and the effective date of such individual's employment or termination of employment, as the case may be.
2.16 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
2.17 "Exercise Date" means the date specified in the Participant's Exercise Notice, on which the Participant seeks to exercise an Option or SAR.
2.18 "Exercise Notice" means the electronic or written notice from the Participant to the Company (or to a designated broker acting as agent for the Company) notifying the Company or designated broker, as applicable, that the Participant seeks to exercise an Option or SAR.
2.19 "Fair Market Value" of a Share means:
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(a) | If the Share is listed on any established stock exchange or a national market system, including, without limitation, the Nasdaq Global Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be its closing sales price (or the closing bid, if no sales were reported) as quoted on such exchange or system for the date of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; |
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(b) | If the Share is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share shall be the mean between the high bid and low asked prices for the Share on the date of determination, as reported in The Wall Street Journal or such other source as the Committee deems reliable; or |
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(c) | In the absence of an established market for the Share, the Fair Market Value shall be determined in good faith by the Committee. |
2.20 "Good Reason" means the assignment to the Participant of duties that result in a material diminution of the Participant's duties and responsibilities. The Committee, in its sole discretion, shall determine whether a Participant's termination from employment or cessation of services is for "Good Reason."
2.21 "Incentive Stock Option" or "ISO" means an incentive stock option within the meaning of Section 422 of the Code, granted pursuant to this Plan.
2.22 "Non-Employee Director" means a member of the Board or the board of directors of any Subsidiary who is not an Employee.
2.23 "Non-qualified Stock Option" or "NQSO" means a stock option, granted pursuant to this Plan that is not intended to comply with the requirements set forth in Section 422 of the Code.
2.24 "Option" means either an ISO or NQSO.
2.25 "Option Price" means the price which must be paid by a Participant upon exercise of an Option to purchase a Share.
2.26 "Participant" shall mean an Employee, Consultant, or Non-Employee Director to whom an Award is granted under this Plan.
2.27 "Performance Goal" means the performance goals or objectives established by the Committee as a condition precedent to the vesting of an Award. The Performance Goals related to a Covered Participant are listed in Article 10 of this Plan. The Performance Goals related to a Participant who is not a Covered Participant shall be determined by the Committee in its sole discretion.
2.28 "Performance Period" means the time period designated by the Committee during which Performance Goals must be met.
2.29 "Person" shall mean any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.
2.30 "Plan" means this Xilinx, Inc. 2007 Equity Incentive Plan, as amended from time to time.
2.31 "Restricted Stock" means Shares issued or transferred to a Participant pursuant to Section 6.5 of this Plan which are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.
2.32 "Restricted Stock Unit" or "RSU" means a unit denominating a Share that gives the right to receive a payment in cash and/or Shares, and which is subject to restrictions, as described under Section 6.5 of the Plan and in the related Award Agreement.
2.33 "SAR" or "Stock Appreciation Right" means the right to receive a payment, in cash and/or Shares, equal to the excess of the Fair Market Value of a specified number of Shares on the date the SAR is exercised over the SAR Price for such Shares.
2.34 "SAR Price" means the Fair Market Value of each Share covered by a SAR on the Date of Grant of such SAR.
2.35 "SEC" shall mean the U.S. Securities and Exchange Commission.
2.36 "Section 16 Insider”means an officer or Director of the Company or any other Participant whose transactions in Shares are subject to the short-swing profit liabilities of Section 16 of the Exchange Act.
2.37 “Service” means a Participant's employment or service with the Company or its Subsidiaries whether in the capacity of an Employee, Director or Consultant. A Participant's Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders such Service.
2.38 "Shares" means the Company's common stock.
2.39 "Subsidiary" means a "subsidiary corporation," as defined under Section 424(f) of the Code.
ARTICLE 3
ADMINISTRATION
3.1 The Committee shall administer the Plan unless otherwise determined by the Board. However, any Awards granted to members of the Committee (other than pursuant to the automatic grant program under Article 11) must be authorized by a disinterested majority of the Board. The Board may, in its discretion and in accordance with applicable law, delegate authority to one or more elected officers of the Company to grant Awards to Participants who are not Section 16 Insiders. In that event, the applicable provisions of the Plan will be interpreted to permit such officers to take the actions otherwise conferred on the Committee to the extent necessary or appropriate to implement such delegation.
3.2 Members of the Committee shall serve for such period of time as the Board may determine and may be removed by the Board at any time. The Board may also at any time terminate the functions delegated to any officer pursuant to Section 3.1, and reassume all powers and authority previously delegated to such officer.
3.3 The Committee shall determine and designate from time to time the eligible persons to whom Awards will be granted and shall set forth in each related Award Agreement the Award Period, the Date of Grant, and such other terms, provisions, limitations, and Performance Goals, as are approved by the Committee, but not inconsistent with the Plan, including, but not limited to, any rights of the Committee to cancel or rescind any such Award.
3.4 The Committee, in its discretion, shall (i) interpret the Plan, (ii) prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of the Plan, and (iii) make such other determinations and take such other action as it deems necessary or advisable in the administration of the Plan, including, but not limited to, creating sub-plans to take advantage of favorable tax-treatment, or otherwise provide for grants of Awards to Employees, Consultants, or Non-Employee Directors of the Company and/or any Subsidiary residing in non-U.S. jurisdictions. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding and conclusive on all interested parties.
