UNITED
☐ | Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
☒ | Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material Pursuant to §240.14a-12 |
☒ | No fee required. | |||
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LETTER TO THE STOCKHOLDERS
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March 8, 2023 |
Notice of Annual Meeting and Proxy Statement
Annual Meeting of Stockholders
Thursday, April 19, 2018
A more connected world is here.
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To the Stockholders of Silicon Laboratories Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders of Silicon Laboratories Inc., (“Silicon Labs”) a Delaware corporation, to be held on April 19, 2018,20, 2023, at 9:00 a.m. Central Time atin a virtual meeting format only, via the Lady Bird Johnson Wildflower Center, 4801 La Crosse Avenue, Austin, Texas 78739,Internet, with no physical in-person meeting, for the purposes described in the Proxy Statement. To participate in the Annual Meeting virtually via the Internet, please visit www.proxydocs.com/SLAB. In order to attend, you must register in advance at www.proxydocs.com/SLAB prior to the deadline of April 20, 2023 at 9:00 a.m. (Central Time). Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the meeting and to submit questions during the meeting. You will not be able to attend the Annual Meeting in person. During the Annual Meeting, you may submit questions via the question box provided on the virtual meeting website and we will respond to as many inquiries as time permits. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition. Our Investor Relations team will follow up with individual stockholders to answer appropriate questions received during the Annual Meeting that were not answered due to time constraints. We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting website. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the Annual Meeting website log-in page.
The 20182023 Annual Meeting will focus on the items of business listed in the Notice of Annual Meeting of Stockholders and Proxy Statement that follows. We are sending this Proxy Statement to our stockholders on or about March 8, 2018.2023. During the Annual Meeting we will also present a report on Silicon Labs’ performance and operations during 2017.2022.
Whether or not you plan to attend the meeting, in person, your vote is important. Instructions regarding the various methods of voting are contained onin the Proxy, including voting by toll-free telephone number or the Internet. If you request and receive a paper copy of the Proxy by mail, you may still vote your shares by fully completing and returning the Proxy. You may revoke your Proxy at any time prior to the Annual Meeting. If you attend the Annual Meeting and vote by ballot, your Proxy will be revoked automatically and only your vote at the Annual Meeting will be counted.
Sincerely,
R. Matthew Johnson
President, Chief Executive Officer and Director
Silicon Laboratories Inc.
Notice of Annual Meeting of Stockholders
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SILICON LABORATORIES INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
9:00 a.m., Central Time on Thursday, April | ||
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Items of Business | 1. To elect three Class
2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December
3. To vote on an advisory(non-binding) resolution
4. To vote on an advisory (non-binding) resolution regarding the frequency of holding future advisory votes regarding executive compensation; and 5. To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. | |
Voting | We have furnished proxy materials over the Internet where you may read, print and download our Annual Report and Proxy Statement at the investor relations section of our website address, http://www.silabs.com. On or about March 8, | |
Who Can Vote | Only stockholders of record at the close of business on February |
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY AND VOTE YOUR SHARES
BY TELEPHONE, BY INTERNET, OR BY COMPLETING, SIGNING, DATING, AND RETURNING A
PROXY CARD AS PROMPTLY AS POSSIBLE.
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE READ THE ATTACHED PROXY STATEMENT CAREFULLY AND VOTE YOUR SHARES BY TELEPHONE, BY INTERNET, OR BY COMPLETING, SIGNING, DATING, AND RETURNING A PROXY CARD AS PROMPTLY AS POSSIBLE. |
PROXY STATEMENT SUMMARY | This Proxy Statement Summary highlights information contained elsewhere in this proxy statement, which is |
Table2023 Annual Meeting of Contents
Stockholders
Date and Time | Location | Record Date | ||
Thursday, April 20, 2023 9:00 a.m., Central Time | Virtually at www.proxydocs.com/SLAB | February 24, 2023 |
Matters To Be Voted Upon
The following table summarizes the proposals to be voted upon at the 2023 Annual Meeting of Stockholders to be held on April 20, 2023 (the “Annual Meeting”) and the Board’s voting recommendations with respect to each proposal.
Proposals | Board Recommendation | Page Reference | ||
1. Election of Directors | FOR each nominee | 3 | ||
2. Ratification of Appointment of Independent Registered Public Accounting Firm | FOR | 15 | ||
3. Advisory Vote on Executive Compensation | FOR | 17 | ||
4. Advisory (Non-binding) Vote Regarding the Frequency of Holding Future Advisory Votes Regarding Executive Compensation | ONE YEAR | 18 |
Director Nominees
Age | Director Since | Independent | Committee Membership | |||||
Navdeep S. Sooch | 60 | 1996 | ✓ | • Corporate Development & Finance (Member) | ||||
Robert J. Conrad | 63 | 2022 | ✓ | • Corporate Development & Finance (Member) | ||||
Nina Richardson | 64 | 2016 | ✓ | • Nominating & Corporate Governance (Chair) • Corporate Development & Finance (Member) |
Business Highlights
Fiscal 2022 Revenue $1,024M Increased by $303 million, or 42% from 2021, reflecting continued strong growth and share gains. | Gross Margins 63% Gross margins up from 59% in 2021. | |||
Cash Flows from Operating Activities of Continuing Operations $141M We continue to strategically manage our capital, including preserving liquidity for strategic M&A opportunities. | Capital Deployment $888M In 2022, we executed $888 million in share repurchases, bringing the total amount of capital returned to shareholders since the divestiture to $2 billion. |
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Appendix I: Reconciliation of GAAP to Non-GAAP Executive Compensation Financial Measures | 52 |
CORPORATE RESPONSIBILITY AND ESG |
Corporate Responsibility & ESG
Silicon Labs is a leading provider of silicon, software, and solutions for a smarter, more connected world. Our integrated hardware and software platform empowers developers to create wirelessly connected devices that are transforming industries, growing economies, and improving lives. Guided by our shared values, we strive to “do the right thing” for our employees, customers, shareholders, and communities. We integrate environmental, social, and governance (ESG) principles throughout our business, driven by our stakeholders, who help us identify and prioritize ESG-related issues. Silicon Labs routinely engages with our shareholders to better understand their ESG views, carefully considering the feedback we receive and acting when appropriate. While we devote resources to a wide range of ESG-related issues, our goals are focused in five strategic areas: employee wellbeing, product and services innovation, eco-efficient operations, climate change mitigation, and responsible supply chain based on a materiality assessment by stakeholders.
We report additional details on our ESG commitments and progress in our annual Corporate Sustainability Report, available at: https://www.silabs.com/corporate-responsibility.
Ensuring Ethical & Responsible Governance
At Silicon Labs, ESG Governance is a shared responsibility of the Board of Directors and Executive Management. Together, we prioritize climate-related risks and opportunities to focus our efforts where we will have the most impact – setting clear goals, tracking progress, and ensuring accountability.
To integrate ESG oversight across all parts of the company, Silicon Labs established an ESG Steering Committee with executive sponsorship by the Chief Financial Officer, the Chief Legal Officer, and the VP Strategy & Corporate Development. This steering committee meets monthly and is comprised of senior management and cross-functional personnel from various departments, including our ESG Coordinator, Investor Relations, Legal, People, Marketing, Operations, Quality, and others. The ESG Steering Committee sets the overall ESG strategy and meets monthly to oversee the company’s ESG priorities, goals, and disclosures.
The Board has tasked the Nominating and Corporate Governance (“NCG”) Committee to review issues and developments related to corporate governance, environmental and social matters. ESG Steering Committee and senior leadership provide quarterly updates to the NCG and at least annual updates to the Board. Together, the NCG and the ESG Steering Committee recommend associated ESG frameworks and standards to the Board.
The highest level of ESG oversight is with the Silicon Labs Board of Directors. At least annually, but often more frequently, the board reviews identified risks across a wide variety of focus areas including supply chain, macroeconomic fluctuations, cybersecurity, and climate-related related risks, and advises on action plans.
Enabling a More Sustainable World
Our products enable sustainable IoT solutions across home, medical, industrial, and commercial environments, including air pollution and waste management monitoring, water integrity, residential irrigation monitoring, street lighting networks, advanced metering infrastructure, and residential and commercial building energy management. We also actively support research to improve safety, sustainability, and overall quality of life in densifying cities as the founding corporate partner for the Smart City Living Lab at The International Institute of Information Technology in Hyderabad, India.
Silicon Labs is a leading provider in performance, power efficiency, and security with support for the broadest set of multi-protocol solutions. We’re committed to clean tech product design with a focus on reducing die size to
CORPORATE RESPONSIBILITY AND ESG |
improve production yields, optimizing sustainable manufacturing processes, and providing the highest level of product security – PSA Certified Level 3.
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Silicon Labs Series 2 products have been designed to meet the growing needs for low-power IoT devices, allowing devices to stay in the field for up to ten years on a single coin-cell battery. |
SILICON LABORATORIES INC.Our small, energy-efficient integrated circuits can extend battery life by up to 25 percent, reducing disposable batteries and landfill waste.
Mindful of the circular economy, we use recycled/recyclable materials in the manufacturing and transportation of our products.
We became the world’s first pure-play semiconductor company to achieve PSA Certified Level 3, the highest level of IoT hardware and software security protection and this year, we certified the first Sub Ghx SoC, the xG23x.
Creating a Culture of Innovation
PROXY STATEMENTSilicon Labs is a multi-national and multi-ethnic workforce, with sites and employees in more than a dozen countries. We support a curious, high-performing culture with the resources they need to grow their technical knowledge, build management skills, and achieve their career goals. We believe a diversity of experiences and viewpoints lead to better solutions and are the cornerstone of innovation.
We are committed to fostering a diverse and inclusive workplace that attracts and retains exceptional talent. These principles are also reflected in our employee training, with targeted curriculum on eliminating harassment, discrimination, and bias in the workplace. We’re committed to driving long-term change and accountability by incorporating our diversity, equity, and inclusion (DEI) objectives into our executive bonus plan and conducting an annual employee inclusion assessment to inform our action plans.
Silicon Labs has been a certified Great Place to Work since 2019 and annually executes an employee engagement survey to assess progress.
We offer medical, dental, and vision insurance plans to fit the needs of employees and their families and provide broad benefit packages, including profit sharing, retirement, disability insurance, life insurance plans, and mental health and wellness plans.
• | We inspire creativity and innovation through a robust internal training program, including on-demand skills training, external speakers, technical certifications, mentoring and coaching, and leadership training. |
Silicon Labs strives to foster an inclusive environment for all employees supporting employee resource groups, mentorship circles, and diversity leadership initiatives in the semiconductor industry.
We actively promote representation in our organization and equity in our recruitment, development, and promotion practices.
Silicon Labs’ Corporate Governance Policy requires that women and minority candidates are included in the pool from which we select new director candidates.
We partner with universities and nonprofits, providing donations and volunteer support to increase underrepresented groups in engineering and STEM roles.
All Silicon Labs employees receive 24 hours of paid time off annually to volunteer and help direct our global philanthropy programs through local grants and corporate matching gifts for board service and employee giving in the US.
Advancing Responsible & Sustainable Operations
Sustainability is an integral part of everything we do. Responsible and sustainable practices are threaded throughout our everyday business operations, product design, and technology investments, in both our own internal operations and our relationships with suppliers and customers. We minimize resource use, reduce the environmental impact of our production processes, require working conditions in our supply chain are safe, and protect the security of our technology infrastructure and data.
CORPORATE RESPONSIBILITY AND ESG |
We strive to deliver products that meet environmental regulations and requirements and have high standards for our global supply chain partners, prioritizing qualified suppliers who are socially and environmentally progressive. As a fabless semiconductor company, we are committed to working closely with our suppliers to understand climate-related impacts throughout our supply chain as we strive to reduce our carbon footprint.
We demand excellence in our quality and environmental management systems, each respectively certified to ISO 9001:2015 and ISO 14001:2015 standards.
Silicon Labs is an EPA Green Power Partner and is committed to increasing our use of renewable energy where available.
• | We employ proactive programs to reduce office water usage, including integrated low-flow equipment and reduced landscaping water usage in common areas. |
We actively track waste generation and implement measures to improve our diversion rate with higher availability of recycling and electronic disposal options.
• | In 2022, Silicon Labs joined the Responsible Business Alliance® (“RBA®”), the world’s largest industry coalition dedicated to Corporate Social Responsibility (CSR) in global supply chains, providing guidance and endorsement with our suppliers. |
All tier 1 suppliers involved in the manufacture of Silicon Labs products are required to abide by the RBA Code of Conduct and be ISO 9001:2015 certified and ISO 14001 certified or on the path to certification.
We recognize the importance of the secure protection of our customer, partner, supplier, and employee data and are committed to continuously strengthening our technology infrastructure and policies, following best practices and standards such as the ISO/IEC 27001 and NIST CSF.
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Matters to be Considered at Annual Meeting
Silicon Laboratories Inc. Proxy Statement
Annual Meeting of Stockholders to be held on April 19, 201820, 2023
General
The enclosed Proxy is solicited on behalf of the Board of Directors of Silicon Laboratories Inc., a Delaware corporation, for use at the Annual Meeting of Stockholders to be held on April 19, 201820, 2023 at 9:00 a.m. Central Time and which will be conducted virtually via a live webcast at the Lady Bird Johnson Wildflower Center, 4801 La Crosse Avenue, Austin, Texas 78739,www.proxydocs.com/SLAB, or at any adjournment thereof. On or about March 8, 20182023 we mailed to our stockholders a notice containing instructions on how to vote and how to access our 20182023 Proxy Statement and 20172022 Annual Report.
Voting
The specific proposals to be considered and acted upon at the Annual Meeting are summarized in the accompanying notice and are described in more detail in this Proxy Statement. On February 23, 2018,24, 2023, the record date for determination of stockholders entitled to notice of and to vote at the Annual Meeting, 43,170,82231,995,739 shares of our common stock were outstanding and no shares of our preferred stock were outstanding. Each stockholder is entitled to one vote for each share of common stock held by such stockholder on February 23, 2018.24, 2023. The presence, in person or representation by proxy, of the holders of a majority of our shares entitled to vote is necessary to constitute a quorum at the Annual Meeting or at any adjournment thereof. Stockholders may not cumulate votes in the election of directors. The affirmative vote of a majority of the votes cast (in person or represented(including votes cast by proxyproxy) at the Annual Meeting)Meeting with respect to each director’s election is necessary for the election of such director. The affirmative vote of a majority of our shares present in person or represented by proxy at the Annual Meeting and entitled to vote will be required to approve Proposals Two, Three and Three.Four. All votes will be tabulated by the inspector of electionelections appointed for the meeting, who will separately tabulate affirmative and negative votes, abstentions and brokernon-votes (i.e., a Proxy submitted by a broker or nominee specifically indicating the lack of discretionary authority to vote on the matter). Abstentions and brokernon-votes will be counted as present for purposes of determining a quorum for the transaction of business but will not be counted for purposes of determining whether each proposal has been approved.
Proxies
If the enclosed form of Proxy is properly signed and returned or you properly follow the instructions for telephone or Internet voting, the shares represented thereby will be voted at the Annual Meeting in accordance with the instructions specified thereon. If the Proxy does not otherwise specify how the shares represented thereby are to be voted, the Proxy will be voted (i) FOR the election of the directors proposed by the Board of Directors, (ii) FOR the approval of the selection of Ernst & Young LLP as our independent registered public accounting firm and (iii) FOR the approval of an advisory resolution to approve executive compensation and (iv) FOR the approval of an advisory resolution to approve the frequency of holding future advisory votes regarding executive compensation. You may revoke or change your Proxy at any time before the Annual Meeting by filing either a notice of revocation or another signed Proxy with a later date with our Corporate Secretary at our principal executive offices at 400 West Cesar Chavez, Austin, Texas 78701. You may also revoke your Proxy by attending the Annual Meeting and voting in person.during the meeting.
Solicitation
We will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement, the Proxy and any additional solicitation materials furnished to the stockholders. Copies of solicitation
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PROXY STATEMENT |
materials will be furnished to brokerage houses, fiduciaries and custodians holding in their names shares that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners. In addition, we may reimburse such persons for their costs in forwarding the solicitation materials to such beneficial owners. The original solicitation of Proxies by mail and the Internet may be supplemented by a solicitation by telephone or other means by directors, officers, or
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employees. No additional compensation will be paid to these individuals for any such services. Except as described above, we do not presently intend to solicit Proxies other than by mail and the Internet.
Deadline for Receipt of Future Stockholder Proposals
Pursuant to Rule14a-8 under the Securities Exchange Act of 1934, stockholder proposals to be presented at our 20192024 annual meeting of stockholders and in our proxy statement and form of proxy relating to that meeting must be received by us at our principal executive offices at 400 West Cesar Chavez, Austin, Texas 78701, addressed to our Corporate Secretary, not later than November 8, 2018.9, 2023. These proposals must comply with applicable Delaware law, the rules and regulations promulgated by the Securities and Exchange Commission (“SEC”) and the procedures set forth in our bylaws. Pursuant to our bylaws, stockholder proposals received after November 8, 20189, 2023 will be considered untimely. In addition to satisfying advance notice requirements under our bylaws, to comply with the universal proxy rules under the Exchange Act, stockholders who intend to solicit proxies in support of director nominees other than those nominees nominated by the Company must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than February 20, 2024, which is 60 days prior to the anniversary date of the 2023 annual meeting of stockholders. Unless we receive notice in the manner specified above, the proxy holders shall have discretionary authority to vote for or against any such proposal presented at our 20192024 annual meeting of stockholders.
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PROPOSAL ONE: ELECTION OF DIRECTORS |
AT ANNUAL MEETING
Proposal One: Election of Directors
General
The Board of Directors is divided into three classes, designated Class I, Class II and Class III, with staggered three-year terms. William P. Wood, a Class I Director, notified the Company of his decision not to stand for re-election at the Annual Meeting of Stockholders on April 20, 2023. His tenure as a member of the Board of Directors will be completed at the Annual Meeting. The term of office of the other Class III Directors, G. Tyson Tuttle, Sumit SadanaNavdeep Sooch, Robert J. Conrad and Gregg LoweNina Richardson will expire at this Annual Meeting. Messrs. Tuttle, SadanaSooch and LoweConrad and Ms. Richardson have been nominated to continue as Class III Directors. The directors elected as Class III Directors at the Annual Meeting will each serve for a term of three years expiring at the 20212026 annual meeting of stockholders, or until such director’s successor has been duly elected and qualified or until such director’s earlier death, resignation or removal.
The nominees for election have agreed to serve if elected, and management has no reason to believe that the nominees will be unavailable to serve. In the event the nominees are unable or decline to serve as directors at the time of the Annual Meeting, the Proxies will be voted for any nominees who may be designated by our present Board of Directors to fill the vacancies. Unless otherwise instructed, the Proxy holders will vote the Proxies received by them FOR the nominees named below.
Nominees for Class III Directors with a Term Expiring in 20212023 (ages as of Annual Meeting date)
| Mr. Mr. Sooch brings to our board extensive experience as an executive, engineer, and |
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Nina Richardson, 64 | Ms. Richardson has served as a Director of Silicon Labs since 2016. Ms. Richardson was previously the Chief Operating Officer at GoPro where she led Engineering, Operations, Sales, Sales Operations, Support and Human Resources. She also held a variety of executive positions at global EMS provider, Flex, including Vice President and GM where she managed several manufacturing plants in the U.S. and Mexico. Ms. Richardson is |
Ms. Richardson has broad executive experience in manufacturing, engineering, and supply chain that complements our Company’s operations. She brings valuable insights from her experiences as a director at several other publicly traded companies and particularly her governance and ESG experience, having completed NACD’s Cybersecurity Certification and the Diligent Climate Leadership Certification. She has scaled operations, talent and organizations in multiple geographies bringing an important perspective to this stage of our growth. |
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Other Directors
Set forth below is information concerning our other Directors whose term of office continues after this Annual Meeting.
