Each year we
have conductedconduct significant stockholder outreach efforts. In
2016, the Compensation Committee solicited significant stockholder feedback, which the Committee and our Independent Directors took into consideration when designing our CEO’s Fiscal Year
2017 long-term multi-year PSU award. Specifically, the performance criteria of that award are solely based onpre-established relative and absolute TSR performance objectives, to further align his interests with those of our stockholders.Consistent with our emphasis on delivering sustainable long-term value creation for our stockholders, beginning in Fiscal Year 2017, the Compensation Committee also designed the PSU awards granted to our other executives to be subject solely to relative and absolute TSR performance metrics.
In Fiscal Year 2018,2020, we contacted stockholders beneficially owning over 50%60% of our then outstanding shares of common stock, and engaged with stockholders owning over 46% of our then outstanding stock, to discuss our compensation philosophy and structure, as well as Compensation Committee actions and decisions. The ChairmanOur Lead Independent Director and chairperson of the Compensation Committee, Mr. Hartenstein, participated in these discussions with our largest stockholders related toand discussed with them our succession plan for our CEO and executives, executive compensation programs. Topics that were discussed included:
the expected timing of Mr. Tan’s nextprogram and equity grant, in light of his Fiscal Year 2017 long-term, multi-year PSU award, which we have confirmed will not occur until 2021 at the earliest;
the structure of Mr. Tan’s Fiscal Year 2017 long-term, multi-year PSU award and our independent directors’ approach to setting Mr. Tan’s LTI compensation in Fiscal Year 2017;
the structure of ourstrategy among other NEOs’ LTI compensation; and
topics.the rationale for choosing our incentive compensation performance goals and related target levels.
These stockholders indicated that they were,continue to be generally supportive of our compensation actions and decisions and program design, with a number of holders indicating that they appreciated the long-term nature of the Fiscal Year 2017 equity award granted to Mr. Tan.design. The inputfeedback received from our stockholders was reported to both the Compensation Committee and the Board.
Following Fiscal Year 2020, Mr. Hartenstein, along with our Chairman of the Board and members of management, continued to
meet with our
Board.Say-on-Pay
Atstockholders to discuss our 2018 annual meeting, we submitted ourexecutive management succession plan, executive compensation program, to anon-binding, advisory voteequity compensation strategy, proposed amendment and restatement of our stockholders (the“say-on-pay proposal”). Stockholders representing approximately 62% of2012 Plan as set forth in this Proxy Statement and our outstanding shares present in person or by proxy at the meeting and voting on the matter voted in favor of thesay-on-pay proposal. Following the 2018 annual meeting, the Compensation Committee reviewed the results of thesay-on-pay proposal. Our engagement with stockholders discussed above, indicated that the lower support for thesay-on-pay proposal was primarily due to concerns regarding the timing of Mr. Tan’s next equity award, with some investors expressing concern about the size of the award. Consequently, subsequent to the 2018 annual meeting, we have confirmed that Mr. Tan will not receive another equity award until at least 2021. The input received from our stockholders was reported to the Compensation Committee and to our Board. Given this feedback, and the fact that no equity award will be granted to Mr. Tan until at least 2021, the Compensation Committee determined to retain the existing structure of our compensation program design for our other executives for Fiscal Year 2018.
corporate social responsibility program. Compensation Determination Process
Role of the Compensation Committee
The Compensation Committee devotes significant time throughout the year to our executive compensation program to ensure that it aligns executive pay with corporate performance and incentivizes our executives to pursue corporate
strategicfinancial, operational and
financialstrategic goals that will create sustainable, long-term stockholder value.
The Compensation Committee reviews and approves the compensation for our key executives, except for our CEO, whichwhose compensation is reviewed and approved by the independent directors of our Board (the “Independent Directors”) based on recommendations from the Compensation Committee. IndividualIndividual Executive Compensation Assessment.In addition to market compensation data provided by its compensation consultant, the Compensation Committee (and, in the case of our CEO, the Independent Directors)independent directors) considers the following information, among other factors, for each executive when determining his or her compensation:•current base salary, target APB Plan opportunities (and prior fiscal year payouts), the accumulated value of outstanding and unvested equity awards and other benefits;
• the individual’s overall performance, as well as the importance of the role, the individual’s knowledge and skills to Broadcom, the individual’s leadership within Broadcom and the individual’s contributions to Broadcom’s culture; and
•our CEO’s recommendation on compensation and individual performance (other than for himself), the executive’s performance and his or her importance to our Company, among other things.
.This information helps the Compensation Committee and the
Independent Directorsindependent directors to understand the long-term retentive elements and total compensation being delivered to our executives.
Internal Pay Parity. While we do not maintain a formal policy regarding internal pay parity, it is often considered as a factor by the Compensation Committee and the Independent Directorsindependent directors when determining compensation. Our CEO is compensated at a higher level than our other executives because he has a significantly higher level of responsibility, accountability and experience. Mr. Tan also receives more of his target total direct compensation in the form of LTI compensation through
long-term PSU awards as compared to our other executives. Given Mr. Tan’s responsibility for our overall performance, the
Independent Directorsindependent directors believe that compensating him at a higher level than our other executives and weighting his total compensation more heavily toward long-term, performance-based incentive compensation is consistent with market practice, appropriately reflects his contributions and directly aligns his incentives with the interests of our stockholders.
Compensation Risk Oversight.While our Board has overall responsibility for risk oversight, each of the committees of our Board regularly assesses risk in connection with executing their responsibilities. The Compensation Committee annually reviews and discusses thosethe risks that relate to all of our compensation policies and practices and it does not believe that our compensation policies or practices encourage excessive or inappropriate risk taking.
Role of Compensation Consultant
In Fiscal Year 2018,2020, Compensia provided consulting services to the Compensation Committee and the Independent Directors,independent directors, including the preparation of an assessmentseparate assessments of executive andnon-employee director compensation based on an analysisanalyses of competitive market compensation data. In addition, the Compensation Committee relied on Compensia for periodic updates on regulatory developments and market trends related to executive andnon-employee director compensation matters. Compensia does not provide any other services to usBroadcom other than advising the Compensation Committee and the Independent Directorsindependent directors on compensation-related matters.
The Compensation Committee has assessed the independence of Compensia pursuant to the six independence factors set forth in the SEC and Nasdaq rules and has concluded that Compensia is independent, and that its work for the Compensation Committee does not raise any conflict of interest.
Compensation Competitive Analysis
The Compensation Committee works with Compensia to develop a meaningful compensation peer group for purposes of understanding competitive market compensation practices. This peer group is evaluatedreviewed and updated annually as necessary. The peer group is used for comparative purposes only; the Compensation Committee does not benchmark any pay componentselements or target total direct compensation to a specific percentile. However, the Compensation Committee and, in the case of our CEO, the Independent Directors generally viewindependent directors, target executive officers’ total direct compensation to be competitive relative to the companies in our compensation peer group. Generally, target total cash compensation asfalls below the median of the competitive when it falls withinmarket whereas, in combination with equity, target total direct compensation around the 25th to 75th percentile range relative to our compensation peer group.or better of the competitive market is generally viewed as desirable. In the absence of relevant competitivepeer group data, the Compensation Committee reviews industry-based market compensation survey data as described below.
In August 2017,October 2019, the Compensation Committee approved the compensation peer group for Fiscal Year 2018,2020, which appears below. below and was developed in consultation with Compensia.
The following selection criteria were considered when developing
ourthe compensation peer group:
•Revenues: comparability across annual revenue, generally 0.5 to 2.0 times that of our Company;Broadcom;
•Market capitalization: market capitalizationscapitalization that generally fall between 0.3 to 3.0 times that of our Company;Broadcom; and
•Industry: companies in semiconductor-related and other technology-focused industries having a similar scale.
| | | | | | | | | | | |
| Fiscal Year 2020 Peer Group |
Fiscal Year 2018 Peer Group
3M Company | Cisco Systems, Inc. | Mastercard, Inc. | Qualcomm Inc. |
| Adobe, Inc. | Dell Technologies, Inc. | Micron Technology, Inc. | Salesforce.com, Inc. |
| Applied Materials, Inc. | | eBay,Honeywell International, Inc. | | NVIDIA Corporation | | Texas Instruments, Inc. |
| | | |
Cisco Systems, Automatic Data Processing, Inc. | | Emerson Electric Company | | Oracle Corporation | | Booking Holdings (formerly The Priceline Group, Inc.) |
| | | |
Cognizant Technology
Solutions Corporation
| | Intel Corporation | | PayPal Holdings, Inc. | Oracle Corporation | Thermo Fisher Scientific, Inc. |
| Booking Holdings | Mastercard,International Business Machines Corporation | PayPal Holdings, Inc. | | Qualcomm Incorporated | | Visa, Inc. |
| | | |
Corning, Inc. | | Micron Technology, Inc. | | TE Connectivity Ltd. | | Western Digital Corporation |
| | | | | | | | | | |
| | | |
| | | Percentile | | Revenue ($mm)(1) | | | Market Capitalization ($mm)(2) | |
| | | |
| | | |
Fiscal Year 2018 Peer Group | | 25th | | $ | 11,169 | | | $ | 38,105 | |
| | | |
| | | |
| | Median | | $ | 13,831 | | | $ | 68,789 | |
| | | |
| | | |
| | 75th | | $ | 18,245 | | | $ | 112,287 | |
| | | |
| | | |
Broadcom | | | | $ | 16,257 | | | $ | 98,330 | |
| | | |
| | | |
| | Rank | | | 60% | | | | 73% | |
| | | |
| | | | | | | | | | | |
| Percentile | Revenue ($mm)(1) | Market Capitalization ($mm)(2) |
| Fiscal Year 2020 Peer Group | 25th
Median
75th | $ 15,039
$ 21,788
$ 38,840 | $ 88,034
$118,715
$156,762 |
| Broadcom | | $ 21,813 | $113,065 |
| Rank | 50% | 45% |
(1) Represents publicly reported revenue for the trailing four quarters ended
July 30, 2017.May 5, 2019.
(2) As of July
14, 2017,25, 2019, using publicly reported data available at such date.
In October
2018,2020, the compensation peer group was updated for Fiscal Year
20192021 to reflect the growth in our revenue
and market
capitalization and the expected acquisition of CA. Corning,capitalization. Visa, Inc.
, eBay, Inc., Emerson Electric Company and TE Connectivity Ltd. were was removed due to
their revenues orits market
capitalizationscapitalization falling
belowoutside of the
financial selection criteria set forth above.
CompaniesDanaher Corporation was added to the
compensation peer group,
were DXC Technology Company, Hewlett Packard Enterprise Company, International Business Machines Corporation and Salesforce.com, Inc., which
wereis viewed as
an appropriate
peerspeer because
theirits revenues and market
capitalizationscapitalization better aligned with the applicable
relevant selection criteria
detailedset forth above.
Where the peer group data does not provide sufficient information for a particular executive position, the Compensation Committee reviews industry-based market compensation survey data (“market
salary surveys”survey data”) from the
following data sources:Radford Global Technology Survey;
Survey, Radford Global Sales Survey;Survey and
Mercer High Tech Salary Survey (Asia).
Elements of Executive Compensation
The principal
componentselements of our executive compensation program are:
•an annual cash incentive bonus plan;
•LTI compensation in the form of equity awards, including a substantial weighting toward PSU awards;
•severance and change in control payments and benefits; and
•modest perquisites and other personal benefits.
We believe that a competitive base salary is an important
componentelement of our executive compensation program designed to attract, engage and retain
key executives.our executive officers. Base salaries provide fixed, baseline compensation and are set at levels intended to reflect an executive’s individual performance throughout the prior fiscal year and level and scope of responsibility, to be within a competitive range for similar positions at the companies in our compensation peer group and/or in the market
salary survey data, and
to take into account internal pay parity among our
executives.executive officers. The Compensation Committee also
receivedreviews our economic and business conditions and outlook. The base salaries of our key executives are reviewed annually by the Compensation Committee.
Our CEO makes recommendations to the Compensation Committee with respect to base salary adjustments for our key executivesexecutive officers (other than himself).
The Compensation Committee also reviews and considers many factors in determining individual performance for the purposes of adjusting base salaries.Thesesalaries.These factors include such measures as division or function performance against budget, achievement of divisional or functional goals, new product introductions and corporate strategy implementation.
Given our focus on performance-based compensation and awards tied to long-term performance, for Fiscal Year 2018,
In consultation with Compensia, the Compensation Committee
on January 28, 2020 and, in the case of our CEO, the
Independent Directorsindependent directors on January 31, 2020, elected to
maintainincrease the base
salarysalaries for
Messrs. Tan, Krause and Brazeal and Dr. Kawwas effective in February 2020 to remain aligned with the competitive market. Other than in connection with Mr. Krause’s appointment to CFO, our NEOs
at their Fiscal Year 2017 levels. | | | | | | | | | | | | |
| | | | |
| NEO | | Title | | Base Salary (USD) Effective July 1, 2017 | | | Base Salary (USD) Effective July 1, 2018 | | | % Change |
| | | | |
| | | | |
Hock E. Tan | | President and Chief Executive Officer | | | $1,100,000 | | | | $1,100,000 | | | 0% |
| | | | |
Thomas H. Krause Jr. | | Chief Financial Officer | | | $ 400,000 | | | | $ 400,000 | | | 0% |
| | | | |
Charlie B. Kawwas, Ph.D. | | Senior Vice President and Chief Sales Officer | | | $ 488,529 | | | | $ 488,529 | | | 0% |
| | | | |
Mark D. Brazeal | | Chief Legal Officer | | | $ 450,000 | | | | $ 450,000 | | | 0% |
| | | | |
Bryan T. Ingram | | Senior Vice President and General Manager, Wireless Semiconductor Division | | | $ 592,250 | | | | $ 592,250 | | | 0% |
have not received a base salary increase since 2016 or, in the case of Mr. Brazeal, since joining Broadcom in 2017. These increases were approved in January 2020 prior to any significant macroeconomic impact of the COVID-19 pandemic.
| | | | | | | | | | | | | | |
| NEO | Title | Base Salary
(USD)
Effective
July 1, 2019 | Base Salary
(USD)
Effective
February 15, 2020 | % Change |
| Hock E. Tan | President and Chief Executive Officer | $ 1,100,000 | $ 1,200,000 | 9.1% |
| Thomas H. Krause, Jr. | Chief Financial Officer | $ 400,000 | $ 500,000 | 25.0% |
| Mark D. Brazeal | Chief Legal Officer | $ 450,000 | $ 500,000 | 11.1% |
| Charlie B. Kawwas, Ph.D. | Senior Vice President and Chief Sales Officer | $ 488,529 | $ 500,000 | 2.3% |
| Kirsten M. Spears | Principal Accounting Officer, Vice President and Corporate Controller | $ 332,964 | $ 332,964 | — |
Annual Cash Incentive Bonus Plan
We believe that a significant portion of our
executives’executive officers’ target total direct compensation should be dependent upon performance.
WeAccordingly, we use the APB Plan to provide a performance-based annual cash incentive bonus opportunity for our
executives.executive officers. The APB Plan is designed to encourage and motivate our CEO to achieve
our overall corporate goals
for the fiscal year and our other
executivesexecutive officers to achieve both corporate and divisional or functional goals, and to drive positive contributions to
our Company’sBroadcom’s growth and performance.
Each executive
officer is annually assigned a specified target annual cash incentive bonus opportunity under the APB Plan, expressed as a percentage of
his or her base salary.the executive officer’s eligible earnings. The Compensation Committee considers the compensation peer group data and market survey data as one factor in determining an
executive’sexecutive officer’s target annual cash incentive bonus opportunity and, in the case of our CEO,
the Compensation Committee includes the data in its recommendation to the
Independent Directors.independent directors. In addition, the Compensation Committee determines or, in the case of our CEO, recommends to the
Independent Directorsindependent directors for approval, target annual cash incentive bonus opportunities based on
such additional factors as an executive’s experience in
his or herthe executive’s role
with us and
his or herthe executive’s level of responsibility
within Broadcom, which the Compensation Committee believes directly correlates to
his or herthe executive’s ability to influence corporate and operational results.
Fiscal Year 20182020 APB Plan.Plan
In consultation with Compensia, the Compensation Committee and, in case of our CEO, the independent directors, approved an increase in target annual cash incentive bonus opportunities for Messrs. Tan, Krause and Brazeal and Dr. Kawwas to remain aligned with the competitive market. The target annual cash incentive bonus opportunities for our NEOs
for Fiscal Year 2018 remainedhave not increased since 2016 or, in case of Mr. Brazeal, since joining Broadcom in 2017. These increases were approved in January 2020, prior to anticipating any significant macroeconomic impacts of the
same as for Fiscal Year 2017. | | |
| |
NEO | | APB Plan Target Bonus
(as a % of base salary)
|
| |
| |
Hock E. Tan
| | 150%
|
| |
| |
Thomas H. Krause Jr.
| | 75%
|
| |
| |
Charlie B. Kawwas, Ph.D.
| | 75%
|
| |
| |
Mark D. Brazeal
| | 60%
|
| |
| |
Bryan T. Ingram
| | 100%
|
| |
COVID-19 pandemic.
| | | | | | | | |
| NEO | Fiscal Year 2019 APB Plan Target Bonus
(as a % of eligible earnings) | Fiscal Year 2020 APB Plan Target Bonus
(as a % of eligible earnings) |
| Hock E. Tan | 150% | 200% |
| Thomas H. Krause, Jr. | 75% | 100% |
| Mark D. Brazeal | 60% | 100% |
| Charlie B. Kawwas, Ph.D. | 75% | 100% |
| Kirsten M. Spears | 50% | 50% |
Annual cash incentive bonuses under the APB Plan are calculated as follows:
Bonuses under the APB Plan are payable to our NEOs in cash, with the exception of our CEO in certain circumstances. In the event the Independent Directorsindependent directors assign our CEO an individual performance multiplier (discussed in more detail below) greater than 100%, they may elect to pay the difference between the dollar amount of our CEO’s actual annual cash incentive bonus amountpayout and the dollar amount of his annual cash incentive bonus payout calculated using a performance factor of 100% in the form of an equity award. The type and terms of any such equity award are determined by the Independent Directors.independent directors. The Independent Directorsindependent directors believe that this feature gives them the flexibility to further incentivize our CEO to focus on ourmid-term to long-term performance and to further provide for value creation for our stockholders, to more
closely align our CEO’s interests with those of our stockholders generally, and to provide additional retention incentive to our CEO.
Corporate Performance Components The corporate performance goals for the Fiscal Year
20182020 APB Plan were:
adjusted•non-GAAP revenue threshold attainment level set at $23,644 million, target set at $19,876$24,889 million and maximum set at $20,870$26,133 million; and
•adjustednon-GAAP operating income as a percentage ofnon-GAAP revenue referred(referred to as “adjustednon-GAAP operating margin”) threshold attainment level set at 53.2%, target set at 49.5%54.2% and maximum set at 51.5%56.2%.
These
target and maximumperformance attainment levels were established by the Compensation Committee, based on the recommendation of our CEO, and approved by the
Independent Directors. They wereindependent directors. Revenue target was set
at levels significantly above our Fiscal Year
20172019 actual
performancerevenue. Adjusted non-GAAP operating margin target was set to approximate the level achieved in Fiscal Year 2019, as we expected the integration of our recent acquisitions to negatively impact our operating margins in Fiscal Year 2020. These attainment levels
and were designed to
significantly enhance stockholder value, be difficult to attain and to require substantial effort to achieve. Each goal carried an equal weighting of 50% of the corporate performance component.
Macroeconomic uncertainties outside of our control, such as the COVID-19 pandemic and increased tensions between the U.S. and its international trading partners made achievement of our corporate performance goals during Fiscal Year 2020 more challenging. However, the Compensation Committee elected not to adjust the challenging performance goals set for our Fiscal Year 2020 APB Plan.
Divisional or Functional Performance Components
The Compensation Committee, following consideration oftaking into account our CEO’s recommendations, determined an executive’sexecutive officer’s divisional or functional goals and setsset their weightings based on its assessment of the business requirements of the particular division or function to which the goals relaterelated and the relative importance of the goals to the division or function. Each divisional or functional goal was set by the Compensation Committee to be difficult to attain and to require substantial effort on behalf ofby the division or function and the NEO in charge of the division or function to achieve. The table below
under “Fiscal Year 20182020 APB Plan Attainment”Attainment and Payout Amounts” sets forth the divisional and functional goals for Fiscal Year 2018.2020. Individual Performance Multiplier The final payouts under the APB Plan
includeincluded the effect of a
non-subjective individual performance multiplier applied judiciously to recognize the extraordinary efforts of our executives
in light of negativedespite adverse market conditions or
when we exceed the maximumexceptional performance
levels forwith respect to our corporate goals or
where an executive’s division or function
results exceed the maximum specified performance levels.results. Each individual NEO’s performance multiplier (other than our CEO’s) is approved by the Compensation Committee based, in part, on the recommendations of our CEO and by the
Independent Directorsindependent directors in the case of our CEO with input from the Compensation Committee. In evaluating individual performance to determine the applicable multiplier, the Compensation Committee considers the requirements of the NEO’s position, including the achievement of the corporate, divisional or functional goals, fiscal responsibility as determined by the Compensation Committee with input from our CEO, the NEO’s senior leadership ability and
contribution to Broadcom’s culture, and how each of these factors impact the overall performance of
the CompanyBroadcom or the NEO’s division or function, as applicable. Based on each NEO’s contribution to
our Company’sBroadcom’s performance and their respective division or function’s levels of performance, the Compensation Committee or, in the case of our CEO, the
Independent Directors,independent directors, assigns each NEO an individual performance multiplier of between 50% and 150%. NEOs who consistently meet or exceed the requirements of their position, as determined by the Compensation Committee, receive an individual performance multiplier of between 100% and 150%. NEOs who meet some, but not all, of the requirements of their position or for whom the Compensation Committee believes that improvement is needed receive a bonus multiplier of between 50% and 100%.
Fiscal Year
20182020 APB Plan Attainment
Corporate Performance Components
In December 2018,2020, the Compensation Committee and the Independent Directors determined thatindependent directors reviewed Broadcom’s actual performance for Fiscal Year 2020 to determine the level of achievement for the corporate performance goals and the divisional or functional goals, and to assign an individual performance multiplier for each of our executives.
Corporate Performance Component
For Fiscal Year 2020, we achieved revenue of $23,888 million, which, while a 6% improvement over Fiscal Year 2018 adjustednon-GAAP revenue2019 that exceeded the pre-established threshold attainment, was below the pre-established target attainment level of $20,943 million and adjustedperformance. Adjusted non-GAAP operating margin of 52.6%was 56.5%, which werewas above thepre-established maximum attainment levels of performance. The Compensation Committee elected not to adjust the corporate performance goals established for our Fiscal Year 2020 APB Plan despite adverse macroeconomic impact of the COVID-19 pandemic and other conditions outside of our control, which negatively impacted our revenue growth. See Appendix A for a reconciliation ofnon-GAAP financial measures to the most directly comparable GAAP financial measures.
| | | | | | | | | | | | | | |
| Revenue Performance Goal Attainment |
Fiscal Year 2019
Revenue Achieved (in millions) | Fiscal Year 2020 Revenue Threshold Attainment Level (in millions) | Fiscal Year 2020 Revenue Target Attainment Level (in millions) | Fiscal Year 2020 Revenue Maximum
Attainment Level (in millions) | Fiscal Year 2020 Revenue Achieved (in millions) |
| $22,597 | $23,644 | $24,889 | $26,133 | $23,888 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Non-GAAP Operating Margin Performance Goal Attainment |
Fiscal Year 2019 APB Plan Adjusted Non-GAAP Operating Margin Achieved | Fiscal Year 2020 Adjusted Non-GAAP Operating Margin Threshold Attainment Level | Fiscal Year 2020
Adjusted Non-GAAP Operating Margin Target Attainment Level | Fiscal Year 2020 Adjusted Non-GAAP Operating Margin Maximum Attainment Level | Fiscal Year 2020 Non-GAAP Operating Income Achieved (in millions) | Provisions or Accruals for Anticipated Payouts Under APB Plan
(in millions) | Fiscal Year 2020 Adjusted Non- GAAP Operating Income Achieved (in millions) | Fiscal Year 2020 Adjusted Non-GAAP Operating Margin Achieved |
| 54.4% | 53.2% | 54.2% | 56.2% | $12,939 | $549 | $13,488 | 56.5% |
| | | | | | | | | | | | | | |
| Corporate Performance Attainment Level |
| Corporate Performance Goals | Actual Fiscal Year
2020 Performance (in millions) | As a % of
Target
Attainment | Weight | Weighted Attainment |
| Revenue | $23,888 | 59.8% | 50% | 29.9% |
| Adjusted non-GAAP Operating Margin | 56.5% | 150% | 50% | 75.0% |
| Total Attainment | | | | 104.9% |
Non-GAAP
Revenue Performance Goal Attainment | | | | | | | | | | |
| | | | | | |
Fiscal Year 2017 APB Plan Adjusted
Non-GAAP Revenue Achieved (in millions) | | Fiscal Year 2018 Adjusted Non-GAAP Revenue Target Attainment Level (in millions) | | Fiscal Year 2018
Adjusted Non-GAAP
Revenue Maximum Attainment Level (in millions) | | Fiscal Year 2018 Non-GAAP
Revenue Achieved (in millions) | | Fiscal Year 2018 Revenue from Acquired
Businesses (in millions) | | Fiscal Year 2018 APB Plan
Adjusted Non-
GAAP Revenue
Achieved (in millions) |
| | | | | | |
| | | | | |
$17,658 | | $19,876 | | $20,870 | | $20,862 | | $81(1) | | $20,943 |
(1) | Represents revenue from Brocade during Fiscal Year 2018 prior to the completion of our acquisition of Brocade that was taken into consideration in setting Fiscal Year 2018 performance goals.
|
Non-GAAP Operating Margin Performance Goal Attainment
| | | | | | | | | | | | | | |
| | | | | | | | |
Fiscal Year 2017 APB Plan Adjusted Non-GAAP Operating Margin Achieved | | Fiscal Year 2018 Adjusted Non-GAAP
Operating
Margin Target
Attainment Level | | Fiscal Year 2018
Adjusted Non-GAAP
Operating
Margin
Maximum
Attainment
Level | | Fiscal Year
2018
Non-GAAP
Operating
Income
Achieved (in millions) | | Provisions
or Accruals
for
Anticipated
Payouts
Under APB
Plan (in millions) | | Other
Provisions
or Accruals,
Net (in millions) | | Fiscal Year 2018 APB Plan
Adjusted Non-GAAP
Operating Income
Achieved (in millions) | | Fiscal Year 2018
APB Plan
Adjusted Non-
GAAP
Operating
Margin
Achieved |
| | | | | | | | |
| | | | | | | |
48.1% | | 49.5% | | 51.5% | | $10,424 | | $542 | | $53(1) | | $11,019 | | 52.6% |
| | | | | | | |
(1) | Represents expenses related to Brocade during Fiscal Year 2018 prior to the completion of our acquisition of Brocade, that were excluded in setting Fiscal Year 2018 performance goals.
|
Corporate Performance Attainment Level
| | | | | | | | |
| | | | |
| Corporate Performance Goals | | Actual Fiscal Year 2018 Performance (in millions) | | As a % of Target Attainment | | Weight | | Weighted Attainment |
| | | | |
| | | | |
Adjustednon-GAAP Revenue | | $20,943 | | 150% | | 50% | | 75% |
| | | | |
| | | | |
Adjustednon-GAAP Operating Margin | | 52.6% | | 150% | | 50% | | 75% |
| | | | |
| | | | |
Total Attainment | | | | | | | | 150% |
| | | | |
Divisional or Functional Performance Components
The Compensation Committee determined an executive’seach NEO’s divisional or functional performance percentage based on the actual level of achievement of specifiedthe pre-established goals by the division or function overseen by him or her.the NEO. In December 2018,2020,the Compensation Committee determined that the NEO’s divisional or functional goals had been achieved at the levels set forth in the table below under “Fiscal Year 20182020 APB Plan Attainment and Payout Amounts”Amounts.” Individual Performance Multiplier When assessing the performance of our NEOs, the Compensation Committee noted that ongoing COVID-19 pandemic and macroeconomic uncertainties negatively impacted our operating results. The Compensation Committee determined that, despite the ongoing COVID-19 pandemic and macroeconomic uncertainties, our individual NEOs still performed well, which resulted in increased revenue year-over-year, increased non-GAAP operating margin and the successful integration of the Symantec Business. The Compensation Committee, with input from our CEO, determined that each of our NEOs (other than our CEO) should receive an individual performance multiplier of
130%100%.
The
Independent Directors,independent directors, based upon the recommendation of the Compensation Committee, determined that Mr. Tan should receive an individual performance multiplier of
150%100% for his performance in delivering
extremely strong financial and operational results,
abovedespite the
APB Plan maximum performance goals.macroeconomic factors outside Broadcom’s control, including the ongoing COVID-19 pandemic and increased tensions between the U.S. and its international trading partners, resulting in a payout of 105% of his target bonus.
Fiscal Year
20182020 APB Plan Attainment and Payout Amounts
Each of the corporate and divisional or functional goals for our NEOs, and their respective weighting is set forth in the following table.
| | | | | | | | | | | | | | | | | | | | | | |
| Name | | Bonus Target Percent | | Fiscal Year 2018 Bonus Goals | | Fiscal Year 2018 Bonus Achievement | | Fiscal Year 2018 Payout Amount in Dollars (USD) and as a
Percentage of Base Salary Paid(1) |
Hock E. Tan President and Chief Executive Officer | | 150% | | Adjustednon-GAAP Revenue (50%) | | 150% | | | | | | | | | | |
| | | | Adjusted non-GAAP Operating Margin (50%) | | 150% | | | | | | | | | | |
| | | | Fiscal Year 2018 Attainment | | 150% | | | $ | 3,855,288 | | | | | 337.5% | |
Thomas H. Krause Jr. Chief Financial Officer | | 75% | | Adjusted non-GAAP Revenue (25%) | | 150% | | | | | | | | | | |
| | | | Adjusted non-GAAP Operating Margin (25%) | | 150% | | | | | | | | | | |
| | | | Direct Expenses (50%)(2) | | 117% | | | | | | | | | | |
| | | | Fiscal Year 2018 Attainment | | 134% | | | $ | 541,042 | | | | | 130.3% | |
Charlie B. Kawwas, Ph.D. Senior Vice President and Chief Sales Officer | | 75% | | Adjusted non-GAAP Revenue (25%) | | 150% | | | | | | | | | | |
| | | | Adjusted non-GAAP Operating Margin (25%) | | 150% | | | | | | | | | | |
| | | | Design Wins (15%) | | 106% | | | | | | | | | | |
| | | | Direct Expenses (15%)(2) | | 120% | | | | | | | | | | |
| | | | Product Revenue (20%) | | 150% | | | | | | | | | | |
| | | | Fiscal Year 2018 Attainment | | 139% | | | $ | 686,715 | | | | | 135.4% | |
Mark D. Brazeal Chief Legal Officer | | 60% | | Adjusted non-GAAP Revenue (25%) | | 150% | | | | | | | | | | |
| | | | Adjusted non-GAAP Operating Margin (25%) | | 150% | | | | | | | | | | |
| | | | Direct Expenses (50%)(2) | | 120% | | | | | | | | | | |
| | | | Fiscal Year 2018 Attainment | | 135% | | | $ | 492,075 | | | | | 105.3% | |
| | | | | | | | | | | | | | | | | | | | | | |
| Name | | Bonus Target Percent | | Fiscal Year 2018 Bonus Goals | | Fiscal Year 2018 Bonus Achievement | | Fiscal Year 2018 Payout Amount in Dollars (USD) and as a
Percentage of Base Salary Paid(1) |
Bryan T. Ingram Senior Vice President and General Manager, Wireless Semiconductor Division | | 100% | | Adjusted non-GAAP Revenue (25%) | | 150% | | | | | | | | | | |
| | | | Adjusted non-GAAP Operating Margin (25%) | | 150% | | | | | | | | | | |
| | | | WSD Revenue (25%) | | 98% | | | | | | | | | | |
| | | | WSD Operating Margin (25%) | | 143% | | | | | | | | | | |
| | | | Fiscal Year 2018 Attainment | | 135% | | | $ | 1,080,171 | | | | | 175.6% | |
(1) | Includes the quantitative effect of our NEOs’ applicable individual performance multiplier.
|
(2) | Represents direct expenses of the division or function, as applicable.
|
| | | | | | | | | | | | | | | | | | | | |
| Name | Bonus
Target
Percent | Fiscal Year 2020 Bonus Goals | Fiscal Year
2020 Bonus
Achievement | Fiscal Year 2020 Payout Amount
in Dollars (USD) and as a
Percentage of Base Salary Paid(1) |
| Hock E. Tan | 200% | Revenue (50%) | 60 | | % | | |
President and Chief
Executive Officer | | Adjusted non-GAAP Operating Margin (50%) | 150 | | % | | |
| Fiscal Year 2020 Attainment | 105 | | % | $ 2,452,930 | 209.8 | % |
| Thomas H. Krause, Jr. | 100% | Revenue (25%) | 60 | | % | | |
| Chief Financial Officer | | Adjusted non-GAAP Operating Margin (25%) | 150 | | % | | |
| | Direct Expenses (50%)(2) | 120 | | % | | |
| | Fiscal Year 2020 Attainment | 112 | | % | $ 527,638 | 112.4 | % |
| Mark D. Brazeal | 100% | Revenue (25%) | 60 | | % | | |
| Chief Legal Officer | | Adjusted non-GAAP Operating Margin (25%) | 150 | | % | | |
| | Direct Expenses (50%)(2) | 120 | | % | | |
| | Fiscal Year 2020 Attainment | 112 | | % | $ 544,938 | 112.4 | % |
| Charlie B. Kawwas, Ph.D. | 100% | Revenue (25%) | 60 | | % | | |
| Senior Vice President and Chief Sales Officer | | Adjusted non-GAAP Operating Margin (25%) | 150 | | % | | |
| Bookings (15%) | 150 | | % | | |
| Product Revenue (12.5%) | 60 | | % | | |
| | Design Wins (12.5%) | 80 | | % | | |
| | Direct Expenses (10%)(2) | 120 | | % | | |
| | Fiscal Year 2020 Attainment | 104 | | % | $ 518,478 | 104.4 | % |
| Kirsten M. Spears | 50% | Revenue (25%) | 60 | | % | | |
| Principal Accounting Officer, Vice President and Corporate Controller | | Adjusted non-GAAP Operating Margin (25%) | 150 | | % | | |
| Direct Expenses (50%)(2) | 120 | | % | | |
| Fiscal Year 2020 Attainment | 112 | | % | $ 187,205 | 56.2 | % |
(1) Includes the quantitative effect of our NEOs’ applicable individual performance multiplier.