3.5 With respect to restrictions in the Plan that are based on the requirements of Section 422 of the Code, Section 162(m) of the Code, the rules of any exchange or inter-dealer quotation system upon which the Company's securities are listed or quoted, or any other applicable law, rule or restriction (collectively, "applicable law"), to the extent that any such restrictions are no longer required by applicable law, the Committee shall have the sole discretion and authority to grant Awards that are not subject to such mandated restrictions and/or to waive any such mandated restrictions with respect to outstanding Awards.
ARTICLE 4
ELIGIBILITY
The Committee, upon its own action, may grant, but shall not be required to grant, an Award to any Employee, Consultant, or Non-Employee Director. Awards may be granted by the Committee at any time and from time to time to new Participants, or to then Participants, or to a greater or lesser number of Participants, and may include or exclude previous Participants, as the Committee
shall determine. Except as required by this Plan, different Awards need not contain similar provisions. The Committee's determinations under the Plan (including, without limitation, the determination of the individual who is to receive an Award, the form, amount and timing of such Award, and the terms and provisions of such Award and the agreements evidencing the same) need not be uniform and may be made by it selectively among Employees, Consultants, or Non-Employee Directors who receive, or are eligible to receive, Awards under the Plan.
ARTICLE 5
SHARES SUBJECT TO PLAN
5.1 Total Shares Available. Subject to adjustment as provided in Articles 14 and 15, the maximum number of Shares that may be delivered pursuant to Awards granted under the Plan is 41,500,000, all of which may be granted as Incentive Stock Options.
5.2 Source of Shares. Shares to be issued may be made available from authorized but unissued Shares, Shares held by the Company in its treasury, or Shares purchased by the Company on the open market or otherwise. During the term of this Plan, the Company will at all times reserve and keep available a number of Shares that shall be sufficient to satisfy the requirements of this Plan.
5.3 Restoration and Retention of Shares. If any Shares subject to an Award shall not be issued or transferred to a Participant and shall cease to be issuable or transferable to a Participant because of the forfeiture, termination, expiration or cancellation, in whole or in part, of such Award or for any other reason, or if any such Shares shall, after issuance or transfer, be reacquired by the Company because of the Participant's failure to comply with the terms and conditions of an Award or for any other reason, the Shares not so issued or transferred, or the Shares so reacquired by the Company, as the case may be, shall no longer be charged against the limitation provided for in Section 5.1 and may be used thereafter for additional Awards under the Plan. To the extent an Award under the Plan is settled or paid in cash, Shares subject to such Award will not be considered to have been issued and will not be applied against the maximum number of Shares provided for in Section 5.1. If an Award may be settled in Shares or cash, such Shares shall be deemed issued only when and to the extent that settlement or payment is actually made in Shares. To the extent an Award is settled or paid in cash, and not Shares, any Shares previously reserved for issuance or transfer pursuant to such Award will again be deemed available for issuance or transfer under the Plan, and the maximum number of Shares that may be issued or transferred under the Plan shall be reduced only by the number of Shares actually issued and transferred to the Participant. The Committee may, from time to time, adopt and observe such procedures concerning the counting of Shares against the Plan maximum as it may deem appropriate.
ARTICLE 6
GRANT OF AWARDS
6.1 Award Agreement. The grant of an Award shall be authorized by the Committee and may be evidenced by an Award Agreement setting forth the term of the Award, including the total number of Shares subject to the Award, the Option Price (if applicable), the Award Period, the Date of Grant, and such other terms, provisions, limitations, and Performance Goals, as are approved by the Committee, but not inconsistent with the Plan. The Company may execute an Award Agreement with a Participant after the Committee approves the issuance of an Award. The grant of an Award to a Participant shall not be deemed either to entitle the Participant to, or to disqualify the Participant from, the receipt of any other Award under the Plan.
6.2 Limitations on Awards. The Plan is subject to the following limitations:
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(a) | Options. The Option Price cannot be less than 100% of the Fair Market Value of the Share(s) underlying the Option on the Date of Grant of such Option. |
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(b) | SARs. The SAR Price of a SAR cannot be less than 100% of the Fair Market Value of the Share(s) underlying the SAR on the Date of Grant of such SAR. |
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(c) | Calendar Year Share Limit. Subject to the adjustments as provided in Articles 14 and 15, the aggregate Awards granted under the Plan to any Participant during any calendar year shall not exceed:
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(i) | 4,000,000 Shares subject to Options, SARs or a combination of the foregoing; and |
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(ii) | 2,000,000 Shares subject to Awards other than Options or SARs. |
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(d) | Calendar Year Cash Limit. No Participant may receive during any calendar year Awards under the Plan that are to be settled in cash covering an aggregate of more than $6,000,000.
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(e) | Term. The term of Awards may not exceed seven (7) years.
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(f) | Repricing. The Committee shall not reprice an Option or SAR, whether by directly lowering the exercise price, through the cancellation of an Option or SAR in exchange for a new Option or SAR having a lower exercise price, or by substituting Restricted Stock or RSU awards in place of the Option or SAR, without stockholder approval.
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6.3 Rights as Stockholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or any authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder of the Company shall exist with respect to such Shares, notwithstanding the exercise of any Award. No adjustment will be made for a dividend or other rights for which the record date is prior to the date Shares are issued.
