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Summary Compensation Table
The following table presents information regarding the total compensation of our Named Officers, who consist of (i) our principal executive officer, (ii)
all individuals who served as our principal financial officer
during fiscal 2020, and (iii) our other most highly compensated executive officers, other than our principal executive officer and principal financial officer, who were serving as executive officers at the end of fiscal
2019, and (iv) our former executive officer for whom disclosure would have been provided pursuant to Item 402 of RegulationS-K but for the fact that the individual was not serving as an executive officer at the end of fiscal 2019. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | | Salary ($) | | | Bonus ($) | | | Stock Awards ($)(1)(2) | | | Option Awards ($) | | | Non-Equity Incentive Plan Compensation ($)(3) | | | All Other Compensation ($)(4) | | | Total ($) | |
Seamus Grady(5) | | | 2019 | | | | 775,000 | | | | — | | | | 4,124,943 | | | | — | | | | 766,300 | | | | 66,929 | | | | 5,733,172 | |
Chief Executive Officer | | | 2018 | | | | 542,500 | | | | — | | | | 4,499,916 | | | | — | | | | — | | | | 49,015 | | | | 5,091,431 | |
| | | | | | | | |
Dr. Harpal S. Gill | | | 2019 | | | | 950,000 | | | | — | | | | 3,449,902 | | | | — | | | | 987,500 | | | | 978,315 | | | | 6,365,717 | |
President and Chief Operating Officer | | | 2018 | | | | 950,000 | | | | — | | | | 3,299,970 | | | | — | | | | — | | | | 957,687 | | | | 5,207,657 | |
| | 2017 | | | | 900,000 | | | | — | | | | 2,999,931 | | | | — | | | | 1,100,000 | | | | 851,654 | | | | 5,851,585 | |
| | | | | | | | |
Toh-Seng Ng | | | 2019 | | | | 650,000 | | | | — | | | | 3,049,990 | | | | — | | | | 659,650 | | | | 729,703 | | | | 5,089,343 | |
Executive Vice President, Chief Financial Officer | | | 2018 | | | | 650,000 | | | | — | | | | 2,804,986 | | | | — | | | | — | | | | 556,565 | | | | 4,011,551 | |
| | 2017 | | | | 600,000 | | | | — | | | | 2,549,997 | | | | — | | | | 750,000 | | | | 570,896 | | | | 4,470,893 | |
| | | | | | | | |
Dr. Hong Q. Hou(6) | | | 2019 | | | | 78,385 | | | | — | | | | — | | | | — | | | | — | | | | 654,026 | | | | 732,411 | |
Former Executive Vice President, Chief Technical Officer | | | 2018 | | | | 525,000 | | | | — | | | | 1,649,985 | | | | — | | | | — | | | | 58,335 | | | | 2,233,320 | |
| | 2017 | | | | 475,000 | | | | — | | | | 749,892 | | | | — | | | | 400,000 | | | | 62,827 | | | | 1,687,719 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2020. | Seamus Grady
Chief Executive Officer | | | 2020 | | | 860,000 | | | 5,849,940 | | | 1,075,000 | | | 58,533 | | | 7,843,473 | |
| 2019 | | | 775,000 | | | 4,124,943 | | | 766,300 | | | 66,929 | | | 5,733,172 | |
| 2018 | | | 542,500 | | | 4,499,916 | | | — | | | 49,015 | | | 5,091,431 | |
| Dr. Harpal S. Gill
President and Chief Operating Officer | | | 2020 | | | 990,000 | | | 4,214,963 | | | 1,300,000 | | | 685,684 | | | 7,190,647 | |
| 2019 | | | 950,000 | | | 3,449,902 | | | 987,500 | | | 978,315 | | | 6,365,717 | |
| 2018 | | | 950,000 | | | 3,299,970 | | | — | | | 957,687 | | | 5,207,657 | |
| Csaba Sverha(5)
Executive Vice President, Chief Financial Officer | | | 2020 | | | 331,250 | | | 411,601 | | | 163,000 | | | 227,582 | | | 1,133,433 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Edward T. Archer(6) Executive Vice President, Sales & Marketing | | | 2020 | | | 450,000 | | | 1,649,930 | | | 360,000 | | | 72,522 | | | 2,532,452 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Toh-Seng Ng(7)
Executive Vice President, Special Projects; former Chief
Financial Officer | | | 2020 | | | 680,000 | | | 3,757,387 | | | 865,000 | | | 573,027 | | | 5,875,414 | |
| 2019 | | | 650,000 | | | 3,049,990 | | | 659,650 | | | 729,703 | | | 5,089,343 | |
| 2018 | | | 650,000 | | | 2,804,986 | | | — | | | 556,565 | | | 4,011,551 | |
(1)
| The amounts in this column include the aggregate grant date fair value (computed in accordance with FASB ASC Topic 718) of time-based RSU awards granted during the designated fiscal year. The assumptions used in the valuation of these awards are set forth in the notes to our consolidated financial statements, which are included in our Annual Report on Form10-K for our fiscal year ended June 28, 2019,26, 2020, filed with the SEC on August 20, 2019.18, 2020. These amounts do not necessarily correspond to the actual value that may be recognized by the Named Officer. |
(2)
| The amounts in this column also include the value at the grant date of performance-based RSUs (PSUs) granted during the designated fiscal year based upon the probable outcome of the performance conditions for such awards, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. |
On August
23, 2018,22, 2019, the Compensation Committee granted PSUs to each of our Named Officers (other than
Dr. Hou,Mr. Sverha, who
resigned in August 2018)was granted PSUs on February 17, 2020). The PSUs will vest, if at all, following a
2-year cumulative performance period covering fiscal
20192020 and fiscal
2020.2021. As of the date of grant, consistent with the estimate determined as of the grant date under FASB ASC Topic 718, the probable outcome of the performance conditions for these PSU grants was 75% achievement. Assuming the highest level of performance conditions will be achieved and these PSUs will vest at their maximum level of 100%, the following table sets forth the value of these PSUs at the date of grant:
Name | | Maximum Value of PSUs Granted in
Fiscal 20192020
(Fiscal 2019-20202020-2021 Performance Period) | |
| Mr. Grady | | | $3,499,9863,899,944 | |
| Dr. Gill | | | $2,999,9063,119,994 | |
| Mr. Sverha | | | $249,302 | |
| Mr. Archer | | | $1,399,922 | |
| Mr. Ng | | | $2,599,9942,719,906 | |
(3)
| The amounts in this column reflect cash bonuses earned under our executivecash-based incentive plan for the applicable fiscal year. Amounts earned under our Fiscal 2020 Bonus Plan are reported as compensation for fiscal 2020 but were paid in fiscal 2021. Amounts earned under our fiscal 2019 executivecash-based incentive plan are reported as compensation for fiscal 2019 but were paid in fiscal 2020. Amounts earned under our fiscal 2017 executive incentive plan are reported as compensation for fiscal 2017 but were paid in fiscal 2018. For more information, see the “Grants of Plan-Based Awards in Fiscal 2019”2020” table below. |
(4)
| For more information, see the “All Other Compensation for Fiscal 2019”2020” table below. |
(5)
| Mr. Grady joined FabrinetSverha became an executive officer in September 2017.February 2020. Accordingly, only information for fiscal 2018 and fiscal 20192020 is provided with respect to Mr. Grady. Sverha. |
(6)
| Dr. Hou left FabrinetMr. Archer became an executive officer in August 2018. 2019. Accordingly, only information for fiscal 2020 is provided with respect to Mr. Archer. |
(7)
| Mr. Ng transitioned from Executive Vice President, Chief Financial Officer to Executive Vice President, Special Projects in February 2020. |
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All Other Compensation for Fiscal