(2) Represents direct expenses of the division or function, as applicable.
Discretionary Cash Bonuses
Each year, the Compensation Committee may supplement or substitute the APB Plan payout earned by our NEOs with discretionary cash bonuses that are awarded based on our CEO’s recommendations, other than with respect to himself, and the Compensation Committee’s assessment of individual contributions. Due to Mr. Krause and Dr. Kawwas each received a $200,000 discretionary cash bonus, and Mr. Brazeal received a $100,000 discretionary cash bonus due to theirBrazeal’s significant contributions outside of the regular scopeordinary course of theirhis responsibilities and in particular due to their significant efforts towardhis role in managing various complex regulatory and
public policy matters during Fiscal Year 2020, the closing and integration ofCompensation Committee awarded Mr. Brazeal a cash bonus in the Brocade acquisition, and towards the execution and completion of the acquisition of CA.amount o
f $455,062. Long-Term Incentive Compensation
Our equity awards serve as a long-term retention tool for our executives and are intended to reflect the value we place on their contribution to
our Company.Broadcom. The philosophy behind our equity awards is to provide each executive with a strong incentive to remain with, and build value in,
usBroadcom over an extended period of time. The Compensation Committee believes that,
for our CEO, a grant of PSU awards and, for our executives other than our CEO, a combination of service-based RSU awards and PSU awards
promotes long-term retention of our executives. This combination providespromote these objectives. The service-based RSU awards provide an element of
certainty of value
from their service-based RSUthat fluctuates based on our stock price, while the PSU awards
while motivatingcreate the
executivemotivation to improve performance and maximize our
stock price and TSR, thereby more closely aligning
theirthe executives’ interests with those of our stockholders
generally, through the PSU awards.generally. The Compensation Committee has historically approvedgranted equity awards granted under anour annual equity program to our NEOs, other than our CEO, in March of each year, with 50% in the form of service-based RSU awards and 50% performance-based.
Relative TSRin the form of PSU awards.
Our NEOs were not granted equity awards in Fiscal Year 2020. Our CEO last received an equity award in Fiscal Year 2017, which consisted of a long-term PSU award that may be earned, if at all, over two overlapping performance periods ending in 2020 and 2021. Our NEOs, other than our CEO, received Multi-Year Equity Awards in Fiscal Year 2019 and will not receive annual equity awards until at least 2023, except for outside the ordinary course of events related to promotion or retention. The Fiscal 2019 Multi-Year Equity Awards vest on the same basis as if four annual equity grants were made on March 15 of each year, beginning in 2019, with 50% in the form of service-based RSU awards and 50% in the form of PSU awards. See the “ToCompensation Discussion and Analysis – Elements of Executive Compensation – Long-Term Incentive Compensation” in our Proxy Statement filed with the SEC on February 18, 2020 for a detailed discussion of the Multi-Year Equity Awards.
After consultation with Compensia, the Compensation Committee approved in Fiscal Year 2021 the grant of equity awards to Mr. Krause, Dr. Kawwas and Ms. Spears in connection with their promotions, as described in “Additional Compensation Practices and Policies - Fiscal Year 2021 Compensation Actions” below. In addition, the independent directors approved in Fiscal Year 2021 the grant of a PSU award to Mr. Tan in consideration of the fact that Mr. Tan would no longer have any unvested equity awards after June 2021 and to continue to closely align the NEOs’Mr. Tan’s interests with thosethe interests of our stockholders duringand to encourage his retention. The equity awards approved for Messrs. Tan and Krause and Dr. Kawwas are contingent upon stockholder approval of Proposal 3 to amend and restate our 2012 Plan at the Annual Meeting.
PSU Awards Earned for the 2017-2020, 2018-2020 and 2019-2020 Performance Periods
The PSU award granted to our CEO in Fiscal Year 2018, our NEOs were granted PSU awards that are earned2017 consist of an aggregate of 168,000 shares, which gives Mr. Tan the opportunity to earn up to 756,000 shares of common stock based on our Relative TSR and our absolute TSR, over two overlapping performance overperiods, consisting of one three-year performance period ending in 2020 (“Performance Period #1”) and one four-year performance period ending in 2021 (“Performance Period #2”). Following completion of each performance period, the independent directors determine the Relative TSR attained for the completed performance period and the shares earned under the PSU award.
The table below sets forth the Relative TSR attainment and the number of shares earned by Mr. Tan under the PSU award for Performance Period #1, as determined by the independent directors.
| | | | | | | | | | | |
| | | |
| Performance Period | 2017-2020 | |
| Relative TSR Attainment | 60th Percentile | |
| Percentage of Target Shares Earned | 181.95% | |
| Shares Earned | 152,838 shares | |
The PSU awards granted to our NEOs (other than our CEO) in Fiscal Years 2017, 2018 and 2019 are subject to four overlapping performance periods. Following completion of each performance period, the Compensation Committee determines the Relative TSR attained, and the shares earned under the applicable PSU award pursuant to the following calculation:
The Fiscal Year 2017 PSU awards are subject to four overlapping performance periods beginningending on each of March 2 on or immediately preceding14th of 2018, 2019, 2020 and 2021. The table below sets forth the grant dateRelative TSR attainment and the number of shares earned under the PSU award for each completed performance period, as determined by the Compensation Committee.
| | | | | | | | | | | | | | |
| | | | |
| Performance Period | 2017-2018 | 2017-2019 | 2017-2020 |
| Relative TSR Attainment | 57th Percentile | 67th Percentile | 59th Percentile |
| Percentage of Target Shares Earned | 100% | 100% | 100% |
| Thomas H. Krause, Jr. | 3,125 shares | 3,125 shares | 3,125 shares |
| Mark D. Brazeal | 3,125 shares | 3,125 shares | 3,125 shares |
| Charlie B. Kawwas, Ph.D. | 3,125 shares | 3,125 shares | 3,125 shares |
| Kirsten M. Spears | 1,875 shares | 1,875 shares | 1,875 shares |
| | | |
The Fiscal Year 2018 PSU awards are subject to four overlapping performance periods ending on each of March 1st of 2019, 2020, 2021 and 2022. The
number of shares of common stock that may be earned is capped at 25% oftable below sets forth the
target number of shares for each of the first three performance periods. In the aggregate, each NEO may earn up to 200% of the total target number of shares of common stock, if at the end of the fourth performance period our Relative TSR
is at or above the 75th percentile of the S&P 500attainment and
our absolute TSR is not negative.The PSU awards vest on each anniversary of the grant date, subject to the NEO’s continued employment with us on the relevant vesting date. Within 60 days after the end of each performance period, the Compensation Committee will determine the number of shares earned based on our Relative TSR overunder the PSU award for each complete performance period, expressed as a percentile.
Relative TSR less than the 25th percentile, no shares will be earned for that performance period.
Relative TSR at the 25th percentile, 50% of the target number of shares subject to that performance period will be earned.
Relative TSR at the 50th percentile, 100% of the target number of shares subject to that performance period will be earned.
For the fourth performance period:
| ○ | | Relative TSR greater than 50th but less than 75th percentile, between 100% and 200% of the total number of the target shares subject to the award will be earned.
|
| ○ | | Relative TSR at or greater than 75th percentile, 200% of the total number of the target shares subject to the award will be earned.
|
| ○ | | In the aggregate, the maximum payout over four years is 200% of the total target number of shares.
|
If our absolute TSR for the fourth performance period is negative, maximum payout over four years is 100% of the total target number of shares.
If the Relative TSR is between two of the percentile levels, the number of shares earned will be determined using linear interpolation.
The number of shares earned will be determined by multiplying the target number of shares subject to the performance period (25% of the total target number of shares) by an achievement factor (the “Achievement Factor”). Compensation Committee.
| | | | | | | | | | | |
| | | |
| Performance Period | 2018-2019 | 2018-2020 |
| Relative TSR Attainment | 71st Percentile | 64th Percentile |
| Percentage of Target Shares Earned | 100% | 100% |
| Thomas H. Krause, Jr. | 2,000 shares | 2,000 shares |
| Mark D. Brazeal | 1,675 shares | 1,675 shares |
| Charlie B. Kawwas, Ph.D. | 1,875 shares | 1,875 shares |
| Kirsten M. Spears | 1,250 shares | 1,250 shares |
| | |
The
Achievement Factor is based on our Relative TSR for the performance period. For the fourth performance period the Achievement Factor is based on our Relative TSR, as well as the sum of the Achievement Factors for the first three performance periods (the “Prior Achievement Sum”). However, if our absolute TSR is negative for the fourth performance period, then the maximum number of shares of common stock that may be earned is 100% of the total target number of shares. | | |
| |
Relative TSR
| | TSR Achievement Factor
|
| |
| |
Performance Periods 1, 2 and 3
| | |
At the 50th Percentile of the S&P 500
| | 1 |
| |
| |
At the 25th Percentile of the S&P 500
| | 0.5 |
| |
| |
Below the 25th Percentile of the S&P 500
| | 0 |
| |
| |
Performance Period 4
| | |
At the 75th Percentile of the S&P 500
| | Absolute TSR Negative = 4 less the Prior Achievement Sum
Absolute TSR Neutral or Positive = 8 less the Prior
Achievement Sum
|
| |
| |
At the 50th Percentile of the S&P 500
| | 4 less the Prior Achievement Sum |
| |
| |
At the 25th Percentile of the S&P 500
| | Prior Achievement Sum greater than or equal to 1.5 = 0.5
Prior Achievement Sum less than 1.5 = 2 less the Prior
Achievement Sum
|
| |
| |
Below the 25th Percentile of the S&P 500
| | 0 |
| |
Fiscal Year 2018 Mix of Equity Awards
Consistent with our compensation philosophy, the Compensation Committee granted equity2019 PSU awards to our NEOsthat commenced vesting in Fiscal Year 2018 as set forth in the table below. The awards vest over four years, with 25% of the shares of common stock subject to the awards vesting annually, subject to the NEO’s continued employment with us on the relevant vesting dates. The PSU awards however are also subject to the satisfaction of the applicable performance criteria, discussed in more detail above under “Relative TSR PSU Awards”. As intended, Mr. Tan did not receive an equity award in Fiscal Year 2018 and Mr. Tan will not receive another equity award until at least 2021.
| | | | | | | | | | | | | | | |
| | |
| | | December 2017(1) | | March 2018 |
| | | |
| NEO | | Service-Based
RSUs
(Number of Shares) | | PSUs
(Maximum Number
of Shares)(2) | | Service-Based RSUs
(Number of Shares) |
| | | |
Thomas H. Krause Jr. | | | | 5,000 | | | | | 16,000 | | | | | 8,000 | |
| | | |
| | | |
Charlie B. Kawwas, Ph.D. | | | | 5,000 | | | | | 15,000 | | | | | 7,500 | |
| | | |
| | | |
Mark D. Brazeal | | | | 3,000 | | | | | 13,000 | | | | | 6,500 | |
| | | |
| | | |
Bryan T. Ingram | | | | 5,000 | | | | | 15,000 | | | | | 7,500 | |
| | | |
(1) | Awards granted to certain executives in recognition of their significant additional contributions during Fiscal Year 2017 with regard to acquisition related activity and for retention purposes. These service-based RSU awards vest at a rate of 25% per year on each anniversary of the grant date, subject to continued employment with us on the relevant vesting date.
|
(2) | Represents the maximum number of shares of common stock that may be earned. The target number of shares that may be earned is 50% of this amount (i.e., 8,000 shares of common stock for Mr. Krause, 7,500 shares of common stock for Dr. Kawwas and Mr. Ingram, and 6,500 shares of common stock for Mr. Brazeal).
|
Relative TSR PSU Awards Earned for the 2017-2018 Performance Period
The Relative TSR PSU awards granted to our NEOs (other than our CEO) in Fiscal Year 20172019 are subject to four overlapping performance periods ending on each of March 141st of 2018, 2019, 2020, 2021, 2022 and 2021.2023. The Compensation Committee determined that ourtable below sets forth the Relative TSR was atattainment and the 57th percentile atnumber of shares earned under the end ofPSU award for the firstcompleted performance period, resulting in 100% of target shares subject to this performance period (which represents 25% ofas determined by the total target shares underlying the PSU award) being earned, as calculated in accordance with the following formula:
Compensation Committee. | | | | | | | | | | | |
 | |  | |
| Performance Period | 2019-2020 | |
| Relative TSR Attainment | 48th Percentile | |
| Percentage of Target Shares Earned | 95.76% | |
| Thomas H. Krause, Jr. | 2,394 shares | |
| Mark D. Brazeal | 1,795 shares | |
| Charlie B. Kawwas, Ph.D. | 2,394 shares | |
| Kirsten M. Spears | 1,495 shares | |
| | |
Fiscal Year 2019 Multi-Year Equity Incentive Awards
In December 2018, the Compensation Committee, with advice from Compensia, approved a broad-based program of multi-year equity grants (the “Multi-Year Equity Awards”) of RSUs and PSUs to eligible individuals, including employees who recently joined Broadcom in connection with our acquisition of CA, and our NEOs, other than our CEO.
Each Multi-Year Equity Award vests on the same basis as four annual equity grants made on March 15 of each year, beginning in 2019. The value of each grant was intended to approximate the value of an annual grant, consistent with the Company’s historical practices, with successive four-year vesting periods. The grant date for each Multi-Year Equity Award granted to our NEOs was January 15, 2019. The vesting start dates are March 15, 2019, 2020, 2021 and 2022. As with the awards granted to our NEOs under the annual equity program, 50% of each grant are service-based RSUs and 50% are PSUs. Each grant will vest as to 25% of the shares underlying such grant on each annual anniversary of the vesting start date applicable to that grant, subject to the NEO’s continued employment with us on the relevant vesting date. The PSU awards are based on our Relative TSR and absolute TSR over four overlapping one, two, three and four-year performance periods. The number of shares earned are determined in the same manner as the PSU awards discussed above under “Relative TSR PSU Awards”. No further annual equity grants will be made to our NEOs (or other employees receiving such Multi-Year Equity Awards) until at least 2023.
The Multi-Year Equity Awards were all granted at the same time, instead of annually over the next four years. However, they have annual staggered vesting start dates (starting March 15, 2019) and pursuant to their terms, in the event of a change of control (such as a qualifying termination) or other event, holders are not entitled to any accelerated vesting provided by any other agreement or arrangement with us except with respect to those grants for which a vesting start date has already occurred as at the effective time of the event giving rise to the acceleration.
An example of a Multi-Year Equity Award of RSUs, vesting over seven years, is set forth below:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| For Illustrative Purposes Only | | # of RSUs Vesting On | |
| | | | | | | | |
| Multi-Year Equity Award | | 3/15/19 | | | 3/15/20 | | | 3/15/21 | | | 3/15/22 | | | 3/15/23 | | | 3/15/24 | | | 3/15/25 | | | 3/15/26 | |
| | | | | | | | |
Grant 1: 400 RSUs | | | — * | | | | 100 | | | | 100 | | | | 100 | | | | 100 | | | | — | | | | — | | | | — | |
Grant 2: 400 RSUs | | | — | | | | — | * | | | 100 | | | | 100 | | | | 100 | | | | 100 | | | | — | | | | — | |
Grant 3: 400 RSUs | | | — | | | | — | | | | — | * | | | 100 | | | | 100 | | | | 100 | | | | 100 | | | | — | |
Grant 4: 400 RSUs | | | — | | | | — | | | | — | | | | — | * | | | 100 | | | | 100 | | | | 100 | | | | 100 | |
| | | | | | | | |
Total: 1,600 RSUs | | | 0 | | | | 100 | | | | 200 | | | | 300 | | | | 400 | | | | 300 | | | | 200 | | | | 100 | |
| | | | | | | | |
* Denotes grant vesting start date
We have historically granted annual equity awards to the vast majority of our employee base to align their interests with those of our stockholders, encourage retention, and drive performance. The acquisition of CA marks an important milestone for us and the Multi-Year Equity Awards are intended to provide our employees with clarity regarding future compensation in order to create a powerful long-term retention incentive, as well as sharpened focus on long-term stockholder value creation.
We also believe it is in the best interests of our stockholders to maximize the use of the remaining shares available under the Avago Technologies Limited 2009 Equity Incentive Plan (“2009 Plan”), which expires in 2019. The Multi-Year Equity Awards were issued out of the 2009 Plan, as well as out of the BRCM 2012 Stock Incentive Plan (the “2012 Plan”).
Additional Compensation Practices and Policies
Hedging and Pledging Prohibitions
A core element of our compensation philosophy is to align the interests of our executives with those of our stockholders by providing appropriate long-term incentives. In furtherance of this philosophy, our insider trading policy prohibits our directors and employees, including our executives, from hedging or pledging our securities, from making short sales, or trading in derivative securities related to our securities.
Employee Stock Purchase Plan
Executives employed by our participating subsidiaries, including all of our NEOs, may also participate in our ESPP.Employee Stock Purchase Plan (the “ESPP”). Our ESPP provides eligible employees with the opportunity to acquire our shares of ourBroadcom common stock through periodic payroll deductions, at a 15% discount, based on asix-month “look-back” period. Our ESPP is structured in the U.S. as a qualified employee stock purchase plan under Section 423 of the Code. Our ESPP requires participants to hold their purchased shares of common stock for a minimum of six months after any purchase date, unless they cease to be eligible to participate in the ESPP in which case the shares of common stock become freely tradable, subject to applicable securities laws and our insider trading policy.
Other Compensation
The Compensation Committee provides modest perquisites and other personal benefits to our executives on a case-by-case basis. Typically, the Compensation Committee will provide a perquisite to an executive in limited circumstances, such as where it believes that such benefit is appropriate to assist the executive in the performance of the executive’s
duties, to make the executive more efficient and effective, and for recruitment, motivation or retention purposes. For example, in Fiscal Year 2020, Mr. Tan received reimbursement for travel to his residence in Pennsylvania and a car service for business-related travel in the San Francisco Bay Area, both of which were approved by the independent directors. For additional information on the perquisites and other personal benefits provided to our NEOs in Fiscal Year 2020, see the “Fiscal Year 2020 Summary Compensation Table” below.
Severance and Change in Control Benefits
The Compensation Committee believes that severance and change in control arrangements are important parts of the overall compensation program for our NEOs. Severance arrangements provide a stable work environment and are used primarily to attract, retain and motivate individuals with the requisite experience and ability to drive our success. Change in control provisions help to secure the continued employment and dedication of our NEOs, to reduce any concern that they might have regarding their own continued employment prior to or following a change in control of
our Company,Broadcom and to promote continuity of management during a corporate transaction.
Each of our NEOs is eligible for severance and change in control payments and benefits under
his or hertheir respective severance
benefits agreement with us.benefit agreement. The Compensation Committee provides such payments and benefits to our NEOs based on its review of severance practices at the companies in our compensation peer group and as the result of arms’ length negotiations at the time our NEOs enter into employment with
us,Broadcom, when they are requested to take on additional responsibilities, or from time to time if deemed necessary or desirable to achieve parity with other NEOs or otherwise.
Our NEOs are entitled to severance
payments and other benefits upon termination of employment without “cause” or for “good reason” (as each of those terms is defined in the applicable agreement) or in the event of
death orpermanent disability (a “qualifying termination”). In the event of a qualifying termination not involving a change in control of
our Company,Broadcom, the severance
benefitsbenefit agreements generally provide for continued base salary (12 months in the case of Mr. Tan and nine months in the case of our other NEOs),
an annual cash incentive bonus payment (100% in the case of Mr. Tan and 50% in the case of our other NEOs) and, other than in the case of Mr. Tan, health benefits continuation coverage (for six months).
In the event of a qualifying termination within 12 months following a change in control of
our CompanyBroadcom (or in the case of Mr. Tan, three months before or 12 months following such a change in control) (a “CIC qualifying termination”), the severance benefits agreements generally provide for continued base salary (24 months in the case of Mr. Tan and 12 months in the case of our other NEOs),
an annual cash incentive bonus payment (200% in the case of Mr. Tan and 100% in the case of our other NEOs) and, other than in the case of Mr. Tan, health benefits continuation coverage (for 12 months).
In the event of a CIC qualifying termination, the severance benefitsbenefit agreements also provide for acceleration of vesting of all outstanding service-based equity awardsRSUs and acceleration of vesting of outstanding performance-based equity awardsPSUs, with such vesting generally based on actual performance.performance determined in accordance with the underlying equity award agreement. Effective Fiscal Year 2021, for each NEO except Mr. Brazeal, the severance benefit agreements specify that PSUs will vest at target performance levels except as otherwise provided in the applicable award agreement. Vesting of the equity awards held by our NEOs will generally only accelerate following a CIC qualifying termination, of employment, which is commonly referred to as a “double trigger” provision. We believe our double trigger change in control arrangements protects stockholder value by allowing us the opportunity to deliver a motivated management team to any potential acquirer. If we did not offer any such change in control arrangements, our NEOs could be less motivated to pursue a potential acquisition even if such a transaction would benefit our stockholders, due to the possibility that they would lose the potential value of their unvested equity compensation upon an acquisition. Notwithstanding the foregoing, beginning in Fiscal Year 2021, Dr. Kawwas and Mr. Krause are eligible to receive equity acceleration benefits upon a qualifying termination that is not in connection with a change in control, as described in “
Fiscal Year 2021 Compensation Actions” below. For a summary of the material terms and conditions of these arrangements, as well as an estimate of the post-employment payments and benefits that our NEOs are eligible to receive, see “Executive Compensation – Severance and Change in Control Agreements with Named Executive Officers; Death and Permanent Disability PolicyPolicies; Retirement” below.
Fiscal Year 2021 Compensation Actions
On December 10, 2020, the following promotions took effect:
Other Compensation• Mr. Krause was appointed President of Infrastructure Software Group;
• Dr. Kawwas was appointed Chief Operating Officer; and
• Ms. Spears was appointed Vice President, Chief Financial Officer and Chief Accounting Officer.
In connection with their promotions, Dr. Kawwas and Mr. Krause each entered into an amended and restated severance benefit agreement on December 10, 2020 (collectively, the “Kawwas and Krause Agreements”). Under the Kawwas and Krause Agreements, the annual base salary for each of Dr. Kawwas and Mr. Krause is $700,000, effective as of December 10, 2020 through December 15, 2023 (the “Continuation Period”). Additionally, for fiscal years 2021 through 2023, Dr. Kawwas and Mr. Krause will each be eligible to participate in the APB Plan at an annual target percentage of 100% of his eligible earnings, with payout based on corporate level metrics and individual performance.
Pursuant to the Kawwas and Krause Agreements, Dr. Kawwas and Mr. Krause will each be awarded a long-term equity incentive award with a target value of $15,000,000, consisting of 50% service-based RSUs (the “Promotion RSUs”) and 50% PSUs at target (the “Promotion PSUs”), effective as of December 15, 2020 and contingent upon stockholder approval of Proposal 3 to amend and restate our 2012 Plan at the Annual Meeting. The Promotion RSUs will vest over a three-year period, with one-third of the Promotion RSUs vesting on each anniversary of December 15, 2020, subject to Dr. Kawwas’s or Mr. Krause’s (as applicable) continued employment on the relevant vesting date. Dr. Kawwas and Mr. Krause may earn up to 200% of the target number of shares under their respective Promotion PSUs based on our Relative TSR and absolute TSR measured over the period beginning on November 2, 2020 and ending on October 29, 2023, as determined by the Compensation Committee provides modest perquisitesCommittee. Subject to Dr. Kawwas’s or Mr. Krause’s (as applicable) continued employment with Broadcom on the vesting date and other personalachievement of the performance goals, the Promotion PSUs will fully vest on October 29, 2023.
Under the Kawwas and Krause Agreements, if the employment of Dr. Kawwas or Mr. Krause (as applicable) is terminated without “cause” or for “good reason” (as each of those terms is defined in the Kawwas and Krause Agreements) during the Continuation Period and upon the timely execution and non-revocation of a general release of claims against Broadcom and its affiliates:
• Each outstanding and unvested service-based RSUs held by him will be cancelled, effective on the date his employment terminates, and in exchange, he will be entitled to receive an amount in cash (less applicable tax withholdings) equal to: (x) that number of shares that would have vested under such RSUs had he remained continuously employed by Broadcom for an additional eighteen months following his termination, multiplied by (y) the closing price of Broadcom common stock on the date his employment terminates (or, if there is no closing price on such date, then the closing price on the last preceding trading date).
• Each outstanding and unvested PSUs held by him will be cancelled, effective on the date his employment terminates, and in exchange, he will be entitled to receive an amount in cash (less applicable tax withholdings) equal to: (x) that number of shares that would have vested under such PSUs had he remained continuously employed by Broadcom for an additional eighteen months following his termination with any applicable performance conditions deemed to have been achieved at target performance, multiplied by (y) the closing price of Broadcom common stock on the date his employment terminates (or, if there is no closing price on such date, then the closing price on the last preceding trading date).
The payments described in the two preceding bullets are referred to herein as the “Continuation Period Termination Equity Acceleration Payments.”
If the Continuation Period termination is also a “covered termination” (as such term is defined in the Kawwas and Krause Agreements), Dr. Kawwas or Mr. Krause (as applicable) will be eligible to receive additional severance amounts and benefits under the Kawwas and Krause Agreements. The Continuation Period Termination Equity Acceleration Payments are in lieu of, and not in addition to, our executivesany similar accelerated vesting benefits provided under any agreement between Dr. Kawwas or Mr. Krause (as applicable) and Broadcom, provided that, if he is entitled to greater accelerated vesting benefits under a separate agreement with Broadcom, he will instead remain entitled to such benefits under such separate agreement. However, if his Continuation Period termination is a “covered termination” during a change in control period” (as such term is defined in the Kawwas and Krause Agreements), his outstanding unvested equity awards will instead be treated in accordance with the section titled “Covered Termination During a Change in Control Period” in the Kawwas and Krause Agreements and for any unvested PSUs that vest based upon the achievement of performance goals (other than average stock price) for which any performance period has not been completed, the performance goals applicable to each such performance period will be deemed met at target levels.
In connection with her promotion, Ms. Spears entered into a severance benefit agreement on aDecember 10, 2020, pursuant to which she is eligible to receive certain severance benefits, as described in “case-by-caseSeverance and Change in Control Agreements with Named Executive Officers; Death and Permanent Disability Policies; Retirement basis. Typically,” below. Additionally, the Compensation Committee approved an increase in Ms. Spears’ annual base salary, from $332,964 to $400,000, and an increase in Ms. Spears’ target cash incentive bonus percentage under the APB Plan from 50% of eligible earnings to 100% of eligible earnings, in each case effective as of December 10, 2020. Ms. Spears was granted 13,000 service-based RSUs (the “Spears Promotion RSUs”) and 13,000 PSUs (the “Spears Promotion PSUs”) at target on December 15, 2020.
The Spears Promotion RSUs will providevest over four years at a perquisiterate of 25% per year on each anniversary of the grant date, subject to Ms. Spears’s continued employment with Broadcom on the relevant vesting date. The Spears PSUs are earned based on our Relative TSR and absolute TSR over four overlapping performance periods that begins on March 2, 2020 (the “Performance Period Commencement Date”) and ends on March 1 of the first, second, third and fourth calendar years that follow the Performance Period Commencement Date, respectively, as determined by the Compensation Committee. The number of shares that may be earned is capped at 25% of the target number of shares for each of the first three performance periods. In the aggregate, Ms. Spears may earn up to 200% of the target number of shares, provided that no shares will be earned for a performance period if our Relative TSR is not at or above the 25th percentile of the S&P 500 Index. Subject to Ms. Spears’ continued employment with Broadcom as of the vesting date and achievement of the performance goals, the Spears Promotion PSUs will vest on each anniversary of the grant date.
Mr. Tan also entered into an executive in limited circumstances, suchamended and restated severance benefit agreement on December 10, 2020. Pursuant to this agreement, Mr. Tan will be awarded long-term PSUs with a target value of $25,000,000 (the “Tan Fiscal Year 2021 PSU Award”), effective as where it believes that such benefit is appropriateof December 15, 2020 and contingent upon stockholder approval of Proposal 3 to assist himamend and restate our 2012 Plan at the Annual Meeting, to continue to align Mr. Tan’s interests with the interests of our stockholders and to encourage his retention.
Pursuant to the terms of the Tan Fiscal Year 2021 PSU Award, Mr. Tan may earn up to 300% of the target number of shares based on our Relative TSR and absolute TSR performance measured over the period beginning on November 2, 2020 and ending on October 29, 2023 (the “Performance Period”), as determined by the independent members of the Board. Subject to Mr. Tan’s continued employment with Broadcom or herits subsidiaries on the vesting date and achievement of the performance goals, the Tan Fiscal Year 2021 PSU Award will vest on October 29, 2023. However, if Mr. Tan retires from Broadcom on or after the last day of Fiscal Year 2021, the Performance Period will end on the date of his retirement notice and vest on his retirement date, subject to achievement of the performance goals. In the event of Mr. Tan’s employment terminates due to his death or permanent disability prior to October 29, 2023, 50% of the Tan Fiscal Year 2021 PSU Award will automatically vest with respect to the target number of shares. Following Fiscal Year 2021, Mr. Tan will be eligible to receive additional annual equity awards consistent with the terms of the Tan Fiscal Year 2021 PSU Award, which may be granted in the sole discretion of the independent members of the Board; provided that any such equity awards approved in fiscal year 2022 or 2023 will have a target value not less than the Tan Fiscal Year 2021 PSU Award.
The Tan Agreement also provides that, except as otherwise provided in an applicable award agreement, if a “change in control” (as such term is defined in the Tan Agreement) occurs and Mr. Tan holds PSUs that vest based upon the achievement of performance of his or her duties, to make him or her more efficient and effective,goals other than average stock price and for recruitment, motivation or retention purposes. In Fiscal Year 2018, Mr. Tan received reimbursement for travelwhich any performance period has not been completed, then the performance goals applicable to his residence in Pennsylvania and a car service for business-related travel in the San Francisco Bay Area, both of which were approved by the Independent Directors. each such performance period will be deemed met at target levels.
For additional information on
the perquisites and other personal benefits provided to Mr. Tan inthese Fiscal Year
2018,2021 compensation changes, see
our Current Report on Form 8-K, filed with the
“Fiscal Year 2018 Summary Compensation Table” below.Accounting and Tax Considerations
While the Compensation Committee and our Board generally consider the accounting and tax implications of their executive compensation decisions, neither element has been a material consideration in the compensation awarded to our NEOs historically.
Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1 million in any taxable year for our CEO, our CFO, any employee who is one of the top three highest compensated executive officers for the tax year; or for any employee who was a covered employee for any preceding taxable year beginning after December 31, 2016 referred to as “covered employees.” Further, since the enactment of tax reform legislationSEC on December 22, 2017 (the “2017 Tax Reform Act”), “qualified performance-based compensation” is exempt from this $1 million limitation only if payable pursuant to a written binding contract in effect on November 2, 2017 (and that has not subsequently been materially modified). The Compensation Committee has not previously taken the deductibility limit imposed by Section 162(m) into consideration in setting compensation and as a result of the 2017 Tax Reform Act, a deduction for any compensation paid to our NEOs in excess of $1 million is disallowed.
10, 2020.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with
members of management the Compensation Discussion and Analysis section included in this
proxy statement,Proxy Statement, as required by Item 402(b) of Regulation
S-K. Based upon such review and related discussions, the Compensation Committee recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this
proxy statementProxy Statement for the
Company’s 2019 Annual Meeting
of Stockholders and
the Company’sBroadcom’s Annual Report on Form
10-K for the
fiscal year ended November 4, 2018.Submitted by the Compensation Committee of the Board of Directors:
Fiscal Year 2020.
COMPENSATION COMMITTEE
Eddy W. Hartenstein, Chairperson
Diane M.