6.4 Options.
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(a) | In General. The Committee may grant Options under the Plan. ISOs may be granted only to Employees. NQSOs may be granted to Employees, Consultants, and Non-Employee Directors. With respect to each Option, the Committee shall determine the number of Shares subject to the Option, the Option Price, the term of the Option, the time or times at which the Option may be exercised and whether the Option is an ISO or an NQSO.
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(b) | Vesting. Subject to Article 15 of the Plan, Options shall vest upon satisfaction of the conditions set forth in the Award Agreement. Such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business objectives, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other Performance Goals, as may be determined by the Committee in its sole discretion.
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(c) | Special Rule for ISOs. If the aggregate Fair Market Value of Shares (determined as of the Date of Grant) underlying ISOs that first become exercisable during any calendar year exceeds $100,000, the portion of the Option or Options not exceeding $100,000, to the extent of whole Shares, will be treated as an ISO and the remaining portion of the Option or Options will be treated as an NQSO. The preceding sentence will be applied by taking Options into account in the order in which they were granted.
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6.5 Restricted Stock/Restricted Stock Units. If Restricted Stock and/or Restricted Stock Units are granted to a Participant under an Award, the Committee shall establish: (i) the number of Shares of Restricted Stock and/or the number of Restricted Stock Units awarded, (ii) the price, if any, to be paid by the Participant for such Restricted Stock and/or Restricted Stock Units, (iii) the time or times within which such Award may be subject to forfeiture, (iv) Performance Goals of the Company, a Subsidiary, any division thereof or any group of Employees of the Company, or other criteria, if any, which the Committee determines must be met in order to remove any restrictions (including vesting) on such Award, and (v) all other terms, limitations, restrictions, and conditions of the Restricted Stock and/or Restricted Stock Units, which shall be consistent with this Plan. The provisions of Restricted Stock and/or Restricted Stock Units need not be the same with respect to each Participant.
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(a) | Legend on Shares. Each Participant who is awarded Restricted Stock shall be issued the number of Shares specified in the Award Agreement for such Restricted Stock, and such Shares shall be recorded in the Share transfer records of the Company and ownership of such Shares shall be evidenced by a certificate or book entry notation in the Share transfer records of the Company. Such Shares shall be registered in the name of the Participant, and shall bear or be subject to an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock. The Committee may require that the Share certificates or other evidence of ownership of the Shares of Restricted Stock be held in custody by the Company until the restrictions thereon shall have lapsed, and that the Participant deliver to the Committee a share power or share powers, endorsed in blank, relating to the Shares of Restricted Stock.
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(b) | Restrictions and Conditions. Shares of Restricted Stock and Restricted Stock Units shall be subject to the following restrictions and conditions:
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(i) | Subject to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as may be determined by the Committee commencing on the Date of Grant (the "Restriction Period"), the Participant shall not be permitted to sell, transfer, pledge or assign Shares of Restricted Stock and/or Restricted Stock Units. |
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(ii) | Except as provided in subparagraph (i) above and subject to the terms of a Participant's Award Agreement, the Participant shall have, with respect to his or her Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the Shares, and the right to receive any dividends thereon. Certificates or evidence of ownership of Shares free of restriction under this Plan shall be delivered to the Participant promptly after, and only after, the Restriction Period shall expire without forfeiture in respect of such Shares. Certificates for the Shares forfeited under the provisions of the Plan shall be promptly returned to the Company by the forfeiting Participant. Each Participant, by his or her acceptance of Restricted Stock, shall irrevocably grant to the Company a power of attorney to transfer any Shares so forfeited to the Company and agrees to execute any documents requested by the Company in connection with such forfeiture and transfer. |
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(iii) | The Restriction Period of Restricted Stock and/or Restricted Stock Units shall commence on the Date of Grant and, subject to Article 15 of the Plan, shall expire upon satisfaction of the conditions set forth in the Award Agreement; such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business objectives, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other Performance Goals, as may be determined by the Committee in its sole discretion. |
6.6 SARs.
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(a) | In General. A SAR shall entitle the Participant to surrender to the Company the SAR, or a portion thereof, as the Participant shall choose, and to receive from the Company in exchange therefore cash or Shares in an amount equal to the excess (if any) of the Fair Market Value (as of the date of the exercise of the SAR) per Share over the SAR Price per Share specified in such SAR, multiplied by the total number of Shares of the SAR being surrendered. In the discretion of the Committee, the Company may satisfy its obligation upon exercise of a SAR by the distribution of that number of Shares having an aggregate Fair Market Value (as of the date of the exercise of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to be made for any fractional Shares, or the Company may settle such obligation in part with Shares and in part with cash.
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(b) | Vesting. Subject to Article 15 of the Plan, SARs shall vest upon satisfaction of the conditions set forth in the Award Agreement; such conditions may provide for vesting based on (i) length of continuous service, (ii) achievement of specific business objectives, (iii) increases in specified indices, (iv) attainment of specified growth rates, or (v) other Performance Goals, as may be determined by the Committee in its sole discretion.
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ARTICLE 7
AWARD PERIOD; VESTING
The Committee, in its sole discretion, may determine that an Award will be immediately exercisable or vested, in whole or in part, or that all or any portion may not be exercised or vest until a date, or dates, subsequent to its Date of Grant, or until the occurrence of one or more specified events, subject in any case to the terms of the Plan. If the Committee imposes conditions upon exercise or vesting, then subsequent to the Date of Grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the Award may be exercised or vested.