2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Transportation ($)(1) | | | Housing ($)(2) | | | Tax Equalization Payment ($)(3) | | | Foreign Service Premium Pay ($)(4) | | | Health Insurance Premiums ($) | | | Term Life Insurance Premiums ($) | | | Company- Paid 401(k) Contributions ($) | | | Other ($) | | | Total ($) | |
Mr. Grady | | | 14,540 | | | | — | | | | — | | | | — | | | | 31,701 | | | | — | | | | 20,688 | | | | — | | | | 66,929 | |
Dr. Gill | | | 77,287 | | | | 120,000 | | | | 479,581 | | | | 190,000 | | | | 33,522 | | | | 56,084 | | | | 21,841 | | | | — | | | | 978,315 | |
Mr. Ng | | | 49,933 | | | | 120,000 | | | | 308,715 | | | | 130,000 | | | | 33,434 | | | | 74,210 | | | | 13,411 | | | | — | | | | 729,703 | |
Dr. Hou | | | 2,000 | | | | — | | | | — | | | | — | | | | 65,274 | | | | — | | | | 1,752 | | | | 585,000 | (5) | | | 654,026 | |
2020 | Mr. Grady | | | 12,000 | | | — | | | — | | | — | | | 29,433 | | | — | | | 17,100 | | | — | | | 58,533 | |
| Dr. Gill | | | 53,365 | | | 120,000 | | | 210,776 | | | 198,000 | | | 31,659 | | | 56,084 | | | 15,800 | | | — | | | 685,684 | |
| Mr. Sverha | | | 17,397 | | | 82,500 | | | 4,421 | | | — | | | 53,094 | | | — | | | 8,164 | | | 62,006 | | | 227,582 | |
| Mr. Archer | | | 12,000 | | | — | | | — | | | — | | | 36,972 | | | — | | | 23,550 | | | — | | | 72,522 | |
| Mr. Ng | | | 35,755 | | | 120,000 | | | 162,022 | | | 136,000 | | | 22,271 | | | 74,210 | | | 22,769 | | | — | | | 573,027 | |
(1)
| For Mr. Grady and Mr. Archer, represents an annual automobile expenses.allowance. For Dr. Gill, represents (i) an annual travel allowance $25,000$25,602 ($51,123,26,049, inclusive of taxgross-up), (ii) an annual automobile allowance of $12,000, and (iii) $14,164$15,316 of expenses related to a car and driver in Thailand. For Mr. Sverha, represents expenses related to a car and driver in Thailand. For Mr. Ng, represents (i) an annual travel allowance $15,000of $15,361 ($26,816,15,613, inclusive of taxgross-up), (ii) an annual automobile allowance of $12,000, and (iii) $11,117$8,142 of expenses related to a car and driver in Thailand. For Dr. Hou, represents an automobile allowance. |
(2)
| For Dr. Gill, Mr. Sverha and Mr. Ng, represents an annual allowance for housing and related living expenses in Thailand. |
(3)
| Represents foreign tax liability payments by Fabrinet on the Named Officer’s behalf to satisfy all applicablenon-U.S. taxes of such Named Officer for the following calendar years: Dr. Gill – calendar year 2017;2018; Mr. Ng—Sverha – calendar year 2018.2019; Mr. Ng – calendar year 2019. Consistent with corporate policy, we pay on behalf of all U.S. citizens who are working on our behalf in Asia on an expatriate basis a tax equalization payment that is intended to put the employee in the same position, from atax-liability perspective, that he or she would be in if they were still located in the United States. |
(4)
| Represents additional cash compensation in the amount of 20% of Dr. Gill and Mr. Ng’s respective then-current annual base salary, with a taxgross-up, to incentivize them to continue working for us in Thailand and ameliorate the resulting hardships to their families who are located in the United States. |
(5)
| Dr. Hou leftRepresents premiums paid by Fabrinet in August 2018. As severance compensation, he received: (i) a lump sum cash payment for twelve months of salary equal to $525,000; (ii) a lump sum cash payment in the amount of $60,000, representing reimbursement for health care insurance premiums under COBRA for a period of twelve months; and (iii) accelerated vesting with respect to an aggregatethe portion of 22,926 then-unvested restricted share units. key man life insurance policies that would be payable to the applicable Named Officer’s elected beneficiaries. |
(6)
| For Mr. Sverha, represents reimbursement of tuition and related fees incurred by Mr. Sverha in connection with his children’s attendance at an international school in Thailand. |
Grants of Plan-Based Awards in Fiscal
20192020
The following table presents information concerning each grant of an award made to a Named Officer in fiscal
20192020 under any plan. No option awards were granted to a Named Officer in fiscal
2019. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Approval Date | | | Grant Date | | | Type of Award | | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(1) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | Grant Date Fair Value of Stock Awards ($)(3) | |
| Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold ($) | | | Target ($) | | | Maximum ($) | |
Mr. Grady | | | — | | | | — | | | FY19 Bonus Plan | | | 0 | | | | 970,000 | | | | 970,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 8/14/2018 | | | | 8/23/2018 | (4) | | RSU | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 31,236 | | | | 1,499,953 | |
| | | 8/14/2018 | | | | 8/23/2018 | (4) | | PSU | | | — | | | | — | | | | — | | | | 0 | | | | 72,886 | | | | 72,886 | | | | — | | | | 2,624,990 | |
Dr. Gill | | | — | | | | — | | | FY19 Bonus Plan | | | 0 | | | | 1,250,000 | | | | 1,250,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 8/14/2018 | | | | 8/23/2018 | (4) | | RSU | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 24,989 | | | | 1,199,972 | |
| | | 8/14/2018 | | | | 8/23/2018 | (4) | | PSU | | | — | | | | — | | | | — | | | | 0 | | | | 62,472 | | | | 62,472 | | | | — | | | | 2,249,930 | |
Mr. Ng | | | — | | | | — | | | FY19 Bonus Plan | | | 0 | | | | 835,000 | | | | 835,000 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 8/14/2018 | | | | 8/23/2018 | (4) | | RSU | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,907 | | | | 1,099,994 | |
| | | 8/14/2018 | | | | 8/23/2018 | (4) | | PSU | | | — | | | | — | | | | — | | | | 0 | | | | 54,144 | | | | 54,144 | | | | — | | | | 1,949,996 | |
Dr. Hou | | | — | | | | — | | | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
2020. | Mr. Grady | | | — | | | — | | | FY20
Bonus
Plan | | | 0 | | | 1,075,000 | | | 1,075,000 | | | — | | | — | | | — | | | — | | | — | |
| 8/14/2019 | | | 8/22/2019(4) | | | RSU | | | — | | | — | | | — | | | — | | | — | | | — | | | 60,466 | | | 2,924,982 | |
| 8/14/2019 | | | 8/22/2019(4) | | | PSU | | | — | | | — | | | — | | | 0 | | | 80,594 | | | 80,594 | | | — | | | 2,924,958 | |
| Dr. Gill | | | — | | | — | | | FY20
Bonus
Plan | | | 0 | | | 1,300,000 | | | 1,300,000 | | | — | | | — | | | — | | | — | | | — | |
| 8/14/2019 | | | 8/22/2019(4) | | | RSU | | | — | | | — | | | — | | | — | | | — | | | — | | | 38,747 | | | 1,874,967 | |
| 8/14/2019 | | | 8/22/2019(4) | | | PSU | | | — | | | — | | | — | | | 0 | | | 64,476 | | | 64,476 | | | — | | | 2,339,995 | |
| Mr. Sverha | | | — | | | — | | | FY20
Bonus
Plan | | | 0 | | | 163,000 | | | 163,000 | | | — | | | — | | | — | | | — | | | — | |
| 8/14/2019 | | | 8/22/2019(4) | | | RSU | | | — | | | — | | | — | | | — | | | — | | | — | | | 2,066 | | | 99,974 | |
| 2/6/2020 | | | 2/17/2020(5) | | | RSU | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,918 | | | 124,651 | |