Bryant*James V. Diller
Lewis C. Eggebrecht
Bryant
Check Kian
Low*Donald Macleod
* Ms. Bryant and Mr. Low joined the Compensation Committee on January 11, 2019
Fiscal Year
20182020 Summary Compensation Table
The following table sets forth information about compensation earned by our NEOs during Fiscal Years
2020, 2019 and 2018,
2017except in the case of Ms. Spears who was not a NEO in Fiscal Years 2019 and
2016.2018. Our NEOs consist of our CEO, our CFO, and each of our three other most highly compensated executive officers serving at the end of Fiscal Year
2018. | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Name and Principal Positions | | Fiscal Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(2) | | | All Other Compensation ($) | | | Total ($) | |
| | | | | | | |
| | | | | | | |
Hock E. Tan | | | 2018 | | | | 1,121,154 | | | | 0 | | | | 0 | | | | 3,855,288 | | | | 66,495 | (3) | | | 5,042,937 | |
| | | | | | | |
President and Chief Executive Officer | | | 2017 | | | | 1,100,000 | | | | 0 | | | | 98,322,843 | | | | 3,712,500 | | | | 75,820 | | | | 103,211,163 | |
| | | 2016 | | | | 1,011,662 | | | | 0 | | | | 21,656,268 | (4) | | | 1,980,516 | (5) | | | 43,601 | | | | 24,692,047 | |
| | | | | | |
| | | | | | | |
Thomas H. Krause Jr. | | | 2018 | | | | 407,692 | | | | 200,000 | (6) | | | 6,168,190 | | | | 541,042 | | | | 16,500 | (7) | | | 7,333,425 | |
| | | | | | | |
Chief Financial Officer | | | 2017 | | | | 400,000 | | | | 100,000 | | | | 10,101,125 | | | | 520,888 | | | | 16,200 | | | | 11,138,213 | |
| | | | | | | |
| | | 2016 | | | | 349,687 | | | | 200,000 | | | | 2,574,300 | | | | 312,924 | | | | 15,900 | | | | 3,452,811 | |
| | | | | | | |
| | | | | | | |
Charlie B. Kawwas, Ph.D. | | | 2018 | | | | 497,924 | | | | 200,000 | (6) | | | 5,860,388 | | | | 686,715 | | | | 16,500 | (7) | | | 7,261,527 | |
| | | | | | | |
Senior Vice President and Chief Sales Officer | | | 2017 | | | | 488,529 | | | | 0 | | | | 7,322,750 | | | | 672,688 | | | | 16,200 | | | | 8,500,167 | |
| | | 2016 | | | | 479,007 | | | | 0 | | | | 4,273,410 | | | | 549,885 | | | | 20,278 | | | | 5,322,580 | |
| | | | | | |
| | | | | | | |
Mark D. Brazeal | | | 2018 | | | | 458,654 | | | | 100,000 | (6) | | | 4,747,443 | | | | 492,075 | | | | 19,200 | (7) | | | 5,817,372 | |
| | | | | | | |
Chief Legal Officer | | | 2017 | | | | 268,269 | | | | 0 | | | | 5,906,188 | | | | 243,935 | | | | 12,462 | | | | 6,430,854 | |
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
| | | | | | | |
Bryan T. Ingram | | | 2018 | | | | 603,640 | | | | 0 | | | | 5,860,388 | | | | 1,080,171 | | | | 16,500 | (7) | | | 7,560,699 | |
| | | | | | | |
Senior Vice President and General Manager, Wireless Semiconductor Division | | | 2017 | | | | 592,250 | | | | 0 | | | | 7,322,750 | | | | 1,145,780 | | | | 16,200 | | | | 9,076,980 | |
| | | 2016 | | | | 580,706 | | | | 0 | | | | 3,123,580 | | | | 380,423 | | | | 15,900 | | | | 4,100,609 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
(1) | Represents the grant date fair value of service-based RSU awards and PSU awards,2020. | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal
Positions | Fiscal
Year | Salary
($) | Bonus ($) | Stock
Awards
($)(1) | Non-Equity
Incentive Plan
Compensation
($)(2) | All Other
Compensation
($) | Total
($) | | Hock E. Tan | 2020 | 1,171,154 | — | — | 2,452,930 | 71,768(4) | 3,695,852 | President and Chief Executive Officer | 2019 | 1,100,000 | — | — | 1,202,281 | 64,607 | 2,366,888 | | 2018 | 1,121,154 | — | — | 3,855,288 | 66,495 | 5,042,937 | | | | | | | | | Thomas H. Krause, Jr.(3) | 2020 | 471,154 | — | — | 527,638 | 17,100(5) | 1,015,892 | | Chief Financial Officer | 2019 | 400,000 | — | 17,073,150 | 355,443 | 16,800 | 17,845,393 | | 2018 | 407,692 | 200,000 | 6,168,190 | 541,042 | 16,500 | 7,333,425 | | | | | | | | | | Mark D. Brazeal | 2020 | 485,577 | 455,062(6) | — | 544,938 | 43,490(7) | 1,529,067 | | Chief Legal Officer | 2019 | 450,000 | — | 12,804,863 | 285,436 | 16,800 | 13,557,099 | | 2018 | 458,654 | 100,000 | 4,747,443 | 492,075 | 19,200 | 5,817,372 | | | | | | | | | Charlie B. Kawwas, Ph.D.(3) | 2020 | 496,691 | — | — | 518,478 | 17,100(5) | 1,032,269 | Senior Vice President and Chief Sales Officer | 2019 | 488,529 | — | 17,073,150 | 351,418 | 16,800 | 17,929,897 | | 2018 | 497,924 | 200,000 | 5,860,388 | 686,715 | 16,500 | 7,261,527 | | | | | | | | | Kirsten M. Spears(3) | 2020 | 332,964 | — | — | 187,205 | 16,904(5) | 537,073 | Principal Accounting Officer, Vice President and Corporate Controller | | | | | | | | | | | | | | | | | | | | | |
(1) Represents the grant date fair value of service-based RSUs and PSUs, determined in accordance with ASC 718. As the PSU awards are not subject to performance conditions as defined under ASC 718, the maximum grant date fair values for such awards do not differ from the fair values presented in this table. The amounts in this column do not reflect compensation actually received by the NEOs or the actual value that may be recognized by the NEO. For a discussion of the valuation assumptions used in the calculations, see Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of our 2018 Form10-K filed with the SEC on December 21, 2018.
|
(2) | Represents amounts paid under the APB Plan for each fiscal year. Please see the plan description in “Compensation Discussion and Analysis—Elements of Executive Compensation—Annual Cash Incentive Bonus Plan” above.
|
(3) | Represents $10,393 in expense reimbursements for travel to Mr. Tan’s residence in Pennsylvania, a $16,500 Section 401(k) employer matching contribution and $39,602 for car service.
|
(4) | Includes the portion of Mr. Tan’s Fiscal Year 2016 APB Plan payout ($990,258 in value) delivered in the form of a service-based RSU award, as determined by the Independent Directors.
|
(5) | Represents the portion of Mr. Tan’s Fiscal Year 2016 APB Plan payout paid in cash. Mr. Tan’s total Fiscal Year 2016 APB Plan payout amount was $2,970,774. However, the Independent Directors determined that $1,980,516 of that amount, which represents his payout based on a performance multiplier of 100%, would be paid in cash and the remaining $990,258 delivered to Mr. Tan in the form of a service-based RSU award.
|
(6) | Represents discretionary cash bonuses paid in recognition of each executive’s significant efforts toward the completion of the acquisition of CA.
|
(7) | Represents Section 401(k) employer matching contributions.
|
Fiscal Year 20182019, although the Multi-Year Equity Awards have four staggered vesting start dates of March 15, 2019, 2020, 2021 and 2022, under ASC 718 we are required to include the grant date fair value of all the Multi-Year Equity Awards in Fiscal Year 2019. As the PSUs are not subject to performance conditions as defined under ASC 718, the maximum grant date fair values for such awards do not differ from the fair values presented in this table. The amounts in this column do not reflect compensation actually received by the NEOs or the actual value that may be recognized by the NEOs. For a discussion of the valuation assumptions used in the calculations, see Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of our 2020 Annual Report filed with the SEC on December 18, 2020.
(2) Represents amounts paid under the APB Plan for each fiscal year. See the plan description in “Compensation Discussion and Analysis—Elements of Executive Compensation—Annual Cash Incentive Bonus Plan” above.
(3) Following the end of Fiscal Year 2020, Mr. Krause was appointed President of Infrastructure Software Group, Dr. Kawwas was appointed Chief Operating Officer, and Ms. Spears was appointed Vice President, Chief Financial Officer and Chief Accounting Officer.
(4) Represents $1,817 in expense reimbursements for travel to Mr. Tan’s residence in Pennsylvania, a $17,100 Section 401(k) employer matching contribution, $19,766 for car service and $33,085 for temporary security services.
(5) Represents Section 401(k) employer matching contributions.
(6) Represents a discretionary cash bonus paid to Mr. Brazeal due to his contributions outside the regular scope of his responsibility, in particular his role in managing various complex regulatory and public policy matters during this fiscal year.
(7) Represents $17,100 in Section 401(k) employer matching contribution and $26,390 for temporary security services.
Fiscal Year 2020 Grants of Plan-Based Awards Table
The following table sets forth information regarding grants of plan-based awards during Fiscal Year 20182020 to each of our NEOs. AllWe did not grant equity awards were grantedto any of our NEOs in Fiscal Year 2020.
| | | | | | | | | | | |
| Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1) |
| Name | Threshold
($) | Target
($) | Maximum
($) |
| Hock E. Tan | 292,308 | 2,338,462 | 5,261,539 |
| Thomas H. Krause, Jr. | 29,327 | 469,231 | 950,192 |
| Mark D. Brazeal | 30,288 | 484,615 | 981,346 |
| Charlie B. Kawwas, Ph.D. | 15,515 | 496,471 | 1,094,717 |
| Kirsten M. Spears | 10,405 | 166,482 | 337,126 |
(1) Represents potential payouts under the
2009 Plan unless otherwise noted. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Name | | Approval Date(1) | | | Grant Date(1) | | | Estimated Future Payouts Under Non-Equity Incentive
Plan Awards(2) | | | Estimated Future Payouts Under Equity Incentive Plan
Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | | | Grant Date Fair Value of Stock and Option Awards ($)(4) | |
| | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold (#) | | | Target(5) (#) | | | Maximum (#) | |
|
Hock E. Tan | | | | | | | | | | | 214,183 | | | | 1,713,461 | | | | 3,855,288 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Thomas H. Krause Jr. | | | | | | | | | | | 19,471 | | | | 311,539 | | | | 700,962 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | 12/4/2017 | | | | 12/15/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,000 | | | | 1,243,350 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | 1,000 | | | | 8,000 | | | | 16,000 | | | | | | | | 2,918,360 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,000 | | | | 2,006,480 | |
| | | | | | | | | | |
Charlie B. Kawwas, Ph.D. | | | | | | | | | | | 14,268 | | | | 380,489 | | | | 856,100 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | 12/4/2017 | | | | 12/15/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,000 | | | | 1,243,350 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | 937 | | | | 7,500 | | | | 15,000 | | | | | | | | 2,735,963 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7,500 | | | | 1,881,075 | |
| | | | | | | | | | |
Mark D. Brazeal | | | | | | | | | | | 17,524 | | | | 280,385 | | | | 630,865 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | 12/4/2017 | | | | 12/15/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,000 | | | | 746,010 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | 812 | | | | 6,500 | | | | 13,000 | | | | | | | | 2,371,168 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 6,500 | | | | 1,630,265 | |
| | | | | | | | | | |
Bryan T. Ingram | | | | | | | | | | | 38,439 | | | | 615,029 | | | | 1,383,815 | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| | | 12/4/2017 | | | | 12/15/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5,000 | | | | 1,243,350 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | 937 | | | | 7,500 | | | | 15,000 | | | | | | | | 2,735,963 | |
| | | | | | | | | | |
| | | 3/13/2018 | | | | 3/15/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7,500 | | | | 1,881,075 | |
| | | | | | | | | | |
(1) | The approval date represents the date on which the award was approved by the Compensation Committee or the Independent Directors, as applicable. The grant date is the date on which the award became effective.
|
(2) | Represents potential payouts under the APB Plan for Fiscal Year 2018. Target bonus amount for Fiscal Year 2018 were as follows: Mr. Tan 150%, Mr. Krause 75%, Dr. Kawwas 75%, Mr. Brazeal 60% and Mr. Ingram 100%, as a percentage of base salary. The threshold amount for Mr. Tan was 12.5% of his target bonus amount, calculated based on the achievement of a single corporate goal at 50% of the target for such goal and with the individual performance multiplier set at target 50%. The threshold amount for each of Messrs. Krause, Brazeal and Ingram was 6.25% of his target bonus amount, calculated based on the achievement of a single corporate or divisional goal at 25% of the target for such goal and with the individual performance multiplier set at target 50%. The threshold amount for Dr. Kawwas was 3.75% of his target bonus amount, calculated based on the achievement of a single corporate or divisional goal at 15% of the target for such goal and with the individual performance multiplier set at target 50%. The maximum bonus payable was 225% of the target bonus amount for Mr. Tan, which assumes maximum (150%) performance for each corporate goal and with the individual performance multiplier set at 150%. The maximum bonus payable was 225% of the target bonus amount for Messrs. Krause, Brazeal and Ingram, and Dr. Kawwas, which assumes maximum (150%) performance for (i) each corporate goal and (ii) each divisional or functional goal and with the maximum individual performance multiplier set at 150%.
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(3) | Represents service-based RSU awards, which vest at a rate of 25% per year on each anniversary of the grant date, subject to the NEO’s continued employment with us through the relevant vesting date.
|
(4) | Represents the grant date fair value of the equity awards, as determined in accordance with ASC 718. For a discussion of the valuation assumptions used in the calculations, see Note 2 to the Consolidated Financial Statements included in Part II, Item 8 of our 2018 Form10-K filed with the SEC on December 21, 2018.
|
(5) | Represents a PSU award that will vest at a rate of 25% per year on each anniversary of the grant date, subject to the NEO’s continued employment with us through the relevant vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on March 2, 2018 and ending on each of March 1 of 2019, 2020, 2021, and 2022. The number of shares of common stock that may be earned is capped atone-quarter of the target number of shares for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock subject to the PSU award, if at the end of the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares will be issued and this award will be cancelled.
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Fiscal Year 20182020. Target bonus amount for Fiscal Year 2020 were as follows, in each case, as a percentage of eligible earnings: Mr. Tan 200%, Mr. Krause 100%, Mr. Brazeal 100%, Dr. Kawwas 100% and Ms. Spears 50%. The threshold amount for Mr. Tan was 12.5% of his target bonus amount, calculated based on the achievement of a single corporate goal at 50% of the target for such goal and with the individual performance multiplier set at 50%. The threshold amount for each of Messrs. Krause and Brazeal and Ms. Spears was 6.25% of their respective target bonus amount, calculated based on the achievement of a single corporate or divisional goal at 25% of the target for such goal and with the individual performance multiplier set at 50%. The threshold amount for Dr. Kawwas was 3.13% of his target bonus amount, calculated based on the achievement of a single corporate or divisional goal at 12.5% of the target for such goal and with the individual performance multiplier set at 50%. The maximum bonus payable was 225% of the target bonus amount for Mr. Tan, which assumes maximum (150%) performance for each corporate goal and with the individual performance multiplier set at 150%.The maximum bonus payable was 202.5% of the target bonus amount for each of Messrs. Krause and Brazeal and Ms. Spears, which assumes maximum (150%) performance for each corporate goal and maximum (120%) for their divisional or functional goals and with the maximum individual performance multiplier set at 150%. The maximum bonus payable was 220.5% of the target bonus amount for Dr. Kawwas, which assumes maximum (150%) performance for each corporate goal and maximum (144%) for his divisional or functional goals and with the maximum individual performance multiplier set at 150%.
Fiscal Year 2020 Outstanding Equity Awards at Fiscal
Year-End Table
The following table sets forth information about
sharestock options and RSU awards outstanding on November
4, 2018,1, 2020, the last day of Fiscal Year
2018,2020, held by each of our NEOs.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | |
| | | | | | Option Awards(1) | | | Restricted Share Unit Awards(1) | |
| | | | | | | | | |
| Name | | Grant Date | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock that Have Not Vested (#) | | | Market Value of Shares
or Units of Stock that Have Not Vested ($)(2) | | | Equity Incentive Plan Awards: Number of Securities Underlying Unearned Units of Stock (#) | | | Market Value of Shares or Units of Stock that Have Not Vested($)(2) | |
| | | | | | | | | |
| | | | | | | | | |
Hock E. Tan | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | 3/12/2013 | | | | 131,250 | | | | — | | | | 35.45 | | | | 3/11/2020 | | | | — | | | | — | | | | — | | | | — | |
| | | 9/13/2013 | | | | 1,337,916 | | | | — | | | | 38.99 | | | | 9/12/2020 | | | | — | | | | — | | | | — | | | | — | |
| | | 1/2/2014 | | | | 750,000 | | | | — | | | | 52.65 | | | | 1/1/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | 6/15/2016 | | | | — | | | | — | | | | | | | | | | | | — | | | | — | | | | 240,000(3) | | | | 52,984,800 | |
| | | 12/15/2016 | | | | — | | | | — | | | | | | | | | | | | 4,507(4) | | | | 995,010 | | | | — | | | | — | |
| | | 6/15/2017 | | | | — | | | | — | | | | | | | | | | | | — | | | | — | | | | 168,000(5) | | | | 37,089,360 | |
| | | | | | | | | |
| | | | | | | | | |
Thomas H. Krause Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | 3/11/2014 | | | | 22,500 | | | | — | | | | 62.02 | | | | 3/10/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | 3/15/2015 | | | | — | | | | — | | | | | | | | | | | | 2,500(4) | | | | 551,925 | | | | — | | | | — | |
| | | 3/15/2015 | | | | — | | | | — | | | | | | | | | | | | 2,500(6) | | | | 551,925 | | | | — | | | | — | |
| | | 3/15/2016 | | | | — | | | | — | | | | | | | | | | | | 5,000(4) | | | | 1,103,850 | | | | — | | | | — | |
| | | 3/15/2016 | | | | — | | | | — | | | | | | | | | | | | 5,000(6) | | | | 1,103,850 | | | | — | | | | — | |
| | | 11/15/2016 | | | | — | | | | — | | | | | | | | | | | | 7,500(4) | | | | 1,655,775 | | | | — | | | | — | |
| | | 11/15/2016 | | | | — | | | | — | | | | | | | | | | | | 7,500(6) | | | | 1,655,775 | | | | — | | | | — | |
| | | 12/15/2016 | | | | — | | | | — | | | | | | | | | | | | 3,750(4) | | | | 827,888 | | | | — | | | | — | |
| | | 3/15/2017 | | | | — | | | | — | | | | | | | | | | | | 9,375(4) | | | | 2,069,719 | | | | 9,375(7) | | | | 2,069,719 | |
| | | 12/15/2017 | | | | — | | | | — | | | | | | | | | | | | 5,000(4) | | | | 1,103,850 | | | | — | | | | — | |
| | | 3/15/2018 | | | | — | | | | — | | | | | | | | | | | | 8,000(4) | | | | 1,766,160 | | | | 8,000(8) | | | | 1,766,160 | |
| | | | | | | | | |
| | | | | | | | | |
Charlie B. Kawwas, Ph.D. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | 3/1/2013 | | | | 3,668 | | | | — | | | | 38.92 | | | | 3/1/2020 | | | | — | | | | — | | | | — | | | | — | |
| | | 3/1/2014 | | | | 5,662 | | | | — | | | | 62.63 | | | | 3/1/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | 6/10/2014 | | | | 50,000 | | | | — | | | | 71.86 | | | | 6/9/2021 | | | | — | | | | — | | | | — | | | | — | |
| | | 3/15/2015 | | | | — | | | | — | | | | | | | | | | | | 3,750(4) | | | | 827,888 | | | | — | | | | — | |
| | | 3/15/2015 | | | | — | | | | — | | | | | | | | | | | | 3,750(6) | | | | 827,888 | | | | — | | | | — | |
| | | 12/15/2015 | | | | — | | | | — | | | | | | | | | | | | 1,500(4) | | | | 331,155 | | | | — | | | | — | |
| | | 3/15/2016 | | | | — | | | | — | | | | | | | | | | | | 7,500(4) | | | | 1,655,775 | | | | — | | | | — | |
| | | 3/15/2016 | | | | — | | | | — | | | | | | | | | | | | 7,500(6) | | | | 1,655,775 | | | | — | | | | — | |
| | | 12/15/2016 | | | | — | | | | — | | | | | | | | | | | | 3,750(4) | | | | 827,888 | | | | — | | | | — | |
| | | 3/15/2017 | | | | — | | | | — | | | | | | | | | | | | 9,375(4) | | | | 2,069,719 | | | | 9,375(7) | | | | 2,069,719 | |
| | | 12/15/2017 | | | | — | | | | — | | | | | | | | | | | | 5,000(4) | | | | 1,103,850 | | | | — | | | | — | |
| | | 3/15/2018 | | | | — | | | | — | | | | | | | | | | | | 7,500(4) | | | | 1,655,775 | | | | 7,500(8) | | | | 1,655,775 | |
| | | | | | | | | |
| | | | | | | | | |
Mark D. Brazeal | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | 4/15/2017 | | | | — | | | | — | | | | | | | | | | | | 9,375(4) | | | | 2,069,719 | | | | 9,375(9) | | | | 2,069,719 | |
| | | 12/15/2017 | | | | — | | | | — | | | | | | | | | | | | 3,000(4) | | | | 662,310 | | | | — | | | | — | |
| | | 3/15/2018 | | | | — | | | | — | | | | | | | | | | | | 6,500(4) | | | | 1,435,005 | | | | 6,500(8) | | | | 1,435,005 | |
| | | | | | | | | |
| | | | | | | | | |
Bryan T. Ingram | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | 12/9/2014 | | | | — | | | | — | | | | | | | | | | | | 1,500(4) | | | | 331,155 | | | | — | | | | — | |
| | | 3/15/2015 | | | | — | | | | — | | | | | | | | | | | | 6,250(4) | | | | 1,379,813 | | | | — | | | | — | |
| | | 3/15/2015 | | | | — | | | | — | | | | | | | | | | | | 6,250(6) | | | | 1,379,813 | | | | — | | | | — | |
| | | 12/15/2015 | | | | — | | | | — | | | | | | | | | | | | 2,000(4) | | | | 441,540 | | | | — | | | | — | |
| | | 3/15/2016 | | | | — | | | | — | | | | | | | | | | | | 5,000(4) | | | | 1,103,850 | | | | — | | | | — | |
| | | 3/15/2016 | | | | — | | | | — | | | | | | | | | | | | 5,000(6) | | | | 1,103,850 | | | | — | | | | — | |
| | | 12/15/2016 | | | | — | | | | — | | | | | | | | | | | | 3,750(4) | | | | 827,888 | | | | — | | | | — | |
| | | 3/15/2017 | | | | — | | | | — | | | | | | | | | | | | 9,375(4) | | | | 2,069,719 | | | | 9,375(7) | | | | 2,069,719 | |
| | | 12/15/2017 | | | | — | | | | — | | | | | | | | | | | | 5,000(4) | | | | 1,103,850 | | | | — | | | | — | |
| | | 3/15/2018 | | | | — | | | | — | | | | | | | | | | | | 7,500(4) | | | | 1,655,775 | | | | 7,500(8) | | | | 1,655,775 | |
(1) | The awards shown in these columns are awards granted under our 2009 Plan unless otherwise noted.
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(2) | The amounts shown in this column represent the number of shares of common stock that have not vested multiplied by $220.77, the closing price per share of common stock on November 2, 2018, the last trading day of Fiscal Year 2018.
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(3) | Represents the PSU award granted in Fiscal Year 2016 based on attainment of the maximum performance level, which vests in full upon completion of the performance period, subject to continued employment with us and achievement of thepre-established performance goals over the performance period of three years from the grant date, as determined by the Independent Directors within 60 days following the end of the performance period. The Independent Directors will determine the achievement of two performance measures (i) Relative TSR over the performance period and (ii) share price growth over the performance period, based on90-day trailing average prices at the start and end of the performance period. Based upon the level of performance achieved, a maximum of 240,000 shares of common stock may be earned under the PSU award. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled.
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(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards(1) | | Stock Awards(1) | | | Name | Grant Date | Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable | Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable | Option
Exercise
Price
($) | Option
Expiration
Date | | Number of
Shares or
Units of
Stock that
Have Not
Vested
(#) | Market
Value of
Shares or
Units of
Stock
that
Have Not
Vested
($)(2) | Equity
Incentive
Plan
Awards:
Number of
Unearned Shares, Units or Other Rights that Have Not Vested
(#) | Market
Value of
Unearned Shares, Units or Other Rights that
Have Not
Vested
($)(2) | Multi-Year
Equity Award Vest
Start Date | | Hock E. Tan | 1/2/2014 | 312,500 | — | 52.65 | 1/1/2021 | | — | — | — | — | | | 12/15/2016 | — | — | | | | 1,502(3) | 525,144 | — | — | | | 6/15/2017 | — | — | | | | — | — | 603,162(4) | 210,883,530 | | | | | | | | | | | | | | | Thomas H. Krause, Jr. | 11/15/2016 | — | — | | | | 2,500(3) | 874,075 | — | — | | | 11/15/2016 | — | — | | | | 2,500(5) | 874,075 | — | — | | | 12/15/2016 | — | — | | | | 1,250(3) | 437,038 | — | — | | | 3/15/2017 | — | — | | | | 3,125(3) | 1,092,594 | 15,625(6) | 5,462,969 | | | 12/15/2017 | — | — | | | | 2,500(3) | 874,075 | — | — | | | 3/15/2018 | — | — | | | | 4,000(3) | 1,398,520 | 12,000(7) | 4,195,560 | | | 1/15/2019 | — | — | | | | 7,500(9) | 2,622,225 | 17,60610) | 6,155,586 | 3/15/2019 | | 1/15/2019 | — | — | | | | 10,000(9) | 3,496,300 | 20,000(11) | 6,992,600 | 3/15/2020 | | 1/15/2019 | — | — | | | | 10,000(9) | 3,496,300 | 20,000(11) | 6,992,600 | 3/15/2021 | | 1/15/2019 | — | — | | | | 10,000(9) | 3,496,300 | 20,000(11) | 6,992,600 | 3/15/2022 | | | | | | | | | | | | | | Mark D. Brazeal | 4/15/2017 | — | — | | | | 3,125(3) | 1,092,594 | 15,625(8) | 5,462,969 | | | 12/15/2017 | — | — | | | | 1,500(3) | 524,445 | — | — | | | 3/15/2018 | — | — | | | | 3,250(3) | 1,136,298 | 9,750(7) | 3,408,893 | | | 1/15/2019 | — | — | | | | 5,625(9) | 1,966,669 | 13,205(10) | 4,616,864 | 3/15/2019 | | 1/15/2019 | — | — | | | | 7,500(9) | 2,622,225 | 15,000(11) | 5,244,450 | 3/15/2020 | | 1/15/2019 | — | — | | | | 7,500(9) | 2,622,225 | 15,000(11) | 5,244,450 | 3/15/2021 | | 1/15/2019 | — | — | | | | 7,500(9) | 2,622,225 | 15,000(11) | 5,244,450 | 3/15/2022 | | | | | | | | | | | | | | Charlie B. Kawwas, Ph.D. | 12/15/2016 | — | — | | | | 1,250(3) | 437,038 | — | — | | | 3/15/2017 | — | — | | | | 3,125(3) | 1,092,594 | 15,625(6) | 5,462,969 | | | 12/15/2017 | — | — | | | | 2,500(3) | 874,075 | — | — | | | 3/15/2018 | — | — | | | | 3,750(3) | 1,311,113 | 11,250(7) | 3,933,338 | | | 1/15/2019 | — | — | | | | 7,500(9) | 2,622,225 | 17,606(10) | 6,155,586 | 3/15/2019 | | 1/15/2019 | — | — | | | | 10,000(9) | 3,496,300 | 20,000(11) | 6,992,600 | 3/15/2020 | | 1/15/2019 | — | — | | | | 10,000(9) | 3,496,300 | 20,000(11) | 6,992,600 | 3/15/2021 | | 1/15/2019 | — | — | | | | 10,000(9) | 3,496,300 | 20,000(11) | 6,992,600 | 3/15/2022 | | | | | | | | | | | | | | Kirsten M. Spears | 12/15/2016 | — | — | | | | 750(3) | 262,223 | — | — | | | 3/15/2017 | — | — | | | | 1,875(3) | 655,556 | 9,375(6) | 3,277,781 | | | 12/15/2017 | — | — | | | | 1,500(3) | 524,445 | — | — | | | 3/15/2018 | — | — | | | | 2,5003) | 874,075 | 7,500(7) | 2,622,225 | | | 1/15/2019 | — | — | | | | 4,687(9) | 1,638,716 | 11,005(10) | 3,847,678 | 3/15/2019 | | 1/15/2019 | — | — | | | | 6,250(9) | 2,185,188 | 12,500(11) | 4,370,375 | 3/15/2020 | | 1/15/2019 | — | — | | | | 6,250(9) | 2,185,188 | 12,500(11) | 4,370,375 | 3/15/2021 | | 1/15/2019 | — | — | | | | 6,250(9) | 2,185,188 | 12,500(11) | 4,370,375 | 3/15/2022 |
(1) The awards shown in these columns are awards granted under our Avago Plan unless otherwise noted. (2) The amounts shown in this column represent the number of shares of common stock that have not vested multiplied by $349.63, the closing price per share of common stock on October 30, 2020, the last trading day of Fiscal Year 2020. (3) Represents service-based RSU awards that vest at a rate of 25% per year on each anniversary of the grant date, subject to the NEO’s continued employment with Broadcom through the applicable vesting date. (4) Represents the PSU award granted in Fiscal Year 2017 based on attainment of the maximum performance level, given that the level of performance through November 1, 2020 is tracking at above target. This PSU award vests in two overlapping performance periods, one over a
three-year performance period that ended in 2020 (“Performance Period #1”) and one over a four-year performance period ending in 2021 (“Performance Period #2,” together with Performance Period #1, the “Performance Periods”), with each commencing on June 15, 2017. The shares of common stock earned at the end of each Performance Period become fully vested on the last day of each Performance Period, subject to Mr. Tan’s continued employment with Broadcom through each such date. The number of shares of common stock earned during a Performance Period depends on the level of performance achieved based on our Relative TSR and our absolute TSR over the Performance Periods, as determined by the independent directors within 60 days following the end of each Performance Period. Based upon the level of performance achieved, a maximum of 756,000 shares of common stock may be earned under the PSU award. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. Our Relative TSR for Performance Period #1 was at the 60th percentile and as a result, 91% of the total target PSU award was earned in Fiscal Year 2020 (i.e. 152,838 shares). The amount shown in the table reflects the shares that may be earned with respect to the remaining performance period. (5) Represents PSU awards that are scheduled to vest at the rate of 25% a year on each anniversary of the grant date, subject to the satisfaction of a share price contingency (set at the grant date) and the NEO’s continued employment with Broadcom through the applicable vesting date. No shares of common stock will vest until the average closing price per share of Broadcom common stock over a 20 consecutive trading day period is equal to or greater than 120% of the fair market value of a share of common stock on the grant date. The share price contingency for this PSU award was met prior to the fourth anniversary of the grant date and therefore all of the shares of common stock subject to the PSU have the potential to vest (assuming continued service through the applicable vesting date). If the share price contingency had not been met by the fourth anniversary of the grant date or the time the NEO ceases to provide services to Broadcom, the PSUs would not vest and the award would have expired or immediately terminated, as applicable. (6) Represents a PSU award based on attainment of the maximum performance level, given that the level of performance through November 1, 2020 is tracking at above target. The PSU award will vest at a rate of 25% per year on the last day of the performance period, subject to the NEO’s continued employment with Broadcom through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on the grant date and ending on each of March 14 of 2018, 2019, 2020 and 2021. The number of shares of common stock that may be earned is capped at one-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. Our Relative TSR for the first performance period was at the 57th percentile, for the second performance period was at the 67th percentile and for the third performance period was at the 59th percentile, and as a result, 25% of the PSU award was earned in each anniversary of the grant date, subject to the NEO’s continued employment with us through the applicable vesting date. |
(5) | Represents the PSU award granted in Fiscal Year 2017 based on attainment of the target performance level. This PSU award vests in two overlapping performance periods, one over a three-year performance period ending in 2020 (“Performance Period #1”) and one over a four-year performance period ending in 2021 (“Performance Period #2,” together with Performance Period #1, the “Performance Periods”), with each commencing on June 15, 2017. The shares of common stock earned at the end of each Performance Period will be fully vested on the last day of each Performance Period, subject to Mr. Tan’s continued employment with us through each such date. The number of shares of common stock earned during a Performance Period will depend on the level of performance achieved based on our Relative TSR and our absolute TSR over the Performance Periods, as determined by the Independent Directors within 60 days following the end of each Performance Period. Based upon the level of performance achieved, a maximum of 756,000 shares of common stock may be earned under the PSU award. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled.
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(6) | Represents PSU awards that are scheduled to vest at the rate of 25% a year on each anniversary of the grant date, subject to the satisfaction of a share price contingency (set at the grant date) and the NEO’s continued employment with us through the applicable vesting date. No shares of common stock will vest until the average closing price per share of our common stock over a 20 consecutive trading day period is equal to or greater than 120% of the fair market value of a share of common stock on the grant date. The share price contingency for this PSU award was met prior to the fourth anniversary of the grant date and therefore all of the shares of common stock subject to the PSU have the potential to vest (assuming continued service). If the share price contingency was not met by the fourth anniversary of the grant date or the time the NEO ceases to provide services to us, the PSUs would not vest and the award would have expired or immediately terminated, as applicable.
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(7) | Represents a PSU award based on attainment of the target performance level. The PSU award will vest at a rate of 25% per year on the last day of the performance period, subject to the NEO’s continued employment with us through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on the grant date and ending on each of March 14 of 2018, 2019, 2020 and 2021. The number of shares of common stock that may be earned is capped atone-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. Our Relative TSR for the first performance period was at the 57th percentile, and as a result, 25% of the PSU award was earned in Fiscal Year 2018.
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(8) | Represents a PSU award based on attainment of the target performance level. The PSU award will vest at a rate of 25% per year on each anniversary of the grant date, subject to the NEO’s continued employment with us through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on March 2. 2018 and ending on each of March 1 of 2019, 2020, 2021 and 2022. The number of shares of common stock that may be earned is capped atone-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled.
|
(9) | Represents a PSU award based on attainment of the target performance level. The PSU award will vest at a rate of 25% per year on the later of (i) each anniversary of the grant date and (ii) the last day of the performance period, subject to the NEO’s continued employment with us through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on March 15, 2017 and ending on each of March 14 of 2018, 2019, 2020 and 2021. The number of shares of common stock that may be earned is capped atone-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. Our Relative TSR for the first performance period was at the 57th percentile, and as a result, 25% of the PSU award was earned in Fiscal Year 2018.
|
Fiscal Year 2018, Fiscal Year 2019 and Fiscal Year 2020, respectively. The amounts shown in the table reflect the shares that may be earned with respect to the remaining performance periods.
(7) Represents a PSU award based on attainment of the maximum performance level, given that the level of performance through November 1, 2020 is tracking at above target. The PSU award will vest at a rate of 25% per year on each anniversary of the grant date, subject to the NEO’s continued employment with Broadcom through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on March 2. 2018 and ending on each of March 1 of 2019, 2020, 2021 and 2022. The number of shares of common stock that may be earned is capped at one-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. Our Relative TSR for the first performance period was at the 71st percentile and for the second performance period was the 64th percentile, and as a result, 25% of the PSU award was earned in each Fiscal Year 2019 and Fiscal Year 2020, respectively. The amounts shown in the table reflect the shares that may be earned with respect to the remaining performance periods.
(8) Represents a PSU award based on attainment of the maximum performance level, given that the level of performance through November 1, 2020 is tracking at above target. The PSU award will vest at a rate of 25% per year on the later of (i) each anniversary of the grant date and (ii) the last day of the performance period, subject to the NEO’s continued employment with Broadcom through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on March 15, 2017 and ending on each of March 14 of 2018, 2019, 2020 and 2021. The number of shares of common stock that may be earned is capped at one-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. Our Relative TSR for the first performance period was at the 57th percentile, for the second performance period was at the 67th percentile and for the third performance period was at the 59th percentile, and as a result, 25% of the PSU award was earned in each Fiscal Year 2018, Fiscal Year 2019 and Fiscal Year 2020, respectively. The amounts shown in the table reflect the shares that may be earned with respect to the remaining performance period.