ARTICLE 8
TERMINATION OF SERVICE
The provisions of this Article 8 shall apply to each Award granted under the Plan other than an Outside Director RSU Award granted pursuant to Article 11, unless otherwise provided in an applicable Award Agreement.
8.1 In General. If a Participant's Service is terminated or ceases, other than for Good Reason, Cause, or by reason of death or Disability, then the portion of any Award that is not vested as of the date of such termination or cessation shall automatically lapse and be forfeited. The portion, if any, of any Option or SAR that is vested as of the date of such termination or cessation shall automatically lapse and be forfeited at the close of business on the 30th day following the date of such Participant's termination or cessation (or if earlier, upon the expiration of the term of the Option or SAR), subject to Section 8.6 and 8.7 below, to the extent applicable.
8.2 Death or Disability. If a Participant's employment as an Employee, or service as a Consultant or Non-Employee Director is terminated by reason of Disability, then the portion of any Award that is not vested as of the date of such termination shall automatically lapse and be forfeited. The portion, if any, of any Option or SAR that is vested as of the date of such termination shall automatically lapse and be forfeited at the close of business on the 12-month anniversary of the date of such Participant's termination (or if earlier, upon the expiration of the option term). If a Participant's employment as an Employee, or service as a Consultant or Non-Employee Director is terminated by reason of death, vesting of the unvested portion of any Award shall be accelerated on the date of such termination so that the Participant's Award shall vest with respect to an additional number of Shares in which the Participant would have vested if the Participant had remained in employment or service for a period of 12 months following such termination. Any such vested Award shall automatically lapse and be forfeited at the close of business on the 12-month anniversary of the date of such Participant's death (or if earlier, upon the expiration of the term of the Option or SAR).
8.3 Suspension or Termination for Cause. If at any time (including after a notice of exercise has been delivered) the Committee reasonably believes that a Participant has committed an act of misconduct as described in Section 2.5, the Committee or an officer of the Company authorized by the Committee may suspend the Participant's right to receive the benefit of any Award pending a determination by the Committee of whether an act of misconduct amounting to Cause has been committed. If at any time a Participant's employment as an Employee, or service as a Consultant or Non-Employee Director is terminated by the Company for Cause, the Participant's entire Award, whether vested or unvested, shall automatically lapse and be forfeited on the date of such termination. Any determination by the Committee with regard to the foregoing shall be final, conclusive and binding on all interested parties. For any Participant who is an "executive officer" for purposes of Section 16 of the Exchange Act, the determination of the Committee shall be subject to the approval of the Board of Directors.
8.4 Termination for Good Reason. If a Participant's employment as an Employee, or service as a Consultant or Non-Employee Director is terminated for Good Reason, the portion of any Award that is not vested as of the date of such termination shall automatically lapse and be forfeited. The portion, if any, of any Option or SAR that is vested as of the date of such termination shall automatically lapse and be forfeited at the close of business on the 12-month anniversary of the date of such Participant's termination (or if earlier, upon the expiration of the term of the Option or SAR).
8.5 Leave of Absence; Transfer. For purposes of this Plan, a Participant shall not be deemed to have a termination of employment or a cessation of services, if the Participant is either on a leave of absence approved by the Company or any Subsidiary, or the Participant transfers between locations of the Company or any Subsidiary. Notwithstanding the above, vesting of Awards shall cease while a Participant is on a leave of absence unless the Committee or applicable laws and regulations determine[s] otherwise.
8.6 Extension if Exercise is Prevented by Law. Notwithstanding the foregoing, if the exercise of an Option or SAR within the applicable periods set forth in this Article 8 is prevented by the provisions of Section 18.6, the Option or SAR shall remain exercisable until 30 days after the date the Participant is notified by the Company that the Option or SAR is exercisable, but in any event, no later than the expiration of the term of the Option or SAR.
8.7 Extension if Participant is a Section 16 Insider. Notwithstanding the foregoing, other than termination for Good Reason, Cause or by reason of death or Disability, if the Participant is a Section 16 Insider at the time of termination or cessation of Service, then the portion of any Award that is not vested as of the date of such termination or cessation shall automatically lapse and be forfeited. The portion, if any, of any Option or SAR that is vested as of the date of such termination or cessation of Service shall automatically lapse and be forfeited at the close of business on the last business day of the seventh month following the date of Participant's termination or cessation of Service (or if earlier, upon the expiration of the term of the Option or SAR).
ARTICLE 9
EXERCISE OF AWARD
9.1 In General.
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(a) | A vested Award may be exercised at such times and in such amounts as provided in this Plan and the applicable Award Agreement, subject to the terms, conditions and restrictions of the Plan. |
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(b) | In no event may an Award be exercised or Shares be issued pursuant to an Award if a necessary listing or quotation of the Shares on a stock exchange or inter-dealer quotation system or any registration under, or compliance with, any laws required under the circumstances has not been accomplished. No Award may be exercised for a fractional Share. |