| 2/6/2020 | | | 2/17/2020(5) | | | PSU | | | — | | | — | | | — | | | 0 | | | 3,836 | | | 3,836 | | | — | | | 186,976 | |
| Mr. Archer | | | — | | | — | | | FY20
Bonus
Plan | | | 0 | | | 360,000 | | | 360,000 | | | — | | | — | | | — | | | — | | | — | |
| 8/14/2019 | | | 8/22/2019(4) | | | RSU | | | — | | | — | | | — | | | — | | | — | | | — | | | 12,399 | | | 599,988 | |
| 8/14/2019 | | | 8/22/2019(4) | | | PSU | | | — | | | — | | | — | | | 0 | | | 28,930 | | | 28,930 | | | — | | | 1,049,942 | |
| Mr. Ng | | | — | | | — | | | FY20
Bonus
Plan | | | 0 | | | 865,000 | | | 865,000 | | | — | | | — | | | — | | | — | | | — | |
| 8/14/2019 | | | 8/22/2019(4) | | | RSU | | | — | | | — | | | — | | | — | | | — | | | — | | | 35,492 | | | 1,717,458 | |
| 8/14/2019 | | | 8/22/2019(4) | | | PSU | | | — | | | — | | | — | | | 0 | | | 56,208 | | | 56,208 | | | — | | | 2,039,929 | |
(1)
| Amounts reported represent the potential threshold, target and maximum cash incentive award amounts depending on the level of performance achieved under the Fiscal 20192020 Bonus Plan, as described in “Compensation Discussion and Analysis—Analysis — Executive Compensation Program Elements—Short-Term Cash Incentive Awards.” Such amounts ranged from 0% of the target payout, representing the lowest payout that would have been awarded upon achievement of a certain level of performance against one of the related financial goals, to 100% of the target payout, which also represents the maximum payout possible under the Fiscal 2019 Bonus Plan. In August 2019, the Compensation Committee determined that we partially achieved thepre-established performance targets under the Fiscal 2019 Bonus Plan and awarded bonus amounts equal to 79% of each participant’s target bonus. The actual bonus amounts that were awarded are reflected in the“Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” Elements — |
44 | | | | | | 2020 PROXY STATEMENT |
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Short-Term Cash Incentive Awards.” Such amounts ranged from 0% of the target payout, representing the lowest payout that would have been awarded upon achievement of a certain level of performance against one of the related financial goals, to 100% of the target payout, which also represents the maximum payout possible under the Fiscal 2020 Bonus Plan. In August 2020, the Compensation Committee determined that we achieved all of the pre-established performance targets under the Fiscal 2020 Bonus Plan and awarded bonus amounts equal to 100% of each participant’s target bonus. The actual bonus amounts that were awarded are reflected in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.”
(2)
| Amounts reported represent the potential target and maximum number of performance-based RSUs (PSUs) the Named Officer could earn pursuant to his PSU award based on achievement oftwo-year corporate performance objectives covering fiscal 2019 and fiscal 2020. There is no threshold payout amount under the PSUs, as the minimum amount that may vest under each PSU award is 0 shares. |
(3)
| Reflects the aggregate grant date fair value of each equity award computed in accordance with FASB ASC Topic 718. Amounts reported for PSUs are based upon the probable outcome of the performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effects of estimated forfeitures. As of the date of grant, the probable outcome of the performance conditions for these grants was 75% achievement. The reported amounts do not necessarily correspond to the actual value that may be recognized by the Named Officer. Assuming the highest level of performance conditions will be achieved and the PSUs will vest at their maximum level of 100%, the following table sets forth the value of the PSUs at the date of grant: |
Name | | Maximum Value of PSUs Granted in
Fiscal 20192020
(Fiscal 2019-20202020-2021 Performance Period) | |
| Mr. Grady | | | $3,499,9863,899,944 | |
| Dr. Gill | | | $2,999,9063,119,994 | |
| Mr. Sverha | | | $249,302 | |
| Mr. Archer | | | $1,399,922 | |
| Mr. Ng | | | $2,599,9942,719,906 | |
(4)
| Granted under our 2010 Performance Incentive Plan. |
(5)
| Granted under our 2020 Equity Incentive Plan. |
Outstanding Equity Awards at Fiscal
20192020 Year-End
The following table presents information regarding the outstanding equity awards held by each Named Officer as of the end of fiscal 2019.2020.
| Mr. Grady | | | 8/22/2019 | | | 60,446 | | | 3,587,470 | | | — | | | — | |
| 8/22/2019(5) | | | — | | | — | | | 40,297 | | | 2,391,627 | |
| 8/22/2019(5) | | | — | | | — | | | 40,297 | | | 2,391,627 | |
| 8/23/2018 | | | 20,824 | | | 1,235,904 | | | — | | | — | |
| 8/23/2018(6) | | | — | | | — | | | 36,443 | | | 2,162,892 | |
| 8/23/2018(6) | | | — | | | — | | | 36,443 | | | 2,162,892 | |
| 11/9/2017(7) | | | 24,327 | | | 1,443,807 | | | — | | | — | |
| Dr. Gill | | | 8/22/2019 | | | 38,747 | | | 2,299,634 | | | — | | | — | |
| 8/22/2019(5) | | | — | | | — | | | 32,238 | | | 1,913,325 | |
| 8/22/2019(5) | | | — | | | — | | | 32,238 | | | 1,913,325 | |
| 8/23/2018 | | | 16,660 | | | 988,771 | | | — | | | — | |
| 8/23/2018(6) | | | — | | | — | | | 31,236 | | | 1,853,857 | |
| 8/23/2018(6) | | | — | | | — | | | 31,236 | | | 1,853,857 | |
| 8/24/2017 | | | 9,318 | | | 553,023 | | | — | | | — | |
| Mr. Sverha | | | 2/17/2020 | | | 1,918 | | | 113,833 | | | — | | | — | |
| 2/17/2020(5) | | | — | | | — | | | 1,918 | | | 113,833 | |
| 2/17/2020(5) | | | — | | | — | | | 1,918 | | | 113,833 | |
| 8/22/2019(7) | | | 2,066 | | | 122,617 | | | — | | | — | |
| 5/10/2018(7) | | | 5,650 | | | 335,328 | | | — | | | — | |
| Mr. Archer | | | 8/22/2019 | | | 12,399 | | | 735,881 | | | — | | | — | |
| 8/22/2019(5) | | | — | | | — | | | 14,465 | | | 858,498 | |
| 8/22/2019(5) | | | — | | | — | | | 14,465 | | | 858,498 | |
| 5/9/2019(7) | | | 14,069 | | | 834,995 | | | — | | | — | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Option Awards | | | Stock Awards | |
| | Grant Date | | | Number of Securities Underlying Unexercised Options (#) | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | | Equity Incentive Plan Awards: Number of Shares or Units of Stock That Have Not Vested (#)(3) | | | Equity Incentive Plan Awards: Market Value of Shares or Units of Stock That Have Not Vested ($)(4) | |
Name | | Exercisable | | | Unexercisable | |
Mr. Grady | | | 8/23/2018 | | | | — | | | | — | | | | — | | | | — | | | | 31,236 | | | | 1,551,492 | | | | — | | | | — | |
| | | 8/23/2018 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,443 | | | | 1,810,124 | |
| | | 8/23/2018 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 36,443 | | | | 1,810,124 | |
| | | 11/9/2017 | (6) | | | — | | | | — | | | | — | | | | — | | | | 48,653 | | | | 2,416,595 | | | | — | | | | — | |
| | | 11/9/2017 | (7) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 48,653 | | | | 2,416,595 | |
| | | 11/9/2017 | (7) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 48,653 | | | | 2,416,595 | |
| | | | | | | | | |
Dr. Gill | | | 8/23/2018 | | | | — | | | | — | | | | — | | | | — | | | | 24,989 | | | | 1,241,204 | | | | — | | | | — | |
| | | 8/23/2018 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 31,236 | | | | 1,551,492 | |
