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EMCORE CORPORATION 2015 W. Chestnut Street Alhambra, California 91803 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON FRIDAY, MARCH 19, 2021 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on March www.proxydocs.com/EMKR. To our Shareholders: The
The Board of Directors has fixed the close of business on January
January 21, 2021 Alhambra, California THIS IS AN IMPORTANT MEETING AND ALL SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING EMCORE CORPORATION PROXY STATEMENT
EMCORE CORPORATION 2015 W. Chestnut Street Alhambra, California 91803 PROXY STATEMENT March 19, 2021 This Proxy Statement is being furnished to shareholders of EMCORE Corporation (the “Company”) as of the close of business on January This Proxy Statement and the Company’s The Company has elected to furnish its proxy materials over the Internet in accordance with applicable rules of the Securities and Exchange Commission (“SEC”) rather than mailing paper copies of this Proxy Statement and the Company’s At the Annual Meeting, the Company’s shareholders will consider and vote upon the following matters:
Unless contrary instructions are indicated on the proxy you submit, all shares represented by valid proxies received pursuant to this solicitation (and that have not been revoked in accordance with the procedures set forth below) will be voted in accordance with the recommendation of the Board of Directors as follows: FOR ALL with respect to the election to the Board of Directors of the five (5) nominees for director named in this Proxy Statement (Proposal I);
FOR approval of the Amended and Restated EMCORE Corporation 2019 Equity Incentive Plan (Proposal III); and FOR the approval, on an advisory basis, of the Company’s executive compensation (Proposal IV). In the event a shareholder specifies a different choice by means of a properly submitted proxy, such shareholder’s shares will be voted in accordance with the specification so made. In addition, your shares will be voted as the proxyholders may determine in their discretion upon any other proposals as may properly come before the Annual Meeting. As of the close of business on the Record Date, the Company had You will be able to attend and participate in the Annual Meeting by visiting www.proxydocs.com/EMKR, where you will be able to vote electronically and submit questions. In order to attend, you must register in advance at www.proxydocs.com/EMKR prior to the deadline of March 17, 2021 at 5:00 p.m. (Eastern Time). Upon completing your registration, you will receive further instructions via email, including your unique link that will allow you to access the meeting and will also permit you to submit questions. Please be sure to follow the instructions on your Proxy Card and/or Voting Authorization Form and subsequent instructions that will be delivered to you via email. If your shares of Common Stock are registered directly in your name with
If your shares are held by a bank, broker or other nominee, you are a beneficial owner of those shares rather than a shareholder of record. If you are a beneficial owner, your bank, broker or other nominee will forward you the Notice of Internet Availability or a complete set of the proxy materials, together with a voting instruction form. As a beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following the voting instructions provided by your bank, broker or other nominee. Please refer to the proxy materials forwarded by your bank, broker or other nominee for instructions regarding the methods available to vote your shares (Internet, telephone or mail). Please note that if your shares of Common Stock are held by a bank, broker or other nominee and you wish to vote in person virtually at the Annual Meeting, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your shares giving you the right to vote in person virtually at the Annual Meeting, and you must register in advance of the deadline of March 17, 2021 at 5 p.m. eastern at www.proxydocs.com/EMKR. Except as noted below, if you are a holder of record, you may use the Internet or any touch-tone telephone to transmit your voting instructions The vote required for approval of each of the proposals before the shareholders at the Annual Meeting is as follows (and as summarized in the table below): For Proposal I — Election of Directors, the For each of Proposal II — Ratification of the Appointment of Independent Registered Public Accounting Firm, Proposal
A broker non-vote occurs when a broker, who has not received voting instructions from the beneficial owner of the shares, does not vote on a non-routine proposal because the broker does not have discretionary authority to vote on such proposal, but the broker does exercise its discretionary authority to vote the beneficial holder’s shares on at least one “routine” matter at the Annual Meeting. Proposal II — Ratification of the Appointment of Independent Registered Public Accounting Firm is considered a “routine” matter under applicable stock exchange rules while the other proposals at the Annual Meeting are considered In regards to Proposal I – Election of Directors, any shares not voted “FOR” a particular nominee (whether as a result of “withhold” votes or broker non-votes) will not be counted in such nominee’s favor and will have no effect on the outcome of the election. In regards to each of Proposal III — Approval of the Amended and Restated EMCORE Corporation 2019 Equity Incentive Plan and Proposal IV therefore, they do not have any effect on the voting results for these proposals. Broker the Appointment of Independent Registered Public Accounting Firm, as that proposal is considered a “routine” matter. Abstentions are not treated as votes cast at the Annual Meeting; and therefore, will have no effect on the outcome of the vote for any of Proposals II, III and IV. Withhold votes, abstentions and broker non-votes will be counted for purposes of determining whether a quorum is present at the meeting. Please note that the proposals regarding the ratification of the appointment of our independent registered public accounting firm and approval of executive compensation are advisory only and will not be binding on the Company or the Board. The results of the votes on those advisory proposals will be taken into consideration by the Company, the Board or the appropriate committee of the Board, as applicable, when making future decisions regarding these matters. The cost of preparing and making available this Proxy Statement, the Notice of Annual Meeting of Shareholders, and the proxy is borne by the Company. In addition to the use of the Internet, employees of the Company may solicit proxies personally and by telephone. The Company’s employees will receive no compensation for soliciting proxies other than their regular salaries. Solicitation of proxies may be made by additional mailings, electronic mail, telephone or in person by directors, officers or regular employees of the Company. The Company may request banks, brokers and other custodians, nominees, and fiduciaries to forward copies of the proxy material to their principals and to request authority for the execution of proxies. The Company will reimburse such persons for their expenses in so doing. We have also retained Alliance Advisors LLC to assist in the solicitation of proxies and related services, for a fee estimated to be approximately Prior to the Company’s 2018 annual meeting of shareholders held on March 16, 2018, the EMCORE Corporation Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), divided the Company’s Board of Directors Each of the incumbent directors on the Board standing for re-election, Mr. Stephen L. Domenik, elected. The following table sets forth certain information regarding each of the director
nominees:
If any of the Set forth below is certain information with respect to members of the Company’s Board of Directors, including the Directors STEPHEN L. DOMENIK, BRUCE E. GROOMS, 62, has served as a director of the Company since degree in Aerospace Engineering from Directors of Censys Technologies Corporation, a developer of industrial drones and remote sensing solutions for unmanned aerial systems. From March 2018 to April 2019, Ms. Heiks served as President and Chief Operating Officer of Duos Technologies Inc., a leader in artificial intelligence and machine learning for inspection and security applications. From August 2017 until March 2018, Ms. Heiks served as Interim Chief Executive Officer of MVTRAK, an early stage health monitoring company. In 2008, Ms. Heiks founded Nuvotronics Inc., a manufacturer of radar and wireless systems for defense and telecom organizations, serving as its Chief Executive Officer and then board member until its eventual acquisition by Cubic Corporation in March 2019. In 1996, Ms. Heiks founded Haleos Inc., a manufacturer of microfabricated optoelectronics components, and served as its Vice President until its eventual acquisition by Rohm and Haas Co. in 2002, where she went on to serve as Marketing Director of Rohm and Haas Co. (now Dow Chemical Company) from 2002 until 2007. Ms. Heiks’ extensive executive management and entrepreneurial experience in high tech companies, including defense and optoelectronics companies, and general business acumen were the primary qualifications that the Board considered in concluding that she should serve as a director of our company. REX S. JACKSON, company. JEFFREY RITTICHIER, of surface-mount photonic components for optical assemblies, from October 2001 to November 2007. From April 1999 to October 2001, Mr. Rittichier was VP and General Manager of Lucent’s Access Business and Vice President of Marketing at Ortel Corporation, a supplier of optoelectronic components in the cable television, satellite communications, wireless, data communications and telecommunications markets. Mr. Rittichier holds a B.S. in Mechanical Engineering from The Ohio State University. He was awarded the title of Distinguished Alumnus by Ohio State University’s College of Engineering in 2011 and has completed the Financial Management Program and Director’s College at Stanford University. Mr. Rittichier’s experience as a 20-year veteran in the semiconductor industry with a demonstrated track record of identifying and realizing optical networking growth opportunities were the primary qualifications that led the Board to conclude that he should serve as a director of our company. Non-Director Executive Officers TOM MINICHIELLO, 61, joined the Company is a Certified Public Accountant. ALBERT LU, IAIN BLACK, 56, was appointed to serve as the Company’s Senior Vice President, Operations, effective April 2018. From May 2017 until April 2018, Mr. Black served as the Company’s Vice President, THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE Board of Directors The Board of Directors oversees the Company’s business and affairs pursuant to the New Jersey Business Corporation Act and the Company’s Certificate of Incorporation and By-Laws, as amended. The Board of Directors is the ultimate decision-making body of the Company, except on matters reserved for the shareholders. Board Leadership Structure The Board believes it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman of the Board and Chief Executive Officer of the Company in any way that is in the best interests of the Company and the shareholders at a given point in time. The Board believes that the decision as to who should serve as Chairman of the Board and Chief Executive Officer, and whether these offices should be combined or separate, should be assessed periodically by the Board, and that the Board should not be constrained by a rigid policy mandating that such positions be separate. The Company currently separates the roles of Chief Executive Officer and Chairman of the The Board recognizes that the roles of Chief Executive Officer and Chairman of the Board are distinct. While the Chief Executive Officer is responsible for setting the strategic direction for the Company and for the day-to-day leadership and performance of the Company, the Chairman of the Board provides guidance to the Chief Executive Officer and sets the agenda for, and presides over, meetings of the Board of Directors. The Board believes that participation of the Chief Executive Officer as a director, while keeping the roles of Chief Executive Officer and Chairman of the Board distinct, provides the proper balance between independence and management participation at this time. By having a separate Chairman of the Board, the Company maintains an independent perspective on the Company’s business affairs, and at the same time, through the Chief Executive Officer’s participation as a director, the Board receives valuable experience regarding the Company’s business and maintains a strong link between management and the Board, which promotes clear communication, enhances strategic planning, and improves implementation of corporate strategies. The independent directors who chair the Company’s Audit, Compensation, Nominating and Corporate Governance, and Strategy and Alternatives Committees also provide leadership to the Board in their assigned areas of responsibility. The Board believes that the independent governance of the Board is safeguarded through: the separation of the roles of Chairman of the Board and Chief Executive Officer; the independence of directors constituting a supermajority (80%) of the current members of the Board; the use of a Lead Independent Director when the Chairman of the Board is not an independent director; the independence of the chairs and other Board committee members; and the holding of regular executive sessions of the non-management directors. The Company will continue to review its Board structure to ensure that it is in the best position to deliver value to its shareholders, key stakeholders and the communities in which the Company operates.