Continuing Class II Directors with a Term Expiring in 2024 (ages as of Annual Meeting date)
Matt Johnson, 47 | Mr. Johnson has served as a Director and our Chief Executive Officer since January 2022 and has served as our President since April 2021. Mr. Johnson served as our Senior Vice President and General Manager of our Internet of Things business unit from July 2018 until he was promoted to President in April 2021. Before joining Silicon Labs, Mr. Johnson held leadership positions at NXP, Freescale, and Fairchild Semiconductor. Mr. Johnson is dedicated to a strong company culture, innovative product development, and operational excellence. Mr. Johnson holds a B.S. in Electrical Engineering Technology from the University of Maine and has completed executive programs at Harvard Business School and Stanford University. Mr. Johnson currently serves on the boards of the Dell Children’s Medical Center Foundation, and the Semiconductor Industry Association where he is the board chairman. Mr. Johnson has extensive technology and operations experience in various leadership positions throughout the semiconductor industry, most recently as our chief executive officer, and brings to the Board a thorough understanding of our people, products and markets worldwide. | |
Sumit Sadana, 54 | Mr. Sadana has served as a Director of Silicon Labs since 2015, and as Lead Director since January 2022. Mr. Sadana is currently the Executive Vice President and Chief Business Officer of Micron Technology, Inc. (NASDAQ: MU) Prior to this role, he was the President of Sunrise Capital Management, LLC a technology, M&A and financial consulting/advisory firm. Mr. Sadana has served in various executive leadership positions at SanDisk, a provider of flash-based storage options, including Executive Vice President and Chief Strategy Officer General Manager of Enterprise Solutions. Mr. Sadana started his career in the semiconductor industry with Freescale Semiconductor and IBM, in a wide variety of roles spanning hardware and software development, operations, strategic planning, business development and general management responsibilities. He has a B.Tech. in Electrical Engineering from the Indian Institute of Technology (IIT), Kharagpur (India) and an M.S. in Electrical Engineering from Stanford University. Mr. Sadana brings to our board significant experience from diverse leadership roles across technology, engineering, operations, strategy, business development, P&L management, as an executive in global technology and semiconductor companies. Mr. Sadana provides valuate insights in the areas of finance and accounting, M&A, culture and diversity, and global business supply chain. |
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Gregg Lowe, 60 | Mr. Lowe has served as a Director of Silicon Labs since 2017. Mr. Lowe is currently the President and Chief Executive Officer of Wolfspeed, Inc. (NYSE: WOLF), an innovator of lighting-class LEDs, lighting products and Wolfspeed™ power and radio frequency (RF) semiconductors. He previously served as President and CEO of Freescale Semiconductor from June 2012 until its merger with NXP (NASDAQ: NXPI) in 2015. Prior, Mr. Lowe served as senior vice president and manager of the Analog business for Texas Instruments (NASDAQ: TXN) where he helped to direct the acquisition of National Semiconductor. During his 27 years at Texas Instruments, he held various leadership positions across field sales, automotive sales, marketing, and integrated circuits where he oversaw a global team with design centers and customers on every continent. Mr. Lowe currently serves on the boards of Wolfspeed, the Semiconductor Industry Association, the Rock & Roll Hall of Fame in Cleveland, Ohio and St. Edward’s High School in Lakewood, Ohio. Mr. Lowe has a Bachelor of Science degree in electrical engineering from Rose-Hulman Institute of Technology in Terre Haute, Indiana and is a graduate from the Stanford Executive Program at Stanford University. Mr. Lowe has been recognized for his accomplishments in the community and within the semiconductor industry as the recipient of the Rose-Hulman Institute of Technology Career Achievement Award. Mr. Lowe brings to our board extensive experience as a chief executive office for publicly traded semiconductor companies. Mr. Lowe provides valuable insights from his experiences managing global operations including expertise in technology, marketing, sales, supply chain, and M&A. |
Continuing Class III Directors with a Term Expiring in 20192025 (ages as of Annual Meeting date)
William G. Bock, | Mr. Bock Mr. | |
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operations and markets. |
Continuing Class I Directors with a Term Expiring in 20206
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Ms. Wyatt’s CEO, director and officer experience provides our board expertise in global and international operating experience as well as cyber and security risk. Ms. Wyatt also has extensive technology expertise in hardware and software global technology product companies | |
Sherri Luther, 57 | Ms. Luther joined the Silicon Labs Board of Directors in January 2022. Ms. Luther currently serves as the Chief Financial Officer of Lattice Semiconductor (NASDAQ: LSCC), a Ms. |
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PROPOSAL ONE: ELECTION OF DIRECTORS |
Board Leadership/Independence
The Board of Directors separates the role of Chairman of the Board from the role of Chief Executive Officer. The Board of Directors has also designated Mr. WoodSadana as the Lead Director. The Lead Director’s duties include presiding over executive sessions of the Company’s independent directors and serving as principal liaison between thenon-employee directors, the Chief Executive Officer and the Chairman of the Board on sensitive issues. The Board believes that the appointment of the Lead Director and the separation of the Chairman and Chief Executive Officer roles currently provides the most efficient and effective leadership model for the Company as it encourages free and open dialogue regarding competing views and provides for strong checks and balances. Specifically, the balance of powers among our Chief Executive Officer, Chairman of the Board and Lead Director facilitates the active participation of our independent directors and enables our Board of Directors to provide more effective oversight of management. The Board of Directors has determined that Messrs. Lazar,Bock, Conrad, Lowe, Sadana, and Sooch and WoodMses. Richardson, Wyatt and Ms. RichardsonLuther are each independent as defined in the applicable Marketplace Rules of the NASDAQ Stock Market, Inc. Independent directors met in executive session without the Chief Executive Officer and othernon-independent directors present on four occasions during fiscal 2017.2022.
Any member of our Board of Directors may resign at any time by delivering written notice to the Company. When a director resigns, a majority of the directors remaining in office shall have the power to fill the vacancy on the Board of Directors and the director so elected shall hold office for the unexpired portion of the term of the resigned director.
During fiscal 2017,2022, our Board of Directors held ninea total of six meetings. Our Board of Directors has an Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee and a MergersCorporate Development and AcquisitionsFinance Committee. During fiscal 2017,2022, each incumbent director attended or participated in substantially allat least 75% of the aggregate of (i) the meetings of the Board of Directors and (ii) the meetings held by all committees of the Board of Directors on which such director served.
Audit Committee. The Audit Committee is responsible for matters relating to the selection of our independent registered public accounting firm, the scope of the annual audits, the fees to be paid to the independent registered public accounting firm, the performance of our independent registered public accounting firm, compliance with our accounting and financial policies, and management’s procedures and policies relative to the adequacy of our internal accounting controls. The Committee also reviews the Company’s policies and practices with respect to risk management including cyber security risks. The members of the Audit Committee are Messrs. LazarMr. Bock and WoodMses. Luther and Ms. Richardson.Wyatt. Mr. LazarBock serves as Chairman of the Audit Committee. The Board of Directors has determined that Mr. LazarBock is qualified as an audit committee financial expert pursuant to Item 407 of RegulationS-K and as a financially sophisticated audit committee member under Rule 5605(c)(2)(A) of the Marketplace Rules of the NASDAQ Stock Market, Inc. The Board of Directors has also determined that each of the members of the Audit Committee is independent as defined in the applicable Marketplace Rules of the NASDAQ Stock Market, Inc. and Rule10A-3 under the Securities Exchange Act of 1934. The Board of Directors has adopted a written charter for the Audit Committee, a current copy of which is located on our Internet website under the “Investor Relations” page. Our Internet website address ishttp://www.silabs.com. See Appendix IV for a copy of the Audit Committee Charter. The Audit Committee reviews and assesses the adequacy of its charter on an annual basis. The Audit Committee held five meetings during fiscal 2017.2022.
Compensation Committee. The Compensation Committee reviews and approves all compensation to be provided to our executive officers and makes recommendations to the Board of Directors regarding our compensation of directors. In addition, the Compensation Committee has authority to administer our stock incentive and stock purchase plans. The members of the Compensation Committee are Messrs. SadanaBock and Lowe and Ms. Richardson.Wyatt. Mr. SadanaLowe serves as Chairman of the Compensation Committee. The Board of Directors has determined that each of the members of the Compensation Committee is independent as defined in the applicable Marketplace Rules of the NASDAQ Stock Market, Inc. The Board of Directors has adopted a written charter for the
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PROPOSAL ONE: ELECTION OF DIRECTORS |
Compensation Committee, a current copy of which is located on our Internet website under the “Investor Relations” page. Our Internet website address ishttp://www.silabs.com. The Compensation Committee reviews and assesses the adequacy of its charter on an annual basis. The Compensation Committee held eightfour meetings during fiscal 2017.2022.
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Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee focuses on issues related to the composition, practices and operations of the Board of Directors. In addition, the Nominating and Corporate Governance Committee has the authority to consider candidates for the Board of Directors recommended by stockholders and to determine the procedures with respect to such stockholder recommendations. The Committee also reviews issues and developments related to corporate governance, environmental and social matters and recommends associated standards to the Board. The members of the Nominating and Corporate Governance Committee are Messrs. SadanaLowe and WoodSadana and Ms. Richardson. Mr. WoodMs. Richardson serves as Chairman of the Nominating and Corporate Governance Committee. The Board of Directors has determined that each member is independent as defined in the applicable Marketplace Rules of the NASDAQ Stock Market, Inc. The Board of Directors has adopted a written charter for the Nominating and Corporate Governance Committee, a current copy of which is available on our Internet website under the “Investor Relations” page. The Nominating and Corporate Governance Committee recommended, and the Board of Directors approved, the Corporate Governance Policy, which is also located on our Internet website under the “Investor Relations” page. Our Internet website address ishttp://www.silabs.com. The Nominating and Corporate Governance Committee held fivefour meetings during fiscal 2017.2022.
MergersCorporate Development and AcquisitionsFinance Committee. The Mergers and AcquisitionsFinance Committee reviews and makes recommendations to the Board of Directors regarding potential materialthe Company’s capital structure, liquidity risk, financial strategies, investment and hedging policies, capital allocation decisions, strategic investments and dispositions, acquisitions and divestitures.divestitures and similar opportunities for maximizing shareholder value. The members of the Mergers and AcquisitionsFinance Committee are Messrs. Bock, Lazar, LoweSooch, Wood and Sadana.Conrad and Ms. Richardson. Mr. BockWood serves as Chairman of the Mergers and AcquisitionsFinance Committee. The Mergers and AcquisitionsFinance Committee held fourfive meetings during fiscal 2017.2022.
In evaluating potential director candidates, the Nominating and Corporate Governance Committee considers the appropriate balance of experience, skills and characteristics required of the Board of Directors and seeks to ensure that at least a majority of the directors are independent under the applicable Marketplace Rules of the NASDAQ Stock Market, Inc. The Nominating and Corporate Governance Committee selects director nominees based on their personal and professional integrity, depth and breadth of experience, ability to make independent analytical inquiries, understanding of our business, willingness to devote adequate attention and time to duties of the Board of Directors and such other criteria as is deemed relevant by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee includes, and has any search firm that it engages include, women and minority candidates in the pool from which the Committee selects director candidates. The Company’s Corporate Governance Policy (approved by the Board of Directors) provides that the backgrounds and qualifications of the directors, considered as a group, should provide a diverse mix of experience, knowledge and skills. The Company does not have any other formal policy with respect to the diversity of our directors. The Nominating and Corporate Governance Committee considers the effectiveness of this policy and the effectiveness of the Board of Directors generally in the course of nominating directors for election. The Company’s Corporate Governance Policy provides that directors that are public company executive officers should not serve on more than two public company boards and other directors should not serve on more than four public company boards (with a grace period until the 2024 annual meeting of stockholders).
9
PROPOSAL ONE: ELECTION OF DIRECTORS |
Particular Competencies | Bock | Conrad | Johnson | Lowe | Luther | Richardson | Sadana | Sooch | Wyatt | |||||||||
Industry/Market Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
Technology – hardware | ● | ● | ● | ● | ● | ● | ● | |||||||||||
Technology – software | ● | ● | ● | ● | ● | ● | ● | |||||||||||
Public Company Executive Leadership | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
Sales and Marketing | ● | ● | ● | ● | ● | ● | ||||||||||||
Financial Literacy, Capital Allocation and M&A | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
Human Capital Management | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
Supply Chain | ● | ● | ● | ● | ● | ● | ||||||||||||
Multinational Experience | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
ESG | ● | ● | ● | |||||||||||||||
Cyber Security and Risk Management | ● | ● | ● | ● |
Competencies | Value to Silicon Labs | |
Industry/Market Experience | Experience in the semiconductor industry and our end markets provides relevant understanding of our business, strategy, and customer dynamics. | |
Technology — Hardware | Our mixed signal technology is used in a wide variety of products and technologies. Experience in hardware technologies helps us to evaluate product strategies. | |
Technology — Software | Increasingly, software applications are critical to the success of our business. Experience in software technologies helps us evaluate development, product security, and business models. | |
Public Company Executive Leadership | Public company executive experience provides important understanding of leadership, governance and best practices that are pertinent to our business. | |
Sales and Marketing | We have a diverse, global customer base and experience in sales and marketing provides relevant perspective to our sales and marketing strategies. | |
Financial Literacy, Capital Allocation and M&A | We are often involved in complex financial transactions and operate in a dynamic M&A environment. Our position as a public company benefits from strong financial oversight and knowledge of financial and accounting principles. | |
Human Capital Management | Experience and knowledge of best practices in the areas of talent management, public company compensation structures and culture support our goals to recruit, retain and maintain a diverse, inclusive and engaged highly-skilled workforce in a competitive environment. | |
Supply Chain | With global operations and customers in several countries, global business and supply chain expertise helps us understand opportunities and challenges. | |
Multinational Experience | Multinational leadership experience leads to a deeper knowledge of global industry dynamics and international business issues which are increasingly important in this macroeconomic environment. | |
ESG | Experience in environmental, social and governance supports our programs and initiatives to align with our corporate strategy and considerations of our employees, customers, suppliers and investors. | |
Cyber Security and Risk Management | These competencies are critical in overseeing our enterprise risk program and cyber threats to our product, and the security of our assets and operations. |
10
PROPOSAL ONE: ELECTION OF DIRECTORS |
Background | ||||||||||||||||||
Tenure/Age | Bock | Conrad | Johnson | Lowe | Luther | Richardson | Sadana | Sooch | Wyatt | |||||||||
Years on the Board | 11 | .5 | 2 | 5 | 1 | 6 | 7 | 26 | 3 | |||||||||
Age | 72 | 63 | 47 | 60 | 57 | 64 | 54 | 60 | 51 | |||||||||
Gender Diversity | ||||||||||||||||||
Female | ● | ● | ● | |||||||||||||||
Male | ● | ● | ● | ● | ● | ● | ||||||||||||
Non-Binary | ||||||||||||||||||
Did not Disclose Gender | ||||||||||||||||||
Racial/Ethnic/Nationality/Other Forms of Diversity: | ||||||||||||||||||
African American or Black | ||||||||||||||||||
Alaskan Native or Native American | ||||||||||||||||||
Asian (other than South Asian) | ||||||||||||||||||
South Asian | ● | ● | ||||||||||||||||
Hispanic or Latinx | ||||||||||||||||||
Native Hawaiian or Pacific Islander | ||||||||||||||||||
White/Caucasian | ● | ● | ● | ● | ● | ● | ● | |||||||||||
Two or More Races or Ethnicities | ||||||||||||||||||
LBGTQ+ | ||||||||||||||||||
Persons with Disabilities | ||||||||||||||||||
Did not Disclose Demographics |
11
PROPOSAL ONE: ELECTION OF DIRECTORS |
In identifying potential director candidates, the Nominating and Corporate Governance Committee relies onconsiders recommendations made by current directors and officers. In addition, the Nominating and Corporate Governance Committee may engage a third partythird-party search firm to identify and recommend potential candidates. The Nominating and Corporate Governance Committee includes, and has any search firm that it engages include, women and minority candidates in the pool from which the committee selects new director candidates. Finally, the Nominating and Corporate Governance Committee will consider candidates recommended by stockholders.
Any stockholder wishing to recommend a director candidate for consideration by the Nominating and Corporate Governance Committee must provide written notice not later than November 8, 20189, 2023 to the Corporate Secretary at our principal executive offices located at 400 West Cesar Chavez, Austin, Texas 78701. Any such notice should clearly indicate that it is a recommendation of a director candidate by a stockholder and must set forth (i) the name, age, business address and residence address of the recommended candidate, (ii) the principal occupation or employment of such recommended candidate, (iii) the class and number of shares of the corporation which are beneficially owned by such recommended candidate, (iv) a description of all understandings or arrangements between the stockholder and the recommended candidate and any other person or persons pursuant to which the recommendations are to be made by the stockholder and (v) any other information relating to such recommended candidate that is required to be disclosed in solicitations of proxies for the election of directors.
In addition, such notice must contain (i) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting, (ii) the name and address, as they appear on the corporation’s books, of the stockholder proposing such nomination, (iii) the class and number of shares of the corporation that are beneficially owned by
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such stockholder, (iv) any material interest of the stockholder in such recommendation and (v) any other information that is required to be provided by the stockholder pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended, in such stockholder’s capacity as proponent of a stockholder proposal. Assuming that a stockholder recommendation contains the information required above, the Nominating and Corporate Governance Committee will evaluate a candidate recommended by a stockholder by following substantially the same process, and applying substantially the same criteria, as for candidates identified through other sources.
The Board of Directors encourages all directors to attend our annual meetings of stockholders if practicable. All of the directors in office at the time of the virtual annual meeting of stockholders held on April 20, 201721, 2022 attended such meeting.
12
PROPOSAL ONE: ELECTION OF DIRECTORS |
Stockholder Communications with the Board of Directors
The Board of Directors maintains a process for stockholders to communicate with the Board of Directors or with individual directors. Stockholders who wish to communicate with the Board of Directors or with individual directors should direct written correspondence to our Corporate Secretary at our principal executive offices located at 400 West Cesar Chavez, Austin, Texas 78701. Any such communication must contain (i) a representation that the stockholder is a holder of record of stock of the corporation, (ii) the name and address, as they appear on the corporation’s books, of the stockholder sending such communication and (iii) the class and number of shares of the corporation that are beneficially owned by such stockholder. The Corporate Secretary will forward such communications to the Board of Directors or the specified individual director to whom the communication is directed unless such communication is deemed unduly hostile, threatening, illegal or similarly inappropriate, in which case the Corporate Secretary has the authority to discard the communication or to take appropriate legal action regarding such communication.
We have adopted a Code of Business Conduct and Ethics that applies to all officers, directors, employees and consultants. Our Code of Business Conduct and Ethics is located on our website under the “Investor Relations” page. Our website address ishttp://www.silabs.com.
Our Board of Directors oversees our management, which is responsible for theday-to-day issues of risk management. Such oversight is facilitated in large part by the Audit Committee, which receives reports from management, the internal audit team, the Chief Information Officer, the Chief Security Officer and the Company’s independent registered public accounting firm. In addition, members of management (including the Chief Executive Officer, Chief Financial Officer and Chief Legal Officer) may also report directly to the Board of Directors on significant risk management issues.
Director Compensation and Indemnification Arrangements
Our 2009 Stock Incentive Plan, as approved by our stockholders, limits to $750,000 in each calendar year, the maximum grant date fair value of awards payable in our common stock and cash compensation for all services as an independent director that may be provided to each of our independent directors. Under the 2009 Stock Incentive Plan, on the date of the 20172022 annual meeting of stockholders, the Board of Directors granted eachnon-employee director a Restricted Stock Unit (“RSU”) award that shall vest on approximately the first anniversary of the date of grant at no cost covering a number of shares of the Company’s common stock equal to $170,000$180,000 (or $225,000$235,000 for the Chairperson of the Board) divided by the average closing price of the Company’s common stock during the fourth fiscal quarter of 2016;30 trading days ending on the second trading day preceding the grant date; provided that any former employee of the Company must have served as anon-employee director for at least six months in order to receive such award. Accordingly, as Chairman of the Board, Mr. Sooch received a grant of 3,5761,630 RSUs and Messrs. Bock, Lazar, Lowe, Sadana, Wood and Ms.Mses. Luther, Richardson and Wyatt each received a grant of 2,7021,249 RSUs on the date of the 20172022 annual meeting of stockholders.
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The RSU awards require no purchase price payment and will vest on approximately the first anniversary of the date of grant.
During 2017,2022, we paid ournon-employee directors cash compensation consisting of (i) $50,000$55,000 per person per year, (ii) an additional $20,000$25,000 per year for the Chairman of the Audit Committee, (iii) an additional $9,000 per year for each Audit Committee member (excluding the Chairman), (iv) an additional $20,000$25,000 per year for the Chairman of the Compensation Committee, (v) an additional $9,000 per year for each Compensation Committee member (excluding the Chairman), (vi) an additional $10,000 per year for the Chairman of the Nominating and Corporate Governance Committee, (vii) an additional $5,000 per year for each Nominating and Corporate Governance Committee member (excluding the Chairman), (viii) an additional $20,000 per year for the Lead Director (ix) an additional $10,000 per year for the Chairman of the Mergers and AcquisitionsFinance Committee, (x) an additional $5,000 per year for each Mergers and Acquisitions
13
PROPOSAL ONE: ELECTION OF DIRECTORS |
Finance Committee member (excluding the Chairman) and (xi) an additional $20,000 per year for the Chairman of the Board. Payments under the cash compensation plan are generally paid in equal quarterly installments on the last day of each fiscal quarter.
Cash compensation waspro-rated if the individual served less than the full year in a position.
Our certificate of incorporation limits the personal liability of our directors for breaches by them of their fiduciary duties. Our bylaws require us to indemnify our directors to the fullest extent permitted by Delaware law. We have also entered into indemnification agreements with all of our directors and have purchased directors’Director and officers’Officers liability insurance.
In addition to the above compensation, we also reimbursenon-employee directors for all reasonableout-of-pocket expenses incurred for attending board and committee meetings.
The following table provides summary information on compensation earned by eachnon-employee member of our Board of Directors in fiscal 2017.2022.