| | | 8/23/2018 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 31,236 | | | | 1,551,492 | |
| | | 8/24/2017 | | | | — | | | | — | | | | — | | | | — | | | | 18,636 | | | | 925,650 | | | | — | | | | — | |
| | | 8/24/2017 | (7) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 27,954 | | | | 1,388,475 | |
| | | 8/24/2017 | (7) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 27,954 | | | | 1,388,475 | |
| | | 8/18/2016 | | | | — | | | | — | | | | — | | | | — | | | | 8,235 | | | | 409,032 | | | | — | | | | — | |
| | | | | | | | | |
Mr. Ng | | | 8/23/2018 | | | | — | | | | — | | | | — | | | | — | | | | 22,907 | | | | 1,137,791 | | | | — | | | | — | |
| | | 8/23/2018 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 27,072 | | | | 1,344,666 | |
| | | 8/23/2018 | (5) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 27,072 | | | | 1,344,666 | |
| | | 8/24/2017 | | | | — | | | | — | | | | — | | | | — | | | | 15,841 | | | | 786,822 | | | | — | | | | — | |
| | | 8/24/2017 | (7) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,761 | | | | 1,180,209 | |
| | | 8/24/2017 | (7) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23,761 | | | | 1,180,209 | |
| | | 8/18/2016 | | | | — | | | | — | | | | — | | | | — | | | | 7,000 | | | | 347,690 | | | | — | | | | — | |
Dr. Hou | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Mr. Ng | | | 8/22/2019 | | | 35,492 | | | 2,106,450 | | | — | | | — | |
| 8/22/2019(5) | | | — | | | — | | | 28,104 | | | 1,667,972 | |
| 8/22/2019(5) | | | — | | | — | | | 28,104 | | | 1,667,972 | |
| 8/23/2018 | | | 15,272 | | | 906,393 | | | — | | | — | |
| 8/23/2018(6) | | | — | | | — | | | 27,072 | | | 1,606,723 | |
| 8/23/2018(6) | | | — | | | — | | | 27,072 | | | 1,606,723 | |
| 8/24/2017 | | | 7,921 | | | 470,111 | | | — | | | — | |
(1)
| Stock awards in this column consist of unvested time-based RSUs. Unless otherwise noted, all time-based RSUs are scheduled to vest over a three-year period at a rate of 33.3% on each anniversary of the grant date, subject to continued service with us through the applicable vesting date. |
(2)
| Values reported were determined by multiplying the number of unvested time-based RSUs by $49.67,$59.35, the closing price on the New York Stock Exchange of our ordinary shares on June 28, 2019,26, 2020, the last business day of fiscal 2019. 2020. |
(3)
| Amounts reported were based on target performance measures and represent PSU awards. |
(4)
| Values reported were based on target performance measures and determined by multiplying the number of unvested PSUs by $49.67,$59.35, the closing price on the New York Stock Exchange of our ordinary shares on June 28, 2019,26, 2020, the last business day of fiscal 2019. 2020. |
(5)
| The performance cycle for this PSU began on June 30, 201829, 2019 and ends on June 28, 202025, 2021 (the “fiscal 2019-20202020-2021 cycle”). This PSU will vest, if at all, following the end of the fiscal 2019-20202020-2021 cycle, on the date the Compensation Committee certifies achievement of the applicable performance criteria. |
(6)
| The performance cycle for this PSU began on began on June 30, 2018 and ended on June 28, 2020 (the “fiscal 2019-2020 cycle”). In August 2019, 41.5% of this PSU vested following the Compensation Committee’s certification of partial achievement of the performance criteria for the fiscal 2019-2020 cycle. |
(7)
| This RSU is scheduled to vest over a four-year period at a rate of 25% on each anniversary of September 22, 2017,the vesting commencement date, subject to continued service with us through the applicable vesting date. |
(7) | The performance cycle for this PSU began on July 1, 2017 and ended on June 28, 2019 (the “fiscal 2018-2019 cycle”).In August 2018, this PSU was forfeited in full following the Compensation Committee’s certification that we did not achieve the applicable performance criteria for the fiscal 2018-2019 cycle.
|
Option Exercises and Shares Vested in Fiscal
20192020
The following table presents information concerning the exercise of options and the vesting of stock awards in fiscal
20192020 for each of our Named Officers.
| | | | | | | | | | | | | | | | |
| | Option Awards | | | Stock Awards | |
Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(1) | |
Mr. Grady | | | — | | | | — | | | | 12,163 | | | | 553,660 | |
Dr. Gill | | | — | | | | — | | | | 66,958 | | | | 2,943,962 | |
Mr. Ng | | | — | | | | — | | | | 127,773 | | | | 5,826,576 | |
Dr. Hou | | | — | | | | — | | | | 44,309 | | | | 2,044,991 | |
| Mr. Grady | | | — | | | — | | | 25,575 | | | 1,138,687 | |
| Dr. Gill | | | — | | | — | | | 25,882 | | | 1,297,440 | |
| Mr. Sverha | | | — | | | — | | | 2,825 | | | 150,375 | |
| Mr. Archer | | | — | | | — | | | 4,689 | | | 308,067 | |
| Mr. Ng | | | — | | | — | | | 22,555 | | | 1,129,252 | |
(1)
| The value realized on vesting was determined by multiplying (i) the number of our ordinary shares acquired upon vesting of a restricted share unit, by (ii) the closing price per share of our ordinary shares on the New York Stock Exchange on the vesting date. |
Potential Payments Upon Termination or Change of Control
We have entered into offer letters with our Named Officers that provide the general terms and conditions of their employment, including payments and benefits upon termination of their employment in specified circumstances.
Arrangement with Mr. Grady
On February 26, 2019, our Compensation Committee approved a change in control and severance agreement (the “CIC Agreement”) for Seamus Grady. The CIC Agreement has an initial term of three years following its effective date and renews automatically annually thereafter unless either party provides noticeof non-renewalnon-
renewal at least 90 days before the date of the scheduled renewal. The CIC Agreement supersedes the severance payments and benefits set forth in Mr. Grady’s offer letter dated September 20, 2017.
Pursuant to the CIC Agreement, if Mr. Grady’s employment is terminated by us without “cause” and other than due to his death or disability, or by him for “good reason” (a “Qualifying Termination”), in each case other than during the period beginning three months prior to a change in control of Fabrinet throughthe one-year anniversary of any such change in control (the “Change in Control Period”), then subject to Mr. Grady
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entering into and not revoking a separation agreement and release of claims (a “Release Agreement”), Mr. Grady will receive the same severance payments and benefits as was set forth in his offer
letter, consisting of: (i) a lump sum payment of 100% of his then annual base salary, (ii) a lump sum payment of any earned but unpaid bonus as of the date of employment termination, (iii) a lump sum payment of two times his cost of COBRA coverage for twelve months, and (iv) to the extent Mr. Grady is receiving tax equalization benefits under our expatriate policy as of the date of employment termination, continued tax equalization benefits for the calendar year in which the employment termination occurs and the immediately following calendar year.