(9) Represents a service-based RSU Multi-Year Equity Award that will vest at a rate of 25% per year on each anniversary of the applicable vesting start date, subject to the NEO’s continued employment with Broadcom through the relevant vesting date. The Multi-Year Equity Awards have staggered vesting start dates of March 15, 2019, 2020, 2021 and 2022.
(10) Represents a PSU Multi-Year Award based on attainment of the maximum performance level, given that the level of performance through November 1, 2020 is tracking at above target. The PSU award will vest at a rate of 25% per year on each anniversary of the March 15, 2019, subject to the NEO’s continued employment with Broadcom through the applicable vesting date and subject to the achievement of specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The performance criteria is based on our Relative TSR over four performance periods beginning on March 2. 2019 and ending on each of March 1 of 2020, 2021, 2022 and 2023. The number of shares of common stock that may be earned is capped at one-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled. Our Relative TSR for the first performance period was at the 48th percentile, and as a result, 23.9% of the PSU award was earned in Fiscal Year 2020.
(11) Represents a PSU Multi-Year Equity Award based on attainment of the maximum performance level, given that the level of performance through November 1, 2020 is tracking at above target. The PSU award will vest at a rate of 25% per year on each anniversary of the applicable vesting start date, subject to the NEO’s continued employment with Broadcom through the applicable vesting date and subject to the achievement of
specified performance goals over each performance period, as determined by the Compensation Committee within 60 days following the end of each performance period. The Multi-Year Equity Awards have staggered vesting start dates of March 15, 2020, 2021 and 2022. The performance criteria is based on our Relative TSR over four performance periods beginning on the March 2nd immediately prior to the applicable vesting start date and ending on the immediately following March 1st. The number of shares of common stock that may be earned is capped at one-quarter of the target number of shares of common stock for each of the first three performance periods. In the aggregate, the NEO may earn up to 200% of the total target number of shares of common stock for each PSU award, if during the fourth performance period our Relative TSR is at or above the 75th percentile of the S&P 500 and our absolute TSR is not negative. If the minimum performance criterion is not met, no shares of common stock will be issued and this award will be cancelled.
Fiscal Year 2020 Option Exercises and Stock Vested Table
The following table sets forth information regarding the exercise of stock options and the vesting of RSU awards during Fiscal Year 20182020 by our NEOs. Stock option award value realized is calculated by subtracting the aggregate exercise price of the stock options exercised from the aggregate sale price. RSU award value realized is calculated by multiplying the number of shares of common stock shown in the table by the closing market price of our shares of common stock, as reported on the Nasdaq Global Select Market, on the date the RSUs vested. Value Realized on Exercise and Value Realized on Vesting/ReleaseVesting represent long-term gain over multiple years of service by the NEO and it isare not considered as part of ana NEO’s Fiscal Year 2020 compensation.
| | | | | | | | | | | | | | |
| Option Awards | Stock Awards |
| Name | Number of Shares
Acquired on
Exercise
(#) | Value Realized
on Exercise
($) | Number of Shares
Acquired on
Vesting
(#)(1) | Value Realized on
Vesting
($) |
| Hock E. Tan | 1,666,666 | 461,996,048 | 154,340 | 48,379,304 |
| Thomas H. Krause, Jr. | — | — | 27,644 | 7,071,228 |
| Mark D. Brazeal | — | — | 13,920 | 3,466,367 |
| Charlie B. Kawwas, Ph.D. | 20,000 | 4,802,800 | 25,644 | 6,270,238 |
| Kirsten M. Spears | 15,750 | 3,854,648 | 14,808 | 3,590,130 |
(1) These shares include shares vested under PSU awards granted in Fiscal Year 2017, Fiscal Year 2018
compensation. | | | | | | | | | | | | | | | | |
| | |
| | | Option Awards | | | RSU Awards | |
| | | | |
| Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Release (#) | | | Value Realized on Vesting/Release ($) | |
| | | | |
Hock E. Tan | | | 240,000 | (1) | | | 49,520,522 | | | | 1,503 | | | | 399,392 | |
| | | | |
Thomas H. Krause Jr. | | | — | | | | — | | | | 30,000 | | | | 7,970,413 | |
| | | | |
Charlie B. Kawwas, Ph.D. | | | 10,000 | | | | 1,785,108 | | | | 36,109 | | | | 9,531,283 | |
| | | | |
Mark D. Brazeal | | | — | | | | — | | | | 6,250 | | | | 1,543,375 | |
| | | | |
Bryan T. Ingram | | | 60,000 | | | | 11,454,246 | | | | 47,500 | | | | 12,574,068 | |
| | | | |
(1) | Represents shares subject to a stock option award expiring in 2020, all of which were exercised and sold pursuant to a10b5-1 trading plan.
|
and Fiscal Year 2019. Severance and Change in Control Agreements with Named Executive Officers; Death and
Permanent Disability
PolicyPolicies; Retirement
Severance Benefit Agreements
Each
In Fiscal Year 2020 each of our NEOs
is(other than Ms. Spears) was party to a severance benefits agreement with
us. TheBroadcom. Ms. Spears entered into her severance benefit agreement with Broadcom in Fiscal Year 2021. These severance benefits agreements provide each NEO with a severance payment and other benefits in the event of the termination of the NEO’s employment without cause, because of death or permanent disability or a resignation by the NEO for “good reason” (a “qualifying termination”), provided that the NEO timely executes a general release of
all claims in
ourBroadcom’s favor. If a qualifying termination takes place within 12 months following (or in the case of Mr. Tan, within three months prior to or 12 months following) a “change in control” (as defined in the severance benefits agreement) of
our Company, weBroadcom, Broadcom must provide the NEO with:
| | | | | | | | | | | | | | | | |
| | | | |
| Name | | Continued Base Salary | | | Bonus(1) | | | Health Benefits Continuation Coverage | | | Equity Award Vesting Acceleration(2) | |
| | | | |
| | | | |
Hock E. Tan | | | 24 months | | | | 200 | % | | | — | | | | 100 | % |
| | | | |
| | | | |
Thomas H. Krause, Jr. | | | 12 months | | | | 100 | % | | | 12 months | | | | 100 | % |
| | | | |
| | | | |
Charlie B. Kawwas, Ph.D. | | | 12 months | | | | 100 | % | | | 12 months | | | | 100 | % |
| | | | |
| | | | |
Mark D. Brazeal | | | 12 months | | | | 100 | % | | | 12 months | | | | 100 | % |
| | | | |
| | | | |
Bryan T. Ingram | | | 12 months | | | | 100 | % | | | 12 months | | | | 100 | % |
| | | | |
| (1) | Bonus payments are calculated using the lesser of the NEO’s prior year’s actual bonus or prior year’s target bonus.
|
| (2) | | | | | | | | | | | | | | | | | Name | Continued
Base Salary | Bonus(1) | Health
Benefits
Continuation
Coverage | Equity Award Vesting Acceleration(2) | | Hock E. Tan | 24 months | 200% | — | 100% | | Thomas H. Krause, Jr. | 12 months | 100% | 12 months | 100% | | Mark D. Brazeal | 12 months | 100% | 12 months | 100% | | Charlie B. Kawwas, Ph.D. | 12 months | 100% | 12 months | 100% | | Kirsten M. Spears | 12 months | 100% | 12 months | 100% |
(1) Bonus payments are calculated using the lesser of the NEO’s prior year’s actual bonus or prior year’s target bonus. (2) Upon a qualifying termination of a NEO’s employment in connection with a change in control of Broadcom, the NEO will receive full acceleration of all outstanding service-based RSUs, and acceleration of outstanding PSUs to the extent (i) the effective price per share paid by the acquirer meets or exceeds any share price contingency applicable to any share-price performance-based awards or (ii) other performance goals have been deemed satisfied, in the discretion of our Board, based on Broadcom’s performance through the date of the change in control, for all other types of
PSU awards. However, effective Fiscal Year 2021, for each NEO except Mr. Brazeal, the severance benefit agreements specify that PSUs will vest at target performance levels except as otherwise provided in the applicable award agreement. If a qualifying termination of a NEO’s employment in connection with a change in control of our Company, the NEO will receive full acceleration of all outstanding service-based equity awards, and acceleration of outstanding performance-based equity awards to the extent (i) the effective price per share paid by the acquirer meets or exceeds any share price contingency applicable to any share-price performance-based awards or (ii) other performance goals have been deemed satisfied, in the discretion of our Board, based on our performance through the date of the change in control, for all other types of performance-based equity awards. |
If the qualifying termination takes place other than in connection with a change“change in controlcontrol” (as defined in the severance benefits agreement) of our Company, weBroadcom, Broadcom must provide the NEO with:
| | | | | | | | | | | | |
| Name | Continued Base
Salary | Bonus(1) | Health Benefits
Continuation Coverage |
Name | | Continued Base
Salary
| | | Bonus(1) | | | Health Benefits
Continuation Coverage
| |
| | | |
| | | |
Hock E. Tan | | | 12 months | | | | 100 | % | | 100% | — | |
| | | |
| | | |
Thomas H. Krause, Jr.(2) | | | 9 months | 50% | | | 50 | % | | | 6 months |
| Mark D. Brazeal | 9 months | 50% | 6 months |
| | | |
| | | |
Charlie B. Kawwas, Ph.D.(2) | | | 9 months | 50% | | | 50 | % | | | 6 months | |
| | | |
| | | |
Mark D. Brazeal
Kirsten M. Spears | | | 9 months | 50% | | | 50 | % | | | 6 months | |
| | | |
| | | |
Bryan T. Ingram
| | | 9 months | | | | 50 | % | | | 6 months | |
| | | |
| (1) | Bonus payments are calculated using the lesser of the NEO’s prior year’s actual bonus or prior year’s target bonus.
|
(1) Bonus payments are calculated using the lesser of the NEO’s prior year’s actual bonus or prior year’s target bonus.
(2) Under the Kawwas and Krause Agreements, which were entered into in Fiscal Year 2021, if Dr. Kawwas or Mr. Krause (in each case, as applicable) experiences a Continuation Period termination, the NEO will receive a cash amount in exchange for the NEO’s outstanding RSU and PSU awards (with applicable performance conditions associated with any such PSU awards deemed achieved at target performance) as if the NEO had remained continuously employed by Broadcom for an additional 18 months following his termination of employment, as further described in the “Compensation Discussion and Analysis — Additional Compensation Practices and Policies - Fiscal Year 2021 Compensation Actions” section.
The definition of “change in control” under the severance benefits agreements is the same as the definition of “change in control” under our
2009Avago Plan, which includes acquisitions of more than 50% of our voting shares by any person or group, as well as the sale of all or substantially all of
ourBroadcom’s assets.
The definition of “good reason” means any of the following: (A) a material reduction in the NEO’s salary (other than as part of a broad salary reduction program instituted because we areBroadcom is in financial distress); (B) a substantial reduction in the NEO’s duties and responsibilities; (C) the elimination or reduction of the NEO’s eligibility to participate in ourBroadcom’s benefit programs that is inconsistent with the eligibility of our executives to participate therein; (D) we informBroadcom informs the NEO of ourits intention to transfer his or herthe NEO’s primary workplace to a location that is more than 50 miles from the location of the NEO’s primary workplace as of such date; (E) ourBroadcom’s material breach of the severance benefits agreement that is not cured within 60 days written notice thereof; and (F) any serious chronic mental or physical illness of the NEO or a member of his or herthe NEO’s family that requires the NEO to terminate his or hertheir employment because of substantial interference with his or herthe NEOs duties; provided, that at ourBroadcom’s request the NEO provides usBroadcom with a written physician’s statement confirming the existence of such mental or physical illness. See
Policy on “Compensation Discussion and Analysis — Additional Compensation Practices and Policies - Fiscal Year 2021 Compensation Actions”for additional benefits under the Kawwas and Krause Agreements. Acceleration of
Executive Staff Equity Awards in the Event of Death or
Permanent Disability
In September 2015, our Board approved the
Broadcom’s Death and Permanent Disability Policy. This policy was effective immediately upon adoption, and providesPolicies provide for the full acceleration of vesting of equity awards that have started vesting upon an executive’s death or permanent disability of his or herthe executive’s outstanding and unvested equity awards that would otherwise vest solely based on the executive’s continued service, including
performance-based equity PSU awards for which the performance criteria have been met as of the date of such death or permanent disability. However, pursuant to the terms of the Multi-Year Equity Awards, holders are not entitled to full acceleration of vesting of these awards except with respect to those awards for which the vesting start date has already occurred at the time of anthe applicable executive’s death or disability. The Death and Permanent Disability Policy appliesPolicies apply in the event of the death or permanent disability of (i) any officer of our Company,Broadcom, as such term is defined in Exchange Act Rule16a-1, and (ii)(i) any member of ourthe CEO’s executive staff, including our NEOs.the NEOs, as determined by the CEO.
See“Compensation Discussion and Analysis — Additional Compensation Practices and Policies - Fiscal Year 2021 Compensation Actions” section above, for additional benefits under the Tan Agreement.
Retirement
As described in the “Compensation Discussion and Analysis — Additional Compensation Practices and Policies - Fiscal Year 2021 Compensation Actions” section above, if Mr. Tan retires from Broadcom on or after the last day of Fiscal Year 2021, the performance period for the Tan Fiscal Year 2021 PSU Award will end on the date of his retirement notice and vest on his retirement date, subject to achievement of the performance goals.
Potential Payments and Benefits upon Certain Terminations of Employment
in Connection with a Change in Control
The following table reflects the potential payments and benefits to which our NEOs would be entitled under their severance benefits agreements in effect as of the end of Fiscal Year
2018,2020 in the event of a qualifying termination taking place
not in connection withwithin 12 months following a change in control of
our Company.Broadcom (or in the case of Mr. Tan three months before or 12 months following a change in control of Broadcom). The amounts presented in the table assume an employment termination date of November
4, 20181, 2020 and that all eligibility requirements contemplated by the NEO’s respective agreements and our policies and practices, as applicable, were met.
| | | | | | | | | | | | | | | | | | | | |
| | | | |
| Name | | Cash Severance
Base Salary ($) | | Cash Severance
Bonus ($) | | Health Benefits
Continuation
Coverage ($)(1) | | Total ($) |
| | | | |
| | | | |
Hock E. Tan | | | | 1,100,000 | | | | | 1,650,000 | | | | | — | | | | | 2,750,000 | |
| | | | |
| | | | |
Thomas H. Krause Jr. | | | | 300,000 | | | | | 150,000 | | | | | 10,998 | | | | | 460,998 | |
| | | | |
| | | | |
Charlie B. Kawwas, Ph.D. | | | | 366,397 | | | | | 183,198 | | | | | 11,778 | | | | | 561,374 | |
| | | | |
| | | | |
Mark D. Brazeal | | | | 337,500 | | | | | 75,289 | (2) | | | | 10,839 | | | | | 423,628 | |
| | | | |
| | | | |
Bryan T. Ingram | | | | 444,188 | | | | | 296,125 | | | | | 10,778 | | | | | 751,091 | |
| | | | |
(1) | Represents the cost of our subsidized continued healthcare benefits, based on our current costs to provide such coverage.
|
(2) | As Mr. Brazeal joined us in April 2017, his actual and target bonus amounts for Fiscal Year 2017 were prorated for his partial year of service. If Mr. Brazeal had an employment termination date of November 5, 2018, the first day of our Fiscal Year 2019, then his bonus payment would have been $140,193, based on the lesser of his actual or target bonus for Fiscal Year 2018.
|
| | | | | | | | | | | | | | | | | | | | |
| Name | Cash Severance Base Salary
($) | Cash Severance Bonus
($) | Health Benefits Continuation Coverage
($)(1) | Value of RSU/PSU
Acceleration ($)(2) | Total
($) | |
| Hock E. Tan | 2,400,000 | 2,404,562 | — | 117,322,472(3) | 122,127,034 | |
| Thomas H. Krause, Jr. | 500,000 | 300,000 | 22,712 | 34,475,616(4) | 35,298,327 | |
| Mark D. Brazeal | 500,000 | 270,000 | 22,542 | 26,075,405(4) | 26,867,948 | |
| Charlie B. Kawwas, Ph.D. | 500,000 | 351,418 | 23,049 | 32,377,836(4) | 33,252,303 | |
(1) Represents the cost of our subsidized continued healthcare benefits based on our current costs to provide such coverage.
(2) The amounts in this column include, for each service-based RSUs and PSUs subject to a share price contingency that has been met, the number of shares of common stock that would have vested multiplied by $349.63, the closing price per share of Broadcom common stock on October 30, 2020, the last trading day of Fiscal Year 2020. As of such date, all share price contingencies have been met and the vesting of all such awards would have accelerated in the event of a qualifying termination.
(3) This amount includes, for each PSU award for which the applicable performance goals have been deemed satisfied based on Broadcom’s actual performance immediately prior to October 30, 2020, the last trading day of Fiscal Year 2020, that would have accelerated, the number of shares of common stock that would have vested multiplied by $349.63, the closing price per share of Broadcom common stock on October 30, 2020. As of such date, 334,060 shares of common stock subject to the PSUs granted in Fiscal Year 2017 would have vested in the event of a qualifying termination.
(4) This amount includes, for each PSU for which the applicable performance goals have been deemed satisfied based on our actual performance immediately prior to October 30, 2020, the last trading day of Fiscal Year 2020, that would have accelerated, the number of shares of common stock that would have vested multiplied by $349.63, the closing price per share of Broadcom common stock on October 30, 2020. As of such date, the following shares would have vested in the event of a qualifying termination: (A) 15,625 shares subject to the Fiscal Year 2017 PSUs for each of Messrs. Krause and Brazeal, and Dr. Kawwas (B) 12,000 shares for Mr. Krause, 9,750 shares for Mr. Brazeal and 11,250 shares for Dr. Kawwas, subject to the Fiscal Year 2018 PSU awards, (C) 17,606 shares for Mr. Krause, 13,205 shares for Mr. Brazeal and 17,606 shares for Dr. Kawwas, subject to the first PSU grant under the Multi-Year Equity Award with a vesting start date of March 15, 2019; and (D) 20,000 shares for Mr. Krause, 15,000 shares for Mr. Brazeal and 20,000 shares for Dr. Kawwas, subject to the second PSU grant under the Multi-Year Equity Award with a vesting start date of March 15, 2020.
Potential Payments and Benefits upon Certain Terminations of Employment
in Connection with a Change in ControlThe following table reflects the potential payments and benefits to which our NEOs would be entitled under their severance benefits agreements in effect as of the end of Fiscal Year
20182020, in the event of a qualifying termination taking place
within 12 months followingnot in connection with a change in control of
our Company (or in the case of Mr. Tan three months before or 12 months following a change in control of our Company).Broadcom. The amounts presented in the table assume an employment termination date of November
4, 20181, 2020 and that all eligibility requirements contemplated by the NEO’s respective agreements and our policies and practices, as applicable, were met.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| Name | | Cash Severance
Base Salary ($) | | Cash Severance
Bonus ($) | | Health Benefits
Continuation
Coverage ($)(1) | | Value of RSU/
PSU Acceleration ($)(2) | | Total ($) |
| | | | | |
| | | | | |
Hock E. Tan | | | | 2,200,000 | | | | | 3,300,000 | | | | | — | | | | | 49,583,838 | (3) | | | | 55,083,838 | |
| | | | | |
| | | | | |
Thomas H. Krause Jr. | | | | 400,000 | | | | | 300,000 | | | | | 21,996 | | | | | 15,169,548 | (4) | | | | 15,891,545 | |
| | | | | |
| | | | | |
Charlie B. Kawwas, Ph.D. | | | | 488,529 | | | | | 366,397 | | | | | 23,557 | | | | | 13,650,651 | (4) | | | | 14,529,133 | |
| | | | | |
| | | | | |
Mark D. Brazeal | | | | 450,000 | | | | | 150,577 | (5) | | | | 21,678 | | | | | 6,694,188 | (4) | | | | 7,316,443 | |
| | | | | |
| | | | | |
Bryan T. Ingram | | | | 592,250 | | | | | 592,250 | | | | | 21,557 | | | | | 14,092,191 | (4) | | | | 15,298,247 | |
| | | | | |
(1) | Represents the cost of our subsidized continued healthcare benefits based on our current costs to provide such coverage.
|
(2) | The amounts in this column include, for each service-based RSU award and PSU award subject to a share price contingency that had been met, the number of shares of common stock that would have vested multiplied by $220.77, the closing price per share of common stock on November 2, 2018, the last trading day of Fiscal Year 2018. As of such date, all share price contingencies had been met and the vesting of all such awards would have accelerated in the event of a qualifying termination.
|
(3) | This amount includes, for each PSU award for which the applicable performance goals have been deemed satisfied based on our actual performance immediately prior to November 2, 2018, the last trading day of Fiscal Year 2018, that would have accelerated, the number of shares of common stock that would have vested multiplied by $220.77, the closing price per share of common stock on November 2, 2018. As of such date, 163,414 shares of common stock and 56,674 shares of common stock subject to the PSU awards granted in Fiscal Year 2016 and Fiscal Year 2017, respectively, would have accelerated in the event of a qualifying termination.
|
(4) | This amount includes, for each PSU award for which the applicable performance goals have been deemed satisfied based on our actual performance immediately prior to November 2, 2018, the last trading day of Fiscal Year 2018, that would have accelerated, the number of shares of common stock that would have vested multiplied by $220.77, the closing price per share of common stock on November 2, 2018. As of such date, 69% of the target shares subject to the Fiscal Year 2017 PSU awards and 76% of the target shares subject to the Fiscal Year 2018 PSU awards, would have accelerated in the event of a qualifying termination.
|
(5) | As Mr. Brazeal joined us in April 2017, his actual and target bonus amounts for Fiscal Year 2017 were prorated for his partial year of service. If Mr. Brazeal had an employment termination date of November 5, 2018, the first day of our Fiscal Year 2019, then his bonus payment would have been $280,385, based on the lesser of his actual or target bonus for Fiscal Year 2018.
|
| | | | | | | | | | | | | | | | | |
| Name | Cash Severance Base Salary
($) | Cash Severance Bonus
($) | Health Benefits Continuation Coverage
($)(1) | Total
($) | |
| Hock E. Tan | 1,200,000 | 1,202,281 | — | 2,402,281 | |
| Thomas H. Krause, Jr. | 375,000 | 150,000 | 11,356 | 536,356 | |
| Mark D. Brazeal | 375,000 | 135,000 | 11,271 | 521,271 | |
| Charlie B. Kawwas, Ph.D. | 375,000 | 175,709 | 11,525 | 562,234 | |
(1) Represents the cost of the subsidized continued healthcare benefits, based on the current costs to provide such coverage.
Potential Payments under our Death and
Permanent Disability
PolicyPolicies
The following table reflects the potential payments and benefits to which our NEOs would be entitled under the Death and
Permanent Disability
PolicyPolicies in effect as of November
4, 2018,1, 2020, in the event of death or permanent disability. The amounts presented in the table assume a termination of employment date of November
4, 20181, 2020 and that all eligibility requirements contemplated by the Death and
Permanent Disability
PolicyPolicies were met.
| | | | | | | | |
| Name | |
Name
| | Value of RSU/PSU Acceleration
($)(1)(2) |
| |
Hock E. Tan | 15,209,604(3) | | | 19,539,690 | (3) |
| |
| |
Thomas H. Krause, Jr. | | | | 12,390,71611,668,901 | |
| Mark D. Brazeal | 7,342,230 | |
| |
Charlie B. Kawwas, Ph.D. | | | | 10,955,7119,833,344 | |
| |
| |
Mark D. Brazeal
| | Kirsten M. Spears | | 4,167,034 | |
| |
| |
Bryan T. Ingram
| | | | 11,397,251 | |
| 6,140,202 | |
(1) | The amounts in this column include for each service-based RSU award and PSU award subject to a share price contingency that had been met, the number of shares of common stock that would have vested multiplied by $220.77, the closing price per share of common stock on November 2, 2018, the last trading day of Fiscal Year 2018. As of such date, all share price contingencies had been met and the vesting of all such awards would have accelerated.
|
(2) | The amounts in this column do not include accelerations of the PSU awards subject to performance goals based on criteria other than share price contingencies, except as noted below, as these awards are not eligible for acceleration upon death or permanent disability.
|
(3) | This amount includes the acceleration of the PSU award granted in Fiscal Year 2017 with respect to 50% of the target number of shares of common stock for each performance period multiplied by $220.77, the closing price per share of our common stock on November 2, 2018, the last trading day of Fiscal Year 2018.
|
(1) The amounts in this column include for each service-based RSU award and PSU award subject to a share price contingency that had been met, the number of shares of common stock that would have vested multiplied by $349.63, the closing price per share of Broadcom common stock on October 30, 2020, the last trading day of Fiscal Year 2020. As of such date, all share price contingencies had been met and the vesting of all such awards would have accelerated.
(2) The amounts in this column do not include accelerations of the PSU awards subject to performance goals based on criteria other than share price contingencies, except as noted below, as these awards are not eligible for acceleration upon death or permanent disability.
(3) This amount includes the acceleration of the PSU award granted in Fiscal Year 2017 with respect to 50% of the target number of shares of common stock for the performance period that is currently in effect multiplied by $349.63, the closing price per share of Broadcom common stock on October 30, 2020, the last trading day of Fiscal Year 2020.
In accordance with SEC rules, we areBroadcom is providing the ratio of the annual total annual compensation of our CEO to the median of the annual total compensation of all our median employeeemployees (the “Ratio”). For Fiscal Year 2018,2020, the annual total compensation of our CEO, as reported in the “Fiscal Year 20182020 Summary Compensation Table,”, is $5,042,937$3,695,852 and the median of the annual total compensation of all our median compensated employeeemployees is $202,915.$239,395. The Ratio is 2515 to 1. In Fiscal Year
2018,2020, Mr. Tan did not receive an equity award, as his Fiscal Year 2017 PSU award was a long-term, multi-year award.
Our median compensated employee was granted Multi-Year Equity Awards, which will vest on the same basis as four annual equity grants made on March 15 of each year, beginning in 2019. In order to better compare Mr. Tan’s annual total compensation to our median compensated employee, we are providing a supplemental pay ratio that includes
(1) in the CEO’s
20182020 annual total compensation an annualized value of Mr. Tan’s Fiscal Year 2017 PSU award, taking the 2017 grant date fair value of the award and annualizing it over four
years.years, and (2) in the median employee’s 2020 annual total compensation the grant date fair value of the Multi-Year Equity Award with a vesting start date of March 15, 2020 and excluding the grant date fair value of the Multi-Year Equity Awards with vesting start dates in 2019, 2021 and 2022. This results in
an annualnotional, total compensation
for Fiscal Year 2020 of
$29,623,648$28,276,563 for our
CEO.CEO and $267,101 for our median employee. The supplemental ratio
calculated using this amount is
146106 to 1.
In determining the annual total compensation of the median employee, we calculated such employee’s compensation in accordance with SEC executive compensation disclosure rules. This calculation is the same calculation used to determine the total compensation for purposes of the “Fiscal Year 20182020 Summary Compensation Table” with respect to each of our NEOs. To identify the median employee, we used the following methodology:
•We collected compensation data from our human resources system of record for all employees globally, whether employed on a full-time, part-time, temporary or seasonal basis, as of November 4, 2018.
1, 2020, which was the last day of Fiscal Year 2020. Last year, our measuring date was also the last day of our fiscal year.•We annualized the compensation of all permanent full-time and part-time employees who we hired between October 30, 2017November 4, 2019 and November 4, 2018.1, 2020. We applied an exchange rate used in our human resources system of record as of November 4, 20181, 2020 to convert all international currencies into U.S. dollars.
•We used target total target direct compensation as of November 4, 2018,1, 2020, as our consistently applied compensation measure. In this context, target total target direct compensation means (1) the applicable annual base salary determinedlevel in effect as of November 4, 2018,1, 2020, (2) the annual incentive cash target amount or commission target amount payable for service in Fiscal Year 2018,2020, and (3) the approved value of the annual equity awards granted during Fiscal Year 2018.
2020.The Ratio presented above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources system of record. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, this pay ratio disclosure may not be comparable to the pay ratio reported by other companies.
EQUITY COMPENSATION PLAN INFORMATION
Plans Approved by our Stockholders
We have
Broadcom has two equity compensation plans that have been approved by our stockholders: the
2009Avago Plan and the ESPP.
The Avago Plan expired in July 2019 and no new grants may be made under the Avago Plan following such date. The ESPP has no expiration date.
Plans Not Approved by our Stockholders
As
atof November
4, 2018, we had1, 2020, Broadcom has two equity compensation plans that had not been approved by our stockholders
and pursuant to which we may continue to grant equity awards: the LSI
Corporation 2003 Equity Incentive Plan
(“LSI Plan”), which(which we assumed in connection with our acquisition of LSI
Corporation,Corporation) and the 2012 Plan
which(which we assumed in connection with our acquisition of
BRCM. We haveBroadcom Corporation). Broadcom also assumed outstanding equity awards granted under the LSI Plan, the 2012 Plan, the Brocade 2009 Stock Plan, the Brocade Amended and Restated Inducement Award Plan,
the CA, Inc. 2011 Incentive Plan and under other equity compensation plans or agreements that were assumed by
usBroadcom in connection with our acquisitions of LSI,
BRCMBroadcom Corporation, Brocade and
Brocade,CA, and other companies that originally granted those awards.
The following table sets forth as of November 1, 2020 the number and weighted-average exercise price of shares of common stock to be issued upon the exercise of outstanding sharestock options and RSU awards,RSUs, and the number of securities remaining available for future issuance under all of our equity compensation plans.
| | | | | | | | | | | |
| Plan Category | Number of Shares of Common Stock to be Issued Upon Exercise of Outstanding Options, Warrants and Rights
(a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights ($)
(b)(1) | Number of Shares of Common Stock Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(c) |
Equity Compensation plans approved by stockholders | 9,423,744(2) | $ 59.68 | — |
Employee stock purchase plans approved by stockholders | | | 6,523,677 |
Equity compensation plans not approved by stockholders | 23,124,959(3) | $ 74.71 | 98,763,757(4)(5) |
| Total | 32,548,703 | $ 62.35 | 105,287,434(5) |
(1) Shares of common stock issuable upon vesting of RSUs have been excluded from the calculation of the weighted average exercise price because they have no exercise price associated with them.
(2) Represents 761,082 shares of common stock subject to outstanding stock options and 8,662,662 shares of common stock that may be issued upon vesting of outstanding RSUs and PSUs (assuming the maximum performance level for PSUs), in each case pursuant to equity awards issued under the Avago Plan.
(3) Represents (i) 164,195 shares of common stock subject to outstanding stock options and 336,625 shares of common stock that may be issued upon the vesting of outstanding RSUs, all of which were awarded under the LSI Plan, (ii) 22,601,973 shares of common stock that may be issued upon the vesting of outstanding RSUs and PSUs (assuming the maximum performance level for PSUs), all of which were awarded under the 2012 Plan, and (iii) and 22,166 shares of common stock that may be issued upon the vesting of outstanding RSUs granted pursuant to other equity compensation plans as at Novemberand agreements assumed by Broadcom in connection with our acquisition of LSI, Broadcom Corporation, Brocade, CA and other companies that originally established those plans or agreements.
(4) Represents shares of common stock available for issuance under the LSI Plan and the 2012 Plan, of which 904,227 shares of common stock and 95,488,245 shares of common stock, respectively, may be used for RSUs.
(5) The 2012 Plan has an automatic annual share renewal provision pursuant to which the aggregate number of shares of common stock available for issuance under the 2012 Plan increases automatically on the first trading day of January each calendar year by 12,195,965 shares of common stock. In accordance with this provision, on January 4,
2018. | | | | | | | | | | | | | | | |
| | | |
| Plan Category | | Number of Shares of
Common Stock to be
Issued Upon Exercise
of Outstanding
Options, Warrants
and Rights (a) | | Weighted-Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights ($) (b)(1) | | Number of Shares of Common Stock Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected
in Column (a)) (c) |
| | | |
| | | |
Equity Compensation plans approved by stockholders | | | | 12,021,758 | (2) | | | $ | 47.07 | | | | | 23,967,559 | (3) |
| | | | |
| | | | |
Employee stock purchase plans approved by stockholders | | | | | | | | | | | | | | 7,549,088 | (4) |
| | | | |
| | | | |
Equity compensation plans not approved by stockholders | | | | 14,145,388 | (5) | | | $ | 73.45 | | | | | 93,067,570 | (6)(7) |
| | | | |
| | | | |
Total | | | | 26,167,146 | | | | $ | 50.14 | | | | | 124,584,217 | (3)(7) |
| | | | |
(1) | Shares of common stock issuable upon vesting of RSU awards have been excluded from the calculation of the weighted average exercise price because they have no exercise price associated with them.
|
(2) | Represents 6,814,554 shares of common stock subject to outstanding stock options and 5,207,204 shares of common stock that may be issued upon vesting of outstanding RSU awards (including PSU awards assuming the maximum performance level), in each case pursuant to equity awards issued under the 2009 Plan.
|
(3) | The 2009 Plan has an automatic annual share renewal formula pursuant to which the aggregate number of shares of common stock available for issuance under the 2009 Plan increases automatically on the first day each fiscal year by the least of (i) 6,000,000 shares of common stock, (ii) 3% of the shares of common stock outstanding on the last day of the immediately preceding fiscal year and (iii) such smaller number of shares of common stock as determined by our Board. In accordance with this formula, on November 5, 2018 (the first day of our Fiscal Year 2019), the number of shares of common stock available for future issuance under the 2009 Plan increased by 6,000,000 shares of common stock, which is not reflected in the table.
|
(4) | The Current ESPP has an automatic annual share renewal formula pursuant to which the aggregate number of shares of common stock available for issuance under the Current ESPP increases automatically on the first day each fiscal year by the least of (i) 2 million shares of common stock, (ii) 1% of the shares of common stock outstanding on the last day of the immediately preceding fiscal year and (iii) such smaller number of shares of common stock as determined by our Board. Our Board determined not to increase the number of shares of common stock available for issuance under the Current ESPP for Fiscal Year 2019. If stockholders approve Proposal 3, this automatic renewal provision will be removed from the ESPP.
|
(5) | Represents (i) 895,900 shares of common stock subject to outstanding stock options and 1,920,975 shares of common stock that may be issued upon the vesting of outstanding RSU awards, all of which were awarded under the LSI Plan, (ii) 11,290,297 shares of common stock that may be issued upon the vesting of outstanding RSU awards (including PSU awards assuming the maximum performance level), all of which were awarded under the 2012 Plan, and (iii) 814 shares of common stock subject to outstanding stock options and 37,402 shares of common stock that may be issued upon the vesting of outstanding RSU awards granted pursuant to other equity compensation plans and agreements assumed by us in connection with our acquisition of LSI, BRCM and other companies that originally established those plans or agreements.
|
(6) | Represents shares of common stock available for issuance under the LSI Plan and the 2012 Plan, of which 837,149 shares of common stock and 89,852,085 shares of common stock, respectively, may be used for RSU awards.
|
(7) | The 2012 Plan has an automatic annual share renewal provision pursuant to which the aggregate number of shares of common stock available for issuance under the 2012 Plan increases automatically on the first trading day of January each calendar year by 12,195,965 shares of common stock. In accordance with this provision, on January 2, 2019 (the first trading day in January 2019), the number of shares of common stock available for future issuance under the 2012 Plan increased by 12,195,965 shares of common stock, which is not reflected in the table.
|
2021 (the first trading day in January 2021), the number of shares of common stock available for future issuance under the 2012 Plan increased by 12,195,965 shares of common stock, which is not reflected in the table. If stockholders approve Proposal 3 to amend and restate our 2012 Plan, the total number of shares of common stock remaining available for future issuances will be reduced and the automatic share renewal provision will not be in effect for future years.