Director Compensation Table for Fiscal 20172022
Name | Fees Earned or ($) | Stock Awards ($)(1) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | ||||||||||||
William G. Bock | 60,000 | 196,435 | 256,435 | 89,000 | 162,183 | 251,183 | ||||||||||||
Neil Kim | 19,516 | 0 | 19,516 | |||||||||||||||
Jack R. Lazar | 75,000 | 196,435 | 271,435 | |||||||||||||||
Bob Conrad | 29,739 | — | 29,739 | |||||||||||||||
Jack R. Lazar(2) | 19,821 | — | 19,821 | |||||||||||||||
Gregg Lowe | 44,483 | 196,435 | 240,918 | 85,000 | 162,183 | 247,183 | ||||||||||||
Sherri Luther | 60,949 | 162,183 | 223,132 | |||||||||||||||
Nina Richardson | 70,255 | 196,435 | 266,690 | 68,475 | 162,183 | 230,658 | ||||||||||||
Sumit Sadana | 81,220 | 196,435 | 277,655 | 79,888 | 162,183 | 242,071 | ||||||||||||
Navdeep S. Sooch | 70,000 | 259,975 | 329,975 | 80,000 | 211,656 | 291,656 | ||||||||||||
William P. Wood | 89,000 | 196,435 | 285,435 | 66,056 | 162,183 | 228,239 | ||||||||||||
Christy Wyatt | 73,000 | 162,183 | 235,183 |
(1) | Amounts shown do not reflect compensation actually received by the director but represent the grant date fair value as determined pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718,Stock Compensation |
(2) | Mr. Lazar served as a member of the Board of Directors until his resignation at the 2022 Annual Meeting. |
Recommendation of the Board of Directors
Our Board of Directors unanimously recommends that the stockholders vote
FOR the election of the Nominees for Class II Directors as listed above.
RECOMMENDATION OF THE BOARD OF DIRECTORS OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES FOR CLASS I DIRECTORS AS LISTED ABOVE. |
14
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm
Our Audit Committee has appointed the firm of Ernst & Young LLP to serve as our independent registered public accounting firm for the fiscal year ending December 29, 2018.30, 2023. Ernst & Young LLP has audited our financial statements since our inception in 1996. A representative of Ernst & Young LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she so desires and will be available to respond to appropriate questions.
The following table presents fees for professional services rendered by Ernst & Young LLP for fiscal 20172022 and 2016:2021:
2022 ($) | 2021 ($) | |||||||||||||||
2017 ($) | 2016 ($) | |||||||||||||||
Audit fees | 1,481,000 | 1,186,000 | 935,700 | 1,021,500 | ||||||||||||
Audit-related fees | 3,000 | 1,400 | 5,000 | 5,400 | ||||||||||||
Tax fees | 277,500 | 108,000 | 224,300 | 126,400 | ||||||||||||
All other fees | 2,160 | 2,160 | 3,300 | 2,800 | ||||||||||||
Total | 1,763,660 | 1,297,560 | 1,168,300 | 1,156,100 |
Audit Fees. Audit fees relate to services rendered in connection with the audits of the annual consolidated financial statements and attestation of management’s report on internal controlscontrol over financial reporting included in our Form10-K, the quarterly reviews of financial statements included in our Form10-Q filings, fees associated with SEC registration statements, assistance in responding to SEC comment letters, accounting consultations related to audit services and statutory audits required internationally.
Audit-Related Fees. Audit-related fees include services for assurance and other related services, such as consultations concerning financial accounting and reporting matters and due diligence related to mergers and acquisitions.
Tax Fees. Tax fees include services for tax compliance, research and technical tax advice.
All Other Fees. All other fees include the aggregate fees for products and services provided by Ernst & Young LLP that are not reported under “Audit Fees,” “Audit-Related Fees” or “Tax Fees.”
The Audit Committee is authorized by its charter topre-approve all auditing and permittednon-audit services to be performed by our independent registered public accounting firm. The Audit Committee reviews and approves the independent registered public accounting firm’s retention to perform attest services, including the associated fees. The Audit Committee also evaluates other known potential engagements of the independent registered public accounting firm, including the scope of the proposed work and the proposed fees, and approves or rejects each service, taking into account whether the services are permissible under applicable law and the possible impact of eachnon-audit service on the independent registered public accounting firm’s independence from management. At subsequent meetings, the Committee will receive updates on the services actually provided by the independent registered public accounting firm, and management may present additional services for approval. The Committee has delegated to the Chairman of the Audit Committee the authority to evaluate and approve engagements on behalf of the Committee in the event that a need arises forpre-approval between Committee meetings. If the Chairman so approves any such engagements, he or she will report that approval to the full Audit Committee at its next meeting. During fiscal 2017,2022, all such services werepre-approved in accordance with the procedures described above.
Our Audit Committee has reviewed the fees described above and believes that such fees are compatible with maintaining the independence of Ernst & Young LLP.
15
PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Stockholder ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm is not required by our bylaws or other applicable legal requirement. However, the appointment of Ernst & Young LLP is being submitted to the stockholders for ratification. If the stockholders fail to ratify the appointment, the Audit Committee will
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reconsider whether or not to retain the firm. Even if the appointment is ratified, the Audit Committee at its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be appropriate.
Recommendation of the Board of Directors
Upon the recommendation of our Audit Committee, our Board of Directors unanimously
recommends that the stockholders vote FOR the ratification of the appointment of
Ernst & Young LLP to serve as our independent registered public accounting firm
for the fiscal year ending December 29, 2018.
RECOMMENDATION OF THE BOARD OF DIRECTORS UPON THE RECOMMENDATION OF OUR AUDIT COMMITTEE, OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP TO SERVE AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 30, 2023. |
16
PROPOSAL THREE: ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Proposal Three: Advisory Vote on Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted in July 2010, enables our stockholders to vote annually to approve, on an advisory(non-binding) basis, the compensation of our Named Executive Officers as disclosed in this Proxy Statement in accordance with the rules of the Securities and Exchange Commission.
This vote is advisory, and, therefore, not binding on the Company, the Compensation Committee, or our Board of Directors. However, our Board of Directors and our Compensation Committee value the opinions of our stockholders and to the extent there is any significant vote against the compensation of the Named Executive Officers as disclosed in this Proxy Statement, we will consider our stockholders’ concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
As described in detail under the heading “Compensation Discussion and Analysis,” our executive compensation program is designed to attract, motivate, and retain the Named Executive Officers, who are critical to our success. Under this program, the Named Executive Officers are rewarded for the achievement of strategic and operational objectives and the realization of increased stockholder value. Please read the Compensation Discussion and Analysis and the accompanying compensation tables beginning on page 2124 of this Proxy Statement for additional information about our executive compensation program, including information about the compensation of the Named Executive Officers in 2017.fiscal 2022.
The Compensation Committee regularly reviews our executive compensation program to ensure that it achieves the desired goal of aligning our executive compensation structure with the interests of our stockholders and current market practices.
We are asking our stockholders to indicate their support for the compensation of the Named Executive Officers as described in this Proxy Statement. This proposal, commonly known as a“Say-on-Pay” proposal, gives our stockholders the opportunity to express their views on the compensation of the Named Executive Officers. Please note that this vote is not intended to address any specific item of compensation, but rather the overall compensation of the Named Executive Officers and the philosophy, policies and practices described in this Proxy Statement.
We will ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the compensation paid to the Company’s Named Executive Officers as disclosed in this Proxy Statement is hereby approved.”
Recommendation of the Board of Directors
Our Board of Directors unanimously recommends that the stockholders
vote FOR approval of the above resolution.
PROPOSAL FOUR: ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY VOTE ON EXECUTIVE COMPENSATION |
Proposal Four: Advisory Vote on the Frequency of the Advisory Vote on Executive Compensation
The Dodd-Frank Wall Street Reform and Consumer Protection Act also enables our stockholders to indicate how frequently we should seek an advisory vote on the compensation of the Named Executive Officers, as disclosed in accordance with the rules of the Securities and Exchange Commission, such as Proposal Three above. By voting on this Proposal Four, stockholders may indicate whether they would prefer that we conduct future advisory votes on Named Executive Officer compensation once every one, two, or three years.
Our Board of Directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for the Company. Our Board of Directors considered that an annual advisory vote on executive compensation will allow our stockholders to provide us with their direct input on our compensation philosophy, policies, and practices as disclosed in the proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices. We understand that our stockholders may have different views as to what is the best approach for the Company, and we look forward to hearing from our stockholders on this Proposal.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting in response to the resolution set forth below.
“RESOLVED, that the stockholders determine, on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Company’s named executive officers should be every year, every two years or every three years.”
The option of one year, two years or three years that receives the highest number of votes cast will be the frequency selected by stockholders for the advisory vote on executive compensation. However, because this vote is advisory and not binding on the Company or our Board of Directors, our Board of Directors may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the option approved by our stockholders.
RECOMMENDATION OF THE BOARD OF DIRECTORS OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE OPTION OF EVERY ONE YEAR AS THE FREQUENCY WITH WHICH STOCKHOLDERS ARE PROVIDED AN ADVISORY VOTE ON EXECUTIVE COMPENSATION. |
18
OTHER MATTERS |
Other Matters
We know of no other matters that will be presented for consideration at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed form of Proxy to vote the shares they represent as the Board of Directors may recommend. Discretionary authority with respect to such other matters is granted by the execution of the enclosed Proxy.
19
OWNERSHIP OF SECURITIES |
Ownership of Securities
The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of January 31, 2018February 15, 2023 by (i) all persons who were beneficial owners of five percent or more of our common stock, (ii) each director and nominee for director, (iii) the named executive officers named in the Summary Compensation Table of the Executive Compensation section of this Proxy Statement and (iv) all then current directors and executive officers as a group. Unless otherwise indicated, each of the stockholders has sole voting and investment power with respect to the shares beneficially owned, subject to community property laws, where applicable.
Beneficial Owner(1) | Shares Beneficially Owned | Percentage of Shares Beneficially Owned(2) | ||||||
G. Tyson Tuttle(3) | 196,074 | * | ||||||
John C. Hollister(4) | 46,033 | * | ||||||
Brandon Tolany(5) | 15,042 | * | ||||||
Sandeep P. Kumar(6) | 27,248 | * | ||||||
Alessandro Piovaccari(7) | 14,632 | * | ||||||
Navdeep S. Sooch(8) | 439,756 | 1.0 | % | |||||
William G. Bock | 40,724 | * | ||||||
Jack R. Lazar | 13,324 | * | ||||||
Gregg Lowe | — | * | ||||||
Nina Richardson | 1,669 | * | ||||||
Sumit Sadana | 6,286 | * | ||||||
William P. Wood(9) | 38,266 | * | ||||||
Entities deemed to be affiliated with BlackRock, Inc.(10) | 4,765,980 | 11.2 | % | |||||
Entities deemed to be affiliated with The Vanguard Group(11) | 3,650,808 | 8.5 | % | |||||
Entities deemed to be affiliated with FMR LLC(12) | 6,384,770 | 14.9 | % | |||||
Entities deemed to be affiliated with Wellington Management Group LLP(13) | 2,330,009 | 5.5 | % | |||||
All directors and executive officers as a group (12 persons)(14) | 839,054 | 1.96 | % | |||||
Total Beneficial Ownership | 17,970,621 | 41.9 | % |
Beneficial Owner(1) | Shares Owned | Percentage of Shares Owned(2) | ||||||
R. Matthew Johnson | 5,257 | * | ||||||
John Hollister | 50,825 | * | ||||||
Brandon Tolany(3) | 39,494 | * | ||||||
Sandeep Kumar | 46,994 | * | ||||||
Navdeep S. Sooch | 397,923 | 1.24 | % | |||||
William G. Bock | 30,219 | * | ||||||
Robert Conrad | — | * | ||||||
Gregg Lowe | 8,255 | * | ||||||
Sherri Luther | — | * | ||||||
Nina Richardson | 4,659 | * | ||||||
Sumit Sadana | 3,281 | * | ||||||
William P. Wood(4) | 37,819 | * | ||||||
Christy Wyatt | 3,973 | * | ||||||
Entities deemed to be affiliated with BlackRock, Inc.(5) | 5,335,000 | 16.67 | % | |||||
Entities deemed to be affiliated with The Vanguard Group(6) | 3,226,121 | 10.08 | % | |||||
Entities deemed to be affiliated with FMR LLC(7) | 4,992,720 | 15.60 | % | |||||
All directors and executive officers as a group (13 persons)(8) | 628,699 | 1.96 | % | |||||
Total Beneficial Ownership | 14,182,540 | 44.30 | % |
* | Represents beneficial ownership of less than 1%. |
(1) | Unless otherwise indicated in the footnotes, the address for the beneficial owners named above is 400 West Cesar Chavez, Austin, Texas 78701. |
(2) | Percentage of ownership is based on |
(3) | Includes |
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(4) | Includes |
(5) | Pursuant to a Schedule 13G/A dated January |
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Pursuant to a Schedule 13G/A dated February |
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OWNERSHIP OF SECURITIES |
(7) | Pursuant to a Schedule 13G/A dated February |
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Includes |
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Transactions
Our bylaws require us to indemnify our directors and executive officers to the fullest extent permitted by Delaware law. We have entered into indemnification agreements with all of our directors and executive officers and have purchased directors’Director and officers’Officers liability insurance. In addition, our certificate of incorporation limits the personal liability of the members of our Board of Directors for breaches by the directors of their fiduciary duties.
Our Chairman of the Board, Mr. Sooch, is Chief Executive Officer, as well as a stockholder, of Ketra, Inc., a private company in the field of solid state lighting. In fiscal 2017, we sold approximately $0.3 million of products to Ketra in the ordinary course of business.
Policies and Procedures with Respect to Related Party Transactions
Our Audit Committee Charter requires that the members of our Audit Committee, all of whom are independent directors, review and approve all related party transactions as described in Item 404 of RegulationS-K promulgated by the SEC. We have also adopted a written policy regarding the approval of all related party transactions. Under such policy, each of our directors and executive officers must notify the Corporate Secretary (who, in turn, will provide such information to the Audit Committee) of any proposed related party transactions. To assist with the identification of potential related party transactions, we solicit information through questionnaires in connection with the appointment of new directors and executive officers and on an annual basis with respect to existing directors and executive officers. The Chairman of the Audit Committee is delegated the authority to approve or ratify any related party transactions in which the aggregate amount involved is expected to be less than $1 million per year. All other proposed related party transactions are subject to approval or ratification by the Audit Committee except for certain categories of transactions that are deemed to bepre-approved by the Audit Committee. In determining whether to approve or ratify a related party transaction, the Audit Committee and the Chairman, if applicable, will take into account, among other factors deemed appropriate, whether the related party transaction is on terms no more favorable to the counterparty than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction.
Our Code of Business Conduct and Ethics requires our executive officers and directors to disclose any conflicts of interest, including any material transaction or relationship involving a potential conflict of interest. No executive officer may work, including as a consultant or a board member, simultaneously for us and any competitor, customer, supplier or business partner without the prior written approval of our Chief Financial Officer or legal department. Furthermore, executive officers are encouraged to avoid any direct or indirect business connections with our competitors, customers, suppliers or business partners.
Pursuant to our Corporate Governance Policy, we expect each of our directors to ensure that other existing and future commitments do not conflict with or materially interfere with their service as a director. Directors are expected to avoid any action, position or interest that conflicts with our interests, or gives the appearance of a conflict. In addition, directors should inform the Chairman of our Nominating and Corporate Governance Committee prior to joining the board of another public company to ensure that any potential conflicts, excessive time demands or other issues are carefully considered.
See the subsection entitled “Committees and Meetings” in the section of this Proxy Statement entitled “Proposal One: Election of Directors.”
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AUDIT COMMITTEE REPORT |
Audit Committee Report
The following is the report of the Audit Committee with respect to the audit of the fiscal 2017 audited2022 consolidated financial statements of Silicon Laboratories Inc. (the “Company”):
Management is responsible for the Company’s internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) and for issuing a report thereon. Additionally, the independent registered public accounting firm is responsible for performing an independent audit of the Company’s internal controlscontrol over financial reporting and for issuing a report thereon. The Committee’s responsibility is to monitor and oversee these processes.
In this context, the Committee has met and held discussions with management and the independent registered public accounting firm. Management represented to the Committee that the Company’s consolidated financial statements in the Annual Report were prepared in accordance with accounting principles generally accepted in the United States, and the Committee has reviewed and discussed the consolidated financial statements in the Annual Report with management and the independent registered public accounting firm. The Committee has discussed with the independent registered public accounting firm, Ernst & Young LLP, the required communications specified by auditing standards together with guidelines established by the SECSecurities and Exchange Commission and the Sarbanes-Oxley Act.
The Company’s independent registered public accounting firm also provided to the Committee the written disclosures required by applicable requirements forof the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence. The Audit Committee reviewednon-audit services provided by its independent registered public accounting firm for the last fiscal year and determined that those services are not incompatible with maintaining the independent registered public accounting firm’s independence.
Based upon the Committee’s discussion with management and the independent registered public accounting firm and the Committee’s review of the representation of management and the reports of the independent registered public accounting firm to the Committee, the Committee recommended that the Board of Directors include the audited consolidated financial statements in the Company’s Annual Report on Form10-K for the fiscal year ended December 30, 201731, 2022 filed with the Securities and Exchange Commission.
Submitted by the Audit Committee of the Board of Directors:
Jack R. LazarWilliam G. Bock (Chairman)
Nina RichardsonChristy Wyatt
William P. WoodSherri Luther
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EXECUTIVE OFFICERS |
Executive Officers
Set forth below is information regarding the executive officers of Silicon Labs as of January 31,2018.February 15, 2023 (ages as of Annual Meeting date).
Name | Age | Position | ||||
| President, Chief Executive Officer and Director | |||||
John | Senior Vice President and Chief Financial Officer | |||||
Brandon Tolany | Senior Vice President of Worldwide Sales & Marketing | |||||
Sandeep | Senior Vice President of Worldwide Operations | |||||
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G. Tyson TuttleR. Matthew Johnsonhas served as a Director and our President and Chief Executive Officer since April 2012. UponJanuary 2022. Prior to this role, Mr. Bock’s retirement in February 2016, he also became President. Mr. TuttleJohnson served as our Chief Operating Officer and Senior Vice President from May 2011 to April 2012. From January 2010 to May 2011, Mr. Tuttle served as our Chief Technical Officer. From May 2005 to December 2009, he was our Vice President and General Manager of Broadcast products including the audio and video product families. Mr. Tuttle joinedSilicon Labs’ Internet of Things (IoT) business unit from July 2018 until he was promoted to President in April 2021. Prior to joining Silicon Labs, in 1997Mr. Johnson served as a senior design engineer. From 1999 to 2005,Senior Vice President and General Manager of automotive processing products and software development at NXP Semiconductors. Mr. Tuttle served in a variety of product management, marketing and business leadership positions. Previously, Mr. Tuttle held senior design engineering positions at Crystal Semiconductor/Cirrus Logic and Broadcom Corporation where he focused on high-speed mixed-signal circuit design for mass storage and Ethernet applications. Mr. TuttleJohnson holds an M.S. in Electrical Engineering from UCLA and a B.S. in Electrical Engineering Technology from Johns Hopkinsthe University of Maine and has completed executive programs at Harvard Business School and Stanford University. Mr. Tuttle has been granted over 70 patents covering many fundamental semiconductor inventions including key aspectsJohnson also serves on the Board of wireless communications.Trustees for Dell Children’s Foundation, the Global Semiconductor Alliance and the Semiconductor Industry Association.
John C. Hollister has served Silicon Labs as our Senior Vice President and Chief Financial Officer and Senior Vice President since June 2013. Prior to this role, Mr. Hollister was our Vice President, Business Development since April 2012 and also served as our Chief Information Officer from November 2012 to June 2013. Mr. Hollister served as our Vice President, Manufacturing and Asia Operations from November 2009 to April 2012. From April 2007 to October 2009, he was Managing Director, Asia Operations. Mr. Hollister joined Silicon Labs in 2004 and held financial management positions until April 2007. Prior to joining Silicon Labs, Mr. Hollister’s experience included Vice President of Finance at Cicada Semiconductor as well as various finance positions at Cirrus Logic, Veritas DGC,3-D Geophysical and PricewaterhouseCoopers LLP. Mr. Hollister is a Certified Public Accountant and has a master’s degree in Accounting and a bachelor’s degree in Business Administration from the University of Texas at Austin. Mr. Hollister also serves as a board member for Macrofab and previously served on the Board of the Central Texas Chapter of the American Red Cross.
Brandon Tolany has served as our Senior Vice President of Worldwide Sales and Marketing since January 2016. Prior to joining Silicon Labs, Mr. Tolany served as Senior Vice President, Chief Sales and Marketing Officer at Freescale Semiconductor where he led global sales and marketing activities from 2013 to 2015. During his tenure at Freescale, Brandon progressed in a range ofMr. Tolany held various leadership positions including Vice President of Global Marketing for Microcontrollers and Director of Sales and Field Application Engineering for Freescale’s Americas West Region. Mr. Tolany started his career at Freescale in 2004 as a marketing manager for the i.MX applications processor product line. Prior to joining Freescale, Mr. Tolany was Director of Sales and Business Development for Luminent where he led global marketing efforts. He also served as a product manager at Mitsubishi Electric. Mr. Tolany holds a bachelor’s degree in Communications from the University of Texas at Austin. Mr. Tolany also serves as a board member for the Rosedale Foundation.