In the event of a Qualifying Termination during the Change in Control Period, then subject to Mr. Grady entering into and not revoking a Release Agreement, and in lieu of the severance payments and benefits described above, Mr. Grady will receive (i) a lump sum payment of 200% of his then annual base salary (or if greater, his annual base salary as in effect immediately before the change in control, (ii) a lump sum payment of any earned but unpaid bonus as of the date of employment termination, (iii) a lump sum payment of 200% of his annual target bonus opportunity in effect as of the date of employment termination (or if greater, his annual target bonus opportunity as in effect immediately before the change in control), (iv) a lump sum payment of two times his cost of COBRA coverage for twelve months, (v) 100% vesting acceleration of any unvested and outstanding time-based equity awards (i.e., awards subject to vest based on continued service but not any other performance requirements), and (vi) to the extent Mr. Grady is receiving tax equalization benefits under our expatriate policy as of the date of employment termination, continued tax equalization benefits for the calendar year in which the employment termination occurs and the immediately following calendar year.
In the event of a change in control, any PSUs held by Mr. Grady that are outstanding and for which the performance period would not be completed as of the change in control will have the performance period shortened in connection with the change in control, any revenue-related performance goals under the PSUs will be measured on a prorated basis to reflect the shortened performance period, and any gross margin-related performance goals under the PSUs will be measured over the last, four, consecutive fiscal quarters of the Company completed before the change in control. Any portion of the PSUs for which performance is deemed achieved based on the foregoing change in control-related measurement will be scheduled to vest on the last day of the original performance period subject to continued service through the vesting date. In the event of a
Qualifying Termination during the Change in Control Period, any unvested portion of the PSUs outstanding as of the date of the Qualifying Termination for which performance was deemed achieved on or before the Qualifying Termination (or if the Qualifying Termination occurs before the change in control, then for which performance is deemed achieved in connection with the change in control based on the foregoing change in control-related measurement) will accelerate vesting in full.
“Cause” means Mr. Grady’s (i) commission of a felony or any crime involving moral turpitude, (ii) willful breach of his duties to us, including, but not limited to, theft from us and failure to fully disclose a personal pecuniary interest in a transaction involving us, or (iii) engaging in willful misconduct, willful or gross neglect, fraud, misappropriation, or embezzlement.
“Good reason” means (i) a material diminution in Mr. Grady’s authority, duties, or responsibilities (including following any change in control) or (ii) a material breach by us of Mr. Grady’s offer letter or the CIC Agreement. However, before terminating his employment for good reason, Mr. Grady must provide (i) written notice to the Board setting forth the condition that could constitute a “good reason” event within sixty (60) days following the initial existence of such condition and (ii) an opportunity for us to remedy the condition within 30 days after receipt of such notice.
Arrangement with Dr. Gill
Pursuant to Dr. Gill’s amended and restated offer letter dated as of January 9, 2018, Dr. Gill and Fabrinet are each free to terminate Dr. Gill’s employment at any time, effective (i) one year after providing written notice, or (ii) such lesser period ending on May 7, 2023 (the “Gill Retirement Date”) to the extent that the written notice is provided within the one year period prior to the Gill Retirement Date, provided that Dr. Gill’s employment can be terminated at any time for cause without advance written notice.
Subject to certain conditions, in the event Dr. Gill’s employment is terminated prior to, or within 10 days after, the Gill Retirement Date, either by us without “good cause” and other than due to his death or disability, or by Dr. Gill for any reason, Dr. Gill will receive the following severance benefits: (1) a lump sum payment equal to the sum of (a) his one month’s base salary multiplied by the total number of full and fractional years of his employment with us as of his termination date; (b) any earned but unpaid bonus; and (c) two times his cost of COBRA coverage for twelve months; (2) any then-outstanding and unvested performance-based equity awards that remain subject to the achievement of any performance
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goals as of the date of termination of employment
(the “Gill Performance Awards”) will remain outstanding and eligible to vest based on the extent that the applicable performance-based or other criteria are satisfied; and (3) continued tax equalization benefits under our expatriate policy, as in effect on the date of termination, for the calendar year in which the termination date occurs, and the following calendar year.
In the event Dr. Gill’s employment is terminated on account of Dr. Gill’s death or disability on or prior to the Gill Retirement Date,
any then-outstanding and unvested Gill Performance Awards will remain outstanding and eligible to vest based on the extent that the applicable performance-based or other criteria are satisfied. In addition, if Dr. Gill’s employment is terminated on account of Dr. Gill’s death or disability, Dr. Gill will
also receive the severance benefits described in
clauseclauses (1)
and (2) of the immediately preceding paragraph.
For purposes of Dr. Gill’s offer letter, “good cause” means (i) an act of dishonesty made in connection with his responsibilities as an employee, (ii) a conviction of or plea of nolo contendere to a felony or any crime involving fraud, embezzlement or any other act of moral turpitude, (iii) gross misconduct, (iv) unauthorized use or disclosure of any proprietary information or trade secrets of Fabrinet or any other party to whom he owes an obligation of nondisclosure as a result of his relationship with us, (v) willful breach of any obligations under any written agreement or covenant with us, or (vi) continued failure to perform employment duties after receipt of a written demand for performance from us.
Arrangement with Mr. Sverha
On March 17, 2020, we entered into an amended and restated offer letter with Mr. Sverha in connection with his promotion to Executive Vice President, Chief Financial Officer. Mr. Sverha’s offer letter sets forth the general terms and conditions of his employment, including initial elements of his compensation and expatriate benefits. Upon termination of Mr. Sverha’s employment while he is assigned to a location outside the United States, Mr. Sverha is entitled to repatriation benefits consisting of one-way economy class airfare, reimbursement of reasonable moving expenses, and continued tax equalization benefits under our expatriate policy, as in effect on the date of termination, for the calendar year in which the termination date occurs.
Arrangement with Mr. Archer
Mr. Archer’s offer letter dated as of December 6, 2018 sets forth the general terms and conditions of his employment, including initial elements of his compensation, but does not provide for any payments or benefits upon termination of his employment.
Pursuant to Mr. Ng’s amended and restated offer letter dated as of January 9, 2018,February 1, 2020, Mr. Ng and Fabrinet are each free to terminate Mr. Ng’s employment at any time,
effective (i) one year after providing written notice, or (ii) such lesser period ending on December 30, 2023 (the
“”Ng Retirement Date”) to the extent that the written notice is provided within the one year period prior to the Ng Retirement Date, provided that Mr. Ng’s employment can be terminated at any time for cause without advance written notice.
On February 1, 2020, Mr. Ng notified us that he would retire on February 1, 2021.
Subject to certain conditions, in the event Mr. Ng’s employment is terminated prior to, or within 10 days after, the Ng Retirement Date, either by us without “good cause” and other than due to his death or disability, or by Mr. Ng for any reason, Mr. Ng will receive the following severance benefits: (1) a lump sum payment equal to the sum of (a) his one month’s base salary multiplied by the total number of full and fractional years of his employment with us as of his termination date; (b) any earned but unpaid bonus; and (c) two times his cost of COBRA coverage for twelve months; (2) any then-outstanding and unvested performance-based equity awards that remain subject to the achievement of any performance goals as of the date of termination of employment
(the “Ng Performance Awards”) will remain outstanding and eligible to vest based on the extent that the applicable performance-based or other criteria are satisfied;
(3) 100% vesting acceleration of any unvested and
(3)outstanding time-based equity awards (i.e., awards subject to vest based on continued service but not any other performance requirements); and (4) continued tax equalization benefits under our expatriate policy, as in effect on the date of termination, for the calendar year in which the termination date occurs, and the following calendar year.
In the event Mr. Ng’s employment is terminated on account of Mr. Ng’s death or disability on or prior to the Ng Retirement Date, any then-outstanding and unvested Ng Performance Awards will remain outstanding and eligible to vest based on the extent that the applicable performance-based or other criteria are satisfied. In addition, if Mr. Ng’s employment is terminated on account of Mr. Ng’s death or disability, Mr. Ng will also receive the severance benefits described in clauseclauses (1), (2) and (3) of the immediately preceding paragraph.