9.2 Stock Options.
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(a) | Subject to such administrative regulations as the Committee may from time to time adopt, an Option may be exercised by the delivery of the Exercise Notice to the Company (or designated broker, as agent for the Company). On the Exercise Date, the Participant shall deliver to the Company (or designated broker, as agent for the Company) consideration with a value equal to the total Option Price of the Shares to be purchased. The acceptable form(s) of consideration for the total Option Price shall be specified in the Award Agreement. Such consideration may include the following: (i) cash, check, bank draft, or money order payable to the order of the Company, (ii)Shares owned by the Participant on the Exercise Date, valued at their Fair Market Value on the Exercise Date, (iii) by delivery (including by fax) to the Company (or designated broker, as agent for the Company) of an executed irrevocable option exercise form together with irrevocable instructions from the Participant to a broker or dealer, reasonably acceptable to the Company, to sell certain of the Shares purchased upon exercise of the Option and promptly deliver to the Company the amount of sale proceeds necessary to pay such purchase price, (iv) a "cashless exercise" mechanism approved by the Committee, and/or (v) in any other form of valid consideration that is acceptable to the Company in its sole discretion. |
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(b) | Upon payment of all amounts due from the Participant, the Company shall cause Shares then being purchased to be delivered as directed by the Participant (or the person exercising the Participant's Option in the event of his death) at its principal business office promptly after the Exercise Date; provided that if the Participant has exercised an ISO, the Company may, at its option, retain possession of the Shares acquired upon exercise until the expiration of the holding periods described in Section 422(a)(1) of the Code. The obligation of the Company to deliver Shares shall, however, be subject to the condition that if at any time the Committee shall determine in its discretion that the listing, registration, or qualification of the Option or the Shares upon any securities exchange or inter-dealer quotation system or under any state or federal law, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the Option or the issuance or purchase of Shares thereunder, the Option may not be exercised in whole or in part unless such listing, registration, qualification, consent, or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. |
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(c) | If the Participant fails to pay for any of the Shares specified in such notice or fails to accept delivery thereof, the Participant's right to purchase such Shares may be terminated by the Company. |
9.3 SARs. Subject to the conditions of this Section and such administrative regulations as the Committee may, from time to time, adopt, a SAR may be exercised by the delivery of the Exercise Notice to the Company (or designated broker, as agent for the Company). On the Exercise Date, the Participant shall receive from the Company in exchange for cash in an amount equal to the excess (if any) of the Fair Market Value (as of the date of the exercise of the SAR) per Share over the SAR Price per
Share specified in such SAR, multiplied by the total number of Shares of the SAR being surrendered. In the discretion of the Committee, the Company may satisfy its obligation upon exercise of a SAR by the distribution of that number of Shares having an aggregate Fair Market Value (as of the date of the exercise of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to be made for any fractional Shares, or the Company may settle such obligation in part with Shares and in part with cash.
9.4 Tax Withholding. The Company or any Subsidiary (as applicable) is hereby authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any applicable withholding taxes with respect to an Award, its exercise, the lapse of restrictions thereon, payment or transfer under an Award or under the Plan, and to take any other action necessary in the opinion of the Company to satisfy all obligations for the payment of the taxes. Such payments shall be required to be made prior to the delivery of any Shares. Such payment may be made in cash, by check, or through the delivery of Shares owned by the Participant (which may be effected by the actual delivery of Shares by the Participant or by the Company's withholding a number of Shares to be issued upon the exercise of a Share, if applicable), or any combination thereof.
ARTICLE 10
SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS
Awards subject to Performance Goals paid to Covered Participants under this Plan shall be governed by the provisions of this Article 10 in addition to the requirements of Article 6. Should the provisions set forth under this Article 10 conflict with the requirements of Article 6, the provisions of this Article 10 shall prevail.
10.1 Establishment of Performance Goals. All Performance Goals, relating to Covered Participants for a relevant Performance Period shall be established by the Committee in writing prior to the beginning of the Performance Period, or by such other later date for the Performance Period as may be permitted under Section 162(m) of the Code. The Performance Goals may be identical for all Participants or, at the discretion of the Committee, may be different to reflect more appropriate measures of individual performance.
10.2 Performance Goals. The Committee shall establish the Performance Goals relating to Covered Participants for a Performance Period in writing. Performance Goals may include alternative and multiple Performance Goals and may be based on one or more business and/or financial criteria. In establishing the Performance Goals for the Performance Period, the Committee, in its discretion, may include one or any combination of the following criteria in either absolute or relative terms, for the Company or any Subsidiary, without excluding other criteria:
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(b) | Net income measures (including, but not limited to, income after capital costs and income before or after any one or more of the share-based compensation expenses, interest, taxes, appreciation or amortization); |
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(c) | Stock price measures (including, but not limited to, growth measures and total stockholder return); |
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(e) | Earnings per Share (actual or targeted growth); |
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(f) | Cash flow measures (including, but not limited to, net cash flow and net cash flow before financing activities); |
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(g) | Return measures (including, but not limited to, return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors' capital and return on average equity); |
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(h) | Operating measures (including operating income, gross margin, operating margin, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes and production efficiency); |
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(i) | Expense measures (including, but not limited to, overhead cost, research and development expenses and general and administrative expense); |
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(j) | Product technology leadership metrics; and |
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(k) | Product quality leadership metrics. |
10.3 Compliance with Section 162(m). The Performance Goals must be objective and must satisfy third party "objectivity" standards under Section 162(m) of the Code, and the regulations promulgated thereunder. In interpreting Plan provisions relating to Awards subject to Performance Goals paid to Covered Participants, it is the intent of the Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation §1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the Plan shall be guided by such provisions.