Following approval by the Company’s shareholders directors elected annually beginning with this Annual Meeting. Each of Corporate Governance Guidelines The Company’s Corporate Governance Guidelines, together with
documenting in the Governance Guidelines an existing provision of the By-Laws that limits the number of consecutive years an independent director may serve on the Board to ten years; charging the Board, through its Compensation Committee, with reviewing the Company’s succession plan for the Chief Executive Officer and general management; and requiring that the Board and each Board committee perform an annual self-evaluation. The full text of the Corporate Governance Guidelines is available by clicking on the Corporate Governance link included in the Investors tab of the Company’s website (www.emcore.com). Code of Ethics The Company has adopted a code of ethics entitled “EMCORE Corporation Code of Business Conduct and Ethics,” which is applicable to all employees, officers, and directors of the Company. In addition, the Company has adopted a Code of Ethics for Financial Professionals, which applies to the Chief Executive Officer, Chief Financial Officer, Vice Presidents of Finance, Controllers and Assistant Controllers of the Company. The full text of both the Code of Business Conduct and Ethics and the Code of Ethics for Financial Professionals is available by clicking on the Corporate Governance link in the Investors tab of the Company’s website (www.emcore.com). The Company intends to disclose any changes in or waivers from either of its codes of ethics for its directors and executive officers, to the extent disclosure is required by the applicable rules of the SEC and Nasdaq, by posting such information on its website at www.emcore.com or by filing a Current Report on Form 8-K. Related Person Transaction Approval Policy The Company’s Code of Business Conduct and Ethics sets forth the Company’s written policy for the review and approval of related person transactions. A related person is defined by applicable SEC rules as any executive officer, director or director nominee, any person who is known to be a beneficial owner of more than five percent (5%) of the voting securities of the Company, and any immediate family member of any of the foregoing persons. A related person transaction is defined under applicable SEC rules as any financial or other transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which the Company (or a subsidiary) would be a participant and the amount involved would exceed $120,000, and in which any related person would have a direct or indirect material interest. A related person will not be deemed to have a direct or indirect material interest in a transaction if the interest arises only from the position of the person as a director of another corporation or organization that is a party to the transaction or the direct or indirect ownership by such person and all the related persons, in the aggregate, of less than 10 percent of the equity interest in another person (other than a partnership) which is a party to the transaction. In addition, certain interests and transactions, such as director compensation that has been approved by the Board, transactions where the rates or charges are determined by competitive bid and compensatory arrangements solely related to employment with the Company (or a subsidiary) that have been approved by the Compensation Committee, are not subject to the policy. The Board of Directors has delegated to the Audit Committee the responsibility for reviewing, approving and, where applicable, ratifying material related person transactions involving the Company’s directors or executive officers or their respective immediate family members or affiliated entities. If a member of the Audit Committee has an interest in a related person transaction, then he or she will not participate in the review process. In considering the appropriate action to be taken regarding a related person transaction, the Audit Committee or the Board (as the case may be) will consider the best interests of the Company, whether the transaction is fair to the Company and serves a compelling business reason, and any other factors that it deems relevant. As a condition to approving or ratifying any related person transaction, the Audit Committee may impose whatever conditions and standards it deems appropriate, including periodic monitoring of ongoing transactions. The Company’s Code of Business Conduct and Ethics also includes the Company’s Conflicts of Interest Policy, among other policies. The Conflicts of Interest Policy provides, among other things, that conflicts of interest exist where the interests or benefits of one person or entity conflict with the interests or benefits of the Company. The Code of Business Conduct and Ethics also provides restrictions on outside directorships, business interests and employment, and receipt of gifts and entertainment and requires that all material violations of the Company’s Code of Business Conduct and Ethics or matters involving financial or legal misconduct be reported to the Company’s Audit Committee on at least a quarterly basis, or more frequently depending upon the level of severity of the violation. Directors and executive officers are also required to disclose potential and existing related person transactions on a quarterly basis and in Directors and Officers Questionnaires completed annually. There are no related person transactions or conflicts of interest that have occurred since October 1, 2019. Director Independence The Board of Directors reviews the independence, and any possible conflicts of interest, of directors and director nominees at least annually. The Board of Directors has affirmatively determined that Messrs. In addition to the Nasdaq listing standard rules, the Company’s By-Laws require that a majority of the Board be independent pursuant to certain additional criteria that, in many cases, are not included within the requirements of the Nasdaq rules. For example, a director is not considered independent for purposes of the By-Laws if, in the past three years, In making its independence determination, the Board considers the responses of each director and executive officer to an annual Directors and Officers Questionnaire, in which Following a review of these Questionnaires, the Company did not identify any transactions, relationships or arrangements engaged in by these directors or in which they participated (directly or indirectly) to be considered by the Board of Directors in making its independence determination. The Board of Directors’ Role in Risk Oversight Risk is inherent in business. The Board of Directors recognizes the importance of effective risk oversight in running a successful business and in fulfilling its fiduciary responsibilities to the Company and its shareholders. While the Chief Executive Officer and other members of our senior leadership team are responsible for the day-to-day management of risk, the Board of Directors takes an active role in risk management and is responsible for (i) overseeing the Company’s aggregate risk profile, and (ii) assisting management in addressing specific risks, such as strategic and competitive risks, financial risks, brand and reputation risks, legal risks, regulatory risks, and operational risks. The Board believes that its current leadership structure has facilitated its oversight of risk by combining independent leadership, through the separation of the roles of Chief Executive Officer and Chairman of the Board, independent Board committees, and majority independent Board composition. The Chairman of the Board, independent committee chairs and members, and other directors are also The Board of Directors exercises its oversight responsibility for risk both directly and through its standing committees. Throughout the year, the Board and each committee spend a portion of their time reviewing and discussing specific risk topics. The full Board is kept informed of each committee’s risk oversight and related activities, and committee meeting minutes are available for review by all directors. Strategic, operational and competitive risks also are presented and discussed at the Board’s quarterly meetings, and more often as necessary. On at least an annual basis, the Board reviews our long-term strategic plans. In addition, at least quarterly, or more often as necessary, the Board receives a briefing on material legal and regulatory matters. The Audit Committee is responsible for reviewing our major financial risk exposures, financial reporting, internal controls, credit and liquidity risk, compliance risk, key operational risks, related party transactions, and other potential conflicts of interest. The Audit Committee meets periodically in separate executive session with the Chief Financial Officer and the independent auditor, as well as with committee members only, to facilitate a full and candid discussion of risk and other issues. The Compensation Committee is responsible for overseeing human capital and compensation risks, including evaluating and assessing risks arising from our compensation policies and practices for all employees and ensuring executive compensation is aligned with performance. The Compensation Committee also is charged with monitoring our incentive and equity-based compensation plans, including employee retirement and benefit plans. In addition, the Compensation Committee is responsible for overseeing risks associated with succession planning for the Board. The Nominating and Corporate Governance Committee oversees risks related to our overall corporate governance, including Board and committee composition, Board size and structure, and director independence. The Strategy and Alternatives Committee oversees risks related to the Company’s strategic opportunities and alternatives which may be relevant to the Company’s business. In addition to the responsibilities undertaken by the committees discussed above, the Board committees may have oversight of specific risk areas consistent with the committees’ charters and responsibilities. Board Meetings and Attendance The Board of Directors held Board Committees Audit Committee The Company has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 2020. Compensation Committee The Compensation Committee evaluates the performance of the Chief Executive Officer and other executive officers and reviews and approves their compensation. Messrs. Domenik, Grooms and Jackson (chairman) currently serve as members of the Compensation Committee. The processes and procedures for the review and approval of executive compensation are described in the Compensation Discussion and Analysis section of this Proxy Statement. In addition, the Compensation Committee has responsibility for recommending to the Board the level and form of compensation and benefits for directors. It also administers the Company’s incentive compensation plans and is responsible for setting the compensation and benefits for the Company’s executives. Additionally, the Compensation Committee is responsible for executive officer development and retention and corporate succession plans for the Chief Executive Officer. A copy of the Charter of the Compensation Committee is posted in the Corporate Governance section on the Investors tab of the Company’s website (www.emcore.com). The Compensation Committee met 2020. To the extent consistent with its obligations and responsibilities, the Compensation Committee may form subcommittees of one or more members of the Compensation Committee and delegate its authority to the subcommittees as it deems appropriate. The Compensation Committee has the authority to retain and terminate external advisors in connection with the discharge of its duties. During fiscal Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee identifies and recommends new members to the Company’s Board of Directors and has responsibility for certain corporate governance matters. 