Sandeep P. Kumar, PhD has served as our Senior Vice President of Worldwide Operations since July 2013. He previously served as Vice President of Operations Engineering from September 2009 to July 2013. He joined Silicon Labs in July 2006 and is responsible for worldwide operations. His team includes the manufacturing teams, CAD organization, process engineering and package engineering, product and test engineering, quality assurance, failure analysis, as well as the prototype production and reliability test labs.labs; and works closely with the technology organization in driving the process and package engineering
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EXECUTIVE OFFICERS |
strategies. Dr. Kumar’s group drives the company technology strategy and supplier choices. Prior to joining Silicon Labs, Dr. Kumar managed global test engineering teams and was responsible for worldwide product and test engineering for the storage business at Agere Systems, Lucent technologiesTechnologies and AT&T Bell Labs. Dr. Kumar has a bachelor’s degree in Electrical Engineering from the Indian Institute of Technology in Bombay, a M.S. in Electrical Engineering from the University of Evansville in Indiana and a Ph.D. in Electrical Engineering from Lehigh University.
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He Mr. Kumar serves on the Electrical and Computer Engineering Department’s Industry Advisory Council for Southern Illinois University in Carbondale, IL.
Alessandro Piovaccari, PhD has served as our Chief Technology Officer since February 2015. He is responsible for the Company’s product and technology research and development. He joined Silicon Labs in 2003 to design the company’s single-chip FM radio products. In 2006, he became part of the Video Broadcast division, where heco-architected the company’s single-chip TV tuner IC and later managed the team as Director of Engineering. From 2012 to 2015 he served as Vice President of Engineering responsible for research and development of the company’s IoT hardware products. Previously, Dr. Piovaccari also held several technical and management positions at Tanner Research and Cadence Design Systems. Dr. Piovaccari holds 36 issued patents and is a Senior Member of IEEE and a Full Member of AES. Dr. Piovaccari received Laurea and PhD degrees in electronic engineering and computer science from the University of Bologna and a Post-Master’s Certificate with Honors in electrical engineering from Johns Hopkins University.
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COMPENSATION DISCUSSION AND ANALYSIS |
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) provides information regarding the 20172022 compensation program for our principal executive officer, principal financial officer and threetwo other most highly compensated executive officers. We had no other executive officers of the Company.during 2022. For 2017,2022, these individuals were:
G. Tyson Tuttle,R. Matthew Johnson, our President and Chief Executive Officer (our “CEO”(“CEO”).
John C. Hollister, our Senior Vice President and Chief Financial Officer (“CFO”).
Brandon Tolany, our Senior Vice President of Worldwide Sales, Marketing & Applications
Sandeep P. Kumar, PhD, our Senior Vice President of Worldwide Operations
Alessandro Piovaccari, PhD, our Chief Technology Officer
We refer to these executive officers collectively in this Proxy Statement as the “Named Executive Officers” or “NEOs”.“NEOs.”
Here,In this CD&A, we describe the material elements of our compensation program for the Named Executive OfficersNEOs during 20172022 as administered by the Compensation Committee of our Board of Directors (the “Compensation Committee”).Committee. This analysis also provides an overview of our executive compensation philosophy, including our principal compensation policies and practices, with respect to Named Executive Officers.for our NEOs. Finally, it explainswe explain how and why the Compensation Committee arrived at the specific compensation decisions for our Named Executive Officers in 2017,2022 and discussesdiscuss the key factors that the Compensation Committee considered in determining their compensation.
Fiscal 2017In our first full year as a pure-play IoT focused company, total revenue increased 42% from 2021 to $1,024 million, doubling our revenue in just two years. Our pure-play IoT strategy gained significant traction in 2022 as customers and suppliers saw the value of $769 million grew 10%working with a partner focused only in the rapidly growing IoT market. Worldwide distribution revenue was 81% of 2022 revenue, with growth across all regions, particularly in Europe and the Americas. Revenue from fiscal 2016. Continued growth in IoTour top ten customers was 20%, and Infrastructure productsno single customer was the key drivergreater than 6% of these results. Silicon Labsour revenue.
We continued to deliver strongsee record design win activity in 2022, which increased over 50% year-on-year in expected lifetime revenue, and our total sales funnel stands at $17 billion. We had GAAP gross margins of nearly 63% in 2022, up from 59% in 2017,2021, reflecting a favorable product and customer mix from our proprietary wireless portfolio as well as the qualityeffects of the company’s products and served markets. Through disciplined management of operating expenses combined with strong revenue growth, Silicon Labs delivered 28% growth inproduct price increases intended to input cost increases. GAAP operating income for the year. Net income declinedyear increased to $119 million from 2022 due to higher interest expense related to the Company’s convertible notes, combined with anrevenue and gross margin, offset partially by a 14% year-on-year increase in ouroperating expenses. Net interest income tax provision resultingincreased from U.S. corporate tax reform. Headcount increased by approximately 2% from 20162021, primarily due to organicrising yields on cash, cash equivalents and short-term investments. Headcount at the end of the year was 1,964, and grew approximately 18% over 2021, due to continued hiring and an acquisition.expansion, particularly in our India development center.
Silicon Labs’In 2022, cash flow from operations has been positive nearly every quarter since it went public in 2000. In fiscal 2017, the company delivered recordoperating activities was $141 million. The strong operating cash flowsflow, in addition to the remaining cash proceeds from our 2021 divestiture allowed us to return $888 million of $190 million. The companycapital to our shareholders through stock repurchases. We ended the year with $770 millionapproximately $1.2 billion in cash, cash equivalents, and investments, and is well-positionedshort-term investments. We are pleased to execute on itshave successfully executed our capital deployment strategy focusing onplan post-divestiture while maintaining substantial liquidity for prospective strategic M&A and share repurchases.
2017 Business Highlightsendeavors.
IoT products grew 26%year-on-year, exceeding expectations, and representing 51% of total 2017 revenue, up from 45% in 2016. Silicon Labs’ wireless products led these results, with growth outpacing the overall market.26
Infrastructure grew 7%year-on-year, falling short of expectations due to macro weakness in optical networking impacting our timing products, offset by robust performance by our isolation products. During 2017, the company’s infrastructure products benefited from continued widespread adoption of its isolation products in industrial and automotive markets.
Broadcast product revenues also exceeded expectations in 2017, declining only 3% for the year. Reductions in TV tuner ASPs drove a decline in Broadcast consumer product revenue despite increasing market share, with some offset by growth in automotive radio products.
COMPENSATION DISCUSSION AND ANALYSIS |
Access declined 11%, consistent with expectations.2022 Business Highlights
We produced record 2022 revenue despite continued supply challenges across the entire industry. Revenue was up 42% over 2021 and reflects an organic doubling of revenue over two years. We also saw record design win activity in 2022, which increased over 50% year-on-year in expected lifetime revenue, providing further validation of strategy, and, importantly, the breadth and depth of our technology portfolio.
The strength of Silicon Labs’ product portfolio continues to drive share gain and accelerate our design win pipeline – positioning us to continue to outperform the market. In 2022, we introduced new and innovative products, including the expansion of the Series 2 SoC family:
Participation in the Industrial end market grew to roughly half of 2017 revenue, up from approximately 40% in 2016.
• | Delivered complete Matter development solutions providing support for Matter over Wi-Fi®, Matter over Thread, Bluetooth® Low Energy (LE) commissioning, and Matter bridges to Zigbee® and Z-Wave® |
Worldwide distribution revenue increased to 73% of total revenue, up 16% from 2016.
• | Released the Silicon Labs Pro Kit for Amazon Sidewalk, the first end-to-end development platform for Amazon Sidewalk with complete connectivity support. The development kit offers differentiated security with Secure Vault™, sub-gigahertz (GHz), and Bluetooth LE connectivity, and the software and tools for Sidewalk device makers, designers, and developers to get to market faster |
• | Introduced the FG25 SoC and EFF01 Front End Module (FEM), a new flagship SoC and power amplifier for Wi-SUN, which, when used together, are designed to provide a sub-gigahertz (GHz) transmission range of up to 3 kilometers in dense urban environments with no data loss |
The company’s customer count increased by more than 15% to 35,000.
• | Delivered the SiWx917, Silicon Labs’ first Wi-Fi 6 and Bluetooth LE SoC family, designed to be the lowest power, longest battery life Wi-Fi 6 and Bluetooth LE combination SoC in the industry |
Significant Executive Compensation Actions
Our Compensation Committee, which consists entirely of independent directors, sets the compensation of our Named Executive Officers. For 2017,In 2022, the Compensation Committee took the following actions with respect to NEO compensation. As noted above, the Company produced strong business results, which positively impacted performance-based compensation of our Named Executive Officers:elements and outcomes:
Increased Mr. Johnson’s base salaries for Messrs. Tuttlesalary 52.9% and Hollisterhis target bonus percentage from 100% to bring them130% in connection with his promotion to the approximate median level of the market data (as adjusted to reflect the factors described under “Compensation-Setting Process” below).President and Chief Executive Officer on January 2, 2022.
Increased Mr. Hollister’s base salary 6.9% on April 1, 2022.
Increased Mr. Tolany’s base salary 3.1% on April 1, 2022.
Increased Mr. Kumar’s base salary 3.1% on April 1, 2022.
Approved annual cash incentive bonus targets with 45% tied to revenue, 45% tied to operating income and 10% tied to diversity, equity and inclusion metrics as part of our 2017 financial performance (such awards to our continuing Named Executive Officers ultimately paid out at 107.9% of target for Messrs. Tuttle, Hollister and Dr. Kumar, at 119.9% of target for Mr. Tolany and at 98.2% of target for Dr. Piovaccari).overall ESG initiatives.
Approved long-term incentive compensation, in the formconsisting of a combination of Restricted Stock Units (“RSUs”), and Performance Shares (“PSU”), and Market Stock Units (“MSU”PSUs”) to further align theour executives’ incentives of the executives andwith our stockholders, retain key employees, and reward performance.
We extendedIncreased our stock ownership guidelines beyondfor our CEO from five times to include our CFO and other executive officers. The CFO is required to hold equity with a value of three times his base salary. Other Section 16 officers will be required to hold equity with a value of onesix times base salary. Aphase-in period will be allowed in all cases.
We prohibited pledging of the Company’s securities.27
COMPENSATION DISCUSSION AND ANALYSIS |
Significant Corporate Governance Standards
We have endeavored to maintain high standards in our executive compensation and governance practices. The following policies remainedwere in effect in 2017:2022:
We do not provide excise taxgross-ups in the event of a change in control.
We have stock ownership guidelines for our CEO and CFO that require the holding of our equity with a value equal to a multiple of three times their base salary (following aphase-in period). Other NEOs will be required to hold equity with a value of one time their base salary (following aphase-in period).
All change in control agreements contain double trigger (rather than single trigger) change in control provisions.
We have stock ownership requirements for our Board of Directors to require the holding of our equity with a value equal to three times their annual cash retainer following aphase-in period.
We do not provide significant perquisites or other personal benefits to our executive officers. Other than an annual physical examination paid for by the Company, our executive officers participate in broad-based company-sponsored health and welfare benefits programs on the same basis as our other full-time employees.
We have operated with the roles of Chairman of the Board and Chief Executive Officer separated for several years. We also have a Lead Independent Director on our Board.
We do not offer retirement plans or nonqualified deferred compensation plans or arrangements to our executive officers, other than the 401(k) plan offered to our other salaried full-time employees.
The compensation consultant engaged by the Compensation Committee does not provide any other services to the Company.
What We Do | ||||
We do have stock ownership guidelines for our CEO requiring him to hold Silicon Labs equity with a value equal to six times his base salary and for our CFO requiring him to hold three times his base salary following a phase-in period. Other executive officers are required to hold equity with a value of two times their base salary following a phase-in period. |
We do not provide excise tax gross-ups in the event of a change in control.
We do have stock ownership requirements for our Directors requiring them to hold Silicon Labs equity with a value equal to three times their annual cash retainer following a phase-in period. | We do not allow hedging and pledging of Company securities. | |
| We do not provide significant perquisites or other personal benefits to our executive officers. Other than an annual physical examination by the Company, our executive officers participate in broad-based company-sponsored health and welfare benefits programs on the same basis as our other full-time employees. | |
We do separate the roles of Chairman of the Board and Chief Executive Officer. Our Board also includes the position of Lead Independent Director. | We do not offer retirement plans or nonqualified deferred compensation plans to our executive officers, other than the 401(k) retirement plan offered to all salaried full-time employees. | |
We do conduct an annual assessment to ensure that the compensation consultant engaged by the Compensation Committee is independent. | ||
We do conduct an annual review of our compensation programs for executive officers and other employees to assess the level of risk associated with those programs and the effectiveness of our policies and practices for monitoring and managing these risks. | ||
We do have a recoupment (or claw-back) policy to provide for recovery of incentive compensation from any executive officer whose fraud or willful misconduct results in a restatement of our financial results. |
We conduct an annual review of our compensation programs for executive officers and other employees to assess the level of risk associated with those programs and the effectiveness of our policies and practices for monitoring and managing these risks.
We have a recoupment (or clawback) policy to provide for recovery of incentive compensation from any executive officer whose fraud or willful misconduct results in a restatement of our financial results.
Our executive compensation program supports our long-term strategic and operational goals. It is intended to attract, motivate, and retain talented individuals to serve as our executive officers. The Compensation Committee designs the various components of our executive compensation program to be market competitive and support growth and profitability objectives while remaining aligned with our culture.
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COMPENSATION DISCUSSION AND ANALYSIS |
We hold our executives to high performance standards and our compensation plansarrangements for our CEO and other Named Executive Officers are designed to deliver competitive base pay and attractive incentive opportunities if performance is outstanding while delivering significantly lower actual compensation when performance is below our rigorous standards. To this end, a significant portion of target compensation for our executives is designed to be at risk.
Salaries are compared not only to our peer group listed below, but also to data from the Radford Technology survey. Our target for salaries, considering data from each source, is market competitive. Our annual cash incentive plan, discussed below, is based solely on achieving corporate targets including financial targets with MBO targets for two of our Named Executive Officers.targets. This plan targets above-market awards when the Company is performing well and places cash incentives at risk when performance targets are not achieved. See also “Annual Cash Incentive BonusBonus” below.
In ourOur equity program in additionincludes time-vesting restricted stock units (RSUs), performance stock units (PSUs), and market stock units (MSUs) that are intended to time-based RSUs, we use two formsincentivize achievement of performance shares,high-performance standards. Our performance-based MSUs and PSUs, to maintain high performance standards in our long-term incentive plan. Our use of MSUs began in 2012 and has consistently been part of our long-term incentive strategy. We require significant levels of performance in terms of Total Shareholder Returnmeasured by our total shareholder return (or “TSR”) relative to the TSRs of a group of benchmark companies consisting of publicly traded companies included in the Philadelphia Semiconductor Index (“XSOX” or “Index”) forand our peer group of companies listed under “Compensation Setting Process – Competitive Positions” below. In 2021, we transitioned away from MSUs to be earned at target levels.
In additiona performance-based PSU program, more appropriate during the period of our company’s transformation and transition to MSUs, we usea new business model. Our PSUs to incentivizealso require significant levels of multi-year performance, measured by our achievement against our stated financial model and reward operational focus on revenue growth. With a target at 10% revenue growth year-over-year, PSUs provide zero reward for 5% or less revenue growth and, conversely, pays 200% of target upon achieving 15% revenue growth. The revenue growth factor is prorated for revenue growth between 5% and 15% (i.e. if revenue growth is 9%, the revenue growth factor of 80% is applied to determine the PSU result). We believe these performance awards appropriately focustargets. These program design changes were made in consultation with our executives on operational activities that drive sustained performance and growth.compensation consultant.
This equity approach provides a strong alignment betweenpay-for-performance, operational results and retention of key executive talent. The design appropriately establishes a clear focus on TSR and year-over-year revenue growth.achieving our financial objectives. As such, our compensation program provides modest compensation when longer-term performance is below expectations. We believe that this approach optimally aligns the interests of management and our stockholders and results in the greatest emphasis on long-term stockholder value creation. For more information on the design of our equity programs and for awards granted in 2017,2022, see “Long-term Incentives Equity Awards” below.
Prior Say On Pay Vote and Shareholder Engagement
Our prior advisory Say-on-Pay proposal regarding the compensation of our Named Executive Officers received the support of approximately 59% of the votes cast at the 2022 Annual Meeting. The Compensation Committee and the Board reviewed the result of the Say-on-Pay vote, and they recognized that it signaled shareholder concerns and a need for further engagement to better understand the perspectives of our shareholders. In connection with and following the 2022 Annual Meeting, the Company reached out to our top 20 shareholders who represented approximately 70% of the Company’s outstanding shares of common stock. We ultimately spoke with shareholders representing approximately 54% of the Company’s outstanding shares of common stock, including at least 11% of the outstanding shares that voted “against” our Say-on-Pay proposal last year. Our Chief Financial Officer led each of the meetings, and our Compensation Committee Chair or Nominating and Governance Committee Chair participated in many of these meetings. The feedback received was then shared and discussed with the Compensation Committee and the Board.
The principal concern expressed by shareholders was with our payment of cash severance to our former CEO Tyson Tuttle upon his resignation. The Compensation Committee has noted such concern and has approved a resolution that it will not provide cash severance in the future to executive officers upon a voluntary resignation (other than as may be contractually committed, such as upon a resignation for good reason).
We received comment that our CEO stock ownership guidelines could be more robust. In response, we increased our CEO stock ownership guidelines from five times to six times base salary.
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COMPENSATION DISCUSSION AND ANALYSIS |
We also received comments on our PSU measurement periods. We evaluated our PSU plan design to ensure that all metrics are multi-year measures and aligned to our long-term stated financial model and growth targets.
We believe that shareholder engagement is important, and our Compensation Committee will continue to take into account shareholder feedback, future Say-on-Pay votes and relevant market developments in order to determine whether any subsequent changes to our executive compensation program are warranted. We expect to continue our outreach efforts with respect to executive compensation in future years in order to ensure that we understand our shareholder views and concerns on each of these subjects for the consideration of our Compensation Committee and the full Board. We made the following changes to our compensation program in response to stockholder feedback:
Feedback from stockholders | Changes in response to feedback | Effective | ||
Concern that our retiring CEO received a cash severance payment | Approved a resolution that we will not provide cash severance in the future to executive officers upon a voluntary resignation, other than as may be contractually committed | 2023 | ||
CEO stock ownership guidelines could be more robust | Increased our stock ownership guidelines for our CEO from five times to six times base salary | 2023 | ||
Review our PSU plan to ensure it includes multi-year measures | Evaluated our PSU plan design to ensure that all metrics are multi-year measures and aligned to our long-term stated financial model and 3-year growth targets | 2023 |
Compensation-Setting Process
Role of Compensation Committee. The Compensation Committee is responsible for administering our executive compensation program, as well as determining and approving the compensation for our Named Executive Officers. The Compensation Committee regularly reports to our Board of Directors on its deliberations and actions.
The Compensation Committee uses a balanced approach to set the compensation of our executive officers, with each primary direct component of compensation (base salary, annual cash incentive bonus, and long-term incentive compensation) designed to play a specific role in achieving this objective.role. The Compensation Committee determines the
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compensation of each executive officer with respect to each compensation component based, in part, on its own analysis of competitive market data and the recommendations of our CEO, both as described below. Additionally, the Compensation Committee periodically reviews whether our compensation policies and practices create any risks reasonably likely to have a material adverse impact on the Company and the steps that have or should be taken to monitor and mitigate such risks. The Compensation Committee’s 2022 review determined that the Company’s pay policies and practices do not create risks reasonably likely to have a material adverse effect on the Company.
The Compensation Committee exercises its own judgment in making its compensation decisions and may accept or reject our CEO’s recommendations. In addition, the Compensation Committee receives input from its compensation consultant and meets in executive session (without our CEO present) prior to making its final determinations regarding compensation.
Differences in compensation among our executive officers are the result of the Compensation Committee’s exercise of its judgment, following its review of our CEO’s recommendations, its analysis of competitive market data and its consideration of overall Company performance, competitive pressures, business conditions the value of current equity holdings and the potential financial impact of its compensation decisions. The key factors in the variance in compensation levels among our executive officersdecisions, including share ownership dilution. Pay decisions are differences in thebased on competitive market data forfrom the compensation consultant and a variety of other factors, including level of performance, the vesting and value of outstanding equity awards, each positionindividual’s tenure, prior experience, distinctive value to the Company, variances in job responsibilities relative to similarly titled officers at other
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COMPENSATION DISCUSSION AND ANALYSIS |
companies and differences in each executive officer’s individual performance.the Compensation Committee’s determination of the appropriate mix of compensation elements (including base salary, cash incentives and equity incentives).
In determining the compensation of our CEO, the Compensation Committee consults with the other independent members of our Board of Directors, assesses our CEO’s individual performance and considers competitive market data and the other factors described above.
For our Named Executive Officers, the Committee targets a market competitive rangemedian for base salaries and targets a range between 65th and 75th percentile ingreater than market total direct compensation (i.e. including incentive compensation) when our stringent performance targets are achieved. The factors described above provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each Named Executive Officer. No single factor wasis determinative in setting pay levels, nor wasis the impact of any factor on the determination of pay levels quantifiable.