10.4 Adjustments. The Committee is authorized to make adjustments in the method of calculating attainment of Performance Goals in recognition of: (i) extraordinary or non-recurring items, (ii) changes in tax laws, (iii) changes in generally
accepted accounting principles, (iv) charges related to restructured or discontinued operations, (v) restatement of prior period financial results, and (vi) any other unusual, non-recurring gain or loss that is separately identified and quantified in the Company's financial statements. Notwithstanding the foregoing, the Committee may, in its sole discretion, reduce the performance results upon which Awards are based under the Plan, to offset any unintended result(s) arising from events not anticipated when the Performance Goals were established, or for any other purpose, provided that such adjustment is permitted by Section 162(m) of the Code.
10.5 Discretionary Adjustments. The Performance Goals shall not allow for any discretion by the Committee as to an increase in any Award, but discretion to lower an Award is permissible.
10.6 Certification. The Award and payment of any Award under this Plan to a Covered Participant with respect to a relevant Performance Period shall be contingent upon the attainment of the Performance Goals that are applicable to such Covered Participant. The Committee shall certify in writing prior to payment of any such Award that such applicable Performance Goals relating to the Award are satisfied. Approved minutes of the Committee may be used for this purpose.
10.7 Other Considerations. All Awards to Covered Participants under this Plan shall be further subject to such other conditions, restrictions and requirements as the Committee may determine to be necessary to carry out the purpose of this Article 10.
ARTICLE 11
AUTOMATIC OUTSIDE DIRECTOR RESTRICTED STOCK UNIT AWARDS
The Committee may from time to time establish an automatic grant program for Non-Employee Directors who are members of the Board (each an “Outside Director”). Unless and until otherwise determined by the Committee, Awards of Restricted Stock Units (each an “Outside Director RSU Award”) shall be granted automatically without any further action of the Committee and without payment of any monetary consideration by an Outside Director as follows:
11.1 Initial Grants. Each individual who is first elected or appointed as an Outside Director at any time on or after August 13, 2014 and who has not previously been an employee member of the Board shall be granted automatically, on the first trading day occurring on or after the 10th day of the month next following the date of such initial election or appointment, an Outside Director RSU Award consisting of a whole number of Restricted Stock Units (rounded to the nearest unit) determined by multiplying (a) the quotient of $185,000.00 and the Fair Market Value of a Share on the grant date by (b) the ratio of (i) the difference between 365 and the number of days elapsed between the date of the most recent annual meeting of the stockholders of the Company and the date of such initial election or appointment, to (ii) 365. Notwithstanding the foregoing, an individual who is first elected or appointed as an Outside Director on the date of an annual meeting of the stockholders of the Company shall be granted an initial Outside Director RSU Award in the manner described in Section 11.2.
11.2 Annual Grants. On the date of the 2014 annual meeting of the stockholders of the Company and on the date of each subsequent annual meeting of the stockholders of the Company, each Outside Director continuing in office following such meeting shall be granted automatically an Outside Director RSU Award consisting of a whole number of Restricted Stock Units (rounded to the nearest unit) determined by the quotient of $185,000.00 and the Fair Market Value of a Share on the grant date.
11.3 Terms of Outside Director RSU Awards. The terms of the Outside Director RSU Awards shall be as follows:
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(a) | Vesting; Termination of Service. Subject to Section 15.4, each Outside Director RSU Award granted on or after May 12, 2010 shall vest in full and the Restriction Period shall lapse on the day immediately preceding the day of the next annual meeting of the stockholders of the Company following the grant date, provided that the Outside Director's Service has continued through such vesting date. In the event of an Outside Director's death, the vesting of such individual's Outside Director RSU Awards shall be accelerated on the date of death so that such Awards shall be vested to the extent they would have vested if the Outside Director had remained in Service for a period of 12 months following death. Any portion of an Outside Director RSU Award which remains unvested following the Outside Director's termination of Service shall automatically lapse and be forfeited.
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(b) | Settlement. Outside Director RSU Awards shall be settled by the issuance to the Participant of Shares on the date which is the later of (i) the date on which such Award vests or (ii) a deferred settlement date elected in accordance with Section 11.3(c).
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(c) | Deferred Settlement Election. On or before the last day of each calendar year, each Outside Director who is then in office shall be entitled to make a deferred settlement election that will apply to each Outside Director RSU Award granted to such Outside Director in the following calendar year. Each such deferred settlement election shall be subject to such conditions and shall be made in accordance with such procedures as shall be established from time to time by the Committee, and shall in all respects comply with the applicable requirements of Section 18.1 of the Plan and Section 409A of the Code and the regulations thereunder.
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ARTICLE 12
AMENDMENT OR DISCONTINUANCE
Subject to the limitations set forth in this Article 12, the Board may, at any time and from time to time, without the consent of the Participants, alter, amend, revise, suspend, or discontinue the Plan, in whole or in part; provided, however, that no amendment which requires stockholder approval under the rules of the national exchange on which Shares are listed (or in order for the Plan and Awards awarded under the Plan to comply with Section 422 or Section 162(m) of the Code, including any successors to such sections), shall be effective unless such amendment shall be approved by the requisite vote of the stockholders of the Company entitled to vote thereon; and, provided further, that, subject to Section 18.1, no amendment shall adversely affect any rights of Participants or obligations of the Company to Participants with respect to any Award theretofore granted under the Plan without the written consent of the affected Participant.