For additional information regarding our equity compensation plans, please refer to Note 911 of Notes to Consolidated Financial Statements included in Part II, Item 8 of our 2018 Form2020 Annual Report.
10-K.66 2021 Proxy Statement
Security Ownership of Certain Beneficial Owners, Directors and Executive Officers
The following table sets forth information about the beneficial ownership of
ourBroadcom common stock as of February
11, 20198, 2021 for:
•each named executive officer;
•each of our directors and nominees for director; and
•all of our executive officers and directors as a group.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and dispositive power with respect to all common stock that they beneficially own.
Common stock subject to options that are currently exercisable or exercisable within 60 days of February
11, 20198, 2021 and RSUs that vest within 60 days of February
11, 20198, 2021 are deemed to be outstanding and to be beneficially owned by the person holding the equity award for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
In the table below, percentage ownership is based on
396,103,899408,226,347 shares of common stock outstanding as of February
11, 2019. | | | | | | | | |
| |
| | | Shares Beneficially Owned(1) | |
| | |
| Name and Address of Beneficial Owner | | Number of Shares Common Stock | | | Percentage of Common Stock | |
| | |
| | |
5% Stockholders: | | | | | | | | |
| | |
| | |
Capital World Investors(2) | | | 46,835,295 | | | | 11.8 | % |
| | |
| | |
333 South Hope Street | | | | | | | | |
| | |
| | |
Los Angeles, CA 90071 | | | | | | | | |
| | |
| | |
The Vanguard Group(3) | | | 32,304,597 | | | | 8.2 | % |
| | |
| | |
100 Vanguard Blvd. | | | | | | | | |
| | |
| | |
Malvern, PA 19355 | | | | | | | | |
| | |
| | |
Capital International Investors(4) | | | 30,918,914 | | | | 7.8 | % |
| | |
| | |
11100 Santa Monica Boulevard | | | | | | | | |
| | |
| | |
16th Floor | | | | | | | | |
| | |
| | |
Los Angeles, CA 90025 | | | | | | | | |
| | |
| | |
BlackRock, Inc.(5) | | | 25,711,481 | | | | 6.5 | % |
| | |
| | |
55 East 52nd Street | | | | | | | | |
| | |
| | |
New York, NY 10055 | | | | | | | | |
| | |
| | |
Capital Research Global Investors(6) | | | 25,273,366 | | | | 6.4 | % |
| | |
| | |
333 South Hope Street | | | | | | | | |
| | |
| | |
Los Angeles, CA 90071 | | | | | | | | |
| | |
| | |
Named Executive Officers, Directors and Nominees: | | | | | | | | |
| | |
| | |
Hock E. Tan(7) | | | 2,265,250 | | | | * | |
| | |
| | |
Thomas H. Krause, Jr.(8) | | | 44,842 | | | | * | |
| | |
| | |
Charles B. Kawwas, Ph.D.(9) | | | 99,318 | | | | * | |
| | |
| | |
Mark D. Brazeal(10) | | | 5,761 | | | | * | |
| | |
| | |
Bryan T. Ingram(11) | | | 51,977 | | | | * | |
| | |
| | |
Diane M. Bryant(12) | | | 255 | | | | * | |
| | |
| | |
Gayla J. Delly(13) | | | 1,051 | | | | * | |
| | |
| | |
James V. Diller(14) | | | 144,204 | | | | * | |
| | |
| | |
Lewis C. Eggebrecht(15) | | | 11,454 | | | | * | |
| | |
| | |
Eddy W. Hartenstein(16) | | | 34,948 | | | | * | |
| | |
| | |
Check Kian Low(17) | | | 2,101 | | | | * | |
| | |
| | |
Donald Macleod(18) | | | 54,565 | | | | * | |
| | |
| | |
Peter J. Marks(19) | | | 33,012 | | | | * | |
| | |
| | |
Henry Samueli, Ph.D.(20) | | | 9,661,185 | | | | 2.4 | % |
| | |
| | |
Harry L. You(21) | | | 223 | | | | * | |
| | |
| | |
All 16 executive officers and directors as a group(22) | | | 12,440,113 | | | | 3.1 | % |
| | |
* | Represents beneficial ownership of less than 1%.
|
8, 2021.(1) | Amounts shown in the table above include securities held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account.
|
(2) | Number of shares of common stock is based solely on information reported by Capital World Investors on the Schedule 13G/A filed with the SEC on February 14, 2019, reporting ownership as of December 31, 2018. According to such Schedule 13G/A, Capital World Investors has sole dispositive power over these shares and sole voting power over 46,810,865 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 11, 2019.
|
(3) | Number of shares of common stock is based solely on information reported by The Vanguard Group on the Schedule 13G filed with the SEC on February 11, 2019, reporting ownership as of December 31, 2018. According to such Schedule 13G. The Vanguard Group has sole voting power over 503,064 of these shares, sole dispositive power over 31,719,984 of these shares, shared voting power over 92,331 of these shares and shared dispositive power over 584,613 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 11, 2019.
|
(4) | Number of shares of common stock is based solely on information reported by Capital International Investors on the Schedule 13G filed with the SEC on February 14, 2019, reporting ownership as of December 31, 2018. According to such Schedule 13G, Capital International Investors has sole dispositive power over these shares and sole voting power over 30,659,989 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 11, 2019.
|
(5) | Number of shares of common stock is based solely on information reported by BlackRock, Inc. on the Schedule 13G filed with the SEC on February 8, 2019, reporting ownership as of December 31, 2018. According to such Schedule 13G, BlackRock, Inc. has sole dispositive power over these shares and sole voting power over 22,272,834 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 11, 2019.
|
(6) | Number of shares of common stock is based solely on information reported by Capital Research Global Investors on the Schedule 13G/A filed with the SEC on February 14, 2019, reporting ownership as of December 31, 2018. According to such Schedule 13G/A, Capital Research Global Investors has sole voting power and sole dispositive power over these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 11, 2019.
|
(7) | Shares shown in the table above include 2,159,166 shares that Mr. Tan has the right to acquire within 60 days after February 11, 2019 upon the exercise of stock options.
|
(8) | Shares shown in the table above include 15,125 shares that Mr. Krause has the right to acquire within 60 days after February 11, 2019 | | | | | | | | | | Shares Beneficially Owned(1) | | Name and Address of Beneficial Owners | Number of Shares Common Stock | Percentage of Common Stock | 5% Stockholders: | | | Capital World Investors(2) | 41,663,834 | 10.2% | | 333 South Hope Street, 55th Floor | | | | 55th Floor | | | | Los Angeles, CA 90071 | | | Capital International Investors(3) | 34,864,563 | 8.5% | | 333 South Hope Street, 55th Floor | | | | Los Angeles, CA 90071 | | | The Vanguard Group(4) | 33,773,019 | 8.3% | | 100 Vanguard Blvd. | | | | Malvern, PA 19355 | | | Capital Research Global Investors(5) | 33,124,886 | 8.1% | | 333 South Hope Street, 55th Floor | | | | Los Angeles, CA 90071 | | | BlackRock, Inc.(6) | 27,011,041 | 6.6% | 55 East 52nd Street | | | | New York, NY 10055 | | | Named Executive Officers, Directors and Nominees: | | | | Hock E. Tan | 217,832 | * | Thomas H. Krause, Jr.(7) | 10,125 | * | Mark D. Brazeal(8) | 9,830 | * | Charlie B. Kawwas, Ph.D.(9) | 24,159 | * | Kirsten M. Spears10) | 6,303 | * | Diane M. Bryant(11) | 1,979 | * | Gayla J. Delly(12) | 2,775 | * | Raul J. Fernandez(13) | 1,351 | * | Eddy W. Hartenstein(14) | 32,432 | * | Check Kian Low(15) | 3,712 | * | Justine F. Page(16) | 2,602 | * | Henry Samueli, Ph.D.(17) | 9,286,971 | 2.3% | Harry L. You(18) | 1,749 | * | All 13 current executive officers and directors as a group(19) | 9,601,820 | 2.4% |
* Represents beneficial ownership of less than 1%.
(1) Amounts shown in the table above include securities held in the beneficial owner’s name or jointly with others, or in the name of a bank, nominee or trustee for the beneficial owner’s account. (2) Number of shares of common stock is based solely on information reported by Capital World Investors on the Schedule 13G/A filed with the SEC on February 16, 2021, reporting ownership as of December 31, 2020. According to such Schedule 13G/A, Capital World Investors has sole dispositive power over these shares and sole voting power over 41,611,523 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 8, 2021. (3) Number of shares of common stock is based solely on information reported by Capital International Investors on the Schedule 13G/A filed with the SEC on February 16, 2021, reporting ownership as of December 31, 2020. According to such Schedule 13G/A, Capital International Investors has sole dispositive power over these shares and sole voting power over 34,675,387 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 8, 2021. (4) Number of shares of common stock is based solely on information reported by The Vanguard Group on the Schedule 13G/A filed with the SEC on February 10, 2021, reporting ownership as of December 31, 2020. According to such Schedule 13G/A. The Vanguard Group has sole dispositive power over 31,956,295 of these shares, shared dispositive power over 1,816,724 of these shares and shared voting power over 695,045 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 8, 2021. (5) Number of shares of common stock is based solely on information reported by Capital Research Global Investors on the Schedule 13G/A filed with the SEC on February 16, 2021, reporting ownership as of December 31, 2020. According to such Schedule 13G/A, Capital Research Global Investors has sole dispositive power over these shares and sole voting power over 33,119,358 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 8, 2021. (6) Number of shares of common stock is based solely on information reported by BlackRock, Inc. on the Schedule 13G/A filed with the SEC on February 5, 2021, reporting ownership as of December 31, 2020. According to such Schedule 13G/A, BlackRock, Inc. has sole dispositive power over these shares and sole voting power over 24,062,381 of these shares. Ownership percentage assumes the stockholder continued to own the number of shares reflected in the table above on February 8, 2021. (7) Shares shown in the table above consist of shares that Mr. Krause has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. These shares do not include any shares that may be earned pursuant to PSUs for the performance periods ending March 1 and 14, 2021. (8) Shares shown in the table above include 5,375 shares that Mr. Brazeal has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. These shares do not include any shares that may be earned pursuant to PSUs for the performance periods ending March 1 and 14, 2021. (9) Shares shown in the table above include 10,000 shares that Dr. Kawwas has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. These shares do not include any shares that may be earned pursuant to PSUs for the performance periods ending March 1 and 14, 2021. (10) Shares shown in the table above include 6,251 shares that Ms. Spears has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. These shares do not include any shares that may be earned pursuant to PSUs for the performance periods ending March 1 and 14, 2021. (11) Shares shown in the table above include 32 shares held by The Diane M. Bryant Trust u/a/d 11/08/17 and 949 shares that Ms. Bryant has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. (12) Shares shown in the table above include 949 shares that Ms. Delly has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. (13) Shares shown in the table above include 949 shares that Mr. Fernandez has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. (14) Shares shown in the table above include 22,892 shares held by The Hartenstein Family Trust and 949 shares that Mr. Hartenstein has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. (15) Shares shown in the table above include 949 shares that Mr. Low has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. (16) Shares shown in the table above include 949 shares that Ms. Page has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. (17) The shares in the table include 1,225 shares that Dr. Samueli has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs, but does not include any shares that may be earned pursuant to PSUs for the performance periods ending March 1 and 14, 2021. Shares in the table also include (i) 4,444,484 shares held by D95GT LLC, (ii) 1,227,203 shares held by E95GT LLC, (iii) 459,690 shares held by H&S Portfolio II L.P., and (iv) 2,893,512 shares held by H&S Investments I L.P.. Dr. Samueli disclaims beneficial ownership of the shares held by H&S Portfolio II, L.P and H&S Investments I, L.P. (collectively, the “H&S Partnerships”) and D95GT LLC and E95GT LLC, except to the extent of his pecuniary interest therein. H&S Ventures LLC is the general partner of the H&S Partnerships and Dr. Samueli has an ownership interest in H&S Ventures LLC. Dr. Samueli has sole dispositive and voting power over the shares held by the H&S Partnerships, D95FT LLC and E95GT LLC. (18) Shares shown in the table above include 949 shares that Mr. You has the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. (19) Shares shown in the table above include 39,619 shares that directors and executive officers have the right to acquire within 60 days after February 8, 2021 upon the vesting of RSUs. These shares do not include any shares that may be earned pursuant to PSU awards for the performance periods ending March 1 and 14, 2019. |
(9) | Shares shown in the table above include 49,330 shares and 20,000 shares that Dr. Kawwas has the right to acquire within 60 days after February 11, 2019 upon the exercise of stock options and the vesting of RSUs, respectively. These shares do not include any shares that may be earned pursuant to PSU awards for the performance periods ending March 1 and 14, 2019.
|
(10) | Shares shown in the table above include 1,625 shares that Mr. Brazeal has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs. These shares do not include any shares that may be earned pursuant to PSU awards for the performance periods ending March 1 and 14, 2019.
|
(11) | Shares shown in the table above include 22,500 shares that Mr. Ingram has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs. These shares do not include any shares that may be earned pursuant to PSU awards for the performance periods ending March 1 and 14, 2019.
|
(12) | Shares shown in the table above include 32 shares held by the The Diane M. Bryant Trust u/a/d 11/08/17 and 223 shares that Ms. Bryant has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs.
|
(13) | Shares shown in the table above include 807 shares that Ms. Delly has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs.
|
(14) | Shares shown in the table above include 119,500 shares held by the James & June Diller Trust UA dated 7/20/77 and 807 shares that Mr. Diller has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs. Mr. Diller will cease to be a director with effect from the start of the Annual Meeting.
|
(15) | Shares shown in the table above include 1,500 shares held by the Lewis & Rebecca Eggebrecht Trust UA dated 6/21/97 and 807 shares that he has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs. Mr. Eggebrecht will cease to be a director with effect from the start of the Annual Meeting.
|
(16) | Shares shown in the table above include 807 shares that Mr. Hartenstein has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs.
|
(17) | Shares shown in the table above include 807 shares that Mr. Low has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs.
|
(18) | Shares shown in the table above include 807 shares that Mr. Macleod has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs. Mr. Macleod will cease to be a director with effect from the start of the Annual Meeting.
|
(19) | Shares shown in the table above include 807 shares that Mr. Marks has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs.
|
(20) | The shares in the table include 7,019 shares that Dr. Samueli has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs, but does not include any shares that may be earned pursuant to PSU awards for the performance periods ending March 1 and 14, 2019. Shares in the table also include (i) 5,752,978 shares held by HS Portfolio L.P., (ii) 399,918 shares held by HS Management, L.P., (iii) 459,690 shares held by H&S Portfolio II L.P., (iv) 2,815,759 shares held by H&S Investments I L.P., and (v) 1,860 shares held by H&S Ventures LLC. Dr. Samueli disclaims beneficial ownership of the shares held by HS Management, L.P., HS Portfolio L.P., H&S Portfolio II, L.P and H&S Investments I, L.P. (collectively, the “H&S Partnerships”) and H&S Ventures LLC, except to the extent of his pecuniary interest therein. H&S Ventures LLC is the general partner of the H&S Partnerships. As the indirect owner of H&S Ventures LLC, Dr. Samueli has sole dispositive and voting power over the shares held by the H&S Partnerships and H&S Ventures LLC.
|
(21) | Shares shown in the table above include 223 shares that Mr. You has the right to acquire within 60 days after February 11, 2019 upon the vesting of RSUs.
|
(22) | Shares shown in the table above include 2,224,246 shares and 82,989 shares that directors and executive officers have the right to acquire within 60 days after February 11, 2019 upon the exercise of stock options and the vesting of RSUs, respectively. These shares do not include any shares that may be earned by our executive officers pursuant to their respective PSU awards for the performance periods ending March 1 and 14, 2019.
|
Section 16(a) Beneficial Ownership Reporting Compliance
Under the securities laws of the United States, our directors, executive officers and any persons holding more than 10 percent of our common stock (“Reporting Persons”) are required to report, to the SEC and to Nasdaq, their initial ownership of our common stock and other equity securities and any subsequent changes in that ownership, and to furnish us with copies of all the reports they file. As a matter of practice, we assist our executive officers pursuant to their respective PSUs for the performance periods ending March 1 and directors in preparing initial ownership reports and reporting ownership changes, and typically file these reports on their behalf.
Based solely on our review of the copies of such reports received by us or written representations from the Reporting Persons, we believe that during Fiscal Year 2018, all Reporting Persons complied with all applicable filing requirements.
14, 2021.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Party Transactions
Other than compensation and other arrangements described above under “Director Compensation,” “Executive Compensation” and as set forth below, since October 30, 2017,November 4, 2019, there was not, nor is there currently planned, any transaction or series of similar transactions to which we wereBroadcom was or will be a party in which: •the amount involved exceeded or will exceed $120,000; and
•any director, nominee, executive officer, holder of more than 5% of ourBroadcom common stock, or any member of their immediate family had or will have a direct or indirect material interest.
We refer to these
These types of transactions
are referred to as “related party transactions.”
Procedures for Approval of Related Party Transactions
As provided by
ourthe Audit Committee Charter, the Audit Committee must review all related party transactions on an ongoing basis and all such transactions must be approved by the Audit Committee. The Audit Committee may delegate to one or more designated members of the committee the authority to
pre-approve related party transactions, provided such approvals are presented to the Audit Committee at its next scheduled meeting. In approving or rejecting the proposed transaction, the Audit Committee considers the relevant facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to the risks, costs and benefits to us, the terms of the transaction, the availability of other sources for comparable services or products, and, if applicable, the impact on a director’s independence. Our Code of Ethics
and Business Conduct requires that directors, officers and employees make appropriate disclosure of potential conflicts of interest to (i) the
Nominating/GovernanceNESG Committee or the Audit Committee, in the case of directors and officers, or (ii) to their supervisor, who will then seek authorization from our compliance officer, in the case of employees. Our Board has authority to approve related party transactions in lieu of the Audit Committee.
Note Purchase Agreement with Silver Lake
In connection with our previously proposed acquisition of Qualcomm Incorporated (“Qualcomm”) on February 11, 2018, Broadcom and Broadcom-Singapore entered into a Note Purchase Agreement (“Purchase Agreement”) to sell up to $6 billion aggregate principal amount of our 3.00% Convertible Senior Notes (the “Convertible Notes”), with $3.5 billion principal amount of the Convertible Notes being issuable to Silver Lake Partners V, L.P., an investment fund affiliated with Silver Lake (“SLP Fund”). Mr. Kenneth Hao, a former director of our Company, is a Managing Partner and Managing Director of Silver Lake. The issuance of the Convertible Notes, and the terms thereof, and entry into other agreements relating to the issuance of the Convertible Notes to the investors, including the SLP Fund, were reviewed and approved by our Board with Mr. Hao recused from such review and approval.
In March 2018, Broadcom withdrew and terminated its offer to acquire Qualcomm. The Purchase Agreement was also terminated with no Convertible Notes being issued pursuant thereto.
From time to time in the ordinary course of business, on an arm’s length basis,
we purchaseBroadcom purchases from, and/or
sellsells to, certain entities where one of our directors also serves or served as a director of that entity. During Fiscal Year
2018 these entities were (i) Symantec Corporation, on whose board of directors Mr. Hao serves as a director and (ii) TiVo Corporation and2020, Broadcom had business dealings with SIRUS XM Holdings, Inc., on whose
boardsboard of directors Mr. Hartenstein serves as a director.
During Fiscal Year 2018, at our request, representatives of Silver Lake have provided advice and assistance Prior to us in connection with obtaining debt financingMr. Fernandez being considered as a candidate for acquisition transactions, given their extensive experience with debt financings of this nature. Silver Lake did not receive any compensation for the provision of such services.
In addition, Silver Lake portfolio companies, such as Dell Inc.,director, Broadcom also entered into, arrangements with us to purchase our products or to sell products to us in the ordinary course of their and our business, and on an arms’arm’s length basis.
basis, an advertising and publicity sponsorship agreement, which expired in June 2020, with Monumental Sports & Entertainment, a private partnership in which Mr. Fernandez holds a minority interest and serves as Vice Chairman.
ADDITIONAL MEETING INFORMATION
| | | | | | | | | | | |
When: | | April 1, 20195, 2021 | Time: | Time:
| | 11:00 a.m. Pacific Time |
Where: | | 280 Innovation1320 Ridder Park Drive
San Jose, California 95134
95131 | | Record Date: | | February 11, 2019 |
| | | 8, 2021 |
We are making this
This Proxy Statement
is made available in connection with the solicitation by our Board of proxies to be voted at the Annual Meeting, or at any adjournments or postponements thereof. The Internet Notice, this Proxy Statement, the accompanying proxy card and our
2018 Form10-K2020 Annual Report were first made available to our stockholders on or about February 19,
2019.2021.
Electronic Delivery of Our Stockholder Communications
We are furnishing the proxy materials, including this Proxy Statement and the
2018 Form10-K,2020 Annual Report, to our stockholders by providing access to such documents on the Internet Notice instead of mailing printed copies. The Internet Notice provides instructions as to how you may access and review all of the proxy materials on the Internet. The Internet Notice also instructs you as to how you may submit your proxy over the Internet or by telephone. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting such materials in the Internet Notice. Any request to receive proxy materials by mail will remain in effect until you revoke it.
Meeting Attendance and Admission
You are invited to attend the Annual Meeting if you were a registered stockholder or a beneficial owner of
ourBroadcom common stock on the Record Date. All stockholders must bring proof of identification. If you are a registered stockholder, your name will be verified against the list of registered stockholders prior to admittance to the Annual Meeting. If you hold your shares through a broker, bank or other nominee, you will need to provide proof of ownership on the Record Date. This can be any of the following:
The• the Internet Notice;
A• a voting instruction card;
A• a brokerage statement or letter from a broker, bank or other nominee indicating ownership as of the Record Date; or
A• a legal proxy provided by your broker, bank or other nominee.
We are monitoring public health and travel safety concerns relating to COVID-19. If we determine that a change in the date, time or location of the Annual Meeting or a change to a virtual meeting format is advisable or required, we will announce such changes through a press release and additional proxy materials filed with the SEC and on our Investor Center page at http://investors.broadcom.com. Please check this website in advance of the meeting date if you are planning to attend in person, and we encourage you to vote your shares prior to the Annual Meeting
Representation at the Annual Meeting of stockholders entitled to vote, in person or by proxy or representative and holding among them at least a majority of all issued and outstanding shares of common stock is required to constitute a quorum. Abstentions and “brokernon-votes” are counted in determining whether a quorum is present at the Annual Meeting.
Only
stockholdersholders of Broadcom common stock as of the close of business on the Record Date are entitled to vote at the Annual Meeting. Each share of
ourBroadcom common stock has one vote for each matter. As of the Record Date,
weBroadcom had
396,103,899408,226,347 shares of common stock issued and outstanding.
If your shares
of common stock are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are a registered stockholder with respect to those shares.
If your shares of common stock are held by a broker, bank or other nominee, you are the “beneficial owner” of shares held in “street name”.name.” As a beneficial owner, you have the right to instruct the broker, bank or other nominee that holds your shares on how to vote them.
We recommend that stockholders vote by proxy even if they plan to attend the Annual Meeting. You may vote over the Internet, by telephone, by mail or in person.
Internet:vote•Internet:Vote your shares at www.proxyvote.com.
Telephone: call•Telephone: Call (800)690-6903.
•
Mail:complete,Mail: Complete, sign and date your proxy card and return it in the postage-paid envelope. You cannot vote by marking the Internet Notice and returning it.
•At the Annual Meeting:Meeting:The method or timing of your vote will not limit your right to vote in person at the Annual Meeting. However, if your shares are held in the name of a broker, bank or other nominee, you must obtain a legal proxy, executed in your favor, from the holder of record to be able to vote at the Annual Meeting. You should allow yourself enough time prior to the Annual Meeting to obtain this proxy from the holder of record.
Internet and telephone voting are available 24 hours a day and will close at 11:59 p.m. Eastern Time on Sunday,
March 31, 2019.April 4, 2021.
The shares voted by proxy over the Internet, telephonically or proxy cards received, properly marked, dated, signed and not revoked, will be voted at the Annual Meeting.
If you are a registered stockholder, you may revoke your proxy and change your vote:
•by submitting a duly executed proxy card bearing a later date;
•by granting a subsequent proxy over the Internet or by telephone;
•by giving written notice of revocation to the Secretary of Broadcom prior to or at the Annual Meeting; or
•by voting in person at the Annual Meeting.
Your attendance at the Annual Meeting itself will not revoke your proxy unless you give written notice of revocation to the Secretary before your proxy is voted or you vote in person at the Annual Meeting. If you are a beneficial owner, you may change or revoke your voting instructions by following the specific directions provided to you by your broker, bank or other nominee, or you may vote in person at the Annual Meeting by obtaining a legal proxy from your broker, bank or other nominee and submitting the legal proxy along with your ballot.
Board Recommendations, Required Vote and Effects of Abstentions and Broker
Non-VotesThe following chart describes the proposals to be considered at the Annual Meeting, our Board’s recommendations, the vote required for each of the proposals, and the manner in which votes will be counted.
If you are a beneficial owner and do not provide specific voting instructions to your broker, bank or other nominee, the organization that holds your shares will not be authorized to vote your shares, which would result in “broker
non-votes,” on proposals other than the ratification of the appointment of PwC as our independent auditors. Accordingly, we encourage you to vote promptly, even if you plan to attend the Annual Meeting.
| | | | | | | | | | | | | | | | | |
| Proposal | Voting Options | Board Recommendation | | | |
Proposal | | Voting
Options | | Board
Recommendation | | Vote Required | | Effect of
Abstentions | | Effect of Broker
Non-Votes |
| | | | | |
| | | | | |
To elect each of the eightnine director nominees named for the next year | | For
Against
Abstain | | For each nominee | | Affirmative vote of a majority of votes cast | | None | | None |
| | | | | |
| | | | | |
| To ratify the appointment of PwC to serve as our independent auditors | For
Against
Abstain | For Against Abstain | | For | | Affirmative vote of a majority of votes represented at the Annual Meeting and entitled to vote | | Against | | Broker has discretion to vote |
| | | | | |
| | | | | |
To approve amendments to the Second Amendedan amendment and Restated Employee Share Purchaserestatement of our 2012 Stock Incentive Plan | For
Against
Abstain | For Against Abstain | | For | | Affirmative vote of a majority of votes represented at the Annual Meeting and entitled to vote | | Against | | None |
| | | | | |
| | | | | |
| To hold an advisory vote to approve compensation of our named executive officers | For
Against
Abstain | For Against
Abstain
| | For | | Affirmative vote of a majority of votes represented at the Annual Meeting and entitled to vote | | Against | | None |
| | | | | |
If you are a registered stockholder and you return your signed proxy card without giving specific voting instructions, your shares will be voted by the proxy holders
—- Hock E. Tan,
Thomas H. Krause, Jr.Kirsten M. Spears and Mark D. Brazeal or any of them, with full power of substitution (together, the “Proxy Holders”)
—- as recommended by the Board (see table above).
If you are a beneficial owner and you do not provide specific voting instructions to your broker, bank or other nominee, your shares will not be voted, resulting in a “broker
non-vote” and will have no effect on the Proposals except for Proposal 2 (see table above).
We have appointed a representative of Broadridge Investor Communication Solutions, Inc. (“Broadridge”) as the inspector of elections of the Annual Meeting.
WePreliminary voting results will
announce preliminary voting resultsbe announced at the Annual Meeting and
publish the final voting results
will be published in a Current Report on Form
8-K within four business days following the Annual Meeting.
Broadcom will bear the cost of soliciting proxies. We have retained D. F. King & Co., Inc., an independent proxy solicitation firm, to assist us in soliciting proxies for an estimated fee of $15,000, plus reimbursement of reasonable expenses. WeBroadcom and/or our agents, including certain of our officers, directors and employees, may solicit proxies by mail, telephone,e-mail, fax or in person. No additional compensation will be paid to our officers, directors or employees for such services. WeBroadcom will reimburse banks, brokerage firms and other custodians, nominees, trustees and fiduciaries for reasonableout-of-pocket expenses incurred by them in sending proxy materials to and soliciting proxies from beneficial holders of ourBroadcom common stock.
Householding of Proxy Materials
We have adopted a procedure called “householding” under which
we are delivering one copy of the Internet Notice and, if applicable, our proxy materials
will be delivered to multiple stockholders who share an address, unless
we receive contrary instructions from one or more
stockholders.stockholders are received.
Upon written request,
weBroadcom will promptly deliver a separate copy of the Internet Notice and, if applicable, the proxy materials to any stockholder at a shared address to which
we delivered a single copy of any of these
documents.documents was delivered. To receive a separate copy of the Internet Notice and, if applicable, the proxy materials, registered stockholders may contact Broadridge at:
•By Internet: www.proxyvote.com
•By telephone: (800)579-1639
•
By email: sendmaterial@proxyvote.com
In addition, if you are receiving multiple copies and would like to receive only one copy for your household, you should contact Broadridge at the address, telephone number or email address above. If you are a beneficial owner, you should contact your broker, bank or other nominee.
Stockholder Proposals and Director Nominations for the
20202022 Annual Meeting
Proposals to be Included in the Proxy Materials
You may submit proposals for consideration at future annual stockholder meetings. To be considered for inclusion in the proxy materials for our annual meeting of stockholders to be held in
20202022 (“
20202022 Annual Meeting”), your proposal (other than a proposal for director nomination) must comply with the procedures and requirements set forth in Rule
14a-8 under the Exchange Act and be received no later than October 22,
2019.2021.
Proposals not to be Included in the Proxy Materials
Proposals for consideration at the 20202022 Annual Meeting, but not for inclusion in the proxy materials, must be received no earlier than the close of business on December 3, 20196, 2021 and no later than the close of business on January 2, 2020.5, 2022. The proposal must be submitted by a stockholder of record and must set forth the information required by our Bylaws. If you
are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a registered stockholder.
Nominations for Election of Directors Using Proxy Access
A stockholder, or group of up to 20 stockholders, that has owned continuously for at least three years shares of
ourBroadcom common stock (with such three-year period to include any period in which such stockholder continuously held ordinary shares of
Broadcom–SingaporeBroadcom Limited prior to April 4, 2018) representing an aggregate of at least 3% of our outstanding shares, may nominate and include in our proxy materials director nominees constituting up to 20% of our Board, provided that the stockholder(s) and nominee(s) satisfy the requirements in our Bylaws. Notice of proxy access director nominees must be received no earlier than the close of business on September 22,
20192021 and no later than the close of business on October 22,
2019.2021.
Nominations for Election of Directors not Included in the Proxy Materials
Director nominations that a stockholder intends to present at the
20202022 Annual Meeting, but does not intend to have included in our proxy materials, must be received no earlier than the close of business on December
3, 20196, 2021 and no later than the close of business on January
2, 2020.5, 2022. Notice of director nominations must be submitted by a registered stockholder and must set forth the information required by our Bylaws. If you are a beneficial owner of shares held in street name, you can contact the organization that holds your shares for information about how to register your shares directly in your name as a registered stockholder.
Delivery Method for Stockholder Proposals and Director Nominations
Notices of stockholder proposals and the intent to nominate directors at the
20202022 Annual Meeting, and all supporting materials required by our Bylaws, must be submitted by one of the following means:
•By Mail: Broadcom Inc., 1320 Ridder Park Drive, San Jose, California 95131, Attention: Secretary
•By Email: compliance.officer@broadcom.com
We reserveBroadcom reserves the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these and other applicable requirements. Qualified director candidates suggested by holders of
ourBroadcom common stock will be evaluated in the same manner as any other candidate for election to our Board (other than those standing for
re-election).
Our management does not know of any matters to be presented at the Annual Meeting other than those set forth in this Proxy Statement. If any other matters are properly presented for a vote, the enclosed proxy confers discretionary authority to the individuals named as Proxy Holders.
Accompanying this Proxy Statement is our 2018 Form10-K. The2020 Annual Report. This Proxy Statement incorporates by reference the information set forth in our 2018 Form10-K2020 Annual Report under the following headings: Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”;Operations;” Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”;Risk;” and Item 8, “Financial Statements and Supplementary Data.” Copies of this Proxy Statement and the 2018Form 10-K,2020 Annual Report, as filed with the SEC, are also available on our website at www.broadcom.com or you can request a copy free of charge by calling Investor Relations at(408) 433-8000 or emailing investor.relations@broadcom.com.
Upon request, weBroadcom will furnish without charge to each person to whom this Proxy Statement is delivered a copy of any exhibit listed in our 2018 Form10-K.2020 Annual Report. You may request a copy, at no cost, by writing, telephoning or emailing us at:
San Jose, California 95131
Email: investor.relations@broadcom.com
To ensure timely delivery of any materials requested prior to the date of the Annual Meeting, you should request such materials no later than March
18, 2019.17, 2021.