The Committee also noted that our stockholders approved our executive compensation practices pursuant to the advisory vote at our 2017 annual stockholders meeting, and the Committee believes that our compensation practices are at least as favorable to the Company as those that were previously approved.
Role of Management. In carrying out its responsibilities, the Compensation Committee works with members of our management, including our CEO. Typically, our management assists the Compensation Committee by providing information on Company performance and its perspective on compensation matters. Our CEO generally attends Compensation Committee meetings (except with respect to discussions involving his own compensation)compensation or other executive sessions of the committee).
Our CEO formulatesmakes pay recommendations to the Compensation Committee regarding our executive officers’ compensation (except for his own compensation) for the Compensation Committee. These recommendations are based on aCommittee using the factors mentioned above and his own review of the competitive market data developed by the Compensation Consultant, his performance evaluation of each executive officer and other considerations, including competitive pressures, business conditions, the value of current equity holdings, each individual’s tenure, compensation history, prior experience, distinctive value to the Company, variances in job responsibilities relative to similarly titled executives at other companies, the appropriate mix of compensation components, the Company’s overall performance and the potential financial impact (including dilution and compensation cost) associated with their compensation. Our CEO does not use a specific formula to weight these various factors.NEO’s performance.
Our CEO conducts this assessment with the assistance of our Chief People Officer. Our CEO then makes formal recommendations to the Compensation Committee, using data from compensation firms Mercer and Radford, regarding adjustments to base salary, annual cash incentive bonus opportunities and equity awards for our executives (except with respect to his own compensation).team. Our CEO also recommends performance measures and related target levels for annual cash incentive bonusbonuses and equity awards (except with respect to his own compensation).for senior management.
While theThe Compensation Committee solicits and reviews our CEO’s recommendations and proposals with respect toon compensation-related matters, the Compensation Committee only usesmatters. They consider these recommendations, and proposalsamong other factors, as one factor in making its ownthey make compensation decisions for our executive officers.
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Role of Compensation Consultant. The Compensation Committee is authorized to retain the services of compensation consultants and other advisors from time to time, as it sees fit, in connection with the administration of our executive compensation programs.
The Compensation Committee retained Compensia, Inc.Mercer US LLC, (“Mercer”), a national compensation consulting firm providing executive compensation advisory services, (“Compensia”), to provide competitive market data and analysis regarding material elements of compensation, including base salary, cash incentives and equity incentives. CompensiaMercer served at the discretion of the Compensation Committee. CompensiaCommittee, and received $212,794 for these services. Mercer did not provide any other services to the Company in 2017.2022.
With the approval of the Compensation Committee, Compensia also providesMercer provided our CEO and our Chief People Officer with market data regarding compensation for our executive officers so that our CEO’s compensation recommendations to the Compensation Committee are consistent with our compensation philosophy.
Competitive Positioning. The Compensation Committee believes it is in the best interests of our stockholders to ensure that our executive compensation is competitive with that of other companies of similar size and complexity. In late 2016,2021, the Compensation Committee directed CompensiaMercer to use data gathered from the 20162021 Radford High-Technology Executive Compensation Survey and publicly-available information from the following companies to
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COMPENSATION DISCUSSION AND ANALYSIS |
identify and analyze the competitive market for 20172022 executive compensation:compensation. Criteria for peer group selection included industry, revenue size, market capitalization, and business characteristics. The Compensation Committee selected the following companies as a compensation peer group in consultation with Mercer:
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| Monolithic Power Systems, Inc. | |
| National Instruments Corporation | |
Cirrus Logic, Inc. | NETGEAR, Inc. | |
CMC Materials, Inc. | Power Integrations, Inc. | |
| Semtech Corporation | |
| Synaptics Incorporated | |
Lattice Semiconductor Corporation | Universal Display Corporation | |
MACOM Technology Solutions Holdings, Inc. | Vivint Smart Home, Inc. | |
MaxLinear, Inc. | Wolfspeed, Inc. |
The primary direct components of our executive compensation program are base salary, annual cash incentive bonus and equity awards. The Compensation Committee uses its discretion and does not use a prescribed formula for allocating compensation between annual and long-term compensation, between cash andnon-cash compensation, or among different forms ofnon-cash compensation.
Approximately 90% of our CEO’s pay mix and on average approximately 82% of our other NEOs’ pay mix is tied to Company performance, including stock price performance (“at-risk”):
Base Salary. The 20172021 and 2022 base salaries and percentage increase are set forth in the following table:
Named Executive Officer | 2016 Base Salary ($)(1) | Percentage Increase | 2017 Base Salary ($) | ||||||||||||
G. Tyson Tuttle | 600,000 | 4.3% | 626,000 | ||||||||||||
John C. Hollister | 360,000 | 3.3% | 372,000 | ||||||||||||
Brandon Tolany | 375,000 | — | 375,000 | ||||||||||||
Sandeep P. Kumar | 340,000 | — | 340,000 | ||||||||||||
Alessandro Piovaccari | 340,230 | — | 340,230 |
Named Executive Officer | 2021 Base Salary ($) | Percentage Increase | 2022 Base Salary ($) | |||||||||
R. Matthew Johnson | 425,000 | 52.9% | 650,0001 | |||||||||
John Hollister | 408,720 | 6.9% | 437,000 | |||||||||
Brandon Tolany | 401,700 | 3.1% | 414,000 | |||||||||
Sandeep Kumar | 367,608 | 3.1% | 379,000 |
(1) |
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COMPENSATION DISCUSSION AND ANALYSIS |
Annual Cash Incentive Bonus.Each year, the Compensation Committee adopts a bonus plan (the “Bonus Plan”) to reward exceptional performance and align the financial incentives of our Named Executive Officers with our short-term operating plan and long-term strategic objectives and the interests of our stockholders. The Compensation Committee
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approves the design, structure, and performance objectives, as well as each objective’s relative weighting, under the Bonus Plan. The Compensation Committee designs the Bonus Plan to pay each Named Executive Officer up to 150% of histhe NEO’s target annual cash incentive bonus opportunity for outstanding performance. Consistent with our“pay-for-performance” philosophy, however, no payment is guaranteed if an executive officer fails to meet the minimum established performance objectives for his award opportunity under the Bonus Plan.Plan are not achieved.
Typically, the Compensation Committee establishes one or more corporate financial metrics tied to our annual operating plan as the principal measures for determining each executive officer’s annual cash incentive bonus. For 2017,2022, consistent with our business strategy, the Compensation Committee established adjusted revenue and adjustednon-GAAP operating income as a percentage of adjusted revenue and adjusted margin as the principal corporate financial metrics. For this purpose, “adjusted revenue” and “adjusted margin percentage” and “adjustednon-GAAP operating income” mean revenue gross margin and operating income (as a percentage of adjusted revenue) as determined under generally accepted accounting principles (GAAP) modified for stock compensation expense, intangible asset amortization, acquisition-related items termination costs and impairments.restructuring charges. These adjusted measures more clearly highlight the results of core ongoing operations. For purposes of cash incentive bonuses, the Compensation Committee reserves the authority to determine whether to exclude any item when making adjustments from the corresponding GAAP metric.
To reflect their functional roles and responsibilities,For 2022, the Compensation Committee established corporate financialis continuing to include diversity, equity and inclusion (DEI) metrics as set forth ina component of bonus compensation.
For each of the table below for the purpose of determining the annual cash incentive bonuses, for the Named Executive Officers. With respect to revenue and adjusted operating income,applicable bonus metrics, the percentage payout was determined using a sliding scale based on actual performance, with no minimum payout and a maximum payout of 150% of the executive’s target annual cash incentive bonus opportunity for above-target performance. The financial components of the plan allowed for 100% payout at 100% of plan target. For the adjusted revenue component, there was a decreasing scale to 10% at 90% of plan target, no payment below 90% of target and a maximum payout of 150% at 110% of target. For the adjusted margin andnon-GAAP operating income components, there was a decreasing scale to 10% at 80% of plan target, no payment below 80% of target and a maximum payout of 150% at 120% of target.
For 2017, the target annual cash incentive bonus opportunities and the relative weighting The DEI components of the corporate financial metrics in their capacities as Named Executive Officersplan were as follows:
Named Executive Officer | Target Annual Cash Incentive Award Opportunity (as a Percentage of Base Salary) (%) | Performance Metrics | Weighting % | |||||||
G. Tyson Tuttle | 125% | Adjusted Revenue | 50% | |||||||
Adjusted Operating Income % | 50% | |||||||||
John C. Hollister | 85% | Adjusted Revenue | 50% | |||||||
Adjusted Operating Income % | 50% | |||||||||
Brandon Tolany | 100% | Adjusted Revenue | 75% | |||||||
MBO | 25% | |||||||||
Sandeep P. Kumar | 75% | Adjusted Revenue | 50% | |||||||
Adjusted Margin % | 50% | |||||||||
Alessandro Piovaccari | 75% | Adjusted Revenue | 25% | |||||||
Adjusted Operating Income % | 25% | |||||||||
MBO | 50% |
Award Decisionsbased on a set of challenging qualitative and Analysis. To ensure a direct correlation betweenquantitative goals representing core objectives of our short-term performance and our actual business results,DEI strategy. If three of five goals were achieved, the Compensation Committee makes quarterly payments to our Named Executive Officers underplan allowed for 80% payout. If four of five goals were achieved, the Bonus Plan. Each fiscal quarter, bonus payments are made toplan allowed for 100% payout. If all five goals were achieved, the extent we have achieved ourpre-established corporate financial metrics.
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plan allowed for 150% payout.
Our Board of Directors and the Compensation Committee may exercise discretion either to make payments absent attainment of the relevant performance metric target levels or to reduce or increase the size of any award payment. Neither the Board of Directors nor the Compensation Committee exercised such discretion in 2017.2022.
For eachall of our Named Executive Officers in 2022, the incentive bonus performance metrics, targets, achievements, and the relative weighting of the metrics were as follows:
2022 Bonus Metrics | 2022 Target Achievement | 2022 Actual Achievement | Metric Weighting | |||||||||
Adjusted Revenue | 960,250,177 | 1,024,106,136 | 45 | % | ||||||||
Adjusted Non-GAAP Operating Income % | 15.1% | 20.9% | 45 | % | ||||||||
DEI Scorecard | 4 goals | 4 goals | 10 | % |
For all of our Named Executive Officers, the portionadjusted revenue component of his target annual cash incentive bonus opportunity that was attributable to these corporate financial metrics was allocated over the four fiscal quarters of 2017 in proportion to the amount of revenue that we estimated we would generate in each such quarter as reflected in our 2017 annual operating plan approved by our Board of Directors. Our Board of Directors established quarterly target levels with respect to the annual operating plan for each of the corporate financial metrics. We set these target levels to be very challenging this year and, as a result, set a higher incentive for achieving the plan.
Messrs. Tuttle, Hollister and Dr. Kumar’s bonus payments were directly tied to the achievement of our corporate financial metrics. Mr. Tolany and Dr. Piovaccari’s bonus targets included both corporate financial metrics and a functional Management Bonus Objective (“MBO”) component. MBO payments are based on the achievement of individual goals, which are designed to support our short and long term corporate objectives.
Mr. Tuttle’s cash incentive bonus was based solely on Company financial targets with 50% of the incentive based on Adjusted Revenue and 50% based on Adjusted Operating Income. The Adjusted Revenue portion of his bonus paid out at 109.6%133% of component target, and Adjusted Operating Incomethe adjusted non-GAAP operating income component paid out at 106%.150% of component target, and the DEI component paid out at 100% of component target. This resulted in a total bonus payout of 107.9%
Mr. Hollister’s cash incentive bonus also was based solely on Company financial targets with 50% of the incentive based on Adjusted Revenue and 50% based on Adjusted Operating Income. The Adjusted Revenue portion of his bonus paid out at 109.6%137% of target and Adjusted Operating Income paid out at 106%. This resulted in a total bonus payout of 107.9%
Mr. Tolany’s cash incentive bonus metrics also included financial and MBO targets. Mr. Tolany’s incentive was based 75% on adjusted revenue, where he achieved 109.6% of his target for 2017, and also included an MBO with respect to 25% of the total cash incentive bonus. His MBO targets were based on quarter over quarter growth in design wins and lifetime revenue associated with those wins. Mr. Tolany received a score of 150% for his MBO target achievement in 2017, making his total incentive achieved 120% for the year.
Dr. Kumar’s cash incentive bonus was based solely on Company financial targets with 50% of the incentive based on Adjusted Revenue and 50% based on Adjusted Margin. The Adjusted Revenue portion of his bonus paid out at 109.6% of target and the Adjusted Margin portion paid out at 105%. This resulted in a total bonus payout of 107.4%.
Dr. Piovaccari’s cash incentive bonus metrics included both Company financial and individual MBO targets. With respect to his financial targets, the cash incentive bonus was based on 25% on adjusted revenue and 25% on adjusted operating income; these portions of his target cash incentive bonus paid out at 109.6% and 106%, respectively. Dr. Piovaccari’s MBO, based on timely product launches in 2017, informed 50% of his bonus. Dr. Piovaccari received a score of 88.3%year for his MBO and his total incentive achieved was 98% for 2017.each Named Executive Officer.
Appendix I provides a reconciliation of GAAP andnon-GAAP executive compensation financial measures and shows the corporate financial metric targets and actual performance against those targets for 2017.measures.
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COMPENSATION DISCUSSION AND ANALYSIS |
The resulting payments to the continuing Named Executive Officers were as follows:
Named Executive Officer | Target Bonus as a Percent of Base Salary (%) | Actual Bonus as a Percent of Base Salary | ||||||||
G. Tyson Tuttle | 125% | 134.9% | ||||||||
John C. Hollister | 85% | 91.7% | ||||||||
Brandon Tolany | 100% | 119.9% | ||||||||
Sandeep P. Kumar | 75% | 80.5% | ||||||||
Alessandro Piovaccari | 75% | 73.6% |
Named Executive Officer | Target Bonus as a Percent of Base Salary (%) | Actual Bonus as a Percent of Base Salary (%) | ||||||
R. Matthew Johnson(1) | 130% | 178 | % | |||||
John Hollister | 100% | 137 | % | |||||
Brandon Tolany | 100% | 137 | % | |||||
Sandeep Kumar | 75% | 103 | % |
(1) | ||||
Mr. Johnson received a bonus target increase from 100% to 130% in connection with his promotion to President and Chief Executive Officer on January 2, 2022. |
The cash incentive bonusbonuses paid to the Named Executive Officers during 20172022 are set forth in the Summary Compensation Table below under the heading“Non-Equity Incentive Plan Compensation.”
Long-Term Incentive Equity Awards.The Compensation Committee uses long-term incentive compensation, typically in the form of equity awards, forto retain our Named Executive Officers, to retain talent, to align their interests with the interests of our stockholders and to provide incentives that we believe encourage behaviors that will maximize stockholder value. For 2017,2022, the Compensation Committee approved the use ofused a mix of MSUs, PSUs and RSUs.
PSU Awards Granted in 2021 and 2022
In 2021, we replaced our performance-based MSU Awards.Since 2011program with a performance-based PSU program that we have awarded MSUsbelieve is more appropriate during the period of our company transformation and transition to a new business model. PSUs allow us to directly tie executive compensation to specific company financial targets that compareare critical to the long-term success of our TSRpure-play IoT model. The PSU program measures performance achievement against the XSOX.our multi-year growth targets and financial plan.
We continued to offer PSU awards in 2022. For MSU awards granted prior to 2017,each PSU award, a payment equalin shares of our common stock relative to the target number of units can onlymay be earned if our TSR exceedsupon the TSR resultsCompany achieving goals based on a three-year revenue compound annual growth rate (CAGR) and corresponding three year non-GAAP operating income margin (OI). The CAGR metric is measured at the end of Year 3 and weighted at 50%. The OI metric is also a long-term metric, with two multi-year measurement points. The first measurement is made at the Index by 25 points. Where our TSRend of Year 2, evaluating a two-year period. The second and final measurement is either greater or lower thanmade at the Index results, paymentend of Year 3, evaluating a cumulative three-year period. Each of these OI measurements is scaled 1.54weighted at 25%. Award payments may range from 0% up to 1, as shown in MSU Scale A.
MSU Scale A
SLAB TSR% minus Index TSR% | Payout % of Target MSUs | Comment | ||||
90+ | 200.0 | % | To earn the maximum award, SLAB TSR must exceed Index TSR by 90 points | |||
70 | 169.3 | % | ||||
50 | 138.5 | % | ||||
30 | 107.7 | % | ||||
25 | 100.0 | % | To earn thetarget MSU award, SLAB TSR mustexceed Index TSR by 25 points | |||
20 | 92.3 | % | ||||
10 | 76.9 | % | ||||
0 | 61.5 | % | If SLAB TSRmatches the Index TSR, MSUs are earned at61.5% of Target | |||
-20 | 30.8 | % | ||||
-30 | 15.4 | % | ||||
-40 or worse | 0.0 | % | If SLAB TSR is more than40 points below the Index TSRno MSUs are earned |
For MSU awards granted in 2017, a payment equal to200% of the target number of units canand are scaled linearly against a base revenue or non-GAAP operating income margin percentage for each measurement, all tracking to our stated financial model.
The PSU Awards will be earned if our TSR is equal tobased upon the resultslevel of achievement of the XSOX. Payment is scaled 2 to 1 if our TSR exceeds the XSOX, and 3 to 1 when our TSR is lower than the XSOX, as shown in MSU Scale B.following multi-year performance criteria:
MSU Scale B
SLAB TSR% minus Index TSR% | Payout % of Target MSUs | Comment | ||||
50+ | 200.0 | % | To earn the maximum award, SLAB TSR must exceed Index TSR by 50 points | |||
30 | 160 | % | ||||
20 | 140 | % | ||||
10 | 120 | % | ||||
0 | 100 | % | If SLAB TSRmatches the Index TSR, MSUs are earned at100% of Target | |||
-20 | 40 | % | ||||
-30 | 10 | % | ||||
-33.34 or worse | 0.0 | % | If SLAB TSR is more than33.34 points below the Index TSRno MSUs are earned |
Grant Date | Period | Weight | Threshold | Target | Maximum | |||||||
May 15, 2021 June 3, 2021 | 3-Year through the end of Fiscal Year 2023 | 3-Year Revenue CAGR Fiscal 2022 Non-GAAP Operating Income Fiscal 2023 Non-GAAP Operating Income | 50% 25% 25% | >10% >7.15% >10.1% | 20% 8.4% 11.8% | 30% 9.65% 13.5% | ||||||
December 22, 2021 February 15, 2022 | 3-Year through the end of Fiscal Year 2024 | 3-Year Revenue CAGR Fiscal 2023 Non-GAAP Operating Income Fiscal 2024 Non-GAAP Operating Income | 50% 25% 25% | >10% >14% >17.65% | 20% 15.8% 19.5% | 30% 17.6% 21.35% |
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COMPENSATION DISCUSSION AND ANALYSIS |
Our MSUs include the following features:
Cap on MSU payouts if TSR is negative. Our Compensation Committee included a cap on MSU payouts such thatRSU Awards Granted in the event our TSR is negative, the maximum payout under the MSUs would be 100% of the target award (regardless of the amount of TSR outperformance relative to the XSOX). This feature was added to reflect leading best practices2022
The RSU awards granted in program design and to further strengthen the program from apay-for-performance and shareholder alignment perspective.
One- and two-year measurement points. In order to further promote sustained performance and to support multi-year retention, our awards provide an opportunity for our executives to “bank” up toone-third of their target award based on relative TSR performance afterone- and two-years. The remainingone-third of the target award opportunity and all potential upside opportunity remains reserved for the three-year measurement period. All shares earned or banked are settled at the end of the three-year period to maximize the retentive value of the awards. Pursuant to the payment scale above, in order for the target number of shares to be “banked” forone- ortwo- year performance, our TSR must exceed that of the XSOX by 25 points or more in the applicable performance period for grants prior to 2017. For grants in 2017, our TSR must equal that of the XSOX in the applicable performance period. Grants prior to 2017 continue to be measured using MSU Scale A. MSU grants made in 2017 are measured using MSU Scale B.
PSU Awards.The Compensation Committee granted PSUs in 2017 to align our executive’s incentives with our revenue growth expectations. The PSUs measure revenue during a single fiscal year relative to revenue for the preceding fiscal year. The number of eligible PSUs is a product of the (a) target number of units and (b) the revenue growth factor. The revenue growth factor is scaled on a performance matrix where 5% or less revenue growth results in zero units, 15% or greater revenue growth results in 200% of the target units and with straight line scaling between 5% and 15% revenue growth. Accordingly, less than 10% revenue growth results in below-target units. The eligible PSUs vest after three years of service following the date of grant.
RSU Awards. The RSUs awarded in 20172022 provide a retention incentive and align the interests of our executive officers with those of our stockholders. These RSUs generally vest as to the underlying shares of common stock in three annual installments on each anniversary of the date of grant.