ARTICLE 13
EFFECTIVE DATE AND TERM
The Plan was effective as of January 1, 2007 and had an initial term of seven (7) years from its effective date until December 31, 2013. At the 2013 Annual Meeting of Stockholders, the stockholders approved an extension of the term of the Plan for an additional ten (10) years from December 31, 2013. Accordingly, subject to earlier termination pursuant to Article 11, the Plan shall have an additional term of ten (10) years from December 31, 2013 and will terminate on December 31, 2023. After termination of the Plan, no future Awards may be made. However, any Awards granted before that date will continue to be effective in accordance with their terms and conditions.
ARTICLE 14
CAPITAL ADJUSTMENTS
14.1 In General. If at any time while the Plan is in effect, or Awards are outstanding, there shall be any increase or decrease in the number of issued and outstanding Shares resulting from (1) the declaration or payment of a stock dividend, (2) any recapitalization resulting in a stock split-up, combination, or exchange of Shares, or (3) other increase or decrease in such Shares effected without receipt of consideration by the Company, then:
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(a) | An equitable adjustment shall be made in the maximum number of Shares then subject to being awarded under the Plan and in the maximum number of Shares that may be awarded to a Participant to the extent that the same proportion of the Company's issued and outstanding Shares shall continue to be subject to being so awarded. |
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(b) | Equitable adjustments shall be made in the number of Shares and the Option Price thereof then subject to purchase pursuant to each such Option previously granted and unexercised, to the extent that the same proportion of the Company's issued and outstanding Shares in each such instance shall remain subject to purchase at the same aggregate Option Price. |
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(c) | Equitable adjustments shall be made in the number of SARs and the SAR Price thereof then subject to exercise pursuant to each such SAR previously granted and unexercised, to the extent that the same proportion of the Company's issued and outstanding Shares in each instance shall remain subject to exercise at the same aggregate SAR Price. |
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(d) | Equitable adjustments shall be made in the number of outstanding Shares of Restricted Stock and the number of Restricted Stock Units with respect to which restrictions have not yet lapsed prior to any such change. |
14.2 Issuance of Shares or Other Convertible Securities. Except as otherwise expressly provided herein, the issuance by the Company of Shares of any class, or securities convertible into Shares of any class, either in connection with direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of Shares or obligations of the Company convertible into such Shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to (i) the number of or Option Price of Shares then subject to outstanding Options granted under the Plan, (ii) the number of or SAR Price or SARs then subject to outstanding SARs granted under the Plan, (iii) the number of outstanding Shares of Restricted Stock, or (iv) the number of outstanding Restricted Stock Units.
14.3 Notification. Upon the occurrence of each event requiring an adjustment with respect to any Award, the Company shall notify each affected Participant of its computation of such adjustment, which shall be conclusive and shall be binding upon each such Participant.
ARTICLE 15
RECAPITALIZATION; CHANGE OF CONTROL
15.1 Adjustments, Recapitalizations, Reorganizations, or Other Adjustments. The existence of this Plan and Awards granted hereunder shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company's capital structure and its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the Shares or the rights thereof (or any rights, options, or warrants to purchase same), or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
15.2 Acquiring Entity. Subject to any required action by the stockholders, if the Company shall be the surviving or resulting corporation in any merger, consolidation or Share exchange, any Award granted hereunder shall pertain to and apply to the securities or rights (including cash, property, or assets) to which a Participant would have been entitled had the Participant been a stockholder of the Company immediately prior to such transaction.
15.3 Acquired Entity. In the event of any merger, consolidation or Share exchange pursuant to which the Company is not the surviving or resulting corporation, there shall be substituted for each or any Share subject to the unexercised portions of such outstanding Award, that number of Shares of each class of stock or other securities or that amount of cash, property, or assets of the surviving, resulting or consolidated company which were distributed or distributable to the stockholders of the Company in respect to each or any Share held by them, such outstanding Awards to be thereafter exercisable or settled for such stock, securities, cash, or property in accordance with their terms. Notwithstanding the foregoing, however, all or any portion of Awards may be canceled by the Company immediately prior to the effective date of any such reorganization, merger, consolidation, Share exchange or any dissolution or liquidation of the Company by giving notice to each holder thereof or his or her personal representative of its intention to do so and by permitting the purchase during the 30 day period next preceding such effective date of all or any portion of the Shares subject to such outstanding Awards whether or not such Awards are then vested or exercisable.
15.4 Change of Control. In the event of a Change of Control, notwithstanding any other provision in this Plan to the contrary, the Committee may, in its sole discretion, and to such extent, if any, as it shall determine, provide that the vesting and exercisability of all or any portion of Awards outstanding and not otherwise canceled in accordance with Section 15.3 above shall be accelerated and all or any Restriction Periods applicable to Restricted Stock and/or Restricted Stock Units shall lapse and expire.
ARTICLE 16
LIQUIDATION OR DISSOLUTION
In case the Company sells all or substantially all of its property, or dissolves, liquidates, or winds up its affairs (each, a "Dissolution Event"), the Participant shall receive, to the extent the participant is vested in an Award, the same kind and amount of any securities or assets as may be issuable, distributable, or payable upon any such sale, dissolution, liquidation, or winding up with respect to each Share of the Company.