2019. In performing its responsibilities relating to the identification and recommendation of new directors, the Nominating and Corporate Governance Committee has not established specific minimum age, education, experience or skill requirements for potential director nominees. When considering a potential director candidate, the Nominating and Corporate Governance Committee considers the candidate’s individual skills and knowledge, including experience in business, finance, or administration, familiarity with national and international business matters, and appreciation of the relationship of the Company’s business to changing needs in our society. The Nominating and Corporate Governance Committee also carefully considers any potential conflicts of interest. All nominees must possess demonstrated character, good judgment, integrity, relevant business, functional and industry experience, and a high degree of acumen. Although the Nominating and Corporate Governance Committee does not have a formal policy with respect to diversity in identifying nominees for director, the Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and considers diversity as a factor when identifying and evaluating candidates for membership on our Board, including in connection with its efforts to seek additional female candidates and candidates from unrepresented communities that it believes have the requisite qualifications and experience to join the Board. The Nominating and Corporate Governance Committee utilizes a broad conception of diversity, including professional and educational background, prior experience on other boards of directors (both public and private), political and social perspectives as well as race, gender and national origin. Utilizing these factors, and the factors described above, the Nominating and Corporate Governance Committee makes recommendations, as it deems appropriate, regarding the composition and size of the Board. The priorities and emphasis of the Nominating and Corporate Governance Committee and of the Board 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. The Nominating and Corporate Governance Committee identifies potential candidates from a number of sources, including current members of the Board and, if the Nominating and Corporate Governance Committee so chooses, third party search firms. The Nominating and Corporate Governance Committee may also consider candidates proposed by management or by shareholders. After the Nominating and Corporate Governance Committee’s initial evaluation of a candidate, if that candidate is still of interest to the Nominating and Corporate Governance Committee, one or more designated members of the Board will interview the candidate. Additional interviews by other Board members and/or senior management may take place and other screening processes may be undertaken. The Nominating and Corporate Governance Committee will meet to finalize its recommended candidates, which will be submitted to the entire Board for consideration. All candidates who are recommended by the Nominating and Corporate Governance Committee and approved by the Board are then included as nominees in the first proxy statement following their appointment or nomination and The Nominating and Corporate Governance Committee will consider suggestions from shareholders regarding possible director candidates for election at future annual meetings of shareholders or in the event of a vacancy on the Board of Directors. The Nominating and Corporate Governance Committee evaluates director candidates recommended by shareholders in the same way that it evaluates candidates recommended by other sources as described above. Such suggestions must contain (1) all information for each nominee required to be disclosed in a proxy statement for the election of directors pursuant to applicable rules of the SEC, (2) the name and address of the shareholder making the recommendation, the number of shares of Common Stock beneficially owned by the shareholder as of the date the shareholder gives notice and the length of ownership, (3) the name, age and address of the director candidate and a description of the director candidate’s business experience for at least the previous five years, (4) the number of shares of Common Stock beneficially owned by the director candidate, and (5) the written consent of the director candidate to serve as a director if elected. The Nominating and Corporate Governance Committee may require additional information as it deems reasonably necessary to determine the eligibility of the director candidate to serve as a member of our Board of Directors. To be considered for possible nomination by the Board at the next annual meeting of shareholders, such suggestions must be submitted to the Company’s Secretary no later than September 30 prior to the next annual meeting of The Nominating and Corporate Governance Committee is also responsible for certain corporate governance matters, including: making recommendations to the Board regarding the membership and chairpersons of each Board committee; ensuring that the requisite number of directors meet the applicable independence requirements contained in the Nasdaq listing standards, SEC rules and the Company’s By-Laws; developing and overseeing the process for completing annual Board and Board committee evaluations; and periodically reviewing and recommending updates to the Corporate Governance Guidelines and addressing any other corporate governance issues that may arise from time to time. When appropriate, the Nominating and Corporate Governance Committee may form subcommittees of one or more of its members and delegate its authority to these subcommittees as it deems appropriate. Strategy and Alternatives Committee The purpose of the Strategy and Alternatives Committee is to oversee the Company’s strategic plan, working with management to define and set strategic goals and expectations for the Company, to evaluate strategic opportunities and alternatives available to the Company, including potential mergers, acquisitions, divestitures and other key strategic transactions outside the ordinary course of the Company’s business, and to perform any other activities or responsibilities as may be delegated to the Committee from time to time by the Board. Board Attendance at Annual Meetings The Company requires members of the Board of Directors to attend the Company’s Annual Meetings of Shareholders, absent extraordinary circumstances. attended the Shareholders by videoconference, due to travel limitations imposed by the outbreak of COVID-19. Annual Board Evaluations Pursuant to our Corporate Governance Guidelines and the charter of the Nominating and Corporate Governance Committee, the Nominating and Corporate Governance Committee oversees an annual evaluation of the performance of the Board and each committee of the Board. The evaluation process is facilitated by outside legal counsel and is designed to assess the overall effectiveness of the Board and its committees and to identify opportunities for improving Board and Board committee operations and procedures. The annual evaluations are generally conducted in the first quarter of each calendar year and the results of the annual evaluation are reviewed and discussed by the Board. Management Succession Planning The Compensation Committee is responsible for reviewing the Company’s succession plan for the Chief Executive Officer and general management. In performing these functions, the Compensation Committee, with the assistance of the Chief Executive Officer, periodically assesses senior managers and their succession potential. Shareholder Communications with the Board Shareholders may communicate with the Company’s Board of Directors through its Secretary by writing to the following address: Board of Directors, c/o The Secretary, EMCORE Corporation, 2015 W. Chestnut Street, Alhambra, CA, 91803. The Company’s Secretary will forward all correspondence to the Board of Directors, except for junk mail, mass mailings, product complaints or inquiries, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate or redundant material. The Company’s Secretary may forward certain correspondence, such as product-related inquiries, elsewhere within the Company for review and possible response. A Board member may request to see all shareholder communications at any time. The Company compensates each non-employee director for service on the Board of Directors. The following table presents director compensation information for fiscal
2020.
With respect to the fees earned or paid in cash as reflected in the table above, fees were earned and paid on the following basis:
Director Compensation Policy Since its adoption in March
Under the
Cash retainers are paid quarterly in arrears. If a non-employee director serves in the corresponding position for only a portion of the year, the cash retainers will be pro-rated (with the proration based on the number of calendar days in the quarter that the director served as a non-employee director or held the particular position, as the case may be). Similarly, in the event a person joins the Board and serves as a non-employee director or Chairman for less than a full plan year, the equity compensation is prorated based on the number of calendar months the director served as a non-employee director or Chairperson during the plan year. grant. In accordance with the 2021. Pursuant to the Plan or any other equity compensation plan approved by the Company’s shareholders and in effect at the time of grant. In December 2020, the Board approved the following changes to the Director Compensation Policy described above, in each case effective immediately prior to the Annual Meeting: (i) increase the annual cash retainer payable to each non-employee director from $37,000 to $50,000 per year; and (ii) in lieu of the Annual Equity Award and Annual Chairperson Equity Award referenced above, each non-employee director would be granted, once every three years, an equity award with a grant date fair value of $225,000 (or $352,500 in the case of the grant made to the Chairperson), with such award vesting as to 1/3 of the shares underlying the award on each of the first three anniversaries of the grant date (or, if the Company’s corresponding annual meeting of shareholders occurs prior to such vesting date, on the day prior to that annual meeting), subject to the non-employee director’s continued service on the Board through such vesting date. Unvested equity awards will also vest in full upon a director’s earlier termination of service due to death or disability or upon a change of control of the Company. No director who is also an employee of the Company receives compensation for services rendered as a director. Director Stock Ownership and Holding Requirements .Our Board of Directors has adopted a stock ownership policy for directors and executive officers. We believe that this policy aligns the interests of our directors with those of our shareholders by requiring directors to have direct ownership in shares of our Common Stock. The policy requires each of our non-employee directors to own shares of our Common Stock having a value equal to at least three times the annual cash retainer they receive (excluding retainers for committee members and chairpersons). Each director is required to be in compliance with the required minimum ownership levels within the later of (i) October 1, 2021 (approximately five years after adoption of the This Compensation Discussion and Analysis describes the material elements of the Company’s executive compensation program and analyzes the compensation decisions made for the executive officers included in the Summary Compensation Table (the “Named Executive Officers”) for the fiscal year ended September 30, 2020 Named Executive Officers Our Named Executive Officers for fiscal Jeffrey Rittichier — Chief Executive Officer (our “CEO”) Tom Minichiello — Chief Financial Officer (our “CFO”) Albert Lu — SVP, Engineering Because Overview Our significant transformation that began in As a result of these and other actions, in the quarter ended September 30, 2020 we achieved net income
Executive Compensation Program Highlights Highlights of our executive compensation program include: Performance-Based Incentive Plans:
During fiscal 2020, we continued with our performance-based annual incentive program design. With respect to each of our Named Executive Officers including our CEO, 100% of his target bonus opportunity during fiscal 2020 was tied to the Company’s net cash balance as of September 30, 2020. Under our annual incentive program, bonus payouts for outperformance are capped at 120% of the target bonus amount to limit our executives’ maximum bonus potential. We do not have any employment or severance agreements with our Named Executive Officers that provide for “single trigger” cash severance benefits. Our employment agreements with each of our CEO and CFO limit cash severance benefits for a qualifying termination of employment to a “1x” multiple, whether or not the qualifying termination of employment is in connection with a change in control. While the employment agreement we entered into with our CEO in December 2014 provides for “single trigger” acceleration and immediate vesting of 50% of his outstanding equity awards in the event of a change in control of the Company, we do not have any agreement with our CFO that provides for “single trigger” equity severance benefits. Our SVP, Engineering is not subject to employment or severance agreements with the Company contractually entitling him to receive any severance benefits in connection with a termination of employment. None of our Named Executive Officers is entitled to a “gross up” of any income or excise taxes. We maintain a clawback policy with respect to incentive compensation as described in more detail below. We maintain a stock ownership policy that subjects our Named Executive Officers and members of our Board of Directors to specified holding requirements. Our Named Executive Officers and members of our Board of Directors are prohibited from engaging in hedging transactions and pledging transactions with respect to Company securities. Objectives of the Company’s Executive Compensation Program The Company’s executive compensation program is designed to: attract, motivate, reward and retain highly qualified and talented individuals, motivate executives to improve the overall performance and profitability of the Company and reward them when specific measurable results have been achieved, encourage accountability by making executive compensation decisions based on each executive’s individual performance and contribution, tie incentive awards to performance metrics that we believe drive the performance of the Company’s Common Stock over the long term to further reinforce the linkage between the interests of the Company’s shareholders and employees, link executives’ interests with shareholders’ interests by generally providing a significant portion of targeted total direct compensation in the form of stock-based incentives, and ensure compensation levels are both externally competitive and internally equitable. Role of Shareholder Say-on-Pay Votes Each year, we provide our shareholders the opportunity to cast an advisory vote on our executive compensation program. This annual vote is known as the We our executive compensation program and our compensation-related corporate governance practices.