The Named Executive Officers were granted the following MSU, PSU and RSU awards during 2017:2022:
Performance Nominal (#) | RSU Awards | |||||||||||||||
Named Executive Officer | Grant Date ($) | Number of (#) | Grant Date ($) | |||||||||||||
G. Tyson Tuttle | 35,834 | (1) | 2,809,206 | 35,834 | 2,592,590 | |||||||||||
John C. Hollister | 11,426 | (2) | 895,742 | 11,426 | 826,671 | |||||||||||
Brandon Tolany | 10,580 | (3) | 829,420 | 10,580 | 765,463 | |||||||||||
Sandeep P. Kumar | 7,374 | (4) | 578,084 | 7,374 | 533,509 | |||||||||||
Alessandro Piovaccari | 7,946 | (5) | 622,927 | 7,946 | 574,893 |
PSU Awards | RSU Awards | |||||||||||||||||||
Named Executive Officer | Target Number of Shares (#) | Grant Date ($) | Number of Shares (#) | Grant Date ($) | ||||||||||||||||
R. Matthew Johnson | 14,424 | 2,321,832 | 18,197 | 2,613,453 | ||||||||||||||||
John Hollister | 5,770 | 928,797 | 7,279 | 1,045,410 | ||||||||||||||||
Brandon Tolany | 4,328 | 696,679 | 5,459 | 784,022 | ||||||||||||||||
Sandeep Kumar | 2,885 | 464,398 | 3,640 | 522,777 |
MSU Awards Granted in 2020
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Actual PerformanceIn 2020, we granted MSU awards that compare our TSR against the TSRs of Plan-Based Awards.The following table contains information concerning PSUa group of benchmark companies that included the publicly traded companies in the XSOX and our named peer group of companies for the applicable year in which the MSU awards were granted. For each of these MSU awards, a payment in shares of our common stock relative to the target number of units may be earned if our relative TSR percentile rank over a performance measurement period of three years equals or exceeds the 50th percentile. Our relative TSR percentile rank is determined by ranking the group of benchmark companies (including us) from the highest to the lowest according to each company’s respective TSR for the performance period, then calculating the TSR percentile ranking of us relative to other companies in the group of benchmark companies. If our relative TSR percentile rank is less than the 25th percentile, no payout is earned. If our relative TSR percentile rank, is greater than the 25th percentile, award performancepayments may range from 50% up to 200% of target scaled to the relative TSR percentile rank, as shown in fiscal year 2017. For shares earned and unearned, see table Outstanding Equity Awards at Fiscal 2017Year-End.below.
SLAB TSR% Index TSR% | Payout % of Target MSUs | Comment | ||
100+ | 200.0% | To earn the maximum award, SLAB Relative TSR Percentile must be 100% | ||
90 | 180% | |||
80 | 160% | |||
70 | 140% | |||
60 | 120% | |||
50 | 100% | If SLAB Relative TSR Percentile is 50%, MSUs are earned at 100% of Target | ||
40 | 80% | |||
30 | 60% | |||
25 | 50% | |||
Less than 25 | 0% | If SLAB Relative TSR Percentile is less than 25%, no MSUs are earned |
For the MSU awards granted in 2020, the SLAB TSR achieved was 23.19% and the relative TSR percentile rank was in the 26th percentile and therefore, a 52% payout was earned.
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COMPENSATION DISCUSSION AND ANALYSIS |
Performance – MSU Grants awarded to NEOs* from FY15 to FY17
*NEOs with outstanding MSU grants include G. Tyson Tuttle, John C. Hollister, Brandon Tolany, Sandeep Kumar and Alessandro Piovacarri.
TSR During Performance Period | ||||||||||||||||||
Year of Grant | Performance Period | Status | Target TSR | SLAB | XSOX | Payment % | ||||||||||||
FY 15 | 1-Year | Complete | Index + 25 Points | 11.84 | % | 4.03 | % | 73.54 | % | |||||||||
FY 15 | 2-Year | Complete | Index + 25 Points | 41.58 | % | 37.22 | % | 68.21 | % | |||||||||
FY 15 | 3-Year | Complete | Index + 25 Points | 102.16 | % | 105.23 | % | 56.77 | % | |||||||||
FY 16 | 1-Year | Complete | Index + 25 Points | 26.29 | % | 31.77 | % | 53.06 | % | |||||||||
FY 16 | 2-Year | Complete | Index + 25 Points | 80.33 | % | 97.08 | % | 35.71 | % | |||||||||
FY 16 | 3-Year | In Progress | Index + 25 Points | 80.33 | % | 97.08 | % | 35.71 | % | |||||||||
FY 17 | 1-Year | Complete | Index | 42.63 | % | 49.48 | % | 79.44 | % | |||||||||
FY 17 | 2-Year | In Progress | Index | 42.63 | % | 49.48 | % | 79.44 | % | |||||||||
FY 17 | 3-Year | In Progress | Index | 42.63 | % | 49.48 | % | 79.44 | % |
Performance – PSU Grants awarded to NEOs in FY17
NEOs with outstanding PSU grants include G. Tyson Tuttle, John C. Hollister, Brandon Tolany, Sandeep Kumar and Alessandro Piovaccari.
Performance Shares (PSU) | ||||||||||||||
Year of Grant | Performance Period | Status | Revenue Growth | Payment % | ||||||||||
2017 | 1-Year | Complete | 11.01 | % | 120 | % |
CEO Pay Ratio
The CEO Pay Ratio analysis is a required disclosure enacted by the Securities and Exchange Commission (“SEC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
A reasonable estimate was prepared of our CEO’s annual total compensation for fiscal year 2017 to that of all other full-and part-time Company employees for the same period. The calculation of all employees compensation was determined in the same manner as the “Total Compensation” shown for our CEO in the “Summary Compensation Table” with some adjustments necessary to report all amounts in US currency. The calculations do not use the SEC-permitted exclusions for small sites or the application ofcost-of-living adjustments fornon-US locations. Our employees do not work in locations where data privacy rules prohibit the inclusion of their compensation data in this analysis. Due to differences in permissible methodologies as well as certain exclusions and use of estimates and assumptions, the pay ratio reported by other companies may not be comparable to the pay ratio reported below.
Pay elements included in the annual total compensation for each employees may include all or some of the following:
Base salary including 13th month payments
Bonus, including quarterly profit sharing, annual MBO, recruiting referral bonuses, andad-hoc bonuses earned via outstanding performance or for international travel
Sales commissions
Benefits, as provided to eligible roles in certain markets such as Company-paid life insurance premiums, car allowances or reimbursement for Company-paid executive physicals
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Long term incentives including RSUs and Restricted Cash Awards (“RCAs”) as provided to eligible rolesCompensation Arrangements Upon Termination of Employment or a Change in certain markets.
Our calculations were prepared based on our active headcount as of December 31, 2017.
We determined the compensation of our median employees by calculating the total annual compensation using the applicable components above, ranking employees (excluding our CEO) from highest to lowest paid and identifying the median employee.
The total annual compensation for our CEO was $6,874,675 and our median employee was $130,891. The resulting ratio is 51.8 to 1.
Post-Employment CompensationControl
The equity awards granted to our Named Executive Officers under the Company’s 2009 Stock Incentive Plan, as amended and restated on April 20, 2017,22, 2021, and Change in Controlthe CEO Severance Agreement and the Executive Severance Agreements approved by the Board on October 20, 2016in May 2021 provide for accelerated vestingthe following potential payments and benefits upon a Change in Control Termination (as defined in the agreements): (a) 100% of annual base salary (200% in the case of the CEO), (b) 100% of target variable compensation for a full fiscal year (200% in the case of the CEO), (c) any unvested sharesactual earned bonus, commission or other short term cash incentive compensation for the fiscal year preceding the Change in Control Termination to the extent such amount has not already been paid, (d) a pro-rated portion of target variable compensation for the full fiscal year in which the Change in Control Termination occurs, (e) stock options, restricted stock, and restricted stock units shall become fully vested, (f) market stock units and performance stock units shall be vested at the greater of actual performance or 100% of the target value, and (g) a lump sum equal to the pre-tax cost of 12 months of continued COBRA coverage (24 months in the case of the CEO). In addition, the Executive Severance Agreements provide certain specified severance benefits to the Named Executive Officers upon a Non-CIC Termination (as defined in the agreements). The terms and conditions of these change in control provisions are provided at a level that the Compensation Committee believes to be comparable to those of companies of similar size in our industry sector. Detailed information concerning the CEO Severance Agreement and the Executive Severance Agreements and the treatment of equity awards under the Company’s 2009 Stock Incentive Plan in the event that (i) such equity awards are not assumed or replaced by the acquiring entity in connection withof a change in control, ofincluding the Company or (ii)events that trigger benefits and the Named Executive Officer is demoted, relocated, or terminated other than for misconduct within the period beginningseverance benefits provided upon the earlieroccurrence of our execution of a definitive agreement that resultssuch events, is discussed below under the heading “Potential Payments Upon Termination or Change in a change in control or 90 days prior to a change in control and ending 18 months following the change in control transaction.Control.” We have provided for this treatment based on our belief that such treatment ensures that the executive officers remain focused on their responsibilities in the event of a potential transaction that will result in a significant benefit to our stockholders. Additionally, the Change in Control Agreements provide twelve months of base salary, target bonus and twelve months of COBRA should said events take place. The terms and conditions of these change in control provisions are provided at a level that the Compensation Committee believes to be comparable to those of companies of similar size in our industry sector.
Welfare, Retirement, and Other Benefits
Welfare Benefits. The Company maintains an array of benefit programs to meet the health care and welfare needs of our employees including medical healthcare and prescription drug coverage, dental and vision programs, medical and dependent care flexible spending accounts, short-term disability insurance, long-term disability insurance, accidental death and dismemberment insurance, and group life insurance, as well as customary vacation, paid holiday, leave of absence and other similar policies. Our executive officers, including the Named Executive Officers, participate in these benefit programs on the same general terms as all of our salaried employees.
Retirement Benefits. The Company has established atax-qualified Section 401(k) retirement savings plan for our employees. Our executive officers, including the Named Executive Officers, are eligible to participate in this plan on the same general terms available to all of our full-time employees. Currently, plan participants are provided with matching contributions that are subject to time-based vesting conditions. It is intended that this plan qualify under Section 401(a) of the Internal Revenue Code so that contributions by participants to the plan, and income earned on plan contributions, are not taxable to participants until withdrawn from the plan. Our executive officers, including the Named Executive Officers, do not receive any retirement benefits beyond those generally available to our full-time employees.
Perquisites and Other Personal Benefits. In addition to the general welfare benefits described above, the Compensation Committee has determined that we provide our executive officers, including the Named Executive Officers, with an annual physical examination beyond the benefit provided under our standard health care plans.
The Compensation Committee does not view perquisites or other personal benefits as a significant component of our executive compensation program and, except as described in the preceding paragraph, did not provide any perquisites or other personal benefits to our executive officers during 2017.2022.
36
COMPENSATION DISCUSSION AND ANALYSIS |
Income Tax and Accounting Considerations
Deductibility of Executive Compensation. In determining which elements of compensation are to be paid, and how they are weighted, the Compensation Committee takes into account the implications of Section 162(m) of the Internal Revenue Code, (“Section 162(m)”). Generally, Section 162(m) prohibits us from taking a federal income tax deduction for remuneration in excessas amended by the Tax Cuts and Jobs Act of $1 million paid to our CEO and each of the other three most highly-compensated executive officers of the Company in a taxable year (not including the CFO for taxable years ending on or before December 31, 2017). For taxable years ending on or before December 31, 2017 remuneration in excess of $1 million may be deducted if, among other things, it qualifies as “performance-based compensation” within the meaning of the Internal Revenue Code. In this regard, the compensation income realized upon the exercise of stock options and settlement of other performance-based equity awards granted under a stockholder-approved equity incentive plan generally will be deductible so long as the awards are granted by a committee whose members arenon-employee directors and certain other conditions are satisfied.
Under federal tax legislation enacted on December 22, 2017 and(the TCJA), effective for taxable years beginning on or after January 1, 2018, the exemption from thegenerally disallows a deduction for federal income tax purposes to any publicly traded corporation of remuneration in excess of $1 million deduction limit for performance-based compensation has been repealed,paid in any taxable year to its covered employees, consisting of the principal executive officer, principal financial officer and the persons treated as covered employees subject to the deduction limit have been expanded to include our CFO, as well as our CEO and ourthree other three most highly-compensated Named Executive Officers.executive officers for the taxable year. Further, any executive officer who was a covered employee for any taxable year beginning after December 31, 2016 will continue to be treated as a covered employee in all future years. Prior to the amendment, qualifying “performance-based compensation” was not subject to the deduction limitation if specified requirements were met. Under the TCJA, the performance-based compensation exception has been repealed. The prior Section 162(m) provisions will, however, continue to apply to remuneration paid pursuant to binding written contracts in effect on November 2, 2017 and that are not materially modified after that date.
The Compensation Committee believes that its primary responsibility is to provide a compensation program to meet our stated business objectives, and accordingly the Company reserves the right to pay compensation that is nottax-deductible if it determines that such a payment is in the best interests of the Company and our stockholders.
Accounting Treatment of Executive Compensation. The Company follows Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”), formerly known as SFAS 123(R), in accounting for our stock-based awards. ASC Topic 718 requires companies to measure the compensation cost for all stock-based options and awards made to employees (including our executive officers) and directors including stock options and restricted stock awards, based on the grant date “fair value” on the date of these awards.grant. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the compensation costfair value of their stock-based options and awards in their income statements over the period that an executive officer is required to render service in exchange for his or her award.grant.
Compensation Committee Report on Executive Compensation
We, the Compensation Committee of the Board of Directors, have reviewed and discussed the Compensation Discussion and Analysis within the Executive Compensation section of this Proxy Statement with the management of the Company. Based on such review and discussion, we are of the opinion that the executive compensation policies and plans provide appropriate compensation to properly align Silicon Labs’ performance and the interests of its stockholders through the use of competitive and equitable executive compensation in a balanced and reasonable manner, for both the short-andshort- and long-term. Accordingly, we have recommended to the Board of Directors that the Compensation Discussion and Analysis be included as part of this Proxy filing.
Submitted by the Compensation Committee of the Board of Directors:
Sumit SadanaGregg Lowe (Chairman)
Gregg LoweWilliam G. Bock
Nina RichardsonChristy Wyatt
37
COMPENSATION DISCUSSION AND ANALYSIS |
Summary Compensation
The following table provides compensation information for our Named Executive Officers for fiscal 2017.years 2020, 2021 and 2022.
Summary Compensation Table
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | ||||||||||||||||||||||||
G. Tyson Tuttle President, Chief Executive Officer and Director | 2017 | 622,000 | — | 5,401,796 | — | 844,662 | 6,217 | 6,874,675 | ||||||||||||||||||||||||
2016 | 596,154 | — | 3,331,590 | 1,178,000 | 902,406 | 5,660 | 6,013,810 | |||||||||||||||||||||||||
2015 | 567,308 | — | 3,510,432 | — | 472,603 | 5,660 | 4,556,003 | |||||||||||||||||||||||||
John C. Hollister Chief Financial Officer and Senior Vice President | 2017 | 370,154 | — | 1,722,413 | — | 341,319 | 6,217 | 2,440,103 | ||||||||||||||||||||||||
2016 | 356,923 | — | 1,610,558 | — | 368,182 | 5,660 | 2,341,323 | |||||||||||||||||||||||||
2015 | 337,692 | — | 988,910 | — | 167,671 | 5,657 | 1,499,930 | |||||||||||||||||||||||||
Brandon Tolany Senior Vice President of Worldwide Sales | 2017 | 375,000 | — | 1,594,883 | — | 449,769 | 6,181 | 2,425,833 | ||||||||||||||||||||||||
2016 | 367,789 | — | 2,000,032 | 1,000,007 | — | 5,660 | 3,373,488 | |||||||||||||||||||||||||
2015 | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Sandeep P. Kumar Senior Vice President of Worldwide Operations | 2017 | 340,000 | — | 1,111,593 | — | 273,940 | 10,345 | 1,735,878 | ||||||||||||||||||||||||
2016 | 338,462 | — | 936,639 | — | 425,376 | 5,660 | 1,706,137 | |||||||||||||||||||||||||
2015 | 371,539 | — | 988,910 | — | 162,740 | 5,644 | 1,528,833 | |||||||||||||||||||||||||
Alessandro Piovaccari(4) Chief Technology Officer | 2017 | 340,230 | — | 1,197,820 | — | 250,612 | 8,908 | 1,797,570 | ||||||||||||||||||||||||
2016 | 338,656 | — | 925,452 | — | 278,119 | 5,660 | 1,547,887 | |||||||||||||||||||||||||
2015 | 321,450 | — | 965,666 | — | 186,744 | 5,648 | 1,479,508 |
Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | ||||||||||||||||||||||||
R. Matthew Johnson President and Chief Executive Officer | 2022 | 650,000 | 1,000 | 4,935,285 | — | 1,159,027 | 10,921 | 6,756,233 | ||||||||||||||||||||||||
2021 | 416,000 | (5) | 1,000 | 7,736,057 | — | 567,319 | 10,212 | 8,730,589 | ||||||||||||||||||||||||
2020 | 390,000 | — | 1,744,772 | — | 267,041 | 6,699 | 2,408,512 | |||||||||||||||||||||||||
John Hollister Senior Vice President and Chief Financial Officer | 2022 | 430,039 | (6) | 1,000 | 1,974,207 | — | 590,642 | 9,139 | 3,005,027 | |||||||||||||||||||||||
2021 | 408,720 | 1,000 | 2,160,802 | — | 592,644 | 12,934 | 3,176,100 | |||||||||||||||||||||||||
2020 | 408,720 | — | 1,744,772 | — | 349,823 | 10,592 | 2,513,907 | |||||||||||||||||||||||||
Brandon Tolany Senior Vice President of Worldwide Sales | 2022 | 410,972 | (6) | 1,000 | 1,480,701 | — | 564,463 | 10,761 | 2,467,897 | |||||||||||||||||||||||
2021 | 401,700 | 1,000 | 1,809,016 | — | 582,465 | 6,460 | 2,800,641 | |||||||||||||||||||||||||
2020 | 401,700 | — | 1,377,321 | — | 343,815 | 6,699 | 2,129,535 | |||||||||||||||||||||||||
Sandeep Kumar Senior Vice President of Worldwide Operations | 2022 | 376,196 | (6) | 1,000 | 987,175 | — | 387,524 | 8,179 | 1,760,074 | |||||||||||||||||||||||
2021 | 367,608 | 1,000 | 2,034,360 | — | 399,774 | 13,729 | 2,816,471 | |||||||||||||||||||||||||
2020 | 367,608 | — | 1,101,940 | — | 235,977 | 7,399 | 1,712,924 |
(1) | Represents holiday or profit-sharing bonus provided to all employees. |
(2) | Amounts shown do not reflect compensation actually received by the Named Executive Officer but represent the grant date fair value as determined pursuant to ASC Topic 718 (disregarding any estimate of forfeitures). The assumptions underlying the calculation under ASC Topic 718 are discussed under Note |
(3) | Represents amounts earned under the |
(4) | Consists of Company-paid life insurance premiums,gross-up related to long term disability premiums, international travel bonuses, |
(5) |
|
(6) | Amount shown reflects the two different base salary rates paid to Messrs. Hollister, Tolany, and Kumar in fiscal 2022 due to market based salary increases provided on |
38
COMPENSATION DISCUSSION AND ANALYSIS |
Grants of Plan-Based Awards
The following table contains information concerning all equity andnon-equity plan-based awards granted during fiscal 20172022 to our Named Executive Officers. All equity plan-based awards were granted under our 2009 Stock Incentive Plan, as amended and restated on April 20, 2017,22, 2021, and allnon-equity plan-based awards were granted under our 20172022 Bonus Plan.