Director, Chief Executive Officer and President
San Jose, California
Reconciliation of Non-GAAP Financial Reconciliation: GAAP toMeasuresNon-GAAP—Unaudited
| | | | | | | | | | | | |
| |
| | | Fiscal Year Ended | |
| | | |
| | | November 4, 2018 | | | October 29, 2017 | | | October 30, 2016 | |
| | | |
| | | (in millions) | |
Net revenue on GAAP basis | | $ | 20,848 | | | $ | 17,636 | | | | | |
Acquisition-related purchase accounting revenue adjustment (1) | | | 14 | | | | 29 | | | | | |
| | | | | | | | | | | | |
Net revenue on non-GAAP basis | | $ | 20,862 | | | $ | 17,665 | | | | | |
| | | | | | | | | | | | |
| | | |
Net revenue on non-GAAP basis | | $ | 20,862 | | | | | | | | | |
Revenue from Acquired Businesses(2) | | | 81 | | | | | | | | | |
| | | | | | | | | | | | |
Adjusted net revenue on a non-GAAP basis | | $ | 20,943 | | | | | | | | | |
| | | | | | | | | | | | |
| | | |
Operating income on GAAP basis | | $ | 5,135 | | | $ | 2,383 | | | | | |
Acquisition-related purchase accounting revenue adjustment (1) | | | 14 | | | | 29 | | | | | |
Purchase accounting effect on inventory | | | 70 | | | | 4 | | | | | |
Amortization of acquisition-related intangible assets | | | 3,545 | | | | 4,275 | | | | | |
Stock-based compensation expense | | | 1,227 | | | | 920 | | | | | |
Restructuring, impairment and disposal charges | | | 239 | | | | 180 | | | | | |
Litigation settlements | | | 14 | | | | 122 | | | | | |
Acquisition-related costs | | | 180 | | | | 98 | | | | | |
| | | | | | | | | | | | |
Operating income on non-GAAP basis | | $ | 10,424 | | | $ | 8,011 | | | | | |
| | | | | | | | | | | | |
| | | |
Operating income on non-GAAP basis | | $ | 10,424 | | | | | | | | | |
Provisions or accruals for anticipated payouts under APB Plan | | | 542 | | | | | | | | | |
Other provisions or accruals, net (3) | | | 53 | | | | | | | | | |
| | | | | | | | | | | | |
Adjusted Operating income on non-GAAP basis | | $ | 11,019 | | | | | | | | | |
| | | | | | | | | | | | |
| | | |
Net cash provided by operating activities | | $ | 8,880 | | | $ | 6,551 | | | $ | 3,411 | |
Purchases of property, plant and equipment | | | (635) | | | | (1,069) | | | | (723) | |
| | | | | | | | | | | | |
Free cash flow | | $ | 8,245 | | | $ | 5,482 | | | $ | 2,688 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| | |
| | Fiscal Year Ended |
| | November 1, 2020 | | November 3, 2019 | | November 4, 2018 |
| | (in millions) |
| Operating income on GAAP basis | $ | 4,014 | $ | 3,444 | $ | 5,135 |
Acquisition-related purchase accounting revenue adjustment (1) | | — | | — | | 14 |
| Purchase accounting effect on inventory | | 11 | | — | | 70 |
| Amortization of acquisition-related intangible assets | | 6,220 | | 5,212 | | 3,545 |
| Stock-based compensation expense | | 1,976 | | 2,185 | | 1,227 |
| Restructuring, impairment and disposal charges | | 233 | | 813 | | 239 |
| Litigation settlements | | 63 | | — | | 14 |
| Acquisition-related costs | | 422 | | 275 | | 180 |
| Operating income on non-GAAP basis | $ | 12,939 | $ | 11,929 | $ | 10,424 |
| | | | | | |
| Operating income on non-GAAP basis | $ | 12,939 | | | | |
| Provisions or accruals for anticipated payouts under APB Plan | | 549 | | | | |
| Adjusted Operating income on non-GAAP basis | $ | 13,488 | | | | |
| Net cash provided by operating activities | $ | 12,061 | $ | 9,697 | $ | 8,880 |
| Purchases of property, plant and equipment | | (463) | | (432) | | (635) |
| Free cash flow | $ | 11,598 | $ | 9,265 | $ | 8,245 |
(1) Amounts represent licensing revenue not included in GAAP net revenue as a result of the effect of purchase accounting for acquisitions.
(2) Represents revenue from Brocade during Fiscal Year 2018 prior to the completion of our acquisition of Brocade that was taken into consideration in setting Fiscal Year 2018 performance goals.
(3) Represents expenses related to Brocade during Fiscal Year 2018 prior to the completion of our acquisition of Brocade, that were excluded in setting Fiscal Year 2018 performance goals.
Use of Non-GAAP Financial Measures
Non-GAAP results exclude acquisition-related revenue adjustments, amortization of acquisition-related intangible assets, stock-based compensation expense, restructuring, impairment and disposal charges, acquisition-related costs, including integration costs, purchase accounting effect on inventory
and litigation
settlements, gain (loss) on acquisition-related assets, other non-recurring gains, income (loss) from discontinuedsettlements. We believe this non-GAAP financial information provides additional insight into our on-going performance. Therefore, we provide this information to investors for a more consistent basis of comparison and to help them evaluate the results of our on-going operations and
non-GAAP tax reconciling adjustments.enable more meaningful period to period comparisons.
Management does not believe that these items are reflective of our underlying performance. Internally, these non-GAAP measures are significant measures used by management for purposes of evaluating our core operating performance, establishing internal budgets, calculating return on investment for development programs and growth initiatives, comparing performance with internal forecasts and targeted business models, strategic planning, evaluating and valuing potential acquisition candidates and how their operations compare to our operations, and benchmarking performance externally against our competitors. The exclusion of these and other similar items from our GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent or unusual. The forgoing reconciliation includes a reconciliation of free cash flow to the most comparable GAAP cash flow measure, "Net“Net cash provided by operating activities".activities.” Free cash flow measures have limitations as they omit certain components of the overall cash flow statement and do not represent the residual cash flow available for discretionary expenditures. Investors should not consider presentation of free cash flow measures as implying that stockholders have any right to such cash. Our free cash flow may not be calculated in a manner comparable to similarly named measures used by other companies.
APPENDIX B
SECOND AMENDMENT TO THE
BROADCOM LIMITEDINC.
2012 STOCK INCENTIVE PLAN
(amended and restated April 5, 2021)
ARTICLE ONE
GENERAL PROVISIONS
I.SECOND AMENDED AND RESTATED EMPLOYEE SHARE PURCHASEPURPOSE OF THE PLAN
February 6, 2019This Second Amendment (this “Amendment”) to2012 Stock Incentive Plan, formerly known as the Broadcom Limited Second AmendedCorporation 2012 Stock Incentive Plan, was adopted by Broadcom Corporation’s Board of Directors on February 16, 2012 and Restated Employee Share Purchasewas approved by Broadcom Corporation’s shareholders at the annual meeting of shareholders on May 15, 2012. The Plan aswas amended and restated by the amendment dated April 4, 2018 (asBroadcom Corporation Board of Directors on February 13, 2014 and again on January 28, 2015, and was amended the “Plan”), is adopted by the Board of Directors of Broadcom Limited and the Board on February 1, 2016 and on April 4, 2018, respectively. The Plan was subsequently amended and restated by the Board on February 5, 2021 (the “Board Approval Date”), subject to approval of the Corporation’s stockholders at the annual meeting of stockholders on April 5, 2021 (the “2021 Annual Meeting”). The Plan is intended to promote the interests of Broadcom Inc., a Delaware corporation, (the “Company”),by providing eligible persons in the Corporation’s service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Corporation as an incentive for them to remain in such service.
Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the attached Appendix.
II.STRUCTURE OF THE PLAN
A.The Plan is divided into two equity incentive programs:
•the Discretionary Grant Program, under which eligible persons may, at the discretion of the Plan Administrator, be granted options to purchase Shares or stock appreciation rights tied to the value of such Shares, and
•the Stock Issuance Program, under which eligible persons may be issued Shares pursuant to restricted stock or restricted stock unit awards or other stock-based awards, made by and at the discretion of the Plan Administrator, that vest upon the completion of a designated service period and/or the attainment of pre-established performance milestones, or under which Shares may be issued through direct purchase or as a bonus for services rendered to the Corporation (or any Parent or Subsidiary).
B.The provisions of Articles One and Four shall apply to all equity programs under the Plan and shall govern the interests of all persons under the Plan.
III.ADMINISTRATION OF THE PLAN
A.The Discretionary Grant and Stock Issuance Programs shall be administered by the Plan Administrator, provided, that, any discretionary Awards to members of the committee that serves as the Plan Administrator for such service must be authorized and approved by a disinterested majority of the Board.
B.Members of the committee appointed by the Board as the Plan Administrator shall serve for such period as the Board may determine and may be removed by the Board at any time.
C.The Plan Administrator shall, within the scope of its administrative functions under the Plan, have full power and authority (subject to the provisions of the Plan) to establish such rules and regulations as it may deem appropriate for proper administration of the Discretionary Grant and Stock Issuance Programs and to make such determinations under, and issue such interpretations of, the provisions of those programs and any outstanding Awards thereunder as it may deem necessary or advisable. Decisions of the Plan Administrator within the scope
of its administrative functions under the Plan shall be final and binding on all parties who have an interest in the Discretionary Grant and Stock Issuance Programs under its jurisdiction or any Award thereunder.
D.Service on the date firstCompensation Committee, or other committee appointed by the Board as the Plan Administrator, shall constitute service as a Board member, and members of each such committee shall accordingly be entitled to full indemnification and reimbursement as Board members for their service on such committee. No member of the Compensation Committee, or other committee appointed by the Board as the Plan Administrator, shall be liable for any act or omission made in good faith with respect to the Plan or any Award under the Plan.
IV.ELIGIBILITY
A.The persons eligible to participate in the Discretionary Grant and Stock Issuance Programs are as follows:
(i)Employees,
(ii)non-employee members of the Board or the board of directors of any Parent or Subsidiary, and
(iii)Consultants who provide services to the Corporation (or any Parent or Subsidiary).
B.The Plan Administrator shall, within the scope of its administrative jurisdiction under the Plan, have full authority to determine (i) with respect to Awards made under the Discretionary Grant Program, which eligible persons are to receive such Awards, the time or times when those Awards are to be made, the number of Shares to be covered by each such Award, the status of any awarded option as either an Incentive Option or a Non-Statutory Option, the exercise price per Share in effect for each Award (subject to the limitations set forth above, effectivein Article Two), the time or times when each Award is to vest and become exercisable, the maximum term for which the Award is to remain outstanding and such other terms of Awards as the Plan Administrator may deem appropriate in its discretion, and (ii) with respect to Awards under the Stock Issuance Program, which eligible persons are to receive such Awards, the time or times when the Awards are to be made, the number of Shares subject to each such Award, the vesting schedule (if any) applicable to the Shares subject to such Award, the cash consideration (if any) payable for such Shares and such other terms of Awards as the Plan Administrator may deem appropriate in its discretion.
C.The Plan Administrator shall have the absolute discretion to grant options or stock appreciation rights in accordance with the Discretionary Grant Program and to effect stock issuances or other stock-based awards in accordance with the Stock Issuance Program.
V.STOCK SUBJECT TO THE PLAN
A.The Shares issuable under the Plan shall be authorized but unissued Shares, including Shares subject to Prior Awards and Shares repurchased by the Corporation on the open market. Subject to any additional Shares authorized by the vote of the Board and approved by the stockholders, the aggregate number of Shares reserved for issuance under the Plan from and after the Effective Date shall be (i) the number of Shares subject to outstanding Prior Awards, plus (ii) 20,000,000 Shares. The maximum number of Shares that may be issued pursuant to Incentive Options granted from and after the Effective Date shall equal the number of Shares available for grant under this Section V.A. of Article One, to the extent allowable under Section 422 of the Code and the rules thereunder.
B.No one person participating in the Plan may be granted Awards for more than 4,000,000 Shares in the aggregate per calendar year.
C.Shares subject to outstanding Awards under the Plan, which for purposes of this paragraph shall include Shares subject to outstanding Prior Awards, shall be available for subsequent issuance under the Plan to the extent those Awards expire or terminate for any reason prior to the issuance of the Shares subject to those Awards. Unvested Shares issued under the Plan and subsequently cancelled or repurchased by the Corporation at the original exercise or issue price paid per Share pursuant to the Corporation’s repurchase rights under the Plan shall be added back to the number of Shares reserved for issuance under the Plan and shall accordingly be available for subsequent reissuance under the Plan. In addition, should the exercise price or base price of an
Award under the Plan be paid with Shares, the authorized reserve of Shares under the Plan shall be reduced only by the net number of Shares issued under the exercised Award. Should Shares otherwise issuable under the Plan be withheld by the Corporation in satisfaction of the withholding taxes incurred in connection with the issuance, exercise, vesting or settlement of an Award under the Plan, the number of Shares available for issuance under the Plan shall be reduced only by the net number of Shares issued with respect to that Award.
D.Shares issued under awards granted by another entity (“other entity awards”) and assumed by the Corporation in connection with a merger, consolidation, stock purchase or similar transaction, or issued by the Corporation under awards substituted for other entity awards in connection with a merger, consolidation, stock purchase or similar transaction, shall not reduce the Shares available for Awards under the Plan, nor shall Shares subject to such assumed or substituted other entity awards be added back to the Shares available for issuance under the Plan.
E.If any change is made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of Shares, exchange of Shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration or should the value of outstanding Shares be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, appropriate adjustments shall be made by the Plan Administrator to (i) the maximum number and/or class of securities issuable under the Plan, (ii) the maximum number and/or class of securities for which any one person may be granted Awards under the Plan per calendar year, (iii) the number and/or class of securities and the exercise or base price per Share (or any other cash consideration payable per Share) in effect under each outstanding Award under the Discretionary Grant Program, and (iv) the number and/or class of securities subject to each outstanding Award under the Stock Issuance Program and the cash consideration (if any) payable per Share thereunder. To the extent such adjustments are to be made to outstanding Awards, those adjustments shall be effected in a manner that shall preclude the enlargement or dilution of rights and benefits under those Awards. The adjustments determined by the Plan Administrator shall be final, binding and conclusive.
VI.CHANGE IN CONTROL
A.Unless otherwise provided in the applicable Award Agreement or another applicable agreement between the Optionee or the Participant and the Corporation or any Parent or Subsidiary, any Award that is outstanding immediately prior to a Change in Control will not vest, lapse (including, without limitation, with respect to forfeiture restrictions or rights of repurchase), and/or become exercisable (as applicable) solely as a result of the Change in Control, but will instead (i) be assumed by the Successor, (ii) continued in full force and effect pursuant to the terms of the Change in Control transaction, or (iii) replaced with a cash retention program of the Successor that preserves the spread existing at the time of the Change in Control on the Shares as to which the Award is not otherwise at that time vested and exercisable, and such Award, as so assumed, continued or replaced, will vest, become exercisable or have any restrictions lapse pursuant to the terms of such Award in effect immediately prior to the Change in Control, subject to subsections (i)-(ii) below.
(i)A Performance-Based Award shall not be deemed to have been assumed, continued or replaced in accordance with Section VI.A of Article One unless the following conditions are satisfied: (i) Performance-Based Awards for which the Performance Period has been completed as of the date of the Change in Control but have not yet been paid will be assumed, continued or replaced based on actual performance during the Performance Period; and (ii) Performance-Based Awards for which the Performance Period has not been completed as of the date of the Change in Control will be deemed to have been achieved at one hundred percent (100%) of target levels for the entire Performance Period (and not pro rata); provided that, in each case, the Performance-Based Awards will continue to be subject to any time-based vesting conditions that were applicable to the Performance-Based Awards prior to their assumption, continuation, or replacement but they will not be subject to any performance goals or metrics following the consummation of the Change in Control.
(ii)The determination of whether an Award is assumed, continued or replaced in accordance with Section VI.A of Article One shall be made by the Plan Administrator, as constituted immediately before the applicable Change in Control, in its sole discretion.
B.No Assumption, Continuation or Replacement of Award. Unless otherwise provided in the applicable Award Agreement or another applicable agreement between the Optionee or the Participant and the Corporation or any Parent or Subsidiary, if for any reason outstanding Awards are not assumed, continued, or replaced pursuant to Section VI.A of Article One, such outstanding Awards will be subject to the following rules, in each
case effective immediately prior to the Change in Control but conditioned upon completion of such Change in Control, with any corresponding payments made as soon as reasonably practicable after the Change in Control, but no later than within 30 days following the date of the Change in Control:
(i)Discretionary Grant Program Awards. All Awards made under the Discretionary Grant Program will become fully vested and exercisable. If an Optionee does not exercise all Awards made under the Discretionary Grant Program prior to the Change in Control, the Plan Administrator will pay such Optionee in exchange for the cancellation of each such unexercised Award the difference between the exercise price or base price per Share of such Award (as applicable) and the per Share consideration provided to other similarly situated shareholders in such Change in Control, with such payment to be made in cash and/or Shares at the Plan Administrator’s discretion (less applicable Withholding Taxes); provided, however that if any such payment is to be made in Shares, the Plan Administrator may in its discretion, provide such Optionees the consideration provided to similarly situated stockholders in such Change in Control; provided further, however, that if the exercise price or base price of such Award exceeds the aforementioned consideration provided, then such Award will be canceled and terminated without any payment.
(ii)Stock Issuance Program Awards that are not Performance-Based Awards. All restrictions imposed on Awards made under the Stock Issuance Program that are not performance-based will lapse and be of no further force and effect, such that all such Awards made under the Stock Issuance Program will become fully vested. Such Awards made under the Stock Issuance Program will be settled (if applicable) and paid in cash and/or Shares at the Plan Administrator’s discretion; provided, however that if any such payment is to be made in Shares, the Plan Administrator may in its discretion, provide such holders the consideration provided to other similarly situated stockholders in such Change in Control.
(iii)Performance-Based Awards. All Performance-Based Awards for which the Performance Period has been completed as of the date of the Change Control but have not yet been paid will vest and be paid in cash and/or Shares at such time at the Plan Administrator’s discretion, with all performance goals to be deemed achieved at actual performance. Moreover, unless otherwise provided in the applicable Award Agreement or another applicable agreement between the Optionee or the Participant and the Corporation or any Parent or Subsidiary, all Performance-Based Awards for which the Performance Period has not been completed as of the date of the Change in Control will, with respect to each applicable performance goal and other vesting criteria, be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met, and vest and be paid out for the entire Performance Period (and not pro rata), with the manner of payment to be made in cash or Shares at the Plan Administrator’s discretion; provided, however that if any such payment is to be made in Shares, the Plan Administrator may in its reasonable discretion, provide such holders the consideration provided to other similarly situated stockholders in such Change in Control.
C.Other Change in Control Matters.
(i)Immediately following the consummation of the Change in Control, all outstanding Awards shall terminate and cease to be outstanding, except to the extent assumed by the Successor or otherwise expressly continued in full force and effect pursuant to the terms of the Change in Control transaction.
(ii)Awards outstanding shall in no way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets, subject to Section V.E of Article One.
(iii)Notwithstanding any other provision of the Plan or any Award Agreement provision, the provisions of Section VI of Article One may not be terminated, amended, or modified in any manner that adversely affects any then-outstanding Award or Optionee or Participant without the prior written consent of the Optionee or Participant, unless for the purpose of complying with Applicable Laws or regulations.
ARTICLE TWO
DISCRETIONARY GRANT PROGRAM
I.OPTION TERMS
Each option shall be evidenced by one or more documents in the form approved by the Plan Administrator; provided, however, that each such document shall comply with the terms specified below. Each document evidencing an Incentive Option shall, in addition, be subject to the provisions of the Plan applicable to such options.
A.Exercise Price.
(i) The exercise price per Share shall be fixed by the Plan Administrator but shall not be less than one hundred percent (100%) of the Fair Market Value per Share on the option grant date. Notwithstanding the foregoing, options may be granted with an exercise price per Share of less than one hundred percent (100%) of the Fair Market Value per Share on the option grant date pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
(ii) The exercise price shall become immediately due upon exercise of the option and shall be payable in one or more of the forms specified below:
(a) cash,
(b) Shares valued at Fair Market Value on the Exercise Date and held for the period (if any) necessary to avoid any additional charges to the Corporation’s earnings for financial reporting purposes, or
(c) to the extent the option is exercised for vested Shares, through a special sale and remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable instructions to (a) a brokerage firm (designated by the Corporation) to effect the immediate sale of the purchased Shares and remit to the Corporation, out of the sale proceeds available on the settlement date, sufficient funds, as determined by the Corporation, to cover the aggregate exercise price payable for the purchased Shares plus all Withholding Taxes to be withheld by the Corporation by reason of such exercise and (b) the Corporation to deliver the certificates for the purchased Shares directly to such brokerage firm to complete the sale, or
(d) if Optionee ceases Service for any reason other than Misconduct and the entire exercise period applicable to the option remaining after such cessation of Service falls within a trading blackout period which the Corporation may impose from time to time, the Plan Administrator may, in its discretion, permit the Corporation (either at the time the option is granted or at any time thereafter) to (a) automatically exercise such portion of the option which has not been exercised previously on the last business day of the exercise period and (b) automatically withhold on such day a number of Shares subject to the option having a Fair Market Value (measured as of the exercise date) equal to (i) the aggregate exercise price of the Shares with respect to which the option is being exercised and (ii) the amount necessary to satisfy Withholding Taxes; provided, that such automatic exercise shall only occur if the Fair Market Value per Share on the last business day of the exercise period of the option is equal to or greater than 101% of the exercise price per Share of the option and, provided, further, that the Plan Administrator shall have the discretionary authority to revoke or amend this Section I.A.2.iv. of this Article Two (and any related provisions in an applicable Award Agreement) at any time without the consent of Optionee.
Except to the extent the procedure set forth in either Section I.A.2.iii. or Section I.A.2.iv. of this Article Two is utilized, payment of the exercise price for the purchased Shares must be made on the Exercise Date.
B.Exercise and Term of Options. Each option shall be exercisable at such time or times, during such period and for such number of Shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in excess of ten (10) years measured from the option grant date. An option shall not be exercisable for any fractional Shares.
C.Effect of Termination of Service.
(i) The following provisions shall govern the exercise of any options held by the Optionee at the time of cessation of Service or death:
(a)Any option outstanding at the time of the Optionee’s cessation of Service for any reason shall remain exercisable for such period of time thereafter as shall be determined by the Plan Administrator and set forth in the documents evidencing the option or as otherwise specifically authorized by the Plan Administrator in its sole discretion pursuant to an express written agreement with Optionee, but no such option shall be exercisable after the expiration of the option term.
(b)Any option held by the Optionee at the time of death and exercisable in whole or in part at that time may be subsequently exercised by the personal representative of the Optionee’s estate or by the person or persons to whom the option is transferred pursuant to the Optionee’s will or the laws of inheritance.
(c)Should the Optionee’s Service be terminated for Misconduct or should the Optionee otherwise engage in Misconduct while holding one or more outstanding options under this Article Two (regardless of whether Optionee’s Service is terminated for Misconduct), all those options shall terminate immediately and cease to be outstanding.
(d)During the applicable post-Service exercise period, the option may not be exercised in the aggregate for more than the number of vested Shares for which that option is at the time exercisable. No additional Shares shall vest under the option following the Optionee’s cessation of Service, except to the extent (if any) specifically authorized by the Plan Administrator in its sole discretion pursuant to an express written agreement with Optionee. Upon the expiration of the applicable exercise period or (if earlier) upon the expiration of the option term, the option shall terminate and cease to be outstanding for any Shares for which the option has not been exercised.
(ii) The Plan Administrator shall have complete discretion, exercisable either at the time an option is granted or at any time while the option remains outstanding, to:
(a)extend the period of time for which the option is to remain exercisable following the Optionee’s cessation of Service from the limited exercise period otherwise in effect for that option to such greater period of time as the Plan Administrator shall deem appropriate, but in no event beyond the expiration of the option term, and/or
(b) permit the option to be exercised, during the applicable post-Service exercise period, not only with respect to the number of vested Shares for which such option is exercisable at the time of the Optionee’s cessation of Service but also with respect to one or more additional options in which the Optionee would have vested had the Optionee continued in Service.
D.Stockholder Rights. The holder of an option shall have no stockholder rights with respect to the Shares subject to the option until such person shall have exercised the option, paid the exercise price for and become a holder of record of the purchased Shares.
E.Repurchase Rights.The Plan Administrator shall have the discretion to grant options that are exercisable for unvested Shares. Should the Optionee cease Service while holding such unvested Shares, the Corporation shall have the right to repurchase, at the exercise price paid per Share, any or all of those unvested Shares. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased Shares) shall be established by the Plan Administrator and set forth in the document evidencing such repurchase right.
F.Transferability of Options. The transferability of options granted under the Plan shall be governed by the following provisions:
(i)Incentive Options. During the lifetime of the Optionee, Incentive Options shall be exercisable only by the Optionee and shall not be assignable or transferable other than by will or the laws of inheritance following the Optionee’s death.
(ii)Non-Statutory Options. Non-Statutory Options shall be subject to the same limitation on transfer as Incentive Options, except that the Plan Administrator may structure one or more Non-Statutory Options so that the option may be assigned in whole or in part during the Optionee’s lifetime by gift or pursuant to a domestic relations order to one or more Family Members of the Optionee or to a trust established exclusively for the Optionee and/or one or more such Family Members. The assigned portion may only be exercised by the person or persons who acquire a proprietary interest in the option pursuant to the assignment. The terms applicable to the assigned portion shall be the same as those in effect for the option immediately prior to such assignment and shall be set forth in such documents issued to the assignee as the Plan Administrator may deem appropriate.
II.INCENTIVE OPTIONS
The terms specified below, together with any additions, deletions or changes thereto imposed from time to time pursuant to the provisions of the Code governing Incentive Options, shall be applicable to all Incentive Options. Except as modified by the provisions of this Section II, all the provisions of Articles One, Two and Four shall be applicable to Incentive Options. Options that are specifically designated as Non-Statutory Options when issued under the Plan shall not be subject to the terms of this Section II.
A.Eligibility. Incentive Options may be granted only to Employees.
B.Exercise Price. The exercise price per Share shall not be less than one hundred percent (100%) of the Fair Market Value per Share on the option grant date.
C.Dollar Limitation. Notwithstanding any Award’s designation as an Incentive Option, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Corporation and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Incentive Options will be treated as Non-Statutory Options. For purposes of the foregoing limitation, options shall be deemed to become first exercisable in the applicable calendar year based on the chronological order in which they were granted, except to the extent otherwise provided under Applicable Laws or regulations.
D.10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10% Stockholder, then the exercise price per Share shall not be less than one hundred ten percent (110%) of the Fair Market Value per Share on the option grant date, and the option term shall not exceed five (5) years measured from the option grant date.
E.Grant Date Limitation. Incentive Options shall not be granted after ten (10) years following the Board Approval Date.
III.STOCK APPRECIATION RIGHTS
A.Authority. The Plan Administrator shall have full power and authority, exercisable in its sole discretion, to grant stock appreciation rights in accordance with this Section III to selected Optionees or other individuals eligible to receive option grants under the Discretionary Grant Program.
B.Types. Two types of stock appreciation rights shall be authorized for issuance under this Section III: (i) tandem stock appreciation rights (“Tandem Rights”), and (ii) standalone stock appreciation rights (“Standalone Rights”).
C.Tandem Rights. The following terms and conditions shall govern the grant and exercise of Tandem Rights.
(i) One or more Optionees may be granted a Tandem Right, exercisable upon such terms and conditions as the Plan Administrator may establish, to elect between the exercise of the underlying stock option for Shares or the surrender of that option in exchange for a distribution from the Corporation in an amount equal to the excess of (i) the Fair Market Value (on the option surrender date) of the number of Shares in which the Optionee is at the time vested under the surrendered option (or surrendered portion thereof) over (ii) the aggregate exercise price payable for such vested Shares. The base price per Share of any Tandem Rights shall be set in accordance with Section I.A.1 of Article Two and Sections II.B and D. of Article Two, as applicable.
(ii) No such option surrender shall be effective unless it is approved by the Company’s stockholders. The Plan Administrator, either at the time of the actual option surrender or at any earlier time. If the surrender is hereby amended, subjectso approved, then the distribution to which the Optionee shall accordingly become entitled under this Section III may be made in Shares valued at Fair Market Value on the option surrender date, in cash, or partly in Shares and effectivepartly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.
(iii) If the surrender of an option is not approved by the Plan Administrator, then the Optionee shall retain whatever rights the Optionee had under the surrendered option (or surrendered portion thereof) on the option surrender date and may exercise such rights at any time prior to the later of (i) five (5) business days after the receipt of the rejection notice or (ii) the last day on which the option is otherwise exercisable in accordance with the terms of the instrument evidencing such option, but in no event may such rights be exercised more than ten (10) years after the date of the option grant. No Tandem Rights shall have a maximum term in excess of ten (10) years measured from the grant date.
D.Standalone Rights. The following terms and conditions shall govern the grant and exercise of Standalone Rights under this Article Two:
(i) One or more individuals eligible to participate in the Discretionary Grant Program may be granted a Standalone Right not tied to any underlying option under this Discretionary Grant Program. The Standalone Right shall relate to a specified number of Shares and shall be exercisable upon such terms and conditions as the Plan Administrator may establish. In no event, however, may the Standalone Right have a maximum term in excess of ten (10) years measured from the grant date. Upon exercise of the Standalone Right, the holder shall be entitled to receive a distribution from the Corporation in an amount equal to the excess of (i) the aggregate Fair Market Value (on the exercise date) of the Shares underlying the exercised right over (ii) the aggregate base price in effect for those Shares.
(ii) The number of Shares underlying each Standalone Right and the base price in effect for those Shares shall be determined by the Plan Administrator in its sole discretion at the time the Standalone Right is granted. In no event, however, may the base price per Share be less than the Fair Market Value per underlying Share on the grant date.
(iii) Standalone Rights shall be subject to the same transferability restrictions applicable to Non-Statutory Options and may not be transferred during the holder’s lifetime, except by gift to one or more Family Members of the holder or to a trust established exclusively for the holder and/or such Family Members or pursuant to a domestic relations order covering the Standalone Right as marital property.
(iv) The distribution with respect to an exercised Standalone Right may be made in Shares valued at Fair Market Value on the exercise date, in cash, or partly in Shares and partly in cash, as the Plan Administrator shall in its sole discretion deem appropriate.
(v) The holder of a Standalone Right shall have no stockholder approval,rights with respect to the Shares subject to the Standalone Right unless and until such person shall have exercised the Standalone Right and become a holder of record of Shares issued upon the exercise of such Standalone Right.
E.Post-Service Exercise. The provisions governing the exercise of Tandem and Standalone Appreciation Rights following the cessation of the recipient’s Service or the recipient’s death shall be substantially the same as follows: | 1. | The following shall replace the title of the Plan: “Broadcom Inc. Employee Stock Purchase Plan”.
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| 2. | The following will replace Section 5(d) of the Plan in its entirety:
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| | (d) During a leave of absence approved by the Company or a Subsidiary and meeting the requirements of Treasury RegulationSection 1.421-1(h)(2), a Participant may continue to participate in the Plan through the Participant’s payroll deductions under the Plan. If a leave of absence is unapproved or fails to meet the requirements of Treasury RegulationSection 1.421-1(h)(2), the Participant will cease automatically to participate in the Plan. In such event, the Company will automatically cease the Participant’s payroll deductions under the Plan. The Company will pay to the Participant his or her total payroll deductions for the Offering Period, in cash in one lump sum (without interest), as soon as practicable after the Participant ceases to participate in the Plan.
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| 3. | The following will replace Section 13(a) of the Plan in its entirety:
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| | (a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of Shares which shall be available for sale under the Plan after February 3, 2019 is seven million five hundred forty-nine thousand eighty-eight (7,549,088).
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| 4. | The following will replace Section 23 of the Plan in its entirety:
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| | “23.Term of Plan. The original Employee Stock Purchase Plan became effective on the Effective Date. The Plan shall be in effect until terminated under Section 20 hereof.”
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| 5. | Except as provided in this Amendment, the Plan shall remain in full force and effect.
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| 6. | Upon receipt of approval of this Amendment by stockholders, the Plan, as amended by this Amendment, shall be deemed amended and restated in form attached hereto as Exhibit A[See Appendix B-1].
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* * * * *
APPENDIXB-1
BROADCOM INC.
EMPLOYEE STOCK PURCHASE PLAN
(as amended and restated on ________, 2019)
Broadcom Inc., a company organizedthose set forth in Section I.C of this Article Two for the options granted under the lawsDiscretionary Grant Program.
F.Net Counting. Upon the exercise of any Tandem or Standalone Right under this Section III, the share reserve under Section V of Article One shall be reduced only by the net number of Shares actually issued by the
Corporation upon such exercise, and not by the gross number of Shares as to which such Tandem or Standalone Right is exercised.
G.Repricing of Awards Made Under the Discretionary Grant Program. Without first obtaining approval of the stockholders of the Corporation, neither the Board nor the Plan Administrator shall approve either (a) the cancellation of Awards of outstanding stock options or stock appreciation rights and the grant in substitution therefore of new stock options or stock appreciation rights having a lower exercise price or base price, as the case may be, or (b) the amendment of outstanding Awards of stock options or stock appreciation rights to reduce the exercise price or base price, as the case may be, thereof. This paragraph shall not be construed to apply to: (i) “issuing or assuming a stock option in a transaction to which Section 424(a) applies” within the meaning of Section 424 of the Code; or (ii) adjustments made pursuant to Sections V.E or VI.A of Article One herein.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
I.STOCK ISSUANCE TERMS
A.Issuances. Shares may be issued under the Stock Issuance Program through direct and immediate issuances without any intervening option grants. Each such stock issuance shall be evidenced by an Award Agreement that complies with the terms specified below. Shares may also be issued under the Stock Issuance Program pursuant to share right awards or restricted stock units, awarded by and at the discretion of the Plan Administrator, that entitle the recipients to receive the Shares underlying those awards or units upon the attainment of designated performance goals and/or the satisfaction of specified Service requirements or upon the expiration of a designated time period following the vesting of those awards or units.
B.Issue Price.
(i) The price per Share at which Shares may be issued under the Stock Issuance Program shall be fixed by the Plan Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value per Share on the issuance date.
(ii) ��Shares may be issued under the Stock Issuance Program for any of the following items of consideration that the Plan Administrator may deem appropriate in each individual instance:
(a) cash;
(b) past services rendered to the Corporation (or any Parent or Subsidiary); or
(c) any other valid form of consideration permissible under the General Corporation Law of the State of Delaware (the “Company”), adopted this Employeeat the time such Shares are issued.