Role of the Compensation Committee Pursuant to its charter, the Compensation Committee has the authority to determine the amount of compensation given to each of the Named Executive Officers. The Compensation Committee approves the structure of our executive compensation program, and is responsible for administering our equity compensation plans, including approving grants of awards under the plans. In performing its duties, the Compensation Committee is authorized to consider the recommendations of our Chief Executive Officer when determining the compensation of the other Named Executive Officers. The elements of our executive compensation program and the compensation amounts payable thereunder to each Named Executive Officer were approved by the Compensation Committee. All Compensation Committee members are independent under applicable Nasdaq rules, and, except for recommendations made by Mr. Rittichier with respect to the compensation of the other Named Executive Officers (other than himself), no Named Executive Officers had any role in determining the compensation of the Named Executive Officers. Role of Compensation Consultant Pursuant to its charter, the Compensation Committee has the authority to engage its own advisors to assist in carrying out its responsibilities. utilizing the new peer The Compensation Committee regularly reviews the services provided by Compensia and performs an assessment at least annually on the independence of Compensia to determine whether the compensation consultant is independent. The Compensation Committee determined that Compensia is independent in providing the Compensation Committee with executive compensation consulting services and that Compensia’s work for the Committee did not raise any conflicts of interest, consistent with SEC rules and Nasdaq listing standards. In making this determination, the Compensation Committee reviewed information provided by Compensia on the following factors: Any other services provided to the Company by Compensia;
Policies or procedures maintained by Compensia to prevent a conflict of interest; Any business or personal relationship between the individual Compensia consultants assigned to the Company relationship and any Compensation Committee member; Any business or personal relationship between the individual Compensia consultants assigned to the Company relationship, or Compensia itself, and the Company’s executive officers; and Any Company stock owned by Compensia or the individual consultants assigned to the Company relationship. Having reviewed such factors, the Compensation Committee determined that it would be in the best interests of the Compensation Committee and of the Company to ratify and approve the engagement of Compensia as its independent compensation consultant. Compensia did not perform any services for the Company during fiscal Peer Companies In Based on this methodology, we implemented the following changes to our peer group:
In Based on the October 2019 compensation review, the Compensation Committee believes that Mr. Rittichier’s, Mr. Minichiello’s and Mr. Lu’s base salary amounts were at approximately the 55th, 85th and 30th percentile levels, respectively, of the base salary amount paid by the members of our October 2019 peer group (or, with respect to Mr. Lu, the broad group of companies used by Compensia). Based on the October 2019 compensation review, the Compensation Committee believes that Mr. Rittichier’s, Mr. Minichiello’s and Mr. Lu’s target total annual cash compensation opportunities were at approximately the 50th, 80th and 30th percentile levels, respectively, of the target total annual cash compensation opportunities paid by the members of our October 2019 peer group to similarly situated executives (or, with respect to each of Mr. Lu, the broad group of companies used by Compensia). As a result of these and other factors, the Compensation Committee made a determination in December 2019 to maintain Mr. Rittichier’s, Mr. Minichiello’s and Mr. Lu’s current base salary and target bonus opportunity at each of their current levels for our 2020 fiscal year. In Based on this methodology, we implemented the following changes to our peer group:
The purpose of the Based on the salary. Employment Agreements with Messrs. Rittichier and Minichiello In an effort to further promote the retention of Messrs. Rittichier and will be limited as provided in the employment agreement. None of the employment agreements provide for any tax “gross up” or similar payment for any excise taxes that may be triggered by the payment of any parachute payments. Mr. Lu is Base Salary Base salaries for the Named Executive Officers are determined based upon job responsibilities, level of experience, individual performance, and the peer group compensation information described above. No Named Executive Officers are entitled to any automatic base salary increases, and all base salary increases are determined by the Compensation Committee in its discretion. The Compensation Committee reviews any proposed salary increase for our Chief Executive Officer in executive session without Company management present. No Named Executive Officer received any base salary increase for our 2020 fiscal year. As described above, in $310,000. Annual Cash Incentives In General . Typically, the Company establishes a cash incentive plan each fiscal year which provides the Company’s executive officers an opportunity to receive an annual cash payment in addition to their base salaries. The purpose of the cash incentive plan is to drive overall effectiveness and productivity by motivating the executives to achieve specified Company financial and, in some years, identifiable individual performance goals that support the Company’s strategic business objectives and goals of achieving increased profitability. By linking a significant portion of an executive’s annual cash compensation opportunity to the achievement of the Company’s strategic objectives,2020 Cash Bonus Plan Structure . On DecemberThe amount of cash bonus payable to each
The maximum cash bonus payable to each The Compensation Committee established States. Under the 2021. In December Lu. Long-Term Stock-Based Incentives In General . The Company believes that stock-based incentives are an effective means for aligning the interests of our executives with the interests of our shareholders and that the long-term compensation of the Company’s Named Executive Officers should be linked to the value provided to our shareholders. In addition, we use stock-based compensation as a retention tool. Because the stock awards generally vest over a multi-year period, they provide our executives with an ongoing incentive to continue their employment with the Company and to maximize shareholder value. Long-term stock-based incentives granted to our executives for the last several years have been structured in the form of restricted stock unit awards. Restricted stock unit awards are designed to link executives’ interests with those of the Company’s shareholders because the value of the awards is based on the value of the Common Stock. In addition, they provide a long-term retention incentive throughout the vesting period because the restricted stock units generally have value regardless of stock price volatility.In granting equity awards to our Named Executive Officers, Fiscal 2020 Awards for Named Executive Officers. Named Executive Officer under the EMCORE Corporation Fiscal 2019 Bonus Plan, and to grant to Mr. In addition, in December 2019, the Compensation Committee determined to grant performance-based restricted stock unit awards (as described below) to each of Mr. Rittichier and Mr. Lu convertible into a target number of shares of the Company’s common stock equal to 300,000 and 48,000 shares, respectively. The Compensation Committee believes that granting 100% of Mr. Rittichier’s equity based compensation for fiscal 2020, and approximately 90% of Mr. Lu’s equity-based compensation for fiscal 2020, in the form of performance-based restricted stock unit awards rather than time-based restricted stock unit awards, further serves to align shareholder interests with the interests of the Named Executive Officers. In determining the appropriate value of these awards, the Compensation Committee used its judgment and discretion, and considered the size of historical equity award The Compensation Committee also approved in December 2019 the grant of a performance-based restricted stock unit award (as described below) to Mr. Minichiello, in accordance with the terms of his employment agreement, Performance-Based Program Design . The performance-based restricted stock units will vest based on a combination of our relative total shareholder return over a three-year performance period and the executive’s continued employment. We chose relative total shareholder return as the applicable performance measure because (1) we believe it will incentivize the Named Executive Officers to focus on and grow our returns for shareholders, and (2) it is an objective and easily understandable performance metric that is different than the net cash-based performance measure used under the 2020 Bonus Plan and the earnings-based performance measure used under certain of our previous annual cash incentiveprograms. Relative total shareholder return is measured against the companies in the Russell Microcap Index, which is a capitalization-weighted index of 2,000 small cap and micro cap stocks. We chose to measure our performance against the Russell Microcap Index because we wanted to measure our performance against a broad index of relatively similarly sized companies in which investors may choose to invest and measure performance against, instead of measuring our performance against the much smaller group of compensation peers described above, substantially all of which are included in the Russell Microcap Index. The performance-based restricted stock units that were granted by the Company to such three-year performance period. 100% of the target number of shares subject to
Our total shareholder return for the one-year period immediately following the granted date of the performance-based restricted stock units that were granted by the Company to our Named Executive Officers in December 2019 was 114.71% of the total shareholder return for the Russell Microcap Index, which would have resulted in a payout of 129.43% had the three-year performance period been a one-year performance period. Time-Based Equity Awards for Named Executive Officers. Payouts of Payouts of December 2016 Performance Units. The performance period for the performance-based restricted stock units granted to Mr. Lu in December 2016 ended on December 14, 2019. We achieved a total shareholder return of –(54.85)% for the performance period compared to a total shareholder return of 16.04% for the Russell Microcap Index for the performance period, yielding a total shareholder return ratio relative to the Russell Microcap Index of 38.91%. As a result of significantly underperforming the Index during the performance period, none of the target number of shares subject to Mr. Lu’s award became vested and payable. We again believe this zero share payout is evidence of the performance contingent nature of our executive compensation program design at work— Mr. Lu did not earn an award payout because our total shareholder return significantly underperformed the Russell Microcap Index. Payouts of December 2017 Performance Units. The performance period for the performance-based restricted stock units granted to each of Mr. Rittichier and Mr. Lu in December 2017 ended after the end of our 2020 fiscal year on December 27, 2020. We achieved a total shareholder return of –(37.28)% for the performance period compared to a total shareholder return of 19.52% for the Russell Microcap Index for the performance period, yielding a total shareholder return ratio relative to the Russell Microcap Index of 52.48%. As a result of significantly underperforming the Index during the performance period, 4.97% of the target number of shares subject to Mr. Rittichier’s or Mr. Lu’s awards became vested and payable. We again believe this 4.97% share payout is evidence of the performance contingent nature of our executive compensation program design at work— Mr. Rittichier