Grants of Plan-based Awards Table for Fiscal 20172022
Name | Grant Date | Estimated Future Payouts ($) | Estimated Future Payouts (#) | All Other Awards: Units(3) (#) | All Other Awards: Underlying (#) | Exercise Awards | Grant Date Value Option ($) | |||||||||||||||||||||||||||||||||||||
Thres- hold | Target | Maximum | Thres- hold | Target | Maximum | |||||||||||||||||||||||||||||||||||||||
G. Tyson Tuttle | 2/15/2017 | 782,500 | 1,173,750 | — | 35,834 | 71,668 | 35,834 | — | — | 5,401,796 | ||||||||||||||||||||||||||||||||||
John C. Hollister | 2/15/2017 | 316,200 | 474,300 | — | 11,426 | 22,852 | 11,426 | — | — | 1,722,413 | ||||||||||||||||||||||||||||||||||
Brandon Tolany | 2/15/2017 | 375,000 | 562,500 | — | 10,580 | 21,160 | 10,580 | — | — | 1,594,883 | ||||||||||||||||||||||||||||||||||
Sandeep P. Kumar | 2/15/2017 | 255,000 | 382,500 | — | 7,374 | 14,748 | 7,374 | — | — | 1,111,593 | ||||||||||||||||||||||||||||||||||
Alessandro Piovaccari | 2/15/2017 | 255,173 | 318,966 | — | 7,946 | 15,892 | 7,946 | — | — | 1,197,820 |
Estimated Future Payouts ($) | Estimated Future Payouts (#) | All Other Awards: | All Other Option Awards: of Underlying | Exercise or Base Price of Option | Grant Date Fair Value Option | |||||||||||||||||||||||||||||||||||||||
Names | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | Units(3) (#) | Options (#) | Awards ($/Sh) | Awards(4) ($) | |||||||||||||||||||||||||||||||||
R. Matthew Johnson | 118,300 | 845,000 | 1,267,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
— | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | 1 | 14,424 | 28,848 | — | — | — | 2,321,832 | ||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | — | — | 18,197 | — | — | 2,613,453 | ||||||||||||||||||||||||||||||||||
John Hollister | 60,212 | 430,085 | 645,128 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | 1 | 5,770 | 11,540 | — | — | — | 928,797 | ||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | — | — | 7,279 | — | — | 1,045,410 | ||||||||||||||||||||||||||||||||||
Brandon Tolany | 57,539 | 410,993 | 616,489 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | 1 | 4,328 | 8,656 | — | — | — | 696,679 | ||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | — | — | 5,459 | — | — | 784,022 | ||||||||||||||||||||||||||||||||||
Sandeep Kumar | 39,503 | 282,161 | 423,242 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | 1 | 2,885 | 5,770 | — | — | — | 464,398 | ||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | — | — | 3,640 | — | — | 522,777 |
(1) | Amounts shown represent amounts that were available under the |
(2) | Represents |
(3) | Represents RSUs. |
(4) | Includes grant date fair value of |
39
COMPENSATION DISCUSSION AND ANALYSIS |
Outstanding Equity Awards at FiscalYear-End
The following table shows all holdings of unexercised stock options and unvested RSU, MSU and PSU awards for each of our Named Executive Officers as of December 30, 2017.31, 2022.
Outstanding Equity Awards at Fiscal 20172022 Year-End Table
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Equity Incentive Plan Awards: | ||||||||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units That Have Not Vested ($) | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned | ||||||||||||||||||||||||||
Name | Exercisable | Unexercisable | ||||||||||||||||||||||||||||||
G. Tyson Tuttle | 25,000 | (1) | 75,000 | (1) | 37.88 | 2/15/2026 | 79,526 | (2) | 7,022,146 | 107,033 | (3) | 9,451,014 | ||||||||||||||||||||
John C. Hollister | — | — | — | — | 38,570 | (4) | 3,405,731 | 33,299 | (5) | 2,940,302 | ||||||||||||||||||||||
Brandon Tolany | — | 54,705 | (6) | 43.82 | 1/28/2026 | 44,812 | (7) | 3,956,900 | 10,580 | (8) | 934,214 | |||||||||||||||||||||
Sandeep P. Kumar | — | — | — | — | 22,198 | (9) | 1,960,083 | 25,828 | (10) | 2,280,612 | ||||||||||||||||||||||
Alessandro Piovaccari | — | — | — | — | 19,710 | (11) | 1,740,393 | 26,606 | (12) | 2,349,310 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan Awards: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) | Option Exercise ($) | Option Expiration | Number of (#) | Market ($) | Number of Vested (#) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercisable | Unexercisable | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
R. Matthew Johnson | 2/15/2020 | — | — | — | — | 2,824 | (1) | 383,132 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2020 | — | — | — | — | — | — | 8,471 | (2) | 1,149,261 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | 5,852 | (3) | 793,941 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | — | — | 8,778 | (4) | 1,190,911 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
6/03/2021 | — | — | — | — | — | — | 3,686 | (5) | 500,080 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
12/22/2021 | — | — | — | — | — | — | 25,014 | (6) | 3,393,649 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | — | — | — | 14,424 | (7) | 1,956,904 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | 18,197 | (8) | 2,468,787 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
John Hollister | 2/15/2020 | — | — | — | — | 2,824 | (1) | 383,132 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2020 | — | — | — | — | — | — | 8,471 | (2) | 1,149,261 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | 4,448 | (3) | 603,460 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | — | — | 6,671 | (4) | 905,055 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
6/03/2021 | — | — | — | — | — | — | 3,686 | (5) | 500,080 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | — | — | — | 5,770 | (7) | 782,816 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | 7,279 | (8) | 987,542 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brandon Tolany | 1/28/2016 | 18,270 | (9) | — | 43.82 | 1/28/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2020 | — | — | — | — | 2,229 | (1) | 302,408 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2020 | — | — | — | — | — | — | 6,687 | (2) | 907,225 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | 3,512 | (3) | 476,473 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | — | — | 5,267 | (4) | 714,574 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
6/03/2021 | — | — | — | — | — | 3,686 | (5) | 500,080 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | — | — | — | 4,328 | (7) | 587,180 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | 5,459 | (8) | 740,623 | — |
40
COMPENSATION DISCUSSION AND ANALYSIS |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan Awards: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) | Option Exercise ($) | Option Expiration | Number of (#) | Market ($) | �� | Number of Vested (#) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercisable | Unexercisable | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Sandeep Kumar | 2/15/2020 | — | — | — | — | 1,784 | (1) | 242,035 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2020 | — | — | — | — | — | — | 5,350 | (2) | 725,835 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | 2,810 | (3) | 381,233 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2021 | — | — | — | — | — | — | 4,214 | (4) | 571,713 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
6/03/2021 | — | — | — | — | — | 7,371 | (5) | 1,000,024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
2/15/2022 | — | — | — | — | — | — | 2,885 | (7) | 391,408 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
5/15/2022 | — | — | — | — | 3,640 | (8) | 493,839 | — | — |
(1) |
|
(2) | Represents |
|
(3) | Assuming continued service, the RSUs shall vest one-half on each of May 15, 2023 and May 15, 2024, respectively. |
(4) | Represents PSUs |
|
(5) | Represents |
(6) | Represents PSUs |
|
(7) | Represents |
|
(8) |
|
(9) | Represents |
|
|
|
|
Option Exercises and Stock Vested Table
The following table shows gains realized from the exercise of stock options and shares acquired upon the vesting of stock awards with respect to our Named Executive Officers during fiscal 2017.2022.
Option Exercises and Stock Vested Table During Fiscal 20172022
Option Awards | Stock Awards | |||||||||||||||
Name | Number of (#) | Value Realized ($) | Number of (#) | Value Realized ($) | ||||||||||||
G. Tyson Tuttle | — | — | 48,185 | 3,435,985 | ||||||||||||
John C. Hollister | — | — | 13,850 | 989,463 | ||||||||||||
Brandon Tolany | 18,235 | 505,207 | 11,410 | 825,513 | ||||||||||||
Sandeep P. Kumar | — | — | 11,652 | 830,438 | ||||||||||||
Alessandro Piovaccari | — | — | 10,743 | 776,514 |
Option Awards | Stock Awards | |||||||||
Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||||
R. Matthew Johnson | — | — | 8,295 | 1,284,480 | ||||||
John Hollister | — | — | 8,766 | 1,372,494 | ||||||
Brandon Tolany | — | — | 6,920 | 1,083,463 | ||||||
Sandeep Kumar | — | — | 5,732 | 898,321 |
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COMPENSATION DISCUSSION AND ANALYSIS |
Potential Payments Upon Termination uponor Change in Control
Consistent with practices within our industry, we also provide certain post-employment termination benefits. We have implemented these programs in order to ensure we are able to continue to attract and retain top talent as well as ensure that during the uncertainty associated with a potential change in control or succession plan, the executives remain focused on their responsibilities and ensure a maximum return for our stockholders.
Change in ControlExecutive Agreements.In October 2016, weWe have entered into Change in Controla CEO Severance Agreement with Mr. Johnson and Executive Severance Agreements with Messrs. Tuttle, Hollister, Tolany, and Drs. Kumar and Piovaccari. Each of the Change in Control Agreements is effective until October 31, 2019. Each Change in Control Agreement providesKumar. The agreements provide for the following potential payments and benefits upon a Change in Control Termination (as defined in the agreement)agreements): (a) 100% of annual base salary (200% in the case of the CEO), (b) 100% of target variable compensation for a full fiscal year (200% in the case of the CEO), (c) any actual earned bonus, commission or other short term cash incentive compensation for the fiscal year preceding the Change in Control Termination to the extent such amount has not already been paid (d) a pro-rated portion of target variable compensation for the full fiscal year in which the Change in Control Termination occurs, (e) stock options, restricted stock, and restricted stock units shall become fully vested, (d)(f) market stock units and performance stock units shall be vested at the greater of actual performance or 100% of the target value and (e)(g) a lump sum equal to thepre-tax cost of 12 months of continued COBRA coverage after(24 months in the deduction for tax withholding.case of the CEO). Change in Control Termination occurs if the executive officer is demoted, relocated, or terminated other than for misconduct within the period beginning upon the earlier of our execution of a definitive agreement that results in a change in control or 90 days prior to a change in control and ending 18 months following the change in control transaction.
The agreements also provide for the following potential payments and benefits upon a Non-CIC Termination (as defined in the agreements): (a) 100% of annual base salary, (b) 100% of target variable compensation for a full fiscal year, (c) any actual earned bonus, commission or other short term cash incentive compensation for the fiscal year preceding the Non-CIC Termination to the extent such amount has not already been paid, (d) a pro-rated portion of actual earned bonus for the full fiscal year in which the Non-CIC Termination occurs, (e) restricted stock units that would have vested within 12 months following such termination shall become fully vested, and (f) a lump sum equal to the pre-tax cost of 12 months of continued COBRA coverage.
Equity Compensation. At our 2009 annual stockholders’ meeting, our stockholders approved the 2009 Stock Incentive Plan (the “2009 Plan”) and the 2009 Plan became effective immediately. On April 15, 2014, our stockholders approved amendments of the 2009 Plan. The amendments updated the 2009 Plan to comply with changes in local laws, authorized additional shares of common stock for future issuance, improved the Company’s corporate governance and implement
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implemented other best practices. The 2009 Plan was subsequently amended and restated on April 20, 2017 upon approval by our stockholders, in order to authorize additional shares of common stock for future issuance under the 2009 Plan, to establish limits on the value of awards that may be granted to ournon-employee directors in any calendar year, to comply with changes in applicable law and to make certain other administrative changes. Under our prior 2000 Stock Incentive Plan (the “2000 Plan”), no shares remain issuable except for those that were subject to outstanding awards as of the date of approval of the 2009 Plan. The 2009 Plan and the 2000 Plan (together, the “Plans”) governgoverns the equity awards granted to our Named Executive Officers and other participants.
The Plans includePlan includes the following general change in control provisions, which may result in the accelerated vesting of outstanding stock options and stock awards:
Automatic Acceleration of Awards if not Assumed: In the event that we experience a change in control, the vesting of outstanding equity awards will automatically fully accelerate and any transfer restrictions or repurchase rights will lapse, unless the awards are assumed or replaced by the successor company or otherwise continued in effect.
Discretionary Acceleration of Awards: Our Compensation Committee, as plan administrator of the Plans, has the authority to accelerate the vesting of all outstanding equity awards at any time, including in the event of a change in control of the Company, by means of a “hostile take-over” or otherwise, whether or not those awards are assumed or replaced or otherwise continued in effect. Under the 2000 Plan, any options so accelerated shall remain exercisable until the expiration or sooner termination of the option term in the case of a hostile take-over.
Acceleration Upon Termination After a Change in Control: During a change in control, our Compensation Committee may provide for the acceleration of vesting if a participant (including a Named Executive Officer) is involuntarily terminated within a period of 18 months following a change in control. Pursuant to this authority, the terms of the stock options and stock awards granted to the Named Executive Officers and other participants under the Plans provide for such acceleration in vesting in the event of involuntary termination within 18 months following a change in control. Under the 2000 Plan, any options so accelerated shall remain exercisable until the earlier of (i) one year from the date of the participant’s termination and (ii) the expiration of the option term in the case of a change of control, and until the expiration or sooner termination of the option term in the case of a hostile take-over. Involuntary Termination includes termination by the successor company for reasons other than misconduct or resignation by the individual following a material reduction in duties, a material reduction in compensation, or involuntary relocation.
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COMPENSATION DISCUSSION AND ANALYSIS |
termination within 18 months following a change in control. Involuntary Termination includes termination by the successor company for reasons other than misconduct or resignation by the individual following a material reduction in duties, a material reduction in compensation, or involuntary relocation. |
The following table depicts potential compensation arrangements with our NEOs as a result of a change in control that subsequently results in involuntary termination. Such termination is assumed to occur on December 29, 2017,31, 2022, the last business day of our fiscal 2017.2022.
Name | Severance ($) | Target ($) | Intrinsic ($) | COBRA ($) | Total ($) | Severance ($) | Target ($) | Intrinsic ($) | COBRA ($) | Total ($) | ||||||||||||||||||||||||||||||
G. Tyson Tuttle | 626,000 | 782,500 | 21,515,160 | 44,135 | 22,967,795 | |||||||||||||||||||||||||||||||||||
John C. Hollister | 372,000 | 316,200 | 6,346,033 | 44,247 | 7,078,480 | |||||||||||||||||||||||||||||||||||
R. Matthew Johnson | 1,300,000 | 1,690,000 | 11,836,665 | 64,573 | 14,891,238 | |||||||||||||||||||||||||||||||||||
John Hollister | 437,000 | 437,000 | 5,311,345 | 48,507 | 6,233,852 | |||||||||||||||||||||||||||||||||||
Brandon Tolany | 375,000 | 375,000 | 7,324,392 | 35,760 | 8,110,152 | 414,000 | 414,000 | 4,228,563 | 36,425 | 5,092,988 | ||||||||||||||||||||||||||||||
Sandeep Kumar | 340,000 | 255,000 | 4,240,696 | 35,760 | 4,871,456 | 379,000 | 284,250 | 3,806,086 | 36,002 | 4,505,338 | ||||||||||||||||||||||||||||||
Alessandro Piovaccari | 340,230 | 255,173 | 4,089,703 | 14,660 | 4,699,766 |
(1) | Value is based upon the closing selling price per share of our common stock on the NASDAQ Global Select Market on the last trading day of fiscal |
The following table depicts potential compensation arrangements with our NEOs as a result of a termination in employment that is not covered by change in control. Such termination is assumed to occur on December 31, 2022, the last business day of our fiscal 2022.
Name | Severance ($) | Target ($) | Pro-rata ($) | Intrinsic ($) | COBRA ($) | Total ($) | ||||||||||||||||||
R. Matthew Johnson | 650,000 | 845,000 | 1,159,027 | 1,602,941 | 32,286 | 4,289,254 | ||||||||||||||||||
John Hollister | 437,000 | 437,000 | 590,642 | 1,013,998 | 48,507 | 2,527,147 | ||||||||||||||||||
Brandon Tolany | 414,000 | 414,000 | 564,463 | 787,429 | 36,425 | 2,216,317 | ||||||||||||||||||
Sandeep Kumar | 379,000 | 284,250 | 387,524 | 597,219 | 36,002 | 1,683,995 |
(1) | Pro-rata current year bonus payment calculation based upon 2022 full fiscal year as all Named Executive Officers worked through the end of the fiscal year. |
(2) | Value is based upon the closing selling price per share of our common stock on the NASDAQ Global Select Market on the last trading day of fiscal 2022, which was $135.67, less (if applicable) the option exercise price payable per share. |
CEO Pay Ratio
The CEO Pay Ratio analysis is a required disclosure enacted by the Securities and Exchange Commission (“SEC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
A reasonable estimate was prepared of the ratio of our CEO’s annual total compensation for fiscal year 2022 to the annual total compensation of our median employee for the same period. The 2022 calculation of all employees’ compensation was determined in the same manner as the “Total Compensation” shown for our CEO in the “Summary Compensation Table” with some adjustments necessary to report all amounts in US currency.
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COMPENSATION DISCUSSION AND ANALYSIS |
Pay elements included in the annual total compensation for our median employee may include all or some of the following:
Base salary including 13th month payments
• | Bonus, including quarterly profit sharing, annual MBO, recruiting referral bonuses, and ad-hoc bonuses earned via outstanding performance or for international travel |
Sales commissions
Benefits, as provided to eligible roles in certain markets such as Company-paid life insurance premiums, car allowances or reimbursement for Company-paid executive physicals
Long term incentives including RSUs and Restricted Cash Awards (“RCAs”) as provided to eligible roles in certain markets
Our calculations were prepared based on our median employee as of December 31, 2022.
We determined the compensation of our median employee by calculating the annual total compensation using the applicable components above.
The annual total compensation for our CEO as represented in the Summary Compensation Table was $6,756,233 and the compensation of our median employee was $167,951. The resulting ratio is 40.2 to 1.
44
COMPENSATION DISCUSSION AND ANALYSIS |
(a) Year | (b) SCT Total for CEO (1) | (c) Compensation Actually Paid to CEO (2) | (d) Average SCT Total for non-CEO NEOs (3) | (e) Average Compensation Actually Paid to non-CEO NEOs (4) | (f) Company TSR (5) | (g) Index TSR (6) | (h) Net Income (7) | (i) Adjusted Revenue (8) | ||||||||
FY2022 | $6,756,233 | $ 647,273 | $2,411,000 | $ (874,461) | $116.43 | $142.26 | $ 91,402,000 | $1,024,106,000 | ||||||||
FY2021 | $17,016,409 | $21,049,328 | $4,380,950 | $11,180,775 | $177.15 | $218.45 | $2,117,399,000 | $926,572,000 | ||||||||
FY2020 | $ 6,204,724 | $ 3,366,644 | $2,273,365 | $ 1,487,824 | $109.29 | $152.93 | $ 12,531,000 | $886,677,000 |
(1) | G. Tyson Tuttle was CEO during FY2020 and FY2021, and R . Matthew Johnson became CEO in FY2022, effective January 2, 2022. The dollar amounts reported in column (b) are the amounts of total compensation reported for the CEO for each corresponding year in the “Total” column of the Summary Compensation Table above. |
(2) | The Compensation Actually Paid Schedule shown below sets forth the adjustments made during each year represented in the Pay Versus Performance Table to arrive at the “compensation actually paid” to our Chief Executive Officer. |
(3) | During FY2020, our non-CEO NEOs were John Hollister, Brandon Tolany, D. Mark Thompson, and R. Matthew Johnson. During FY2021, ournon-CEO NEOs were R. Matthew Johnson, John Hollister, Brandon Tolany, and Sandeep Kumar. During FY2022, ournon-CEO NEOs were John Hollister, Brandon Tolany, and Sandeep Kumar. The dollar amounts reported in column (d) represent the average of the compensation reported for the non-CEO NEOs for each corresponding year in the “Total” column of the Summary Compensation Table. |
(4) | The Compensation Actually Paid Schedule shown below sets forth the adjustments made during each year represented in the Pay Versus Performance Table to arrive at the average “compensation actually paid” to our non-CEO NEOs. |
(5) | Represents the company’s common stock cumulative TSR on a fixed investment of $100 over the FY starting from the market close on the last trading day of FY2019 through the end of each applicable year in the table, assuming reinvestment of any dividends. |
(6) | Represents the cumulative TSR of the PHLX Semiconductor Index, the Company’s peer group for this purpose, on a fixed investment of $100 over the FY starting from the market close on the last trading day of FY2019 through the end of each applicable year in the table. |
(7) | GAAP Net Income as reported under the Company’s Consolidated Statements of Income on Form 10-K for the applicable year. |
(8) | Refers to the GAAP Revenue as reported under the Company’s Consolidated Statements of Income on Form 10-K for the applicable year. The amount shown for FY2021 included $205,712,000 to adjust for the revenue earned in the divested infrastructure and automotive business of the Company through July 3, 2021 of that year, as more fully discussed under Note 3,Discontinued Operations 10-K for the fiscal year ended December 31, 2022. The amount shown for FY2020 is the Company’s GAAP revenue as originally reported in Form10-K for the year prior to the business divestiture. |
COMPENSATION DISCUSSION AND ANALYSIS |
FY2022 | FY2021 | FY2020 | ||||||||||||||||||||||||||||||||||
CEO | Average non-CEO NEO | CEO | Average non-CEO NEO | CEO | Average non-CEO NEO | |||||||||||||||||||||||||||||||
Summary Compensation table total for applicable year. | 6,756,233 | 2,411,000 | 17,016,409 | 4,380,950 | 6,204,724 | 2,273,365 | ||||||||||||||||||||||||||||||
Deduction for amounts reported under the “Stock Awards” and “Option Awards” columns in the Summary Compensation table for applicable year. | (4,935,285 | ) | (1,480,694 | ) | (14,964,504 | ) | (3,435,059 | ) | (4,774,796 | ) | (1,561,047 | ) | ||||||||||||||||||||||||
Increase based on ASC Topic 718 fair value of Awards granted during applicable year that remain unvested as of applicable year end, determined as of applicable year end | 5,738,377 | 1,721,651 | 11,306,449 | 7,785,677 | 5,093,364 | 1,665,197 | ||||||||||||||||||||||||||||||
Increase/deduction for Awards granted in prior years that were outstanding and unvested as of applicable year end, determined based on change in ASC Topic 718 fair value from the prior year end to the applicable year end. | (4,908,675 | ) | (1,272,020 | ) | 7,706,362 | 2,425,332 | (891,423 | ) | (304,472 | ) | ||||||||||||||||||||||||||
Increase/deduction for Awards granted in prior years that vested during the applicable year, determined based on change in ASC Topic 718 fair value from the prior year end to the vesting date | (427,774 | ) | (355,609 | ) | 877,647 | 305,720 | (1,120,299 | ) | (271,432 | ) | ||||||||||||||||||||||||||
Deduction of Awards granted in prior year that were forfeited in the applicable year, determined based on ASC Topic 718 fair value as of prior year end | (1,575,604 | ) | (1,898,789 | ) | (893,035 | ) | (281,846 | ) | (1,144,926 | ) | (313,788 | ) | ||||||||||||||||||||||||
Compensation Actually Paid - | 647,273 | (874,461 | ) | 21,049,328 | 11,180,775 | 3,366,644 | 1,487,824 |
Key Performance Measures | ||
Adjusted Revenue | Adjusted non-GAAP operating income | |
Revenue CAGR | DEI Goal Achievement |
COMPENSATION DISCUSSION AND ANALYSIS |
COMPENSATION DISCUSSION AND ANALYSIS |
CO MPENSATION DISCUSSION AND ANALYSIS |
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Number of Securities (#) Weighted Average ($) Number of Securities (#) Equity Compensation Plans Approved by Stockholders(1) Equity Compensation Plans Not Approved by Stockholders Total30, 201731, 2022 that may be issued under existing equity compensation plans.Equity Compensation Plan Information A B C Plan Category
to be Issued Upon
Exercise of Outstanding
Options and Rights
Exercise Price of
Outstanding Options
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected
in Column A) 1,952,773 (2) 38.88 (3) 4,035,091 (4) — — — 1,952,773 38.88 4,035,091
to be Issued Upon
Exercise of Outstanding
Options and Rights
Exercise Price of
Outstanding Options
($)
1,240,605 38.80 3,665,148 Equity Compensation Plans Not Approved by Stockholders — — — 1,240,605 38.80 3,665,148 (1) our 2000 Stock Incentive Plan, our 2009 Stock Incentive Plan and our 2009 Employee Stock Purchase Plan. No shares remain issuable under our prior 2000 Stock Incentive Plan, except for those that are subject to outstanding awards.(2) 1,783,0681,122,335 shares of common stock subject to full value awards that vest over the holders’ period of continued service and 169,705118,270 shares of common stock issuable upon the exercise of stock options with a weighted average remaining term of 7.53.1 years. Excludes purchase rights accruing under our 2009 Employee Stock Purchase Plan. Under the 2009 Employee Stock Purchase Plan, each eligible employee may contribute up to 15% of his or her base salary to purchase shares of our common stock at semi-annual intervals on the last U.S. business day of April and October each year at a purchase price per share equal to 85% of the lower of (i) the closing selling price per share of our common stock on the employee’s entry date into thetwo-year offering period in which that semi-annual purchase date occurs and (ii) the closing selling price per share on the semi-annual purchase date.(3) 1,783,0681,122,335 shares of common stock subject to outstanding full value awards that will become issuable as those awards vest without any cash consideration for such shares, and excludes shares under the Employee Stock Purchase Plan.Plan(4) 30, 2017,31, 2022, an aggregate of 2,826,9062,520,156 shares of our common stock were available for issuance in connection with future awards under our 2009 Stock Incentive Plan and 1,208,1851,144,992 shares of our common stock were available for issuance under our 2009 Employee Stock Purchase Plan.