For purposes of Mr. Ng’s offer letter, “good cause” means (i) an act of dishonesty made in connection with his responsibilities as an employee, (ii) a conviction of or plea of nolo contendere to a felony or any crime involving fraud, embezzlement or any other act of moral turpitude, (iii) gross misconduct, (iv) unauthorized use or disclosure of any proprietary information or trade secrets of Fabrinet or any other party to whom he owes an obligation of nondisclosure as a result of his relationship with us, (v) willful breach of any obligations under any written agreement or covenant with us, or (vi) continued failure to perform employment duties after receipt of a written demand for performance from us.
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We provide each of Dr. Gill and Mr. Ng with a life insurance policy, which in the event of death would pay $3 million to their respective heirs or beneficiaries and $2 million to us.
Estimated Payments and Benefits
The following tables provide information concerning the estimated payments and benefits that would be provided to
Mr. Grady, Dr. Gill and Mr. Ngour Named Officers in the circumstances described above. Payments and benefits are estimated assuming the triggering event took place on the last business day of fiscal
20192020 (June
28, 2019)26, 2020). There can be no assurance a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date, of if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors affecting the nature and amount of any potential payments or benefits, any actual payments and benefits may be different.
Termination of Employment Unrelated to a Change in Control
| | | | | | | | | | | | | | | | | | | | | | |
Name | | Type of Benefit | | Due to Death ($) | | | Due to Disability ($) | | | Without Cause ($) | | | Due to Resignation for Good Reason ($) | | | Due to Resignation for Any Reason ($) | |
Mr. Grady | | Cash Severance Payment—100% Annual Base Salary(1) | | | — | | | | — | | | | 775,000 | | | | 775,000 | | | | — | |
| | Cash Severance Payment—Cash Incentive Plan Compensation(2) | | | — | | | | — | | | | 766,300 | | | | 766,300 | | | | — | |
| | Continued Coverage of Medical Benefits(3) | | | — | | | | — | | | | 60,000 | | | | 60,000 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Total Value of Termination Benefits(4) | | | — | | | | — | | | | 1,601,300 | | | | 1,601,300 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Dr. Gill | | Cash Severance Payment—Monthly Base Salary x Years of Employment(1) | | | 1,187,500 | | | | 1,187,500 | | | | 1,187,500 | | | | — | | | | 1,187,500 | |
| | Cash Severance Payment—Cash Incentive Plan Compensation(2) | | | 987,500 | | | | 987,500 | | | | 987,500 | | | | — | | | | 987,500 | |
| | Continued Coverage of Medical Benefits(3) | | | 60,000 | | | | 60,000 | | | | 60,000 | | | | — | | | | 60,000 | |
| | Life Insurance Benefits(5) | | | 3,000,000 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Total Value of Termination Benefits(4) | | | 5,235,000 | | | | 2,235,000 | | | | 2,235,000 | | | | — | | | | 2,235,000 | |
| | | | | | | | | | | | | | | | | | | | | | |
Mr. Ng | | Cash Severance Payment—Monthly Base Salary x Years of Employment(1) | | | 704,167 | | | | 704,167 | | | | 704,167 | | | | — | | | | 704,167 | |
| | Cash Severance Payment—Cash Incentive Plan Compensation(2) | | | 659,650 | | | | 659,650 | | | | 659,650 | | | | — | | | | 659,650 | |
| | Continued Coverage of Medical Benefits(3) | | | 60,000 | | | | 60,000 | | | | 60,000 | | | | — | | | | 60,000 | |
| | Life Insurance Benefits(5) | | | 3,000,000 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Total Value of Termination Benefits(4) | | | 4,423,817 | | | | 1,423,817 | | | | 1,423,817 | | | | — | | | | 1,423,817 | |
| | | | | | | | | | | | | | | | | | | | | | |
| Mr. Grady | | | Cash Severance Payment – 100% Annual Base Salary(1) | | | — | | | — | | | 860,000 | | | 860,000 | | | — | |
| Cash Severance Payment – Cash Incentive Plan Compensation(2) | | | — | | | — | | | 1,075,000 | �� | | 1,075,000 | | | — | |
| Continued Coverage of Medical Benefits(3) | | | — | | | — | | | 60,000 | | | 60,000 | | | — | |
| Total Value of Termination Benefits | | | — | | | — | | | 1,995,000 | | | 1,995,000 | | | — | |
| Dr. Gill | | | Cash Severance Payment – Monthly Base Salary x Years of Employment(1) | | | 1,320,000 | | | 1,320,000 | | | 1,320,000 | | | — | | | 1,320,000 | |
| Cash Severance Payment – Cash Incentive Plan Compensation(2) | | | 1,300,000 | | | 1,300,000 | | | 1,300,000 | | | — | | | 1,300,000 | |
| Continued Coverage of Medical Benefits(3) | | | 60,000 | | | 60,000 | | | 60,000 | | | — | | | 60,000 | |
| Life Insurance Benefits(4) | | | 3,000,000 | | | — | | | — | | | — | | | — | |
| Total Value of Termination Benefits(5) | | | 5,680,000 | | | 2,680,000 | | | 2,680,000 | | | — | | | 2,680,000 | |
| Mr. Sverha | | | Repatriation Benefits(6) | | | — | | | — | | | 100,000 | | | — | | | 100,000 | |
| Total Value of Termination Benefits(5) | | | — | | | — | | | 100,000 | | | — | | | 100,000 | |
| Mr. Ng | | | Cash Severance Payment – Monthly Base Salary x Years of Employment(1) | | | 793,333 | | | 793,333 | | | 793,333 | | | — | | | 793,333 | |
| Cash Severance Payment – Cash Incentive Plan Compensation(2) | | | 865,000 | | | 865,000 | | | 865,000 | | | — | | | 865,000 | |
| Continued Coverage of Medical Benefits(3) | | | 60,000 | | | 60,000 | | | 60,000 | | | — | | | 60,000 | |
| Life Insurance Benefits(4) | | | 3,000,000 | | | — | | | — | | | — | | | — | |
| Equity Award Vesting Acceleration(7) | | | 3,482,955 | | | 3,482,955 | | | 3,482,955 | | | — | | | 3,482,955 | |
| Total Value of Termination Benefits(5) | | | 8,201,288 | | | 5,201,288 | | | 5,201,288 | | | — | | | 5,201,288 | |
(1)
| Assumes an annual base salary of $775,000$860,000 for Mr. Grady, $950,000$990,000 for Dr. Gill, and $650,000$680,000 for Mr. Ng (salaries in effect at June 28, 2019)26, 2020). |
(2)
| Reflects the amount of bonus earned under the Fiscal 20192020 Bonus Plan but unpaid as of June 28, 2019. 26, 2020. |
(3)
| Reflects two times the annual cost of COBRA coverage to maintain the benefits provided as of June 28, 2019. 26, 2020. |
(4)
| Reflects the death benefit payable to the executive’s estate in the case of the executive’s death. |
(5)
| Does not include the future tax equalization benefits that such Named Officer may be entitled to under our expatriate policy, as described above in “Executive Compensation—Compensation Discussion and Analysis.” As of June 28, 2019,26, 2020, Dr. Gill, Mr. Sverha and Mr. Ng were our only Named Officers that were entitled to these benefits. The amount of any future tax equalization benefit can vary significantly depending, among other factors, on the individual’s personal tax circumstances with respect to the year for which the benefit is provided. The amount of tax equalization benefit paid in fiscal 20192020 was $210,776 for Dr. Gill, was $479,581 and$4,421 for Mr. Ng was $308,715.Sverha, and $162,022 for Mr. Ng. Tax equalization benefits for any future years may differ substantially from such amounts. |
(5)(6)
| ReflectsRepresents an estimate of the death benefit payablecost of one-way economy class airfare to the executive’s estate inUnited States and reimbursement of reasonable moving expenses.