and Mr. Lu each earned only a very small percentage of his respective target award payout because our total shareholder return significantly underperformed the Russell Microcap Index. CEO Realized Compensation In evaluating Mr. Rittichier’s compensation, particularly his performance-based restricted stock units granted in March 2019 and December 2019, we believe it is important to understand not only the potential value of incentive awards at the time they are granted, but also the value actually realized by Mr. Rittichier. The 2020 and 2019 Realized Compensation Table below supplements the Summary Compensation Table that appears on page 38 and shows the compensation actually realized in each of fiscal 2020 and fiscal 2019 by Mr. Rittichier. The primary difference between the 2020 and 2019 Realized Compensation Table below and the Summary Compensation Table is the method used to value stock awards. SEC rules require that the grant date fair value of all stock awards be reported in the Summary Compensation Table in the year in which they were awarded. As a result, a significant portion of the total compensation amounts reported in the Summary Compensation Table relate to stock awards that have not vested, a substantial portion of which are subject to performance-based vesting requirements based on performance over a three year period. Mr. Rittichier may not realize any value from these awards if his employment terminates before the awards vest or if the performance goals are not achieved. By contrast, the 2020 and 2019 Realized Compensation Table below includes only stock awards held by Mr. Rittichier that vested during fiscal 2020 or fiscal 2019, as applicable (all of which were granted at least one year prior to the applicable vesting date), and shows the value of those awards as of the applicable vesting date. As shown in the table below, Mr. Rittichier’s total realized compensation calculated in this manner was $1,061,586 for fiscal 2020, which was $1,005,550 less than the 2020 total compensation reported in the Summary Compensation Table, and $722,598 for fiscal 2019, which was $668,113 less than the 2019 total compensation reported in the Summary Compensation Table. 2020 and 2019 Realized Compensation Table
This information is supplemental to, and should be read in connection with, the Summary Compensation Table that appears on page 38. Company Benefits The Company’s benefits are an important tool in our ability to attract and retain outstanding employees throughout the Company. As a business matter, we weigh the benefits we need to offer to remain competitive and attract and retain talented employees against the cost of the benefits. Benefit levels are reviewed periodically to ensure they are cost-effective and competitive and support the overall needs of Company employees. This section describes the benefits that the Company provides to key executives and notes those instances when benefits for the Named Executive Officers differ from the general plan. In some instances, we also describe the programs we offer across the Company as context to specific discussions about executive benefits. Medical, Dental, and Vision Benefits The Company offers a standard benefits package to all of its eligible employees, which includes medical, dental and vision coverage. The Named Executive Officers are also eligible to receive supplemental health benefit coverage that is not made available to non-executive employees, which provides the Named Executive Officers with additional medical, dental and vision coverage that could be applied when their primary medical, dental or vision coverage has exceeded its coverage limit or does not provide coverage. Company-Sponsored Retirement Plan The EMCORE Corporation 401(k) Plan (the “401(k) Plan”) is a defined contribution plan that is designed to comply with the Employee Retirement Income Security Act of 1974, as well as federal and state legal requirements. The 401(k) Plan is designed to provide retirement benefits to eligible employees of the Company. Participants in the 401(k) Plan may elect to reduce compensation by a specific percentage, which is contributed to the participant’s 401(k) Plan account on a pre-tax basis as a salary deferral. Employees, including the Company’s Named Executive Officers, may elect to contribute to the 401(k) Plan through salary reduction up to the yearly maximum tax-deductible deferral allowed pursuant to IRS regulations. A participant may elect to defer between The Company may provide a discretionary match of a participant’s contribution to the 401(k) Plan. In fiscal 2019 and the portion of fiscal 2020 prior to January 1, 2020, this discretionary match consisted of 50% of the first 6% of a participant’s contribution to the 401(k) Plan and On January 1, 2020, this discretionary match was increased to 100% of the first 3% of a participant’s contribution to the 401(k) Plan plus 50% of the next 2% of a participant’s contribution to the 401(k) Plan, with such matching contributions vesting immediately. Employee Stock Purchase Plan The Company offers all eligible employees, including the Company’s Named Executive Officers, the opportunity to acquire an ownership interest in the Company by purchasing shares of Common Stock through a tax-qualified employee stock purchase plan (“ESPP”). Under the ESPP, an eligible employee may withhold, through payroll deductions, up to 10% of his or her eligible earnings, up to certain maximums, to be used to purchase shares of Common Stock at certain plan-defined dates. The option price is set at 85% of the average of the high and low price for Common Stock on either the first or last day of the applicable offering period under the ESPP, whichever is lower. Officer and Director Share Purchase Plan In January 2011, the Compensation Committee of the Board of Directors approved an Officer and Director Share Purchase Plan (the “ODPP”), which allows executive officers and directors of the Company to purchase shares of Common Stock at fair market value in lieu of salary or, in the case of directors, director fees. Eligible individuals may voluntarily participate in the ODPP by authorizing payroll deductions or, in the case of directors, deductions from director fees for the purpose of purchasing shares of Common Stock. Elections to participate in the ODPP may only be made during open trading windows under the Company’s insider trading policy and when the participant does not otherwise possess material non-public information concerning the Company. Severance Benefits Messrs. Rittichier and In accordance with the terms of these agreements, Messrs. Rittichier and Under the terms of his employment agreement, Mr. Rittichier would be entitled to acceleration and immediate vesting of 50% of his outstanding equity awards in the event of a change in control of the Company and would be entitled to acceleration and immediate vesting of 50% of his outstanding equity awards (excepting those which were previously vested due to a change in control) which have not vested as of his termination date in the event he experiences a qualifying termination of employment within twelve months following a change in control. We eliminated this partial single-trigger equity vesting provision in Mr. In the event a payment or benefit provided under these employment agreements would constitute a “parachute payment” within the meaning of Section 280G of the Code, then such payment or benefit will be limited as provided in the employment agreements. The employment agreements for Messrs. Rittichier and In order to receive any severance benefits under their employment agreements, Messrs. Rittichier and For more information regarding potential payments that may be made to Messrs. Rittichier and Mr. Lu. The Company has not entered into any agreements with Clawback Policy During fiscal 2016, we adopted a compensation recoupment policy whereby in the event of a restatement of our financial statements to correct a material error, the Compensation Committee is required to review our incentive compensation awards and may, if it determines appropriate after considering all relevant facts and circumstances, require the reimbursement of the incremental incentive compensation that an executive officer received as a result of the incorrect financial results. Annual bonus payments, long-term cash incentives, stock options, restricted stock, restricted stock units (including performance stock units) and other equity incentive awards that are granted, earned or vested based wholly or in part upon the attainment of a financial reporting measure are each subject to the terms of this clawback policy. Stock Ownership and Holding Requirements During fiscal 2016, we adopted a stock ownership policy. We believe that this policy aligns the interests of our executive officers with those of our shareholders by requiring executive officers to have direct ownership in shares of our Common Stock. The policy requires our Chief Executive Officer to own shares of our Common Stock having a value equal to at least three times his or her annual base salary and our other executive officers to own shares of our Common Stock having a value equal to at least one times his or her annual base salary. Shares subject to stock options and unvested stock unit awards are not considered owned by the executive for purposes of the policy. The executives covered by the policy are required to be in compliance with the ownership levels above within five years after the later of (i) adoption of the policy (October 1, 2021) or (ii) the date such person is appointed as an executive officer, and are required to retain at least 50% of the net after-tax shares received in respect of equity awards until they are in compliance. Anti-Hedging, Pledging and Derivatives Policy The Company considers it improper and inappropriate for the Company’s directors, executive officers and other employees to engage in short-term or speculative transactions in the Company’s securities and other transactions in the Company’s securities that create the potential for heightened legal risk or the appearance of improper or inappropriate conduct even if they occur at a time when the individual is not aware of material nonpublic information. Accordingly, the Company prohibits these individuals from engaging in short-term trading of the Company’s securities, short sales, transactions in puts, calls, or other derivative securities related to the Company’s stock on an exchange or in any other organized market, entering into hedging or monetization transactions that are designed to hedge or offset any decrease in the market value of the Company’s securities, margining Company securities held in a margin account, or pledging Company securities as collateral for a loan. Tax and Accounting Considerations Section 162(m) of The table below sets forth certain information concerning the compensation paid to or earned by those persons who during fiscal Additional information regarding the compensation realized by our Chief Executive Officer in fiscal 2020 and fiscal 2019 can be found in the “CEO Realized Compensation” section of the “Compensation Discussion and Analysis” on page 33. Summary Compensation Table for Fiscal
Years ended September 30, 2020 and 2019
The following table sets forth as to each Named Executive Officer information about the grants of plan-based awards during fiscal Grants of Plan-Based Awards in Fiscal
2020
The following table sets forth as to each Named Executive Officer information on outstanding equity awards held by the Named Executive Officer as of September 30, 2020. Outstanding Equity Awards as of September 30,
The following table sets forth as to each Named Executive Officer information on the exercise of stock options and the vesting of other stock awards previously granted to the Named Executive Officer during fiscal 2020. Options Exercised and Stock Vested in Fiscal
2020
Potential Payments upon Termination or Change-in-Control Messrs. Rittichier and Minichiello The Company has entered into employment agreements with Messrs. Rittichier and In accordance with the terms of Mr. Receipt of the severance benefits described above for Messrs. Rittichier and The following are estimated payments and benefits that would be provided to each of Mr. Rittichier and Mr.