NO INCORPORATION BY REFERENCE OF CERTAIN PORTIONS OF THIS PROXY STATEMENT |
No Incorporation by Reference of Certain Portions of this Proxy Statement
Notwithstanding anything to the contrary set forth in any of our filings made under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, that might incorporate information in this Proxy Statement, neither the Audit Committee Report nor the Compensation Committee Report is to be incorporated by reference into any such filings as provided by SEC regulations. In addition, this Proxy Statement includes certain website addresses intended to provide inactive, textual references only. The information on these websites shall not be deemed part of this Proxy Statement.
Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports
The members of our Board of Directors, the executive officers and persons who hold more than 10% of our outstanding common stock are subject to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934 which require them to file reports with respect to their ownership of the common stock and their transactions in such common stock. Based upon (i) the copies of Section 16(a) reports which we received from such persons for their fiscal 20172022 transactions in the common stock and their common stock holdings and (ii) the written representations received from one or more of such persons, we believe that all reporting requirements under Section 16(a) for such fiscal year were met in a timely manner by our directors, executive officers and greater than 10% beneficial owners, other than a Form 3 timely filed by Dr. Piovaccari on November 29, 2017 that incorrectly reported his holdings of Company common stock as 20,510 shares instead of 23,678 shares.owners.
A copy of the Annual Report for fiscal 20172022 has been mailed concurrently with this Proxy Statement to all stockholders entitled to notice of and to vote at the Annual Meeting. The Annual Report is not incorporated into this Proxy Statement and is not considered proxy solicitation material.
We filed an Annual Report on Form10-K with the SEC on January 31, 2018.February 1, 2023. Stockholders may obtain a copy of our Annual Report, without charge, by writing to our Corporate Secretary at our principal executive offices located at 400 West Cesar Chavez, Austin, Texas 78701.
THE BOARD OF DIRECTORS OF SILICON LABORATORIES INC.
Dated: March 8, 20182023
51
Appendix I: Reconciliation of GAAP toNon-GAAP Executive Compensation Financial Measures
Thenon-GAAP financial measurements provided herein do not replace the presentation of Silicon Labs’ GAAP financial results. Thesenon-GAAP measurements merely provide supplemental information to assist investors in analyzing Silicon Labs’ financial position and results of operations in connection with executive compensation; however, these measures are not in accordance with, or an alternative to, GAAP and may be different fromnon-GAAP measures used by other companies ornon-GAAP measures used in other contexts by Silicon Labs. We are providing this information because it may enable investors to perform meaningful comparisons of operating results, and more clearly highlight the results of core ongoing operations in connection with executive compensation.
Unaudited Reconciliation of GAAP toNon-GAAP Executive Compensation Financial Measures (In thousands)
Non-GAAP Income Statement Items | Year Ended December 30, 2017 | |||||||||||||||||||||||||||||||
GAAP Measure | GAAP Percent of | Intangible Asset Amortization | Acquisition Related Items | Non-GAAP Measure | Non-GAAP Percent of | Target Measure | Target Percent of | |||||||||||||||||||||||||
Revenues | $ | 768,867 | $ | 754,151 | ||||||||||||||||||||||||||||
Gross Margin | $ | 454,191 | 59.1 | % | $ | — | $ | 124 | $ | 454,315 | 59.1 | % | $ | 445,283 | 59.0 | % | ||||||||||||||||
Operating Income | $ | 84,974 | 11.1 | % | $ | 26,621 | $ | 1,581 | $ | 113,176 | 14.7 | % | $ | 108,250 | 14.4 | % | ||||||||||||||||
Non-GAAP Income Statement Items | Three Months Ended December 30, 2017 | |||||||||||||||||||||||||||||||
GAAP Measure | GAAP Percent of | Intangible Asset Amortization | Acquisition Related Items | Non-GAAP Measure | Non-GAAP Percent of | Target Measure | Target Percent of | |||||||||||||||||||||||||
Revenues | $ | 201,018 | $ | 195,230 | ||||||||||||||||||||||||||||
Gross Margin | $ | 119, 264 | 59.3 | % | $ | — | $ | — | $ | 119,264 | 59.3 | % | $ | 114,947 | 58.9 | % | ||||||||||||||||
Operating Income | $ | 26,390 | 13.1 | % | $ | 6,590 | $ | (110 | ) | $ | 32,870 | 16.4 | % | $ | 31,282 | 16.0 | % | |||||||||||||||
Non-GAAP Income Statement Items | Three Months Ended September 30, 2017 | |||||||||||||||||||||||||||||||
GAAP Measure | GAAP Percent of | Intangible Asset Amortization | Acquisition Related Items | Non-GAAP Measure | Non-GAAP Percent of | Target Measure | Target Percent of | |||||||||||||||||||||||||
Revenues | $ | 198,723 | $ | 192,523 | ||||||||||||||||||||||||||||
Gross Margin | $ | 116,574 | 58.7 | % | $ | — | $ | — | $ | 116,574 | 58.7 | % | $ | 112,504 | 58.4 | % | ||||||||||||||||
Operating Income | $ | 24,968 | 12.6 | % | $ | 6,834 | $ | 161 | $ | 31,963 | 16.1 | % | $ | 28,262 | 14.7 | % | ||||||||||||||||
Non-GAAP Income Statement Items | Three Months Ended July 1, 2017 | |||||||||||||||||||||||||||||||
GAAP Measure | GAAP Percent of | Intangible Asset Amortization | Acquisition Related Items | Non-GAAP Measure | Non-GAAP Percent of | Target Measure | Target Percent of | |||||||||||||||||||||||||
Revenues | $ | 190,098 | $ | 189,599 | ||||||||||||||||||||||||||||
Gross Margin | $ | 113,192 | 59.5 | % | $ | — | $ | — | $ | 113,192 | 59.5 | % | $ | 113,319 | 59.8 | % | ||||||||||||||||
Operating Income | $ | 20,934 | 11.0 | % | $ | 6,695 | $ | 234 | $ | 27,863 | 14.7 | % | $ | 28,785 | 15.2 | % | ||||||||||||||||
Non-GAAP Income Statement Items | Three Months Ended April 1, 2017 | |||||||||||||||||||||||||||||||
GAAP Measure | GAAP Percent of | Intangible Asset Amortization | Acquisition Related Items | Non-GAAP Measure | Non-GAAP Percent of | Target Measure | Target Percent of | |||||||||||||||||||||||||
Revenues | $ | 179,028 | $ | 176,799 | ||||||||||||||||||||||||||||
Gross Margin | $ | 105,161 | 58.7 | % | $ | — | $ | 124 | $ | 105,285 | 58.8 | % | $ | 104,513 | 59.1 | % | ||||||||||||||||
Operating Income | $ | 12,682 | 7.1 | % | $ | 6,502 | $ | 1,296 | $ | 20,480 | 11.4 | % | $ | 19,921 | 11.3 | % |
Appendix II: Silicon Laboratories Inc. Audit Committee Charter
I. MEMBERSHIP:
The Audit Committee of Silicon Laboratories Inc. (the “Corporation”) shall be comprised of at least three members of the Corporation’s Board of Directors (the “Board”). The members of the Audit Committee shall be appointed by the Board and shall collectively meet the applicable independence, financial literacy and other requirements of The NASDAQ Stock Market (“Nasdaq”) and applicable federal law. Members of the Audit Committee may be removed at any time, with or without cause, by the Board.
II. QUORUM:
A majority of the members of the Audit Committee shall constitute a quorum.
III. FREQUENCY:
The Audit Committee shall meet as required either on the dates of regular Board meetings or in special meetings as appropriate.
IV. PURPOSE:
The purpose of the Audit Committee is to oversee the accounting and financial reporting processes of the Corporation and the audits of the Corporation’s financial statements.
V. LIMITATIONS:
The Audit Committee shall not have authority to: (1) adopt, amend, or repeal the Corporation’s Bylaws; (2) fill vacancies on the Audit Committee or change its membership; (3) amend the Corporation’s Certificate of Incorporation; (4) act on matters assigned to other committees of the Board; or (5) take any action prohibited by the Corporation’s Certificate of Incorporation, Bylaws or applicable law.
VI. MINUTES:
Minutes will be kept of each meeting of the Audit Committee and will be provided to each member of the Board upon request. Unless otherwise restricted by the Corporation’s Certificate of Incorporation or Bylaws, any action that may be taken at any meeting of the Audit Committee may be taken without a meeting, if all members of the Audit Committee consent thereto in writing, and the writing is filed with the minutes of proceedings of such committee. Any action of the Audit Committee shall be subject to revision, modification, rescission, or alteration by the Board, provided that no rights of third parties shall be affected by any such revision, modification, rescission, or alteration.
VII. POWERS, RESPONSIBILITIES AND DUTIES:
To fulfill its responsibilities and duties, the Audit Committee shall:
1. Be directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation, and each such registered public accounting firm must report directly to the Audit Committee. Periodically consider the rotation of the Corporation’s independent auditors.
2. Resolve any disagreements between management and the Corporation’s independent auditors regarding financial reporting.
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Non-GAAP Income Statement Items | Year Ended December 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP Measure | GAAP Percent of | Stock Compensation Expense | Intangible Asset Amortization | Termination Costs & Other | Non-GAAP Measure | Non-GAAP Percent of | Target Measure | Target Percent of | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 1,024,106 | — | — | — | — | — | — | $ | 960,250 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Income | $ | 119,260 | 11.6 | % | $ | 60,510 | $ | 34,071 | $ | 594 | $ | 214,435 | 20.9 | % | $ | 145,073 | 15.1 | % |
3. Review the organization’s annual and quarterly financial statements and quarterly earnings press releases.52
4. Pre-approve all auditing and permittednon-audit services to be performed by the Corporation’s auditors.
5. Obtain, on an annual basis, a formal written statement from the independent auditor affirming their independence (as required by applicable standards of the Public Company Accounting Oversight Board or its successor) and delineating all relationships between the auditor and the Corporation that may reasonably be thought to bear on such independence. Discuss with the auditor any disclosed relationships or services that may impact the objectivity and independence of the auditor and take, or recommend that the Board take, appropriate action to oversee the independence of the independent auditor.
6. Following completion of the annual audit, review separately with the independent auditor, the internal auditing department, if any, and management any significant difficulties encountered during the course of the audit.
7. Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, as well as for the confidential, anonymous submission by the Corporation’s employees of concerns regarding questionable accounting or auditing matters.
8. Retain independent counsel, experts and other advisors as the Audit Committee determines necessary to carry out its duties.
9. Receive appropriate funds, as determined by the Audit Committee, from the Corporation for payment of (i) compensation to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Corporation, (ii) compensation to any independent counsel, experts and other advisors employed by the Audit Committee, and (iii) ordinary administrative expenses of the Audit Committee that are necessary or appropriate in carrying out its duties.
10. Review and approve all “related-party transactions” as such term is defined in Item 404 of RegulationS-K.
11. Prepare the report of the Audit Committee required to be included in the Corporation’s annual proxy statement.
12. Review and discuss the Company’s policies and practices with respect to risk management (including cyber security risks) and report to the Board on its review.
13. Review and reassess the adequacy of this Charter at least annually and recommend any changes to the Board.
14. Perform any other activities consistent with this Charter, the Corporation’s Bylaws, Nasdaq rules and governing law, as the Audit Committee or the Board deems necessary or appropriate, including, without limitation, the delegation of authority to one or more members of the Audit Committee of authority to carry out certain activities set forth hereunder.
400 West Cesar Chavez Street
Austin, Texas, USA 78701
www.silabs.com
SILICON LABORATORIES INC. ATTN: CORPORATE SECRETARY 400 WEST CESAR CHAVEZ AUSTIN, TX 78701 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1YOUR VOTE BY INTERNET—www.proxyvote.com Use the Internet to transmitIS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/SLAB • Cast your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date.vote online P.O. BOX 8016, CARY, NC 27512-9903 • • Have your proxy card in hand when you accessProxy Card ready Follow the web site and follow thesimple instructions to obtainrecord your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BYPHONE—1-800-690-6903PHONE Call 1-866-834-5878 • • Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date.• Have your proxy card in hand when you call and then followProxy Card ready Follow the instructions. VOTE BYsimple recorded instructions MAIL • • Mark, sign and date your proxy cardProxy Card Fold and return ityour Proxy Card in the postage-paid envelope we have provided or return itYou must register to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. 1 OF 2 1 1 CONTROL # NAME THE COMPANY NAME INC.—COMMON SHARES 123,456,789,012.12345 THE COMPANY NAME INC.—CLASS A 123,456,789,012.12345 THE COMPANY NAME INC.—CLASS B 123,456,789,012.12345 THE COMPANY NAME INC.—CLASS C 123,456,789,012.12345 THE COMPANY NAME INC.—CLASS D 123,456,789,012.12345 THE COMPANY NAME INC.—CLASS E 123,456,789,012.12345 THE COMPANY NAME INC.—CLASS F 123,456,789,012.12345 THE COMPANY NAME INC.—401 K 123,456,789,012.12345 PAGE 1 OF 2 x TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. The Board of Directors recommends you vote FOR 2 0 the following: 1. Election of Directors Nominees For Against Abstain 0000000000 1A G. Tyson Tuttle 0 0 0 1B Sumit Sadana 0 0 0 NOTE: In accordance with the discretion of the proxy holders, to act upon all matters incident to the conduct ofattend the meeting and upon other matters 1C Gregg Lowe 0 0 0 as may properly come before the meeting. The Board of Directors recommends you vote FOR proposals 2. and 3. For Against Abstain 2. To ratify the appointment of Ernst & Young LLP 0 0 0 as our independent registered public accounting firm for the fiscal year ending December 29, 2018. 3. To vote on an advisory(non-binding) resolution 0 0 0 regarding executive compensation. For address change/comments, mark here. 0 Investor Address Line 1 (see reverse for instructions) Investor Address Line 2 R1.0.1.17 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 1 Please sign exactly as your name(s) appear(s) hereon. When signing as _ John Sample attorney, executor, administrator, online and/or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must 1234 ANYWHERE STREET sign. If a corporation or partnership, please sign in full corporate or ANY CITY, ON A1A 1A1 partnership name, by authorized officer. 0000352868 SHARES CUSIP # JOB # SEQUENCE # Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Meeting Directions: For Meeting Directions, Please Call: 512-232-0100 The Lady Bird Johnson Wildflower Center is about 12 miles from downtown Austin. 1. Take Loop 1 South (Loop 1 is also known as MOPAC Expressway). 2. Continue South past the traffic lightparticipate at Slaughter Lane. 3. Turn left at the next traffic light at La Crosse Avenue. 4. The Center is on the right near the end of La Crosse Avenue. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement are available at www.proxyvote.com SILICON LABORATORIES INC.www.proxydocs.com/SLAB Silicon Laboratories Inc. Annual Meeting of Stockholders For Stockholders of record as of February 24, 2023 TIME: Thursday, April 19, 201820, 2023 9:00 AM, Central Daylight Time PLACE: Annual Meeting to be held live via the Internet Please visit www.proxydocs.com/SLAB for more details. This proxy is being solicited byon behalf of the Board of Directors The undersigned revokes all previous proxies, acknowledges receipt of the Notice of Annual Meeting of Stockholders (the “Annual Meeting”) of Silicon Laboratories Inc. (“Silicon Laboratories”) and the Proxy Statement and hereby appoints Navdeep S. Sooch and G. Tyson Tuttle,R. Matthew Johnson (“Named Proxies”) or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Silicon Laboratories that the undersigned is entitled to vote at the Annual Meeting to be held Virtually at 9:00 AM, CDT on April 19, 2018, at the Lady Bird Johnson Wildflower Center, 4801 La Crosse Avenue, Austin, Texas 78739,20, 2023, and any adjournment or postponement thereof. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy when properly executed,is revocable and will be voted inas directed. However, if no instructions are specified, the manner directed herein. If no such direction is made, this proxy will be voted FOR the election of the director nominees specified in Proposal 1, FOR Proposals 2, 3 and 1 YEAR on proposal 4. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance this card. with the Board of Directors’ recommendations. Address change/comments: . 17 .recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return Important www.proxydocs. Noticecom/SLAB Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report, Notice & Proxy Statement is/are available at PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Silicon Laboratories Inc. Annual Meeting of Stockholders Please make your marks like this: X THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR the election of the director nominees in Proposal 1 . 0 R1 _and FOR Proposals 2 0000352868 (Ifand 3. The Board recommends you noted any Address Changes and/or Comments above, please mark corresponding boxvote 1 YEAR on Proposal 4. BOARD OF DIRECTORS YOUR VOTE RECOMMENDS 1. To elect three Class I directors to serve on the reverse side.) ContinuedBoard of Directors until our 2026 annual meeting of stockholders or until a successor is duly elected and qualified; FOR AGAINST ABSTAIN 1.01 Navdeep S. Sooch FOR #P2# #P2# #P2# 1.02 Robert J. Conrad FOR #P3# #P3# #P3# 1.03 Nina Richardson FOR #P4# #P4# #P4# FOR AGAINST ABSTAIN 2. To ratify the appointment of Ernst & Young LLP as our independent registered public FOR accounting firm for the fiscal year ending December 30, 2023; #P5# #P5# #P5# 3. To vote on an advisory (non-binding) resolution to approve executive compensation; FOR #P6# #P6# #P6# 1YR 2YR 3YR ABSTAIN 4. To vote on an advisory (non-binding) resolution regarding the frequency of holding 1 YEAR future advisory votes regarding executive compensation; and #P7# #P7# #P7# #P7# 5. To transact such other business as may properly come before the meeting or any adjournment or adjournments thereof. NOTE: In accordance with the discretion of the proxy holders, to act upon all matters incident to the conduct of the meeting and upon other matters as they may properly come before the meeting. You must register to attend the meeting online and/or participate at www.proxydocs.com/SLAB Authorized Signatures—Must be completed for your instructions to be signedexecuted. Please sign exactly as your name(s) appears on reverse sideyour account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date