|
(7)
| Potential value if vesting of eligible RSUs held by Mr. Ng had been accelerated on June 26, 2020. Assumes a share price of $59.35 (based on the caseclosing price per share of the executive’s death.our ordinary shares on June 26, 2020). |
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Termination of Employment in Connection with a Change in Control
| | | | | | | | | | | | | | | | | | | | | | |
Name | | Type of Benefit | | Due to Death ($) | | | Due to Disability ($) | | | Without Cause ($) | | | Due to Resignation for Good Reason ($) | | | Due to Resignation for Any Reason ($) | |
Mr. Grady | | Cash Severance Payment—200% Annual Base Salary(1) | | | — | | | | — | | | | 1,550,000 | | | | 1,550,000 | | | | — | |
| | Cash Severance Payment—Cash Incentive Plan Compensation(2) | | | — | | | | — | | | | 766,300 | | | | 766,300 | | | | — | |
| | Cash Severance Payment—200% Cash Incentive Target Bonus Opportunity(3) | | | — | | | | — | | | | 1,940,000 | | | | 1,940,000 | | | | | |
| | Continued Coverage of Medical Benefits(4) | | | — | | | | — | | | | 60,000 | | | | 60,000 | | | | — | |
| | Equity Award Vesting Acceleration(5) | | | — | | | | — | | | | 3,363,950 | | | | 3,363,950 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Total Value of Termination Benefits(6) | | | — | | | | — | | | | 7,680,250 | | | | 7,680,250 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
Dr. Gill | | Cash Severance Payment—Monthly Base Salary x Years of Employment(1) | | | 1,187,500 | | | | 1,187,500 | | | | 1,187,500 | | | | — | | | | 1,187,500 | |
| | Cash Severance Payment—Cash Incentive Plan Compensation(2) | | | 987,500 | | | | 987,500 | | | | 987,500 | | | | — | | | | 987,500 | |
| | Continued Coverage of Medical Benefits(4) | | | 60,000 | | | | 60,000 | | | | 60,000 | | | | — | | | | 60,000 | |
| | Life Insurance Benefits(7) | | | 3,000,000 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Total Value of Termination Benefits(6) | | | 5,235,000 | | | | 2,235,000 | | | | 2,235,000 | | | | — | | | | 2,235,000 | |
| | | | | | | | | | | | | | | | | | | | | | |
Mr. Ng | | Cash Severance Payment—Monthly Base Salary x Years of Employment(1) | | | 704,167 | | | | 704,167 | | | | 704,167 | | | | — | | | | 704,167 | |
| | Cash Severance Payment—Cash Incentive Plan Compensation(2) | | | 659,650 | | | | 659,650 | | | | 659,650 | | | | — | | | | 659,650 | |
| | Continued Coverage of Medical Benefits(4) | | | 60,000 | | | | 60,000 | | | | 60,000 | | | | — | | | | 60,000 | |
| | Life Insurance Benefits(7) | | | 3,000,000 | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | |
| | Total Value of Termination Benefits(6) | | | 4,423,817 | | | | 1,423,817 | | | | 1,423,817 | | | | — | | | | 1,423,817 | |
| | | | | | | | | | | | | | | | | | | | | | |
| Mr. Grady | | | Cash Severance Payment – 200% Annual Base Salary(1) | | | — | | | — | | | 1,720,000 | | | 1,720,000 | | | — | |
| Cash Severance Payment – Cash Incentive Plan Compensation(2) | | | — | | | — | | | 1,075,000 | | | 1,075,000 | | | — | |
| Cash Severance Payment – 200% Cash Incentive Target Bonus Opportunity(3) | | | — | | | — | | | 2,150,000 | | | 2,150,000 | | | — | |
| Continued Coverage of Medical Benefits(4) | | | — | | | — | | | 60,000 | | | 60,000 | | | — | |
| Equity Award Vesting Acceleration(5) | | | — | | | — | | | 6,267,182 | | | 6,267,182 | | | — | |
| Total Value of Termination Benefits | | | — | | | — | | | 11,272,182 | | | 11,272,182 | | | — | |
| Dr. Gill | | | Cash Severance Payment – Monthly Base Salary x Years of Employment(1) | | | 1,320,000 | | | 1,320,000 | | | 1,320,000 | | | — | | | 1,320,000 | |
| Cash Severance Payment – Cash Incentive Plan Compensation(2) | | | 1,300,000 | | | 1,300,000 | | | 1,300,000 | | | — | | | 1,300,000 | |
| Continued Coverage of Medical Benefits(4) | | | 60,000 | | | 60,000 | | | 60,000 | | | — | | | 60,000 | |
| Life Insurance Benefits(6) | | | 3,000,000 | | | — | | | — | | | — | | | — | |
| Total Value of Termination Benefits(7) | | | 5,680,000 | | | 2,680,000 | | | 2,680,000 | | | — | | | 2,680,000 | |
| Mr. Sverha | | | Repatriation Benefits(6) | | | — | | | — | | | 100,000 | | | — | | | 100,000 | |
| Total Value of Termination Benefits(7) | | | — | | | — | | | 100,000 | | | — | | | 100,000 | |
| Mr. Ng | | | Cash Severance Payment – Monthly Base Salary x Years of Employment(1) | | | 793,333 | | | 793,333 | | | 793,333 | | | — | | | 793,333 | |
| Cash Severance Payment – Cash Incentive Plan Compensation(2) | | | 865,000 | | | 865,000 | | | 865,000 | | | — | | | 865,000 | |
| Continued Coverage of Medical Benefits(4) | | | 60,000 | | | 60,000 | | | 60,000 | | | — | | | 60,000 | |
| Life Insurance Benefits(7) | | | 3,000,000 | | | — | | | — | | | — | | | — | |
| Equity Award Vesting Acceleration(5) | | | 3,482,955 | | | 3,482,955 | | | 3,482,955 | | | — | | | 3,482,955 | |
| Total Value of Termination Benefits(7) | | | 8,201,288 | | | 5,201,288 | | | 5,201,288 | | | — | | | 5,201,288 | |
(1)
| Assumes an annual base salary of $775,000$860,000 for Mr. Grady, $950,000$990,000 for Dr. Gill and $650,000$680,000 for Mr. Ng (salaries in effect at June 28, 2019)26, 2020). |
(2)
| Reflects the amount of bonus earned under the Fiscal 20192020 Bonus Plan but unpaid as of June 28, 2019. 26, 2020. |
(3)
| Assumes an annual target bonus opportunity of $970,000$1,075,000 for Mr. Grady. |
(4)
| Reflects two times the annual cost of COBRA coverage to maintain the benefits provided as of June 28, 2019. 26, 2020. |
(5)
| Potential value if vesting of eligible RSUs held by the Named Officer had been accelerated on June 26, 2020. Assumes a share price of $59.35 (based on the closing price per share of our ordinary shares on June 26, 2020). |
(6)
| Reflects the death benefit payable to the executive’s estate in the case of the executive’s death. |
(7)
| Does not include the future tax equalization benefits that such Named Officer may be entitled to under our expatriate policy, as described above in “Executive Compensation—Compensation Discussion and Analysis.” As of June 28, 2019,26, 2020, Dr. Gill, Mr. Sverha and Mr. Ng were our only Named Officers that were entitled to these benefits. The amount of any future tax equalization benefit can vary significantly depending, among other factors, on the individual’s personal tax circumstances with respect to the year for which the benefit is provided. The amount of tax equalization benefit paid in fiscal 20192020 was $210,776 for Dr. Gill, was $479,581 and$4,421 for Mr. Ng was $308,715.Sverha, and $162,022 for Mr. Ng. Tax equalization benefits for any future years may differ substantially from such amounts. |
(6) | Potential value if vesting of eligible RSUs held by Mr. Grady had been accelerated on June 28, 2019. Assumes a share price of $49.67 (based on the closing price per share of our ordinary shares on June 28, 2019).
|
(7) | Reflects the death benefit payable to the executive’s estate in the case of the executive’s death.
|
Separation Agreement with Dr. Hou
Dr. Hou left Fabrinet on August 25, 2018. In connection with Dr. Hou’s resignation, Dr. Hou entered into a separation agreement with us. As consideration fornon-disparagement,non-solicitation andnon-competition obligations to us and a full release of all claims related to Dr. Hou’s employment with us, he received the following severance: (1) a lump sum cash payment for twelve months of salary equal to $525,000; (2) a lump sum cash payment in the amount of $60,000, representing reimbursement for health care insurance premiums under COBRA for a period of twelve months; and (3) accelerated vesting with respect to an aggregate of 22,926 then-unvested restricted share units.