In addition, as of September 30, Jeffrey Rittichier: $884,562 upon a change of control and an additional $884,562 upon a qualifying termination within twelve months of a change in control. Tom Minichiello: $568,750 upon a qualifying termination within twelve months of a change in control. If Mr. Rittichier’s or Mr. Mr. Lu The Company has not entered into any The information contained under this “Compensation Committee Report” shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any filings under the Securities Act of 1933, as amended (“Securities Act”), or under the Exchange Act, or be subject to the liabilities of Section 18 of the Exchange Act, except to the extent that the Company specifically incorporates this information by reference into any such filing. The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis. Based on this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Proxy Statement in accordance with Item 407(e)(5) of Regulation S-K. This report is submitted by the Compensation Committee. December 10, 2020 COMPENSATION COMMITTEE Rex S. Jackson, Chairman Bruce E. Grooms Stephen L. Domenik During fiscal The Compensation Committee has reviewed the Company’s compensation policies and practices for all employees, including executive and non-executive officers, and determined that the Company’s compensation programs do not give rise to risks reasonably likely to have a material adverse effect on the Company. The Committee noted several design features of the Company’s cash and equity incentive programs for executive officers in particular that reduce the likelihood of excessive risk-taking and instead encourage behaviors that support sustainable value creation by rewarding employees for achieving long-term financial and strategic objectives through prudent business judgment and appropriate risk taking. Some of these elements include:
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth as of December 31,
The following table sets forth, as of September 30,
For fiscal Action by the shareholders is not required by law to appoint or ratify the appointment of an independent registered public accounting firm, but ratification of KPMG’s appointment is being submitted by the Audit Committee of the Board of Directors in order to give the shareholders a voice in the designation of auditors. If the resolution ratifying the appointment of KPMG as the Company’s independent registered public accounting firm for fiscal Representatives of KPMG are expected to attend the Annual Meeting. 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. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR Unless otherwise instructed, the proxyholders will vote all properly submitted proxies “FOR” ratification of the appointment of KPMG LLP as the Company’s independent registered public accounting firm for fiscal year 2021. The following table presents fees
2019:
Audit Committee Pre-Approval Policies and Procedures The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. The Audit Committee has adopted a policy for the pre-approval of services provided by the independent auditors. Under the policy, pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is subject to a specific budget. In addition, the Audit Committee may also pre-approve particular services on a case-by-case basis. For each proposed service, the independent auditors are required to provide detailed back-up documentation at the time of approval. The following Report of the Audit Committee does not constitute soliciting material, and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange Act, except to the extent the Company specifically incorporates this Report of the Audit Committee by reference therein. Management has primary responsibility for the accuracy and fairness of the Company’s consolidated financial statements as well as the processes employed to prepare the financial statements, and the system of internal control over financial reporting. KPMG LLP (“KPMG”), the Company’s independent registered public accounting firm From October 1, 2020. As part of its oversight role, the Audit Committee has reviewed and discussed the Company’s audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for fiscal The Audit Committee has received the written disclosures and the letter from KPMG required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with KPMG matters relating to its independence. The Audit Committee concluded that KPMG’s provision of non-audit services to the Company, as detailed above, is compatible with the accounting firm’s independence. Based on the foregoing review and discussions, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for fiscal 8, 2020. This report is submitted by the Audit Committee. December AUDIT COMMITTEE Rex S. Jackson, Chairman Stephen L. Domenik Noel Heiks PROPOSAL III: APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE EMCORE CORPORATION 2019 EQUITY INCENTIVE PLAN At the Annual Meeting, shareholders will be asked to approve an amendment and restatement of the EMCORE Corporation 2019 Equity Incentive Plan (the “2019 Plan”). The amended and restated version of the 2019 Plan was adopted, subject to shareholder approval, by the Board of Directors on December 10, 2020. The Company believes that incentives and stock-based awards focus employees on the objective of creating shareholder value and promoting the success of the Company, and that incentive compensation plans like the 2019 Plan are an important attraction, retention and motivation tool for participants in the plan. The Board of Directors believes that the number of shares currently available under the 2019 Plan does not give the Company sufficient authority and flexibility to adequately provide for future incentives. Under applicable listing rules, we may not increase the 2019 Plan share limit without stockholder approval. The amended and restated version of the 2019 Plan increases the number of shares available under the 2019 Plan by an additional 2,138,000 shares of the Company’s common stock. The amended and restated version of the 2019 Plan also increases the limit on the number of shares that may be delivered pursuant to “incentive stock options” granted under the 2019 Plan by 2,138,000 million shares for a new limit of 5,813,160 incentive stock options. For clarity, any shares that are delivered pursuant to incentive stock options also count against (and are not in addition to) the aggregate 2019 Plan share limit described above. As of December 31, 2020, a total of 3,129,812 shares of the Company’s common stock were then subject to outstanding awards granted under the 2019 Plan (at maximum level of performance), a total of 115,292 shares of the Company’s common stock were then subject to outstanding awards (at maximum level of performance) granted under the Company’s 2012 Equity Incentive Plan, as amended and restated and the Company’s 2010 Equity Incentive Plan, as amended (collectively, the “Prior Plans”) (which will be available for new grants under the 2019 Plan if they are forfeited, terminated, cancelled, or expire prior to being vested or exercised, as applicable) and an additional 637,303 shares of the Company’s common stock were then available for new award grants under the 2019 Plan (before giving effect to the increase in the aggregate share limit being requested in this Proposal III). No new awards may be granted under the Prior Plans. Based solely on the closing price of the Company’s common stock, as reported on the Nasdaq Stock Market on January 20, 2021, the maximum aggregate market value of the 2,138,000 new shares that could be issued under the amended and restated 2019 Plan is $10,390,680. If shareholders do not approve the amended and restated version of the 2019 Plan, the Company will continue to have the authority to grant awards under the existing terms of the 2019 Plan from the shares currently available for issuance under the 2019 Plan. The following table shows the total number of shares of Common Stock that were subject to outstanding restricted stock and restricted stock unit awards granted under the 2019 Plan and the Prior Plans, that were subject to outstanding stock options granted under the 2019 Plan, the Prior Plans and the Company’s 2000 Stock Option Plan (the “2000 Plan”), and that were then available for new award grants under the 2019 Plan as of December 31, 2020. For performance-based restricted stock units granted under our performance-based long-term equity award program, the number of shares presented is based on achieving the maximum level of performance, even though the actual share payout for these awards may be less than the maximum number below.
As of
The following paragraphs include additional information to help shareholders assess the potential dilutive impact of the Company’s equity awards and the amended and restated 2019 Plan. The discussion that follows in this section does not include any shares that have been purchased under, may be purchased in the current purchase period under, or that remain available for issuance or delivery under the Company’s Employee Stock Purchase Plan and the Company’s Officer and Director Share Purchase Plan. The Employee Stock Purchase Plan is intended as a qualified employee share purchase plan that complies with Section 423 of the Code. The Employee Stock Purchase Plan generally provides for broad-based participation by employees of the Company and certain of its subsidiaries and affords employees who elect to participate an opportunity to purchase shares of Common Stock at a discount. The number of approved shares to issue under the Employee Stock Purchase Plan is 3,250,000, and 2,937,526 shares have been issued from the plan through December 31, 2020 (determined using the actual number of shares issued). The Officer and Director Share Purchase Plan solely permits officers, employees and directors to purchase fully vested shares of Common Stock at fair market value. The number of approved shares to purchase under the Officer and Director Share Purchase Plan is 500,000, and 411,259 shares have been purchased under the plan through December 31, 2020. “Overhang” refers to the number of shares of Common Stock that are subject to outstanding awards or remain available for new award grants. Please see the table in the “General” section above with respect to the total number of shares of Common Stock that were subject to outstanding restricted stock and restricted stock unit awards granted under the 2019 Plan and the Prior Plans, that were subject to outstanding stock options granted under the 2019 Plan, the Prior Plans and the 2000 Plan, and that were then available for new award grants under the 2019 Plan as of December 31, 2020. Other than the Company’s Employee Stock Purchase Plan and the Company’s Officer and Director Share Purchase Plan, (i) the 2019 Plan, the Prior Plans and the 2000 Plan are the Company’s only equity plans with outstanding awards, and (ii) the 2019 Plan is the Company’s only equity plan with shares that remain available for new award grants. The weighted-average number of shares of Common Stock outstanding in each of the last three fiscal years was 27.3 million shares outstanding in fiscal 2018, 28.0 million shares outstanding in fiscal 2019 and 29.1 million shares outstanding in fiscal 2020. The number of shares of Common Stock outstanding as of September 30, 2020 and December 31, 2020 was approximately 29.6 million and 29.8 million shares, respectively. “Burn rate” refers to the number of shares that are subject to awards that the Company grants over a particular period of time. The total number of shares of Common Stock subject to awards that the Company granted under the 2019 Plan and its other equity compensation plans in each of the last three fiscal years, and to date (as of December 31, 2020) for fiscal year 2021, is set forth in the table below.
Through December 31, 2020, for fiscal 2021, we have granted zero stock options, 475,575 non performance-based restricted stock units and 6,086 performance-based restricted shares or restricted stock units have been earned, for a total of 481,661 (which was 1.6% of the number of shares of Common Stock outstanding on December 31, 2020). The total number of shares of Common Stock that were subject to awards granted under the 2019 Plan or the Prior Plans that terminated or expired, and thus became available for new award grants under the 2019 Plan or the Prior Plans, in each of the last three fiscal years (2018, 2019 and 2020), and to date (as of December 31, 2020) in fiscal 2021, are as follows: 232,373 in fiscal 2018, 744,012 in fiscal 2019, 339,767 in fiscal 2020 and 193,699 in fiscal 2021. Shares subject to 2019 Plan or Prior Plan awards that terminated or expired and became available for new award grants under the 2019 Plan or the Prior Plans have been included when information is presented in this amended and restated 2019 Plan proposal on the number of shares available for new award grants under the 2019 Plan. When considering the number of shares to add to the 2019 Plan, the Compensation Committee reviewed, among other things, the potential dilution to the Company’s current shareholders as measured by burn rate and overhang, projected future share usage, and projected future forfeitures. The Compensation Committee anticipates that the 2,138,000 additional shares requested for the 2019 Plan (together with the shares available for new award grants under the 2019 Plan as of December 31, 2020 and assuming usual levels of shares becoming available for new awards as a result of forfeitures of outstanding awards) will provide the Company with flexibility to continue to grant equity awards under the 2019 Plan through approximately March 2022. However, this is only an estimate, in the Company’s judgment, based on current circumstances. The total number of shares that are subject to the Company’s award grants in any one year or from year-to-year may change based on a number of variables, including, without limitation, the value of the Common Stock (since higher stock prices generally require that fewer shares be issued to produce awards of the same grant date fair value), changes in competitors’ compensation practices or changes in compensation practices in the market generally, changes in the number of employees, changes in the number of directors and officers, whether and the extent to which vesting conditions applicable to equity-based awards are satisfied, acquisition activity and the need to grant awards to new employees in connection with acquisitions, the need to attract, retain and incentivize key talent, the type of awards the Company grants, and how the Company chooses to balance total compensation between cash and equity-based awards. The Compensation Committee is committed to effectively managing the number of shares reserved for issuance under the 2019 Plan while minimizing shareholder dilution. The closing market price for a share of the Common Stock as of December 31, 2020 was $5.45 per share. Summary Description of the 2019 Equity Incentive Plan (as Proposed to be Amended and Restated) The principal terms of the 2019 Plan (as proposed to be amended