C.Vesting Provisions.
(i) Shares issued under the Stock PurchaseIssuance Program may, in the discretion of the Plan Administrator, be fully and immediately vested upon issuance or may vest in one or more installments over the Participant’s period of Service and/or upon attainment of specified performance objectives and/or upon the Participant’s attainment of retirement eligibility (as defined in the applicable Award Agreement). The elements of the vesting schedule applicable to any unvested Shares issued under the Stock Issuance Program shall be determined by the Plan Administrator and incorporated into the Award Agreement. Shares may also be issued under the Stock Issuance Program pursuant to share right awards or restricted stock units that entitle the recipients to receive the Shares underlying those awards and/or units upon the attainment of designated performance goals or the satisfaction of specified Service requirements or upon the Participant’s attainment of retirement eligibility (as defined in the applicable Award Agreement) or upon the expiration of a designated time period following the vesting of those awards or units, including (without limitation) a deferred distribution date following the termination of the Participant’s Service.
(ii) The Plan Administrator shall also have the discretionary authority to structure one or more Awards under the Stock Issuance Program so that the Shares subject to those Awards shall vest (or
vest and become issuable) upon the achievement of pre-established performance goals, including, without limitation, goals based on ______, 2019 (the “Plan”),total stockholder return. Such performance goals may be based upon the attainment of specified levels of the Corporation’s performance relative to the performance of other entities and may also be based on the performance of any or all of the Corporation’s business groups or divisions thereof or any Parent or Subsidiary. Performance goals may include a minimum threshold level of performance below which amendsno award will be earned, levels of performance at which specified portions of an award will be earned, and restatesa maximum level of performance at which an award will be fully earned. The Plan Administrator may provide that, if the actual level of attainment for any performance objective is between two specified levels, the amount of the award attributable to that performance objective shall be interpolated on a straight-line basis.
(iii) Any new, substituted or additional securities or other property that the Participant may have the right to receive with respect to the Participant’s unvested Shares by reason of any stock dividend, stock split, recapitalization, combination of Shares, exchange of Shares, spin-off transaction or other change affecting the outstanding Common Stock as a class without the Corporation’s receipt of consideration or a substantial reduction in the value of outstanding Shares as a result of a spin-off transaction or an extraordinary dividend or distribution, shall be issued subject to (i) the same vesting requirements applicable to the Participant’s unvested Shares and (ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
(iv) The Participant shall have the right to vote unvested Shares issued to the Participant under the Stock Issuance Program. The Participant shall not have the right to vote the Shares subject to a restricted stock unit or share right award until that award vests and the Shares are actually issued thereunder. Dividend-equivalent units may be credited, either in cash or in actual or phantom Shares, on outstanding unvested Shares issued under the Stock Issuance Program or restricted stock unit or share right awards, subject to such terms and conditions as the Plan Administrator may deem appropriate, provided that any applicable dividend and dividend equivalent amounts with respect to unvested Shares or any Share underlying any Award may be accrued but not paid to a Participant until all conditions or restrictions relating to such Share have been satisfied or lapsed and shall be forfeited if all of such conditions or restrictions are never satisfied or lapse.
(v) Except as otherwise provided in the Plan or the applicable Award Agreement, should the Participant cease to remain in Service while holding one or more unvested Shares issued under the Stock Issuance Program or a restricted stock unit award or share right award under the Stock Issuance Program or should the performance objectives not be attained with respect to one or more such unvested Shares, then those Shares shall be immediately surrendered to the Corporation for cancellation, the Participant shall have no further stockholder rights with respect to those Shares, and/or no Shares or other consideration shall actually be issued to the Participant in satisfaction of such awards, as applicable. To the extent the surrendered Shares were previously issued to the Participant for consideration paid in cash, cash equivalent or otherwise, the Corporation shall repay to the Participant the same amount and form of consideration as the Participant paid for the surrendered Shares.
(vi) The Plan Administrator may in its entiretydiscretion waive the Second Amendedsurrender and Restated Broadcom Limited Employee Share Purchasecancellation of one or more unvested Shares that would otherwise occur upon the cessation of the Participant’s Service or the non-attainment of the performance objectives applicable to those Shares. The Plan effectiveAdministrator shall also have the discretionary authority to issue vested Shares under one or more outstanding share right awards or restricted stock units as to which the designated performance goals or Service requirements have not been attained or satisfied. Such waiver may be effected at any time, whether before or after the Participant’s cessation of March 15, 2016,Service or the attainment or non-attainment of the applicable performance objectives.
ARTICLE FOUR
MISCELLANEOUS
I.TAX WITHHOLDING
A.Corporation’s obligation to deliver Shares upon the issuance, exercise or vesting of Awards under the Plan shall be subject to the satisfaction, as determined by the Corporation, of all Withholding Taxes. The
Corporation shall have the right to determine the manner in which amendedWithholding Taxes are provided for, and restatedneed not apply the same manner of providing for Withholding Taxes for all Optionees or Participants.
B.In addition to the automatic withholding provision set forth in Section I.A.2.iv of Article Two, the Plan Administrator may, in its entiretydiscretion, provide any or all Optionees or Participants to whom Awards are made under the Avago Technologies Limited Employee Plan with the right to utilize the following methods to satisfy all or part of the Withholding Taxes to which those holders may become subject in connection with the issuance, exercise or vesting of those Awards.
(i)Share PurchaseWithholding. The election to have the Corporation withhold, from the Shares otherwise issuable upon the issuance, exercise or vesting of those Awards a portion of those Shares with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by the Optionee or Participant and make a cash payment equal to such Fair Market Value directly to the appropriate taxing authorities on such individual’s behalf. The Shares so withheld shall not reduce the number of Shares authorized for issuance under the Plan.
(ii)Share Delivery. The election to deliver to the Corporation, at the time the Award is issued, exercised or vests, one or more Shares previously acquired by such Optionee or Participant (other than in connection with the issuance, exercise or vesting triggering the Withholding Taxes) with an aggregate Fair Market Value equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by such holder. The Shares so delivered shall not be added to the Shares authorized for issuance under the Plan.
(iii)Cash Payment by the Optionee or Participant. The election for the Optionee or Participant to tender to the Corporation a cash payment equal to the percentage of the Withholding Taxes (not to exceed one hundred percent (100%)) designated by such holder.
II.COMPLIANCE WITH SECTION 409A OF THE CODE
The Plan as
amendedwell as payments and
restated effective asbenefits under the Plan are intended to be exempt from, or to the extent subject thereto, to comply with Section 409A of
June 2, 2010.1. Purpose. Thethe Code, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted in accordance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A of the Code, an Optionee or Participant shall not be considered to have terminated Service with the Corporation, or a Parent or Subsidiary, for purposes of the Plan are as follows:
(a) To assist employeesand no payment shall be due to the Optionee or Participant under the Plan or any Award until the Optionee or Participant would be considered to have incurred a “separation from service” from the Corporation, its Parent or any Subsidiary within the meaning of Section 409A of the CompanyCode. Any payments described in the Plan that are due within the “short term deferral period” as defined in Section 409A of the Code shall not be treated as deferred compensation unless Applicable Laws require otherwise. Notwithstanding anything to the contrary in the Plan, to the extent that any Awards are payable upon a separation from service and its Designated Subsidiariessuch payment would result in the imposition of any individual tax and penalty interest charges imposed under Section 409A of the Code, the settlement and payment of such awards (or other amounts) shall instead be made on the first business day after the date that is six (6) months following such separation from service (or death, if earlier). Each amount to be paid or benefit to be provided under this Plan shall be construed as a separate identified payment for purposes of Section 409A of the Code. The Corporation makes no representation that any or all of the payments or benefits described in this Plan will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to any such payment. The Optionee or the Participant (as defined below)applicable) shall be solely responsible for the payment of any taxes and penalties incurred under Section 409A.
III.SHARE ESCROW/LEGENDS
Unvested Shares issued under the Plan may, in
acquiring a share ownershipthe Plan Administrator’s discretion, be held in escrow by the Corporation until the Participant’s interest in
such Shares vests or may be issued directly to the
Company.(b) To help employees provideParticipant with restrictive legends on the certificates evidencing those unvested Shares.
IV.EFFECTIVE DATE AND TERM OF THE PLAN
A.The Plan shall be effective immediately on the Effective Date.
B.The Plan shall terminate upon the earliest to occur of (i) the date on which all Shares available for their future securityissuance under the Plan shall have been issued as fully-vested Shares or (ii) the termination of all outstanding
Awards in connection with a Change in Control. All Awards outstanding at the time of Plan termination shall continue to have force and effect in accordance with the provisions of the documents evidencing such Awards.
V.AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to encourage themamend or modify the Plan in any or all respects. However, no such amendment or modification shall adversely affect the rights and obligations with respect to remainAwards at the time outstanding under the Plan unless the Optionee or the Participant consents to such amendment or modification. In addition, stockholder approval will be required for any amendment to the Plan that (i) materially increases the number of Shares available for issuance under the Plan, (ii) materially expands the class of individuals eligible to receive option grants or other awards under the Plan, (iii) materially increases the benefits accruing to the Optionees and Participants under the Plan or materially reduces the price at which Shares may be issued or purchased under the Plan, (iv) materially extends the term of the Plan, (v) expands the types of awards available for issuance under the Plan, or (vi) would require stockholder approval under any Applicable Laws, rules or regulations. In addition, the Board may not amend the Plan to remove the requirement for stockholder approval of any form of repricing of Awards made under the Discretionary Grant Program, as specified in Section IV of Article Two.
VI.USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of Shares under the Plan shall be used for general corporate purposes.
VII.REGULATORY APPROVALS
A.The implementation of the Plan, the grant of any Award and the issuance of Shares in connection with the issuance, exercise or vesting of any Award made under the Plan shall be subject to the Corporation’s procurement of all approvals and permits required by regulatory authorities having jurisdiction over the Plan, the Awards made under the Plan and the Shares issuable pursuant to those Awards.
B.No Shares or other assets shall be issued or delivered under the Plan unless and until there shall have been compliance with all applicable requirements of Federal, state and foreign securities and other laws or regulations, including the filing and effectiveness of the Form S-8 registration statement for the Shares issuable under the Plan, and all applicable listing requirements of any stock exchange on which Common Stock is then listed for trading.
VIII.NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the
employmentPlan shall confer upon the Optionee or the Participant any right to continue in Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the
Company and its Designated Subsidiaries.This Plan includes two components: the Section 423 Component (as defined below) and theNon-Section 423 Component (as defined below). It is the intentionCorporation (or any Parent or Subsidiary employing or retaining such person) or of the CompanyOptionee or the Participant, which rights are hereby expressly reserved by each, to haveterminate such person’s Service at any time for any reason, with or without cause.
APPENDIX
The following definitions shall be in effect under the Section 423 Component qualify as an “employeePlan:
A.Applicable Lawsmeans the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock purchase plan”exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any non-U.S. country or jurisdiction where Awards are, or will be, granted under Section 423(b)the Plan.
B.Award shall mean any of the United States Internal Revenue Codefollowing stock or stock-based awards authorized for issuance or grant under the Plan: stock option, stock appreciation right, direct stock issuance, restricted stock or restricted stock unit award or other stock-based award.
C.Award Agreement shall mean the written or electronic agreement entered into by the Corporation and the Participant setting forth the terms and provisions applicable to each Award granted under the Plan. Each Award Agreement is subject to the terms and conditions of 1986,the Plan.
D.Board shall mean the Corporation’s Board of Directors.
E.Change in Control shall mean a change in ownership or control of the Corporation effected through any of the following transactions, unless otherwise provided in the applicable Award Agreement or another applicable agreement between the Optionee or the Participant and the Corporation or any Parent or Subsidiary:
(i)a stockholder-approved merger or consolidation is consummated in which securities possessing more than fifty percent (50%) of the total combined voting power of the Corporation’s outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction, or
(ii)a stockholder-approved sale, transfer or other disposition of all or substantially all of the Corporation’s assets in complete liquidation or dissolution of the Corporation, or
(iii)the acquisition, directly or indirectly by any person or related group of persons (other than the Corporation or a person that directly or indirectly controls, is controlled by, or is under common control with, the Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “Code”“1934 Act”). The provisions) of securities possessing more than fifty percent (50%) of the Section 423 Component, accordingly, shall be construed so as to extend and limit participation on a uniform and nondiscriminatory basis consistent with the requirements of Section 423total combined voting power of the Code. In addition, this Plan authorizes the grant of Options under theNon-Section 423 Component, which need not qualify as options grantedCorporation’s outstanding securities pursuant to an “employee stock purchase plan” under Section 423a tender or exchange offer made directly to the Corporation’s stockholders or pursuant to a private transaction or series of transactions with one or more of the Code; such Options granted underCorporation’s stockholders, or
(iv)a change in theNon-Section 423 Component shall be granted pursuant to separate Offerings containing suchsub-plans, appendices, rules or procedures as may be adopted by the Administrator and designed to achieve tax, securities laws or other objectives for Eligible Employees and the Designated Subsidiaries in locations outside composition of the U.S. Except as otherwise provided herein,Board over a period of thirty-six (36) consecutive months or less such that a majority of theNon-Section 423 Component will operate and be administered in the same manner as the Section 423 Component. Offerings intended Board members ceases, by reason of one or more contested elections for Board membership, to be made undercomposed of individuals who either (A) have been Board members continuously since theNon-Section 423 Component will be designated beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the AdministratorBoard members described in clause (A) who were still in office at or prior to the time ofthe Board approved such Offering.election or nomination.For purposes of this Plan, the Administrator may designate separate Offerings under the Plan, the terms of which need not be identical, in which Eligible Employees will participate, even if the dates of the applicable Offering Period(s) in each such Offering is identical, provided that the terms of participation are the same within each separate Offering under the Section 423 Component as determined under Section 423 of the Code.
2. Definitions.F.(a) “Administrator”Code shall mean the administrator of the Plan, as determined pursuant to Section 14 hereof.
(b) “Board” shall mean the Board of Directors of the Company.
(c) “Code” shall mean the United States Internal Revenue Code of 1986, as amended.
(d) “Committee”G.Common Stock shall mean the committee appointedCorporation’s common stock, par value $0.001 per Share.
H.Compensation Committee shall mean the Compensation Committee of the Board.
I.Consultant shall mean any natural person, including an advisor, engaged by the Corporation or any Parent or Subsidiary to administerrender bona fide services to such entity, provided the Plan pursuantservices (i) are not in connection with the offer or sale of securities in a capital-raising transaction, and (ii) do not directly promote or maintain a market for the Corporation’s securities, in each case, within the meaning of Form S-8 promulgated under the Securities Act, and provided, further, that a Consultant will include only those persons to Section 14 hereof.whom the issuance of Shares may be registered under Form S-8 promulgated under the Securities Act. (e) “Company”J.Corporation shall mean Broadcom Inc., a Delaware corporation.(f) “Compensation”K.Discretionary Grant Program shall mean all base straight time gross earningsthe discretionary grant program in effect under Article Two pursuant to which stock options and commissions, exclusive of payments for overtime, shift premium, incentive compensation, incentive payments, bonuses, expense reimbursements, fringe benefits and other compensation.stock appreciation rights may be granted to one or more eligible individuals.(g) “Designated Subsidiary”L.Effective Date shall mean any Subsidiary that has been designatedApril 5, 2021, the date the Plan was approved by the Administrator fromCorporation’s stockholders at the annual meeting of stockholders.
M.Eligible Director shall mean a Board member who is not, at the time to time in its sole discretion as eligible to participate inof such determination, an employee of the Plan, such designation to specify whether such participationCorporation (or any Parent or Subsidiary).
N.Employee shall mean an individual who is in the Section 423 Component orNon-Section 423 Component. For the avoidance of doubt, a Designated Subsidiary that participates in the Section 423 Component will not participate in theNon-Section 423 Component. The Administrator may designate, or terminate the designation of, a Subsidiary as a Designated Subsidiary in either the Section 423 Component orNon-Section 423 Component without the approvalemploy of the shareholdersCorporation (or any Parent or Subsidiary), subject to the control and direction of the Company.employer entity as to both the work to be performed and the manner and method of performance.B-1-1
(h) “EffectiveO.Exercise Date” shall mean July 31, 2009 (thethe date on which shareholdersthe Corporation shall have received written notice of the Company approved the original Employee Stock Purchase Plan).option exercise.
(i) “Eligible Employee” shall mean an Employee of the Company or a Designated Subsidiary: (i) who does not, immediately after the Option is granted, own shares possessing five percent (5%) or more of the total combined voting power or value of all classes of shares of the Company, a Parent or a Subsidiary; (ii) whose customary employment is for more than twenty (20) hoursP.Fair Market Value per week; and (iii) whose customary employment is for more than five (5) months inShare on any calendar year. For purposes of clause (i), the rules of Section 424(d) of the Code with regard to the attribution of share ownership shall apply in determining the share ownership of an Employee, and shares which an Employee may purchase under outstanding Optionsrelevant date shall be treated as shares owned by the Employee. Notwithstanding the foregoing the Administrator may exclude from participation in the Section 423 Component of the Plan as an Eligible Employee any Employee who is a citizen or resident of a jurisdiction other than the United States (without regard to whether they are also a citizen of the United States or a resident alien (within the meaning of Section 7701(b)(1)(A) of the Code)) if either (A) the grant of the Option is prohibited under the laws of the jurisdiction governing such Employee, or (B) compliance with the laws of such jurisdiction would cause the Section 423 Component, any Offering thereunder or the Option granted thereunder to violate the requirements of Section 423 of the Code; provided that any such exclusion shall be applied in an identical manner under each Offering to all Employees in such Offering,determined in accordance with Treasury RegulationSection 1.423-2(e). Further notwithstanding the foregoing, with respect tofollowing provisions:
(i)If theNon-Section 423 Component, sentences one through three hereof shall apply in determining who Common Stock is an “Eligible Employee,” except (A)at the Administrator may limit eligibility further within the Company or a Designated Subsidiary so as to only designate some Employees of the Company or a Designated Subsidiary as Eligible Employees, and (B) to the extent sentences one through three hereof are not consistent with applicable local laws, in which case applicable local laws shall control.(j) “Employee” shall mean any person who renders services to the Company or a Subsidiary in the status of an employee within the meaning of Code Section 3401(c). “Employee” shall not include any director of the Company or a Subsidiary who does not render services to the Company or a Subsidiary in the status of an employee within the meaning of Code Section 3401(c). For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or Designated Subsidiary and meeting the requirements of Treasury RegulationSection 1.421-1(h) (2). Where the period of leave exceeds three (3) months and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminatedtime traded on the first day following such three (3)-month period.
(k) “Enrollment Date” shall meanNasdaq Global Select Market (or the first Trading Day of each Offering Period.
(l) “Enrollment Deadline” shall haveNasdaq Global Market), then the meaning given to it in Section 5(a).
(m) “Equity Restructuring” means anon-reciprocal transaction (i.e. a transaction in which the Company does not receive consideration or other resources in respect of the transaction approximately equal to and in exchange for the consideration or resources the Company is relinquishing in such transaction) between the Company and its shareholders, such as a share split,spin-off, rights offering, nonrecurring share dividend or recapitalization through a large, nonrecurring cash dividend, that affects the Shares (or other securities of the Company) or the share price of Shares (or other securities) and causes a change in the per share value of the Shares underlying outstanding Options.
(n) “Exercise Date” shall mean the last Trading Day of each Offering Period.
(o) “Fair Market Value” shall mean, as of any date, the per share value of the Shares determined as follows:
(i) If the Shares are listed on any established stock exchange or a national market system, Fair Market Value shall be the closing selling price per shareShare at the close of regular trading hours (i.e. before after-hours trading begins) on the Nasdaq Global Select Market (or the Nasdaq Global Market) on the date in question, as such price is reported by the Nasdaq Global Select Market (or the Nasdaq Global Market) either as reported on the Nasdaq website (www.nasdaq.com), or otherwise. If there is no closing salesselling price for the Shares (or the per share closing bid, if no sales were reported) as quoted on such exchange or system for such date, or if no bids or sales were reported for such date, then the per share closing sales price (or the per share closing bid, if no sales were reported)Common Stock on the trading date immediately prior to such date during which a bid or sale occurred, in each case, as reported inThe Wall Street Journalor such other source asquestion, then the Administrator deems reliable;
(ii) If the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, Fair Market Value shall be the mean ofclosing selling price on the per share closing bid and asked priceslast preceding date for which such quotation exists.
(ii)If the SharesCommon Stock is at the time listed on such date, or if no per share closing bid and asked prices were reported for such date, the date immediately prior to such date during which closing bid and asked prices were quoted for the Shares, in each case, as reported inThe Wall Street Journalor suchany other source as the Administrator deems reliable; or(iii) In the absence of an established market for the Shares,Stock Exchange, then the Fair Market Value thereof shall be determinedthe closing selling price per Share at the close of regular trading hours (i.e. before after-hours trading begins) on the date in good faithquestion on the Stock Exchange determined by the Administrator.
B-1-2
Plan Administrator to be the primary market for the Common Stock, as such price is officially quoted in the composite tape of transactions on such exchange. If there is no closing selling price for the Common Stock on the date in question, then the Fair Market Value shall be the closing selling price on the last preceding date for which such quotation exists.
(p) “Q.Non-SectionFamily Member 423 Component” means, with respect to a particular Optionee or Participant, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law.
R.Incentive Option shall mean those Offerings underan option that satisfies the requirements of Section 422 of the Code.
S.Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the Optionee or Participant, any unauthorized use or disclosure by such person of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), the Optionee’s or Participant’s material failure to comply with or observe the Corporation’s rules or policies (including, without limitation, codes of conduct, employee handbooks or similar rules or policies, and including, without limitation policies prohibiting harassment (sexual or otherwise)), a material breach by the Optionee or Participant of any of the Optionee’s or Participant’s agreements with the Corporation or any Parent or Subsidiary, or any other intentional misconduct by such person adversely affecting the business or affairs or reputation of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not in any way preclude or restrict the right of the Corporation (or any Parent or Subsidiary) to discharge or dismiss any Optionee, Participant or other person in the Service of the Corporation (or any Parent or Subsidiary) for any other acts or omissions, but such other acts or omissions shall not be deemed, for purposes of the Plan, together withto constitute grounds for termination for Misconduct.
T.1934 Act shall mean thesub-plans, appendices, rules or procedures, if any, adopted by the Administrator Securities Exchange Act of 1934, as a part of this Plan, in each case, pursuantamended.
U.Non-Statutory Option shall mean an option not intended to which Options may be granted tonon-U.S. Eligible Employees that need not satisfy the requirements for options granted pursuant to an “employee stock purchase plan” that are set forth underof Section 423422 of the Code. (q) “Offering”V.Optionee shall mean any person to whom an offer under the Plan of an Option that may be exercised during an Offering Period as further described in Sections 4 and 8. Unless otherwise specified by the Administrator, each Offering to the Eligible Employees of the Company or a Designated Subsidiary shall be deemed a separate Offering, even if the dates and other terms of the applicable Offering Periods of each such Offering are identical and the provisions of the Plan will separately apply to each Offering. To the extent permitted by U.S. Treasury RegulationSection 1.423-2(a)(1), the terms of each separate Offering under the Section 423 Component need not be identical, provided that the terms of the Section 423 Component and an Offering thereunder together satisfy U.S. Treasury RegulationSection 1.423-2(a)(2) and (a)(3).(r) “Offering Date” shall mean March 15, 2016 and each September 15 and March 15 thereafter. Offering Dates may be changed pursuant to Section 4 of this Plan.
(s) “Offering Period” shall mean subject to Section 24, each approximately six (6) month period beginning on an Offering Date and ending on the next succeeding Exercise Date. The first Offering Period shall commence March 15, 2016. The duration and timing of Offering Periods may be changed pursuant to Section 4 of this Plan.
(t) “Option” means an option to purchase the Shares on an Exercise Date thatAward is granted under the Plan.Discretionary Grant Program.
(u) “W.Parent” meansshall mean any entity, othercorporation (other than the Company,Corporation) in an unbroken chain of entitiescorporations ending with the Company if,Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, each of the entities other than the Company owns sharesstock possessing 50%fifty percent (50%) or more of the total combined voting power of all classes of sharesstock in one of the other entitiescorporations in such chain.(v) “X.Participant” means an Eligible Employee shall mean any person who is granted an Optionissued Shares or restricted stock units or other stock-based awards under this Plan.the Stock Issuance Program.(w) “Plan”Y.Performance-Based Awards shall mean this Broadcom Inc. Employee Stock Purchase Plan, including both the Section 423 Component and theNon-Section 423 Component and any othersub-plans or appendices hereto, as amended and/or restated from timeAwards that are subject to time.performance vesting conditions.(x) “Purchase Price” Z.Performance Period shall mean 85%the time period during which the performance vesting conditions applicable to Performance-Based Awards must be met.
AA.Plan shall mean the Corporation’s 2012 Stock Incentive Plan, as set forth in this document.
BB. Plan Administrator shall mean the Compensation Committee or other committee appointed by the Board, which is authorized to administer the Discretionary Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, provided that the independent directors of the Fair Market Value of one Share onBoard may act as the Enrollment Date or onPlan Administrator with regard to any Award to the Exercise Date, whichever is lower;provided,however, that the Purchase Price may be adjusted by the Administrator pursuant to Section 20.Corporation’s Chief Executive Officer.
CC. Prior Award shall mean, Section 409A of the Code and the Department of Treasury regulations and other interpretive guidance issued thereunder, including, without limitation, any such regulationsindividually or other guidance issued after the Effective Date.(z) “Section 423 Component” shall mean those Offeringscollectively, an Award granted under the Plan that are intendedprior to meet the requirements set forth in Section 423(b)amendment and restatement of the Code.Plan on April 5, 2021.
(aa) “DD. Securities Act shall mean the Securities Act of 1933, as amended.
EE. Service shall mean the performance of services for the Corporation (or any Parent or Subsidiary) by a person in the capacity of an Employee, an Eligible Director or a Consultant, except to the extent otherwise specifically provided in the documents evidencing the Award made to such person. Service (as defined herein) shall include continued employment or service through any pre-termination notice period that is applicable to an Optionee or Participant serving in any of the foregoing capacities. For purposes of the Plan, an Optionee or Participant shall be deemed to cease Service immediately upon the occurrence of the either of the following events: (i) the Optionee or Participant no longer performs services in any of the foregoing capacities for the Corporation or any Parent or Subsidiary, provided that, for the avoidance of doubt, the performance of services shall include continued employment or service through the period of time occurring during any pre-termination notice period that is applicable to such Optionee or Participant or (ii) the entity for which the Optionee or Participant is performing such services ceases to remain a Parent or Subsidiary of the Corporation, even though the Optionee or Participant may subsequently continue to perform services for that entity.
FF. Shares” shall mean shares of the Company’s common stock,Corporation’s Common Stock, par value $0.001 per share. (bb) “GG. Stock Exchangeshall mean the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market or the New York Stock Exchange, or their successors.
HH. Stock Issuance Program shall mean the stock issuance program in effect under Article Three.
II. Subsidiary” shall mean any entity, othercorporation (other than the Company,Corporation) in an unbroken chain of entitiescorporations beginning with the Company if,Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, each of the entities other than the last entity in an unbroken chain owns sharesstock possessing 50%fifty percent (50%) or more of the total combined voting power of all classes of sharesstock in one of the other entitiescorporations in such chain. (cc) “Trading Day”JJ. Successor shall mean, a day on which the Nasdaq Stock Market is open for trading.3. Eligibility.
(a) Any Eligible Employee who shall be employed by the Company or a Designated Subsidiary on a given Enrollment Date for an Offering Period shall be eligible to participate in the Plan during such Offering Period, subject toevent of a Change in Control, the requirementsacquiring or succeeding entity (or an affiliate thereof).
KK. 10% Stockholder shall mean the owner of stock (as determined under Section 5 and, with respect to the Section 423 Component424(d) of the Plan, the limitations imposed by Section 423(b) of the Code.(b) Each person who, during the course of an Offering Period, first becomes an Eligible Employee subsequent to the Enrollment Date will be eligible to become a Participant in the Plan on the first Enrollment Date following the day on which such person becomes an Eligible Employee, subject to the requirements of Section 5 and, with respect to the Section 423 Component of the Plan, the limitations imposed by Section 423(b) of the Code.
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(c) No Eligible Employee shall be granted an Option under the Plan which permits such Eligible Employee rights to purchase Shares under the Plan, and to purchase shares under all other employee share purchase plans of the Company, any Parent or any Subsidiary subject to the Section 423, to accrue at a rate which exceeds $25,000 of fair market value of such shares (determined at the time the Option is granted) for each calendar year in which the Option is outstanding at any time. For purpose of the limitation imposed by this subsection, the right to purchase Shares under an Option accrues when the Option (or any portion thereof) first becomes exercisable during the calendar year, the right to purchase Shares under an Option accrues at the rate provided in the Option, but in no case may such rate exceed $25,000 of fair market value of such Shares (determined at the time such Option is granted) for any one calendar year, and a right to purchase Shares which has accrued under an Option may not be carried over to any other Option. This limitation shall be applied in accordance with Section 423(b)(8) of the Code and the Treasury Regulations thereunder.
4. Offering Periods. Subject to Section 24, the Plan shall be implemented by successive approximately six (6) month Offering Periods, the first of which shall commence on March 15, 2016. A new Offering Period shall commence following the expiration of each preceding Offering Period until the Plan expires or is terminated in accordance with Section 20 hereof. The Administrator shall have the power to change the duration of Offering Periods (including the Offering Dates and the Exercise Dates thereof) with respect to future offerings if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected thereafter. In no event may an Offering Period exceed twenty-seven (27) months in duration.
5. Participation.
(a) An Eligible Employee may become a Participant in the Plan by completing a subscription agreement authorizing payroll deductions in a form acceptable to the Company and filing it with the Company’s payroll office or external stock plan agent, as determined by the Administrator, five (5) days (or such shorter or longer period as may be determined by the Administrator, in its sole discretion) prior to the applicable Enrollment Date (the “Enrollment Deadline”).
(b) Each person who first becomes an Eligible Employee subsequent to the Enrollment Date for any Offering Period, will be eligible to become a Participant in the Plan on the first Enrollment Date following the day on which such person becomes an Eligible Employee. Such person may become a Participant in the Plan by completing a subscription agreement authorizing payroll deductions in a form acceptable to the Company and filing it with the Company’s payroll office no laterCode) possessing more than the Enrollment Deadline.
(c) Except as provided in subsection (a), payroll deductions for a Participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 10 hereof.
(d) During a leave of absence approved by the Company or a Subsidiary and meeting the requirements of Treasury RegulationSection 1.421-1(h)(2), a Participant may continue to participate in the Plan through the Participant’s payroll deductions under the Plan. If a leave of absence is unapproved or fails to meet the requirements of Treasury RegulationSection 1.421-1(h)(2), the Participant will cease automatically to participate in the Plan. In such event, the Company will automatically cease the Participant’s payroll deductions under the Plan. The Company will pay to the Participant his or her total payroll deductions for the Offering Period, in cash in one lump sum (without interest), as soon as practicable after the Participant ceases to participate in the Plan.
(e) A Participant’s completion of a subscription agreement will enroll such Participant in the Plan for each successive Offering Period on the terms contained herein and therein until the Participant either submits a new subscription agreement, withdraws from participation under the Plan as provide in Section 10 hereof or otherwise becomes ineligible to participate in the Plan.
(f) Notwithstanding any other provisions of the Plan to the contrary, innon-U.S. jurisdictions where participation in the Plan through payroll deductions is prohibited, the Administrator may provide that an Eligible Employee may elect to participate through contributions to his or her account under the Plan in a form acceptable to the Administrator in lieu of or in addition to payroll deductions; provided, however, that, for any Offering under the Section 423 Component, the Administrator must determine that any alternative method of contribution is applied on an equal and uniform basis to all Eligible Employees in the Offering.
6. Payroll Deductions.
(a) At the time a Participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount from one percent (1%) to ten percent (10%) of the Compensation, uptotal combined voting power of all classes of stock of the Corporation (or any Parent or Subsidiary).
LL. Withholding Taxes shall mean the federal, state, local and non-U.S. income and employment taxes related to a maximumthe issuance, exercise, vesting or settlement of $25,000 in any Offering Period, which hethe Award made to the Optionee or she receives on each pay day during the Offering Period.B-1-4
(b) All payroll deductions made for a Participant shall be credited to his or her account under the Plan, and shall be withheld in whole percentages only. Except as described in Section 5(a) hereof, a Participant may not make any additional payments into such account.
(c) A Participant may discontinue his or her participation in the Plan as provided in Section 10 hereof. A Participant may not make any changes to the rate of his or her payroll deductions during the period starting on the day immediately following the Enrollment Deadline for an Offering Period and running through the end of the applicable Offering Period.
(d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(c) hereof, the Company may decrease a Participant’s payroll deductions to zero percent (0%) at any time during an Offering Period.
(e) At the time the Option is exercised, in whole or in part, or at the time some or all of the Shares issued under the Plan are disposed of, the Participant must make adequate provision for the Company’s federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the Option or the disposition of the Shares. At any time, the Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Sharesamounts determined by the Employee.
7. GrantCorporation in its discretion not to exceed the sum of Option. On the Enrollment Date of each Offering Period, each Eligible Employee participating in such Offering Period shall be granted an Option to purchase on the Exercise Date for such Offering Period (at theall statutory maximum rates applicable Purchase Price) up to a number of Shares determined by dividing such Participant’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s account as of the Exercise Date by the applicable Purchase Price; provided, however, that in no event shall a Participant be permitted to purchase during each Offering Period more than two thousand five hundred (2,500) Shares (subject to any adjustment pursuant to Section 19); and provided, further, that such purchase shall be subject to the limitations set forth in Sections 3(c) and 13 hereof. The Administrator may, for future Offering Periods, increase or decrease, in its sole discretion, the maximum number of Shares a Participant may purchase during each Offering Period. Exercise of the Option shall occur as provided in Section 8 hereof, unless the Participant has withdrawn pursuant to Section 10 hereof or otherwise becomes ineligible to participate in the Plan. The Option shall expire on the last day of the Offering Period.