ARTICLE 17
ADDITIONAL AUTHORITY OF COMMITTEE
In addition to the Committee's authority set forth elsewhere, in order to maintain a Participant's rights in the event of any Change of Control or Dissolution Event described under Articles 15 and 16, the Committee, as constituted before the Change of Control or Dissolution Event, is hereby authorized, and has sole discretion, as to any Award, either at the time the Award is made hereunder or any time thereafter, to take any one or more of the following actions:
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(a) | provide for the acceleration of any time periods relating to the vesting, exercise or realization of the Award so that the Award may be exercised or realized in full on or before a date fixed by the Committee; |
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(b) | provide for the purchase of any Award, upon the Participant's request, for an amount of cash equal to the amount that could have been attained upon the exercise of the Award or realization of the Participant's rights in the Award had the Award been currently exercisable or payable; |
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(c) | adjust any outstanding Award as the Committee deems appropriate to reflect the Change of Control or Dissolution Event; |
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(d) | cause any outstanding Award to be assumed, or new rights substituted therefor, by the acquiring or surviving corporation after a Change of Control or successor following a Dissolution Event; or |
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(e) | the Committee may, in its discretion, include other provisions and limitations in any Award Agreement as it may deem equitable and in the best interests of the Company. |
ARTICLE 18
MISCELLANEOUS PROVISIONS
18.1 Code Section 409A. The Company intends that Awards granted pursuant to the Plan shall either be exempt from or comply with Code Section 409A and related regulations and U.S. Treasury pronouncements ("Section 409A"), and the Plan shall be so construed. Any Award or portion thereof that constitutes or provides for payment of deferred compensation subject to and not exempted from the requirements of Section 409A (“Section 409A Deferred Compensation”) shall comply with the following:
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(a) | Each compensation deferral election (and subsequent deferral election, if any) and each payment election with respect to Section 409A Deferred Compensation shall be made in writing and shall comply in all respects with the requirements of Section 409A and such conditions and procedures as established from time to time by the Committee. |
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(b) | Each payment of Section 409A Deferred Compensation shall be made only upon the occurrence of one or more of the permissible payment events or times complying with the requirements of Section 409A. |
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(c) | Notwithstanding any provision of the Plan or an Award Agreement to the contrary, except as otherwise permitted by Section 409A, no payment of Section 409A Deferred Compensation may be made to a Participant who is a “specified employee” (as defined by Section 409A) as of the date of the Participant's “separation from service” (as defined by Section 409A) before the date (the “Delayed Payment Date”) that is six (6) months after the date of such Participant's separation from service, or, if earlier, the date of the Participant's death. All such amounts that would, but for this paragraph, become payable prior to the Delayed Payment Date shall be accumulated and paid on the Delayed Payment Date. |
Notwithstanding anything in this Plan to the contrary, if any Plan provision or Award under the Plan would result in the imposition of an applicable tax under Section 409A, that Plan provision or Award may be reformed to avoid imposition of the applicable tax and no action taken to comply with Section 409A shall be deemed to adversely affect the Participant's rights to an Award.
18.2 Investment Intent. The Company may require that there be presented to and filed with it by any Participant under the Plan, such evidence as it may deem necessary to establish that the Awards granted or the Shares to be purchased or transferred are being acquired for investment and not with a view to their distribution.
18.3 No Right to Continued Employment. Neither the Plan nor any Award granted under the Plan shall confer upon any Participant any right with respect to continuance of employment or service with the Company or any Subsidiary.
18.4 Indemnification of Board and Committee. No member of the Board of Directors of the Company or the Committee, nor any officer or employee of the Company acting on behalf of the Board of Directors of the Company or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board of Directors of the Company or the Committee and each and any officer or employee of the Company acting on their behalf shall, to the fullest extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination, or interpretation.
18.5 Effect of the Plan. Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any person any right to be granted an Award or any other rights except as may be evidenced by an Award Agreement, or any amendment thereto, duly authorized by the Committee and executed on behalf of the Company, and then only to the extent and upon the terms and conditions expressly set forth therein.
18.6 Compliance with Laws and Regulations. Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue Shares under any Award if the issuance thereof would constitute a violation by the Participant or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange or inter-dealer quotation system or other forum in which Shares are quoted or traded (including, without limitation, Sections 162(m) and 409A or 422 of the Code), and, as a condition of any sale or issuance of Shares under an Award, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation. The Plan, the grant and exercise of Awards hereunder, and the obligation of the Company to sell and deliver Shares, shall be subject to all applicable laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.
18.7 Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
18.8 Assignability. Awards may not be transferred or assigned other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Participant only by the Participant or the Participant's legally authorized representative, and each Award Agreement in respect of an Award shall so provide. Notwithstanding the previous sentence, the Committee, in its sole discretion, may allow for the transfer or assignment of a Participant's Award pursuant to a divorce decree or a domestic relations order, but only if such Participant is a U.S. resident.
18.9 No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or any fiduciary relationship between the Company or any affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any affiliate.
18.10 Use of Proceeds. Proceeds from the sale of Shares pursuant to Awards granted under this Plan shall constitute general funds of the Company.
18.11 Governing Law. The validity, construction and effect of the Plan and any actions taken or relating to the Plan shall be determined in accordance with the laws of Delaware without giving effect to its choice of law provisions.
18.12 No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether fractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.
18.13 Headings. Headings are given to the sections and subsections of the Plan solely as a convenience to facilitate reference. The headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.
18.14 Construction. Use of the term "including" in this Plan shall be construed to mean "including, but not limited to."