and restated) are summarized below. The following summary is qualified in its entirety by the full text of the 2019 Plan (as proposed to be amended and restated), which appears as to this Proxy Statement. Purpose. The purpose of the 2019 Plan is to promote the success of the Company by providing an additional means for us to attract, motivate, retain and reward selected employees and other eligible persons through the grant of awards. Equity-based awards are also intended to further align the interests of award recipients and our shareholders. Administration.Our The Administrator has broad authority under the 2019 Plan, including, without limitation, the authority: to select eligible participants and determine the type(s) of award(s) that they are to receive; to grant awards and determine the terms and conditions of awards, including the price (if any) to be paid for the shares or the award and, in the case of share-based awards, the number of shares to be offered or awarded; to determine any applicable vesting and exercise conditions for awards (including any applicable performance and/or time-based vesting or exercisability conditions) and the extent to which such conditions have been satisfied, or determine that no delayed vesting or exercise is required, to determine the circumstances in which any performance-based goals (or the applicable measure of performance) will be adjusted and the nature and impact of any such adjustment, to establish the events (if any) on which exercisability or vesting may accelerate (including specified terminations of employment or service or other circumstances), and to accelerate or extend the vesting or exercisability or extend the term of any or all outstanding awards (subject in the case of options and stock appreciation rights to the maximum term of the award); to cancel, modify, or waive the Company’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consents; subject to the other provisions of the 2019 Plan, to make certain adjustments to an outstanding award and to authorize the conversion, succession or substitution of an award; to determine the method of payment of any purchase price for an award or shares of the Company’s common stock delivered under the 2019 Plan, as well as any tax-related items with respect to an award, which may be in the form of cash, check, or electronic funds transfer, by the delivery of already-owned shares of the Company’s common stock or by a reduction of the number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the Administrator may authorize, or any other form permitted by law; to modify the terms and conditions of any award, establish sub-plans and agreements and determine different terms and conditions that the Administrator deems necessary or advisable to comply with laws in the countries where the Company or one of its subsidiaries operates or where one or more eligible participants reside or provide services; to approve the form of any award agreements used under the 2019 Plan; and to construe and interpret the 2019 Plan, make rules for the administration of the 2019 Plan, and make all other determinations for the administration of the 2019 Plan. Minimum Vesting Requirement. All awards granted under the 2019 Plan are subject to a minimum vesting requirement of one year, and no portion of any such award may vest earlier than the first anniversary of the grant date of the award. This minimum vesting requirement does not apply to 5% of the total number of shares available under the 2019 Plan. No Repricing. In no case (except due to an adjustment to reflect a stock split or other event referred to under “Adjustments” below, or any repricing that may be approved by shareholders) will the Administrator (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award. Eligibility. Persons eligible to receive awards under the 2019 Plan include officers or employees of the Company or any of its subsidiaries, directors of the Company, and certain consultants and advisors to the Company or any of its subsidiaries. Currently, approximately 305 officers and employees of the Company and its subsidiaries (including all of the Company’s named executive officers), and each of the four members of the Board of Directors who are not employed by the Company or any of its subsidiaries (“Non-Employee Directors”), are considered eligible under the 2019 Plan. Aggregate Share Limit. The maximum number of shares of the Company’s common stock that may be issued or transferred pursuant to awards under the 2019 Plan equals the sum of the following (such total number of shares, the “Share Limit”): 5,813,160shares (which includes the 2,138,000 new shares that will be available under the 2019 Plan if shareholders approve the amended and restated version of the 2019 Plan), plus the number of any shares subject to stock options granted under the Prior Plans and outstanding as of March 22, 2019 which expire, or for any reason are cancelled or terminated, after March 22, 2019 without being exercised, plus the number of any shares subject to restricted stock and restricted stock unit awards granted under the Prior Plans that were outstanding and unvested as of March 22, 2019 which are forfeited, terminated, cancelled, or otherwise reacquired after March 22, 2019 without having become vested. Additional Share Limits. The following other limits are also contained in the 2019 Plan. These limits are in addition to, and not in lieu of, the Share Limit for the plan described above. The maximum number of shares that may be delivered pursuant to options qualified as incentive stock options granted under the plan is 5,813,160 shares (which gives effect to the additional 2,138,000 shares that may be delivered pursuant incentive stock options if shareholders approve the amended and restated version of the 2019 Plan). (For clarity, any shares issued in respect of incentive stock options granted under the plan will also count against the overall Share Limit above.) The maximum grant date fair value for awards granted to a Non-Employee Director under the 2019 Plan during any one calendar year is $250,000, except that this limit will be $350,000 as to (1) a
Share-Limit Counting Rules. The Share Limit of the 2019 Plan is subject to the following rules: Shares that are subject to or underlie awards granted under the 2019 Plan which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under the 2019 Plan will not be counted against the Share Limit and will again be available for subsequent awards under the 2019 Plan. To the extent that shares are delivered pursuant to the exercise of a stock appreciation right granted under the 2019 Plan, the total number of underlying shares subject to such stock appreciation right shall be counted against the Share Limit. (For purposes of clarity, if a stock appreciation right relates to 100,000 shares and is exercised at a time when the payment due to the participant is 15,000 shares, 100,000 shares shall be charged against the Share Limit with respect to such exercise.) Shares that are exchanged by a participant or withheld by the Company to pay the exercise price of a stock option or stock appreciation right granted under the 2019 Plan, as well as any shares exchanged or withheld to satisfy the tax withholding obligations related to any stock option or stock appreciation right, will be counted against the Share Limit and will not again be available for subsequent awards under the 2019 Plan. Shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any full-value award granted under the 2019 Plan, as well as any shares exchanged by a participant or withheld by the Company to satisfy the tax withholding obligations related to any full-value award granted under the 2019 Plan, will be counted against the Share Limit and will not again be available for subsequent awards under the 2019 Plan. In addition, shares that are exchanged by a participant or withheld by the Company as full or partial payment in connection with any award granted under the Prior Plans, as well as any shares exchanged by a participant or withheld by the Company to satisfy the tax withholding obligations related to any award granted under the Prior Plans, shall not be available for new awards under the 2019 Plan. To the extent that an award is settled in cash or a form other than shares, the shares that would have been delivered had there been no such cash or other settlement will not be counted against the Share Limit and will again be available for subsequent awards under the 2019 Plan. In the event that shares are delivered in respect of a dividend equivalent right, the actual number of shares delivered with respect to the award shall be counted against the Share Limit. (For purposes of clarity, if 1,000 dividend equivalent rights are granted and outstanding when the Company pays a dividend, and 50 shares are delivered in payment of those rights with respect to that dividend, 50 shares shall be counted against the Share Limit.) Except as otherwise provided by the Administrator, shares delivered in respect of dividend equivalent rights shall not count against any individual award limit under the 2019 Plan other than the aggregate Share Limit. In addition, the 2019 Plan generally provides that shares issued in connection with awards that are granted by or become obligations of the Company through the assumption of awards (or in substitution for awards) in connection with an acquisition of another company will not count against the shares available for issuance under the 2019 Plan. The Company may not increase the applicable share limits of the 2019 Plan by repurchasing shares of common stock on the market (by using cash received through the exercise of stock options or otherwise). Types of Awards. The 2019 Plan authorizes stock options, stock appreciation rights, and other forms of awards granted or denominated in the Company’s common stock or units of the Company’s common stock, as well as cash bonus awards. The 2019 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash. A stock option is the right to purchase shares of the Company’s common stock at a future date at a specified price per share (the “exercise price”). The per share exercise price of an option may not be less than the fair market value of a share of the Company’s common stock on the date of grant. The maximum term of an option is ten years from the date of grant. An option may either be an incentive stock option or a nonqualified stock option. Incentive stock option benefits are taxed differently from nonqualified stock options, as described under “U.S. Federal Income Tax Consequences of Awards Under the Amended and Restated 2019 Plan” below. Incentive stock options are also subject to more restrictive terms and are limited in amount by the U.S. Internal Revenue Code and the 2019 Plan. Incentive stock options may only be granted to employees of the Company or a subsidiary. A stock appreciation right is the right to receive payment of an amount equal to the excess of the fair market value of share of the Company’s common stock on the date of exercise of the stock appreciation right over the base price of the stock appreciation right. The base price will be established by the Administrator at the time of grant of the stock appreciation right and may not be less than the fair market value of a share of the Company’s common stock on the date of grant. Stock appreciation rights may be granted in connection with other awards or independently. The maximum term of a stock appreciation right is ten years from the date of grant. The other types of awards that may be granted under the 2019 Plan include, without limitation, stock bonuses, restricted stock, performance stock, stock units or phantom stock (which are contractual rights to receive shares of stock, or cash based on the fair market value of a share of stock), dividend equivalents which represent the right to receive a payment based on the dividends paid on a share of stock over a stated period of time, or similar rights to purchase or acquire shares, and cash awards. Subject to the minimum vesting requirement described above, any awards under the 2019 Plan (including awards of stock options and stock appreciation rights) may be fully-vested at grant or may be subject to time- and/or performance-based vesting requirements. Dividend Equivalents; Deferrals. The Administrator may provide for the deferred payment of awards, and may determine the other terms applicable to deferrals. The Administrator may provide that awards under the 2019 Plan (other than options or stock appreciation rights), and/or deferrals, earn dividends or dividend equivalents based on the amount of dividends paid on outstanding shares of Common Stock, provided that any dividends and/or dividend equivalents as to the portion of an award that is subject to unsatisfied vesting requirements will be subject to termination and forfeiture to the same extent as the corresponding portion of the award to which they relate in the event the applicable vesting requirements are not satisfied (or, in the case of a restricted stock or similar award where the dividend must be paid as a matter of law, the dividend payment will be subject to forfeiture or repayment, as the case may be, if the related vesting conditions are not satisfied). Assumption and Termination of Awards. If an event occurs in which the Company does not survive (or does not survive as a public company in respect of its common stock), including, without limitation, a dissolution, merger, combination, consolidation, conversion, exchange of securities, or other reorganization, or a sale of all or substantially all of the business, stock or assets of the Company, awards then-outstanding under the 2019 Plan will not automatically become fully vested pursuant to the provisions of the 2019 Plan so long as such awards are assumed, substituted for or otherwise continued. However, if awards then-outstanding under the 2019 Plan are to be terminated in such circumstances (without being assumed or substituted for), such awards would generally become fully vested (with any performance goals applicable to the award being deemed met at the “target” performance level), subject to any exceptions that the Administrator may provide for in an applicable award agreement. The Administrator also has the discretion to establish other change in control provisions with respect to awards granted under the 2019 Plan. For example, the Administrator could provide for the acceleration of vesting or payment of an award in connection with a corporate event or in connection with a termination of the award holder’s employment. For the treatment of outstanding equity awards held by the Named Executive Officers in connection with a termination of employment and/or a change in control of the Company, please see the “Potential Payments Upon Change in Control and Termination” above in this Proxy Statement. Transfer Restrictions. Subject to certain exceptions contained in Section 5.6 of the 2019 Plan, awards under the 2019 Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution and are generally exercisable, during the recipient’s lifetime, only by the recipient. Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient or the recipient’s beneficiary or representative. The Administrator has discretion, however, to establish written conditions and procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state securities laws and are not made for value (other than nominal consideration, settlement of marital property rights, or for interests in an entity in which more than 50% of the voting securities are held by the award recipient or by the recipient’s family members). Adjustments. As is customary in incentive plans of this nature, each share limit and the number and kind of shares available under the 2019 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the shareholders. No Limit on Other Authority. The 2019 Plan does not limit the authority of the Board of Directors or any committee to grant awards or authorize any other compensation, with or without reference to the Company’s common stock, under any other plan or authority. Administrative Discretion. The minimum vesting requirement described above shall not limit or restrict the Administrator’s discretion to accelerate the vesting of any awards granted under the amended and restated 2019 Plan in circumstances it determines to be appropriate (whether in connection with a transaction, termination of employment or for any other reason). Termination of or Changes to the 2019 Plan. The Board of Directors may amend or terminate the 2019 Plan at any time and in any manner. Shareholder approval for an amendment will be required only to the extent then required by applicable law or deemed necessary or advisable by the Board of Directors. Unless terminated earlier by the Board of Directors and subject to any extension that may be approved by shareholders, the authority to grant new awards under the 2019 Plan will terminate on December 13, 2028. Outstanding awards, as well as the Administrator’s authority with respect thereto, generally will continue following the expiration or termination of the plan. Generally speaking, outstanding awards may be amended by the Administrator (except for a repricing), but the consent of the award holder is required if the amendment (or any plan amendment) materially and adversely affects the holder. U.S. Federal Income Tax Consequences of Awards under the Amended and Restated 2019 Plan The U.S. federal income tax consequences of the 2019 Plan under current federal law, which is subject to change, are summarized in the following discussion of the general tax principles applicable to the 2019 Plan. This summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the U.S. Internal Revenue Code to the extent an award is subject to and does not satisfy those rules, nor does it describe state, local, or international tax consequences. With respect to nonqualified stock options, the company is generally entitled to deduct and the participant recognizes taxable income in an amount equal to the difference between the option exercise price and the fair market value of the shares at the time of exercise. With respect to incentive stock options, the company is generally not entitled to a deduction nor does the participant recognize income at the time of exercise, although the participant may be subject to the U.S. federal alternative minimum tax. The current federal income tax consequences of other awards authorized under the 2019 Plan generally follow certain basic patterns: nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid (if any) only at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant); bonuses, stock appreciation rights, cash and stock-based performance awards, dividend equivalents, stock units, and other types of awards are generally subject to tax at the time of payment; and compensation otherwise effectively deferred is taxed when paid. In each of the foregoing cases, the company will generally have a corresponding deduction at the time the participant recognizes income. If an award is accelerated under the 2019 Plan in connection with a “change in control” (as this term is used under the U.S. Internal Revenue Code), the company may not be permitted to deduct the portion of the compensation attributable to the acceleration (“parachute payments”) if it exceeds certain threshold limits under the U.S. Internal Revenue Code (and certain related excise taxes may be triggered). Furthermore, under Section 162(m) of the Code, the aggregate compensation in excess of $1,000,000 attributable to awards held by current or former Named Executive Officers may not be deductible by the Company in certain circumstances. Specific Benefits under the Amended and Restated 2019 Plan The Company has not approved any awards that are conditioned upon shareholder approval of the amended and restated 2019 Plan. Except as described below, the Company is not currently considering any other specific award grants under the amended and restated 2019 Plan. As described under “Director Compensation Policy” above, under our current Director Compensation Policy, each Non-Employee Director receives an annual award of restricted stock units on the date of each annual meeting of shareholders, with the The Company cannot project the grants that may be made to the Company’s officers and employees because such grants are made at the discretion of the Compensation Committee. If the amended and restated 2019 Plan had been in effect in fiscal year 2020, we expect that our award grants for Equity Compensation Plan Information The table on page 47 of this Proxy Statement under the heading “Equity Compensation Plan Information” sets forth, as of September 30, 2020, the number of securities outstanding under each of the Company’s Aggregate Past Grants under the 2019 Plan As of December 31, 2020, awards covering 3,209,801 shares of our common stock had been granted under the 2019 Plan. (This number of shares includes shares subject to awards under the 2019 Plan that cancelled or terminated without having been exercised and paid and became available for new award grants under the 2019 Plan.) The following table shows information regarding the distribution of those awards among the persons and groups identified below, option exercises and restricted stock and restricted stock unit award vestings prior to that date, and option and unvested restricted stock and restricted stock unit award holdings as of that date. The number of shares subject to outstanding performance-based restricted stock or unit awards is presented based on
Vote Required for Approval of the The Board of Directors All members of the Board of Directors and all of the Company’s executive officers are eligible for awards under the amended and restated 2019 Plan and thus have a Approval of the amended and restated 2019 Plan requires the affirmative vote of a majority of the votes cast and entitled to vote on THE BOARD OF DIRECTORS PROPOSAL In accordance with the requirements of Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act) and the related compensation disclosure rules of the SEC, and consistent with our shareholders’ preference to provide annual advisory votes on the compensation of our Named Executive Officers, we are asking our shareholders to vote to approve, on a non-binding, advisory basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement. As described in detail under the heading “Compensation Discussion and Analysis,” we seek to closely align the interests of our Named Executive Officers with the interests of our shareholders. Our compensation programs are designed to reward our Named Executive Officers for the achievement of short-term and long-term strategic and operational goals, while at the same time avoiding the encouragement of unnecessary or excessive risk-taking. The vote on this resolution is not intended to address any specific element of compensation; rather, the vote relates to the overall compensation of our Named Executive Officers, as described in this Proxy Statement. The vote is advisory, which means that the vote is not binding on the Company, our Board of Directors or the Compensation Committee of the Board of Directors. Although the vote is non-binding, the Compensation Committee will consider the voting results when it evaluates whether any changes should be made to the Company’s compensation program. Accordingly, we ask our shareholders to approve the following resolution at the Annual Meeting: “RESOLVED, that the Company’s shareholders approve, on an advisory basis, the compensation paid to the Company’s Named Executive Officers as disclosed in the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure in this Proxy Statement.” Our current policy is to provide our shareholders with an opportunity to approve the compensation of the Company’s Named Executive Officers each year at the annual meeting of shareholders. We expect that the next advisory vote on the compensation of our Named Executive Officers will occur at our THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THIS PROXY STATEMENT. Annual Report on Form 10-K and Financial Statements A shareholder may send a written request for a copy of the Company’s Shareholder Proposals Shareholder proposals intended to be included in our proxy materials to be distributed in connection with the Nominations of directors for election at the Delivery of Documents to Shareholders Sharing an Address The Company may deliver only one copy of the Annual Report and Proxy Statement to shareholders who did not receive a Notice of Internet Availably and who share a single address. Upon written or oral request, we will deliver promptly a separate copy of the proxy materials to a shareholder at a shared address to which a single copy of proxy materials was delivered. For future deliveries, shareholders who share a single address can request a separate copy of the Company’s proxy materials. Similarly, if multiple copies of the proxy materials are being delivered to a single address, shareholders can request a single copy of the proxy materials for future deliveries. To make a request, please call or write to the Secretary, EMCORE Corporation, 2015 W. Chestnut Street, Alhambra, CA 91803 or (626) 239-3400. If you are a beneficial owner, please contact your bank, broker, or other nominee directly if you have questions, require additional copies of the proxy materials, wish to receive multiple reports by revoking your consent to householding or wish to request single copies of the proxy materials in the future. Other Matters The Board of Directors knows of no other business which will be presented at the Annual Meeting. If, however, other matters are properly presented, the persons named in the proxy will vote the shares represented thereby in accordance with their judgment on such matters.
EMCORE CORPORATION AMENDED AND RESTATED 2019 EQUITY INCENTIVE PLAN
The EMCORE Corporation Amended and
The Administrator (as such use Form
provided that in no event shall the Share Limit exceed 7,106,420 shares (which is the sum of the 5,813,160 shares set forth above, plus the aggregate number of shares subject to awards previously granted and outstanding under the Prior Plans as of the
Refer to Section 8.10 for application of the
5.1.1Stock Options. A stock option is the an option will indicate if the option is intended as an ISO; otherwise it will be deemed to be a nonqualified stock option. The maximum term of each option (ISO or nonqualified) shall 5.1.2Additional Rules Applicable to ISOs. To the extent that the aggregate fair market value (determined at the time of grant of the applicable option) of stock with respect to which ISOs first 5.1.3Stock Appreciation Rights. A stock appreciation right or “SAR” is a right to receive a payment, in cash and/or Common Stock, equal to the excess of the fair market value of a specified number of shares of Common Stock 5.1.4Other Awards; Dividend Equivalent Rights. The other types of awards that may be granted under this Plan include: (a) stock bonuses, restricted stock, performance stock, stock units, restricted stock units, deferred shares, phantom stock or similar rights to purchase or acquire shares, whether at a fixed or variable price (or no price) or fixed or variable ratio related to the Common Stock, and, subject to the Minimum Vesting Requirement, any of which 5.1.5Performance Goals. The grant, vesting, exercisability or payment of an award may (but need not) depend on the degree of achievement of one or more performance goals relative to a pre-established targeted level or levels using business criteria as selected by the Administrator in its sole discretion.
In no event shall any shares newly-issued by the Corporation be issued for less than the minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable state law. Shares of Common Stock used to satisfy the exercise price of an option shall be valued at their fair market value. The Corporation will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other conditions to exercise or purchase have been satisfied. Unless otherwise expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant’s ability to pay any purchase or exercise price of any award or shares by any method other than cash payment to the Corporation.
5.6.1Limitations on Exercise and Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 5.6 or required by applicable law: (a) all awards are non-transferable and shall not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by the participant; and (c) amounts payable or shares issuable pursuant to 5.6.2Exceptions. The Administrator may permit awards to be exercised by and paid to, or 5.6.3Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 5.6.1 shall not apply to:
8.6.1Effective Date. This Plan was originally effective as of December 14, 2018, the date of its 8.6.2Board 8.6.3Stockholder Approval. To the extent 8.6.4Amendments to Awards. Without limiting any other express authority of the Administrator under (but subject to) the express limits of this 8.6.5Limitations on Amendments to Plan and Awards. No amendment, suspension or termination of this Plan or amendment of any outstanding award agreement shall, without written consent of the participant, affect in any manner materially adverse to the participant any rights or benefits of the participant or obligations of the Corporation under any award granted under this Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 7 shall not
8.8.1Choice of Law. This Plan, the awards, all 8.8.2Severability. If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of this Plan shall continue in effect.
ANNUAL MEETING OF EMCORE CORPORATION Date: March 19, 2021 Time: 8:00 A.M. (Pacic Time) Place:Meeting to be Please separate carefully at the perforation and return just this portion in the envelope provided. Please separate carefully at the perforation and return just this portion in the envelope provided. Proxy EMCORE Corporation Annual Meeting of Stockholders March 19, 2021, 8:00 A.M. (PST) This Proxy is Solicited on Behalf of the Board of Directors The undersigned, hereby revoking any proxy previously given, appoints Jeffrey Rittichier, Tom Minichiello and Ryan Hochgesang (the Named Proxies), and each of |