8. Exercise of Option.
(a) Unless a Participant withdraws from the Plan as provided in Section 10 hereof or otherwise becomes ineligible to participate in the Plan, such Participant’s Option to purchase Shares shall be exercised automatically on the Exercise Date, and the maximum number of whole Shares subject to the Option shall be purchased for such Participant at the applicable Purchase Price with the accumulated payroll deductions in his or her account. No fractional shares shall be purchased; any payroll deductions accumulated in a Participant’s account which are not sufficient to purchase a full share shall be either retained in the Participant’s account for the subsequent Offering Period, or refunded to the Participant within sixty (60) days following the end of the applicable Offering Period, to be determined by the Administrator (in its sole discretion). During a Participant’s lifetime, a Participant’s Option to purchase shares hereunder is exercisable only by him or her.
(b) Where a Participant’s payroll deductions are made in a currency other than U.S. dollars, such contributions will be converted into U.S. dollars on the Exercise Date using an exchange ratio determined by the Administrator in its discretion.
(c) If the Administrator determines that, on a given Exercise Date, the number of shares with respect to which Options are to be exercised may exceed (i) the number of Shares that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of shares available for sale under the Plan on such Exercise Date, the Administrator may in its sole discretion (x) provide that the Company shall make a pro rata allocation of the Shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants exercising Options to purchase Shares on such Exercise Date, and continue all Offering Periods then in effect, or (y) provide that the Company shall make a pro rata allocation of the shares available for purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all Participants exercising Options to purchase Shares on such Exercise Date, and terminate any or all Offering Periods then in effect pursuant to Section 20 hereof. The Company may make pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s shareholders subsequent to such
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Enrollment Date. The balance of the amount credited to the account of each Participant which has not been applied to the purchase of Shares shall be paid to such Participant in one lump sum in cash as soon as reasonably practicable after the Exercise Date, without any interest thereon.
9. Deposit of Shares. As promptly as practicable after each Exercise Date on which a purchase of Shares occurs, but in no event later than sixty (60) days after the applicable Exercise Date, the Company may arrange for the deposit, into each Participant’s account with any broker designated by the Company to administer this Plan, of the number of Shares purchased upon exercise of Participant’s Option.
10. Withdrawal.
(a) A Participant may withdraw all but not less than all of the payroll deductions credited to Participant’s account and not yet used to exercise Participant��s Option under the Plan by giving written notice to the Company in the form prescribed by the Company for use under the Plan at least five business days prior to an Exercise Date or such other deadline as is determined by the Administrator. All of the Participant’s payroll deductions credited to the Participant’s account during the Offering Period shall be paid to such Participant as soon as reasonably practicable after receipt of notice of withdrawal and such Participant’s Option for the Offering Period shall be automatically terminated (but in no event more than sixty (60) days thereafter), and no further payroll deductions for the purchase of Shares shall be made for such Offering Period. If a Participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the Participant delivers to the Company a new subscription agreement.
(b) A Participant’s withdrawal from an Offering Period shall not have any effect upon the Participant’s eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the Participant withdraws.
11. Termination or Transfer of Employment. Upon a Participant’s ceasing to be an Eligible Employee, for any reason, the Participant shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such Participant’s account during the Offering Period, up to the date of such termination of employment, shall be paid to such Participant or,jurisdiction(s) (provided, in the case of the Participant’s death, to the person or persons entitled thereto under Section 15 hereof, as soon as reasonably practicable and such Participant’s Option for the Offering Period shall be automatically terminated. If a Participant transfers employment from the Company or any Designated Subsidiary participating in the Section 423 Component to any Designated Subsidiary participating in theNon-Section 423 Component, such transfer shall not be treated as a termination of employment, but he or she shall immediately cease to participate in the Section 423 Component; however, any Contributions made for the Offering Period in which such transfer occurs shall be transferred to theNon-Section 423 Component, and such Participant shall immediately join the then current Offering under theNon-Section 423 Component upon the same terms and conditions in effect for his or her participation in the Section 423 Component, except for such modifications otherwise applicable for Participants in such Offering. A Participant who transfers employment from any Designated Subsidiary participating in theNon-Section 423 Component to the Company or any Designated Subsidiary participating in the Section 423 Component shall not be treated as terminating his or her employment and shall remain a Participant in theNon-Section 423 Component until the earlier of (i) the endis an “officer” of the current Offering Period under theNon-Section 423 Component, or (ii) the Enrollment Date of the first Offering PeriodCorporation as defined in which he or she is eligible to participate following such transfer. Notwithstanding the foregoing, the Administrator may establish different rules to govern transfers of employment between companies participating in the Section 423 Component and theNon-Section 423 Component, consistent with the applicable requirements of Section 423 of the Code.
12. Interest. No interest shall accrue on the payroll deductions or lump sum contributions of a Participant in the Plan.
13. Shares Subject to Plan.
(a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of Shares which shall be available for sale under the Plan after February 3, 2019 is seven million five hundred forty-nine thousand eighty-eight (7,549,088).
(b) If any Option granted under the Plan shall for any reason terminate without having been exercised, the Shares not purchased under such Option shall again become available for issuance under the Plan. The Shares subject to the Plan may be unissued shares or reacquired shares, bought on the market or otherwise.
(c) With respect to Shares subject to an Option granted under the Plan, a Participant shall not be deemed to be a shareholder of the Company, and the Participant shall not have any of the rights or privileges of a
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shareholder, until such Shares have been issued to the Participant or the Participant’s nominee following exercise of the Participant’s Option. No adjustments shall be made for dividends (ordinary or extraordinary, whether in cash securities, or other property) or distribution or other rights for which the record date occurs prior to the date of such issuance, except as otherwise expressly provided herein.
14. Administration.
(a) The Plan shall be administered by the Board unless and until the Board delegates administration to a Committee as set forth below. The Board may delegate administration of the Plan to a Committee comprised of two or more members of the Board, each of whom is a“non-employee director” within the meaning of Rule16b-3 which has been adopted by the United States Securities and Exchange Commission under the United States Securities Exchange Act of 1934, as amended, and which is otherwise constituted to comply with applicable law, and the term “Committee” shall apply to any persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise, subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. Each member of the Committee shall serve for a term commencing on a date specified by the Board and continuing until the member dies or resigns or is removed from office by the Board. References in this Plan to the “Administrator” shall mean the Board unless administration is delegated to a Committee or subcommittee, in which case references in this Plan to the Administrator shall thereafter be to the Committee or subcommittee.
(b) It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with the provisions of the Plan. The Administrator shall have the power to interpret the Plan and the terms of the Options and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. Subject to Section 24, the Administrator shall have the discretion to include any restriction or limitation regarding Shares purchased 16a-1(f) promulgated pursuant to the Plan based on such factors as the Administrator, in its sole discretion, shall determine. The Administrator at its option may delegate its duties hereunder, including duties under Section 5(a) hereof, and may utilize the services of an agent to assist in the administration of the Plan, including establishing and maintaining an individual securities account under the Plan for each Participant. In its absolute discretion, the Board may at1934 Act, or any time and from time to time exercise any and all rights and duties of the Administrator under the Plan. For the avoidance of doubt, the Administrator shall have the exclusive authority to determine which Designated Subsidiaries shall participate in theNon-Section 423 Component and which shall participate in the Section 423 Component.
(c) All expenses and liabilities incurred by the Administrator in connection with the administration of the Plan shall be borne by the Company. The Administrator may, with the approval of the Board, employ attorneys, consultants, accountants, appraisers, brokers or other persons. The Administrator, the Company and its officers and directors shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon all Participants, the Company and all other interested persons. No member of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Options, and all members of the Board shall be fully protected by the Company in respect to any such action, determination, or interpretation.
15. Designation of Beneficiary.
(a) Subject to applicablesuccessor law a Participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to an Exercise Date on which the Option is exercised but prior to delivery to such Participant of such shares and cash. In addition, subject to applicable law, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death prior to exercise of the Option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.
(b) Subject to applicable law, such designation of beneficiary may be changed by the Participant at any time by written notice to the Company. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such Participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the Participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
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16. Transferability.
(a) Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an Option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 15 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.
(b) Subject to Sections 19(c) and 19(d), no Shares issued upon exercise of an Option under this Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the Participant until the six (6) month anniversary of the Exercise Date upon which such Shares were purchased. Notwithstanding the foregoing, in the event a Participant ceases to be an Eligible Employee for any reason, this Section 16(b) shall no longer apply to any Shares then held by such Participant.
17. Use of Funds. All payroll deductions received or held by the Company under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions, provided, that nothing in this Section 17 shall diminish the Company’s obligations pursuant to Section 8(a) hereof.
18. Reports. Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be given to participating Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any.
19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger or Asset Sale.
(a) Changes in Capitalization. In the event that any dividend or other distribution, reorganization, merger, consolidation, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs such that an adjustment is determined by the Administrator (in its sole discretion) to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Administrator shall, in such manner as it may deem equitable, adjust the number and class of Shares which have been authorized for issuance under this Plan but have not yet been placed under Option, the number of shares subject to the Plan and limitations provided in Section 13, the maximum number of shares each Participant may purchase each Offering Period (pursuant to Section 7), the number and class of Shares covered by each outstanding Option, the purchase price per share of Shares covered by each Option which has not yet been exercised.
(b) Equity Restructuring. In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Section 19(a), the number and type of securities subject to each outstanding Option and the purchase price per share thereof, if applicable, will be equitably adjusted by the Administrator. The adjustments provided under this Section 19(b) shall be nondiscretionary and shall be final and binding on the affected Participants and the Company.
(c) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Administrator. In addition, the restrictions on transferability set forth in Section 16(b) shall immediately lapse. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation. The Administrator shall notify each Participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
(d) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding Option shall be assumed or an equivalent Option substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, any Offering Period then in progress shall be shortened by setting a New Exercise Date and any Offering Periods then in progress shall end on the New Exercise Date. The New Exercise Date shall be before the date of the Company’s proposed sale or merger. In addition, the restrictions on transferability set forth in Section 16(b) shall immediately lapse. The Administrator shall notify each Participant in writing, at least ten (10) business days prior to the New Exercise Date, that the Exercise Date for the Participant’s Option has been changed to the New Exercise Date and that the Participant’s Option shall be exercised automatically on the New Exercise Date, unless prior to such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.
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20. Amendment or Termination.
(a) The Administrator may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19 hereof, no such termination can affect Options previously granted, provided that an Offering Period may be terminated by the Board if the Board determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its shareholders. Except as provided in Section 19 and this Section 20 hereof, no amendment may make any change in any Option theretofore granted which adversely affects the rights of any Participant without the consent of such Participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision)rule), with respect to the Section 423 Component, orthat any other applicable law, regulation or stock exchange rule, the Company shall obtain shareholder approval of any such amendment to the Plan in such a manner and to such a degree as required by Section 423 of the Code or such other law, regulation or rule.
(b) Without shareholder consent and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Administrator shall be entitled to change the Offering Periods, limit the frequency and/or number of changes inwithholding amount that exceeds the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Administrator determines in its sole discretion advisable which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:
(i) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;
(ii) shortening any Offering Period so that the Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Administrator action; and
(iii) allocating Shares.
Such modifications or amendments shall not require shareholder approval or the consent of any Participants.
21. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.
22. Conditions To Issuance of Shares. The Company shall not be required to issue or deliver any certificate or certificates for Shares purchased upon the exercise of Options prior to fulfillment of all the following conditions:
(a) The admission of such shares to listing on all stock exchanges, if any, on which is then listed; and
(b) The completion of any registration or other qualification of such shares under any state or federal law or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body, which the Administrator shall, in its absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable; and
(d) The payment to the Company of all amounts which it is required to withhold under federal, state or local law upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the exercise of the Option as the Administrator may from time to time establish for reasons of administrative convenience.
23. Term of Plan. The original Employee Stock Purchase Plan became effective on the Effective Date. The Plan shall be in effect until terminated under Section 20 hereof.
24. Equal Rights and Privileges. All Eligible Employees of the Company (or of any Designated Subsidiary) granted Optionswithheld pursuant to an Offering under the Section 423 Component will have equal rights and privileges so that the Section 423 Component of this Plan qualifies as an “employee stock purchase plan” within the meaning of
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Section 423 of the Code or applicable Treasury regulations thereunder. Any provision of the Section 423 Component of this Plan thatWithholding Taxes for such Participant is inconsistent with Section 423 or applicable Treasury regulations will, without further act or amendmentapproved in advance by the Company, the BoardPlan Administrator or the Administrator, be reformed to comply with the equal rights and privileges requirement of Section 423 or applicable Treasury regulations. Eligible Employees participating in theBoard).
Non-Section
423 Component of this Plan need not have the same rights and privileges as Eligible Employees participating in the Section 423 Component.25. No Employment Rights. Nothing in the Plan shall be construed to give any person (including any Eligible Employee or Participant) the right to remain in the employ of the Company, a Parent or a Subsidiary or to affect the right of the Company, any Parent or any Subsidiary to (i) terminate the employment of any person (including any Eligible Employee or Participant) at any time, with or without cause, or (ii) terminate or amend the Plan or any Offering Period in accordance with Section 20 hereof, in each case, subject to applicable law.
26. Notice of Disposition of Shares. Each Participant shall give prompt notice to the Company of any disposition or other transfer of any Shares purchased upon exercise of an Option granted pursuant to an Offering under the Section 423 Component of the Plan if such disposition or transfer is made: (a) within two (2) years from the Enrollment Date of the Offering Period in which the shares were purchased or (b) within one (1) year after the Exercise Date on which such shares were purchased. Such notice shall specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by the Participant in such disposition or other transfer.
27. Rules Particular To Specific Countries. Notwithstanding anything herein to the contrary, the terms and conditions of the Plan with respect to Participants who are tax residents of a particular country or who are foreign nationals or employed innon-U.S. jurisdictions may be subject to an addendum to the Plan in the form of an appendix orsub-plan (which appendix orsub-plan may be designed to govern Offerings under the Section 423 Component or theNon-Section 423 Component, as determined by the Administrator). To the extent that the terms and conditions set forth in an appendix orsub-plan conflict with any provisions of the Plan, the provisions of the appendix orsub-plan shall govern. The adoption of any such appendix orsub-plan shall be pursuant to Section 17 above. Without limiting the generality of the foregoing, the Administrator is specifically authorized to adopt rules and procedures, with respect to Participants who are who are foreign nationals or employed innon-U.S. jurisdictions, regarding the exclusion of particular Subsidiaries from participation in the Plan, eligibility to participate, the definition of Compensation, handling of payroll deductions or other contributions by Participants, payment of interest, conversion of local currency, data privacy security, payroll tax, withholding procedures, establishment of bank or trust accounts to hold payroll deductions or contributions, determination of beneficiary designation requirements, and handling of stock certificates. The Administrator also is authorized to determine that, to the extent permitted by U.S. Treasury RegulationSection 1.423-2(f), the terms of an Option granted under the Plan or an Offering to citizens or residents of anon-U.S. jurisdiction will be less favorable than the terms of Options granted under the Plan or the same Offering to Employees resident solely in the U.S. To the extent any appendix,sub-plan or changes thereto approved by the Administrator are inconsistent with the requirements of Section 423 of the Code or would jeopardize thetax-qualified status of the Section 423 Component, the Designated Subsidiaries affected thereby shall be considered Designated Subsidiaries in a separate Offerings under theNon-Section 423 Component instead of the Section 423 Component.
28. Governing Law. The validity and enforceability of this Plan shall be governed by and construed in accordance with the laws of the State of California without regard to otherwise governing principles of conflicts of law.
29. Section 409A. The Section 423 Component of the Plan and the Options granted pursuant to Offerings thereunder are intended to be exempt from the application of Section 409A. Neither theNon-Section 423 Component nor any Option granted pursuant to an Offering thereunder is intended to constitute or provide for “nonqualified deferred compensation” within the meaning of Section 409A. Notwithstanding any provision of the Plan to the contrary, if the Administrator determines that any Option granted under the Plan may be or become subject to Section 409A or that any provision of the Plan may cause an Option granted under the Plan to be or become subject to Section 409A, the Administrator may adopt such amendments to the Plan and/or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions as the Administrator determines are necessary or appropriate to avoid the imposition of taxes under Section 409A, either through compliance with the requirements of Section 409A or with an available exemption therefrom.
B-1-10
Israeli Addendum
1.1. | This Addendum (the “Addendum”) shall apply with respect to an Option or Shares delivered upon exercise of such Option, only to persons who, on the Date of Grant for such Option or Shares, are employed by an Israeli resident Designated Subsidiary. The provisions specified herein shall form an integral part of the Broadcom Inc. Employee Stock Purchase Plan (the “Plan”).
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1.2 | This Addendum is to be read as a continuation of the Plan and applies only to Options granted to Israeli Participants and Shares delivered upon exercise of such Options so that they comply with the requirements set by Israeli law in general, and in particular with the provisions of Section 102 (as defined below). For the avoidance of doubt, this Addendum does not add to or modify the Plan in respect of any other category of Participants.
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1.3 | The Plan and this Addendum are complimentary to each other and shall be deemed as one. In any case of contradiction, whether explicit or implied, between the provisions of this Addendum and the Plan, the provisions set out in the Addendum shall prevail. This Addendum complies with, and is subject to, the provisions of the Ordinance (as defined below) and Section 102.
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1.4 | Any capitalized term not specifically defined in this Addendum shall be construed according to the interpretation given to it in the Plan.
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2.1 | “Approved 102 Option” - an Option granted pursuant to Section 102(b) of the Ordinance.
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2.2 | “Capital Gain Option (CGO)” - an Approved 102 Option elected and designated by the Company to qualify under the capital gain tax treatment in accordance with the provisions of Section 102(b)(2) and Section 102(b)(3) of the Ordinance.
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2.3 | “Controlling Shareholder” – shall have the meaning ascribed to it in Section 32(9) of the Ordinance.
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2.4 | “Date of Grant” – the date of grant for tax purposes in regard to Section 102 as determined under any tax ruling received in connection with the Plan and this Addendum, or as otherwise determined by the Administrator.
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2.5 | “Israeli Designated Subsidiary” – shall mean any Israeli resident Designated Subsidiary of the Company which is an “employing company” or “employer” within the meaning of Section 102(a) of the Ordinance.
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2.6 | “IsraeliEligible Employee” -an Eligible Employee who is employed by an Israeli Designated Subsidiary (including an individual who is serving as a director or an office holder, but excluding any Controlling Shareholder, all as determined in Section 102 of the Ordinance).
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2.7 | “Israeli Participant” - means an Israeli Eligible Employee who is granted an Option under the Plan and this Addendum.
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2.8 | “ITA” -the Israeli Tax Authorities.
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2.9 | “Ordinary Income Option (OIO)” – an Approved 102 Option elected and designated by the Company to qualify under the ordinary income tax treatment in accordance with the provisions of Section 102(b)(1) of the Ordinance.
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2.10 | “102 Option” -any Option granted to an Israeli Eligible Employee pursuant to Section 102.
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2.11 | “Ordinance” -the Israeli Income Tax Ordinance [New Version] 1961 as now in effect or as hereafter amended.
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2.12 | “Shares” – notwithstanding the definition of this term in the Plan, in addition thereto, for any tax purposes under this Addendum and any tax ruling issued by the ITA, shall mean shares of the Company’s common stock delivered upon exercise of an Approved 102 Option, held in trust by a Trustee for the benefit of the Israeli Participant as required under Section 102. Any tax reference or provision made under this Addendum with respect to Approved 102 Options shall also apply to any Shares delivered upon exercise of Approved 102 Options.
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2.13 | “Section 102” -Section 102 of the Ordinance and any regulations, rules, orders or procedures, administrative guidelines promulgated thereunder as now in effect or as hereafter amended and any tax rulings issued by the ITA to the Company or any Subsidiary (including any Israeli Designated Subsidiary).
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B-1-11
2.14 | “Trustee” -any individual or entity appointed by the Company to serve as a trustee and approved by the ITA, all in accordance with the provisions of Section 102(a) of the Ordinance, as may be replaced from time to time subject to the provisions of Section 102.
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2.15 | “Unapproved 102 Option” – an Option granted pursuant to Section 102(c) of the Ordinance and not held in trust by a Trustee.
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3.1 | Israeli Eligible Employees may be granted only 102 Options.
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3.2 | The Company may designate Options granted to Israeli Eligible Employees pursuant to Section 102 as Unapproved 102 Options or Approved 102 Options.
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3.3 | Unless a special ruling is received from the ITA, the grant of Approved 102 Options shall not be made until 30 days from the date the Plan has been submitted for approval by the ITA.
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3.4 | The grant of Approved 102 Options shall be made under this Addendum, and shall be conditioned upon the approval of this Addendum by the ITA.
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3.5 | Approved 102 Options may either be classified as Capital Gain Options (“CGOs”) or Ordinary Income Options (“OIOs”).
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3.6 | No Approved 102 Options may be granted under this Addendum to any Israeli Eligible Employee, unless and until, the Company’s election of the type of Approved 102 Options as CGO or OIO granted to Israeli Eligible Employees (the “Election”), is appropriately filed with the ITA. Such Election shall become effective beginning the first date of grant of an Approved 102 Option under this Addendum and shall remain in effect at least until the end of the year following the year during which the Company first granted Approved 102 Options. The Election shall obligate the Company to grantonly the type of Approved 102 Option it has elected, and shall apply to all Approved 102 Options during the period indicated herein, all in accordance with the provisions of Section 102(g) of the Ordinance. For the avoidance of doubt, such Election shall not prevent the Company from granting Unapproved 102 Options to Israeli Eligible Employees. For the avoidance of doubt, for any Israeli tax purposes, the same shall apply to Shares.
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3.7 | To the extent required by Section 102, all Approved 102 Options must be held in trust by a Trustee, as described in Section 4 below.
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3.8 | For the avoidance of doubt, the designation of Unapproved 102 Options and Approved 102 Options shall be subject to the terms and conditions set forth in Section 102.
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4.1 | To the extent required by Section 102, Approved 102 Options which shall be granted under this Addendum and/or any Shares delivered upon exercise of such Approved 102 Options and/or other shares received subsequently following any realization of rights, including without limitation bonus shares, shall be held or controlled and supervised by the Trustee (subject to the approval of the ITA) for the benefit of the Israeli Participant for such period of time as required by Section 102 (the “Holding Period”). If the requirements for Approved 102 Options are not met, then the Approved 102 Options may be regarded as Unapproved 102 Options, all in accordance with the provisions of Section 102.
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4.2 | Notwithstanding anything to the contrary, the Trustee shall not release any Shares acquired upon exercise of an Approved 102 Option prior to the full payment of the Israeli Eligible Employee’s tax liabilities (including, without limitation, social security taxes if applicable) arising from the grant, exercise or vesting of such Approved 102 Option or the sale or transfer of such Shares.
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4.3 | Subject to the provisions of Section 102, to obtain favorable tax treatment, an Israeli Eligible Employee shall not be entitled to sell or release from trust any Approved 102 Option and/or any Shares received upon the exercise of an Approved 102 Option or any other property received with respect to such Approved 102 Option or Shares, including without limitation, bonus shares, until the lapse of the Holding Period required under Section 102 of the Ordinance and any holding period provided for in the Plan, and shall not require the Trustee to release or sell the Approved 102 Options or Shares unless permitted to do so by applicable law and the Plan. Notwithstanding the above, if any such sale or release occurs during the Holding Period, the sanctions under Section 102 shall apply to and shall be borne by such Israeli Eligible Employee.
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B-1-12
4.4 | Upon receipt of an Approved 102 Option, the Israeli Eligible Employee will sign an undertaking in which he or she will give his or her consent to the grant of the Option under Section 102, and will undertake to comply with the terms of Section 102 and the trust agreement between the Company and the Trustee.
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4.5 | For purposes of Section 102, the Holding Period applicable to Shares acquired upon exercise of an Approved 102 Option begins on the date the Approved 102 Option is exercised and such Shares are purchased, such date also to be applicable for any tax calculation required under Section 102 and otherwise as determined under any tax ruling, provided that (i) the Company has provided notice to the Trustee of the Option, and (ii) the Israeli Eligible Employee has signed the subscription agreement and any other documents required by the Company or any Subsidiary (including any Israeli Designated Subsidiary) (which signature may be by electronic acceptance).
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| The terms and conditions upon which the Options shall be granted and exercised, shall be as specified in the Plan, the subscription agreement to be executed pursuant to the Plan and this Addendum. The Plan or the subscription agreement shall state, inter alia, the number of Shares to which the Option relates, the type of Option granted thereunder (including the tax classification), the vesting provisions and the Purchase Price (if applicable).
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6. | ASSIGNABILITY AND SALE OF THE GRANTS
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6.1 | Notwithstanding Section 16 of the Plan or any other provision of the Plan, and in addition thereto, no Option or any right with respect thereto, shall be assignable, transferable or given as collateral or any right with respect to them given to any third party whatsoever, and during the lifetime of the Israeli Participant each and all of such Israeli Participant’s rights to purchase Shares pursuant to an Option shall be exercisable only by the Israeli Participant.
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| Any such action made directly or indirectly, whether to take effect immediately or in the future, shall be void.
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6.2 | With respect to each Approved 102 Option, the Trustee will not perform any transaction regarding the Option, including transferring, selling, seizing, assigning, hypothecating or pledging, disposing or assigning the Option or any Shares subject to the Option, and will not give any power of attorney regarding the Option, in any manner otherwise permitted by the Plan, unless all taxes are paid to the ITA, or the Trustee assures that the taxes will be paid. If the Shares acquired upon exercise of Options are transferred by will or by the laws of descent and distribution, Section 102 will apply to the heirs or transferees of the Israeli Participant.
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7. | INTEGRATION OF SECTION 102 AND TAX ASSESSING OFFICER’S PERMIT
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7.1 | With regards to Approved 102 Options and Shares acquired upon exercise thereof, the provisions of the Plan and/or the Addendum and/or the subscription agreement shall be subject to the provisions of Section 102 and the Tax Assessing Officer’s permit, and any tax ruling received in connection with the Plan and this Addendum, and the said provisions, tax rulings and permit shall be deemed an integral part of the Plan, this Addendum and the subscription agreement.
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7.2 | Any provision of Section 102 and/or the said permit and/or tax ruling which is necessary in order to receive and/or to keep any tax benefit pursuant to Section 102, which is not expressly specified in the Plan, this Addendum or the subscription agreement, shall be considered binding upon the Company and the Israeli Participant.
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| Any dividends payable with respect to Shares acquired upon exercise of Options shall be subject to any applicable taxation on distribution of dividends, and when applicable subject to the provisions of Section 102.
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9.1 | Any tax consequences arising from the grant, exercise or vesting of any Option, from the delivery, acquisition, sale or transfer of Shares or from any other event or act (of the Company, and/or any Israeli Designated Subsidiary and/or any other Subsidiary, or the Trustee or the Israeli Participant) hereunder, shall be borne solely by the Israeli Participant (including without limitation, social security payments or social contributions, if applicable). The Company and/or any Israeli Designated Subsidiary and/or any other Subsidiary, and/or the Trustee shall withhold taxes according to the requirements of applicable laws, rules, and regulations, including withholding taxes at source. Furthermore, the Israeli Participant shall agree to indemnify the Company, each Israeli Designated Subsidiary and each other Subsidiary and the Trustee and hold them harmless against and from any and all liability for any such tax or other payment or interest or penalty thereon, including without
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B-1-13
| limitation, liabilities relating to the obligation to withhold, or to have withheld, any such tax from any payment made to the Israeli Participant. The Company and/or any Israeli Designated Subsidiary and/or any other Subsidiary and/or the Trustee may make such provisions and take such steps as it/they may deem necessary or appropriate for the withholding of all taxes required by law to be withheld with respect to Options granted under the Plan and the exercise, vesting, sale, transfer or other disposition thereof or of any Shares acquired upon exercise thereof, by withholding from proceeds of the sale of Shares acquired upon exercise of Options either through a voluntary sale or through a mandatory sale arranged by the Company; provided and only if (i) such a sale is permissible under the Company’s insider trading policies and (ii) such transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the U.S. Sarbanes-Oxley Act of 2002. In case the Company and/or the Israeli Designated Subsidiary determines that withholding from proceeds of the sale of Shares is not permissible or otherwise not desirable, the Israeli Participant further authorizes the Company and/or the Israeli Designated Subsidiary and/or the Trustee, or their respective agents, at the Company’s discretion, to satisfy the obligations with regard to all withholding taxes through one or more of the following methods (i) irrevocable instructions given by the Israeli Participant to a broker to remit to the Company cash, in an amount equal to such withholding taxes, from a previously established account the Israeli Participant maintains with such broker; or (ii) through withholding from the Israeli Participant’s wages or other cash compensation paid to the Israeli Participant by the Company or the employer. In addition, the Israeli Participant will be required to pay any amount, including penalties, that exceeds the tax to be withheld and transferred to the tax authorities, pursuant to applicable tax laws, regulations and rules. |
9.2 | For avoidance of doubt, there is no assurance that all of the Options granted as Approved 102 Options or Shares acquired upon exercise thereof, shall be eligible for the tax benefits pursuant to Section 102. Therefore, any tax consequences arising from the grant, vesting, or exercise of any Options, from the acquisition of Shares upon exercise thereof, or from any other event or act (of the Company, any Israeli Designated Subsidiary, the Trustee, and/or the Israeli Participant), shall be borne solely by the Israeli Participant.
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9.3 | The Company and/or any Israeli Designated Subsidiary and/or the Trustee shall not be required to release any share certificate or Shares to an Israeli Participant until all required payments have been fully made to the Company and/or to the Israeli Designated Subsidiary and all of the Israeli Participant’s tax liabilities have been satisfied.
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9.4 | With respect to Unapproved 102 Options, if the Israeli Participant ceases to be employed by the Company or any Israeli Designated Subsidiary, the Israeli Participant shall extend to the Company and/or any Israeli Designated Subsidiary a security or guarantee for the payment of tax due at the time of sale of Shares, all in accordance with the provisions of Section 102.
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* * *
B-1-14
DIRECTIONS TO BROADCOM INC.
2019
Our offices located at
280 Innovation
1320 Ridder Park Drive, San Jose, California
Coming North on US-880:
US-880:1. Take Brokaw Road1. | TakeMontague Expresswayexit and keep left following the signs toMontague Expressway.
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2. | Turn right ontoZanker Road.
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3. | Turn right ontoInnovation Drive.
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4. | Turn into theBroadcom campus, which is the second driveway on the right, and the building will be on your left.
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exit and turn right onto Brokaw Road and move into the left lane.
2. Turn left onto Ridder Park Drive.
3. Turn into the Broadcom campus, which is the second building on the right, at the main entrance sign.
Coming South on US-101:
US-880:1. Exit onto US-880 North1. | TakeMontague Expresswayexit and follow the signs toMontague Expressway West.
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2. | Turn right ontoZanker Road.
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3. | Turn right ontoInnovation Drive.
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4. | Turn.2. Take Brokaw Road exit and turn right onto Brokaw Road and move into theBroadcom campus, which is the second driveway on the right, and the building will be on your left.
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Coming onUS-101:
1. | TakeSan Tomas Expressway/Montague Expressway exit and follow the signs toMontague Expressway.
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2. | Turn left ontoZanker Roadusing the second from the left lane.
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3. | Turn right ontoInnovation Drive.
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4. | Turn into theBroadcom campus, which is the second driveway on the right, and the building will be on your left.
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BROADCOM INC. 1320 RIDDER PARK DRIVE SAN JOSE, CA 95131
VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Timeleft lane.
3. Turn left onto Ridder Park Drive.
4. Turn into the day beforeBroadcom campus, which is thecut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
VOTE BY PHONE -1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before thecut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717.
SHAREHOLDER MEETING REGISTRATION
To vote and/or attend the meeting, go to the “Register for Meeting” link at www.proxyvote.com.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E57087-P17496 KEEP THIS PORTION FOR YOUR RECORDS
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
BROADCOM INC.
The Board of Directors recommends you vote FOR the following proposals:
1. Election of Directors
For Against Abstain Nominees:
1a. Mr. Hock E. Tan For Against Abstain
1b. Dr. Henry Samueli 2. Ratification of the appointment of Pricewaterhouse-
Coopers LLP as Broadcom’s independent registered
1c. Mr. Eddy W. Hartenstein public accounting firm for the fiscal year ending
November 3, 2019.
1d. Ms. Diane M. Bryant 3. To approve amendments to Broadcom’s Second Amended and Restated Employee Share Purchase Plan.
1e. Ms. Gayla J. Delly 4.Non-binding, advisory vote to approve compensation of
Broadcom’s named executive officers.
1f. Mr. Check Kian Low
NOTE: In their discretion, the Proxies, and each of them acting alone, are authorized to vote on such other business as may
1g. Mr. Peter J. Marks properly come before the meeting or any adjournment or postponement thereof.
1h. Mr. Harry L. You
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
E57088-P17496
BROADCOM INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, being a stockholder of Broadcom Inc. (“Broadcom”), hereby appoints Hock E. Tan, Thomas H. Krause, Jr. and Mark D. Brazeal, or each of them acting alone, each with full powers of substitution, as proxies (the “Proxies”) of the undersigned and hereby authorizes the Proxies to represent and to vote, as designated second building on the reverse side, all of the shares of common stock of Broadcom owned by the undersigned entitled to voteright, at the 2019 Annual Meeting of Stockholders of main entrance sign.
Coming South on I-880:
1. Take Brokaw Road exit and turn right onto Brokaw Road and move into the left lane.
2. Turn left onto Ridder Park Drive.
3. Turn into the Broadcom to be heldcampus, which is the second building on the right, at 11:00 a.m. Pacific Time on April 1, 2019, at 280 Innovation Drive, San Jose, California 95134, and at any adjournment or postponement thereof.the main entrance sign.
THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE IS SPECIFIED: “FOR” EACH OF THE BOARD NOMINEES (PROPOSAL NO. 1) AND “FOR” PROPOSALS NO. 2, 3 AND 4, AND IN ACCORDANCE WITH THE JUDGMENT OF THE PERSONS NAMED AS PROXIES HEREIN ON ANY OTHER MATTERS THAT MAY PROPERLY BE PUT BEFORE THE 2019 ANNUAL MEETING OF STOCKHOLDERS AND ANY CONTINUATIONS(S) AND ADJOURNMENT(S) THEREOF. PLEASE VOTE, SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED RETURN ENVELOPE THAT IS POSTAGE PREPAID IF MAILED IN THE UNITED STATES.
Continued and to be signed on reverse side