Chief Executive Officer Pay Ratio
The Compensation Committee reviewed a comparison of our CEO’s annual total compensation in fiscal
20192020 to that of the median of all other employees for that same period.
Our CEO’s total fiscal 2019 compensation was $6,608,168,$7,843,473, and our median employee’s total fiscal 2019 compensation was
$11,440,$11,665, making our CEO’s pay in fiscal
20192020 approximately
578672 times the pay of our median employee, who is a worker in Thailand.
The pay ratio described above is a reasonable estimate calculated in a manner consistent with Item 402(u) of
Regulation
S-K (“Item 402(u)”). The median employee was identified by determining the compensation for each employee using the following consistently applied compensation measures:
salary received in fiscal 20192020 (annualized if employee worked only a portion of the fiscal year, including if employee was on an unpaid leave of absence during the fiscal year);
annual incentive bonus earned in fiscal 2019;
2020;50 | | | | | | 2020 PROXY STATEMENT |
TABLE OF CONTENTS
grant date fair value of equity awards granted during fiscal 2019;2020; and
perquisites paid in fiscal 2019.
2020.Our calculation includes all employees in the United States, China, Thailand and the United Kingdom as of June 28, 2019,26, 2020, the last day of fiscal 2019.2020. As of that date, we had 227180 employees located in the United States and 11,451
11,272 employees located outside of the United States. Our employees located in the Cayman Islands, Israel, Singapore and Israelthe United Kingdom (an aggregate total of 2135 employees) were excluded from the calculation under the de minimis exception provided
for in Item 402(u). We applied exchange rates as of June 28, 201926, 2020 to the compensation elements paid in Chinese Renminbi, Thai baht and British pounds.
Equity Compensation Plan Information
The following table provides information as of June
28, 201926, 2020 with respect to our ordinary shares that may be issued under our existing equity compensation plans.
| | | | | | | | | | | | |
| | (a) | | | (b) | | | (c) | |
Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) | | | Weighted-average exercise price of outstanding options, warrants and rights ($) | | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in Column (a) (#) | |
Equity compensation plans approved by security holders | | | 1,215,455 | (1) | | | — | | | | 1,832,949 | |
Equity compensation plans not approved by security holders | | | 133,796 | (2) | | | — | | | | 14,041 | |
| | | | | | | | | | | | |
Total | | | 1,349,251 | | | | — | | | | 1,846,990 | |
| | | | | | | | | | | | |
| Equity compensation plans approved by security holders | | | 1,213,570(1) | | | — | | | 2,923,551 | |
| Equity compensation plans not approved by security holders | | | 24,327(2) | | | — | | | 111,347 | |
| Total | | | 1,237,897 | | | — | | | 3,034,898 | |
(1)
| Consists of shares issuable upon outstanding awards under the 2010 Performance Incentive Plan and the 2020 Equity Incentive Plan. This amount represents an aggregate of 764,261773,430 shares subject to RSUs and 451,194440,140 shares subject to PSUs that were outstanding as of June 28, 2019. 26, 2020. |
(2)
| Consists of shares issuable upon outstanding awards under the 2017 Inducement Equity Incentive Plan. This amount represents an aggregate of 36,49024,327 shares subject to RSUs and 97,306 shares subject to PSUs that were outstanding as of June 28, 2019.26, 2020. We adopted the 2017 Inducement Equity Incentive Plan on November 2, 2017, with a reserve of 160,000 ordinary shares authorized for future issuance solely for the granting of inducement share options and equity awards to new employees. The plan was adopted without shareholder approval in reliance on the “employment inducement exemption” provided under the New York Stock Exchange Listed Company Manual. |
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
We describe below transactions since the beginning of fiscal
20192020 to which we were a party or will be a party, in which the amounts involved exceeded or will exceed $120,000 and in which the following persons had or will have a direct or indirect material interest:
any of our directors or executive officers;
any nominee for election as one of our directors;
any person or entity that beneficially owns more than five percent of our outstanding shares; or
any member of the immediate family of any of the foregoing persons.
Employment of Family Members
George Mitchell, brother of David T. Mitchell, was our Senior Vice President, Business Development and Corporate Quality until March 31, 2019. In fiscal 2019, he received total cash compensation of $243,624, perquisites in the amount of $42,774, and a grant of 1,561 restricted share units with an aggregate grant date fair value of $74,959 that were scheduled to vest in equal annual installments over four years from the grant date. In connection with his resignation, Mr. George Mitchell entered into a separation agreement with us. As consideration fornon-disparagement,non-solicitation andnon-competition obligations to us and a full release of all claims related to his employment with us, he received the following severance: (1) a lump sum cash payment in the amount of $150,000, representing 6 months of annual base salary; (2) a lump sum cash payment in the amount of $60,000, representing reimbursement for health care insurance premiums under COBRA for a period of twelve months; (3) a lump sum cash payment in the amount of $18,000, representing accrued vacation; and (4) accelerated vesting with respect to an aggregate of 4,865 then-unvested restricted share units.
Sean Mitchell, son of David T. Mitchell, is a Manager, Business Development at our Fabrinet West subsidiary. In fiscal 2019,2020, he received total cash compensation of $217,070, $375,000 (consisting of salary and commissions),
perquisites in the amount of
$19,916,$33,479, and a grant of
728723 restricted share units with an aggregate grant date fair value of
$34,959$34,986 that are scheduled to vest in equal annual installments over four years from the grant date, subject to continued service with us. Sean Mitchell’s current annual base salary is
$125,000.$150,000.
Dr. Soon Kaewchansilp,
father-in-law of David T. Mitchell, was appointed in March 2015 as the first Fabrinet Fellow in recognition of his many years of exemplary service to Fabrinet. As a Fabrinet Fellow, Dr. Kaewchansilp will continue to serve as Fabrinet’s ambassador to the Thai-American Chamber of Commerce, liaise with Thai government officials on behalf of Fabrinet, and mentor our employees in Thailand. In fiscal
2019,2020, Dr. Kaewchansilp received total cash compensation of $180,000 and perquisites in the amount of
$15,787.$15,582. Dr. Kaewchansilp will receive a lump sum payment of $500,000 when his relationship with Fabrinet concludes.
Commercial Relationship
We have a commercial relationship with Oclaro, one of our significant customers, of which Mr. Dougherty served as Chief Executive Officer from June 2013 until December 2018. The commercial relationship includes the assembly of products and the fabrication of customized optics. The services we provided to Oclaro were pursuant to arrangements entered into in the ordinary course of business and have been conducted on an arms-length basis, and Mr. Dougherty did not have a direct or indirect material interest in such transactions.
Policy for Approval of Related Party Transactions
In accordance with the Audit Committee’s charter, the Audit Committee reviews andpre-approves in writing any proposed related party transactions. The most significant related party transactions, particularly those involving our directors and officers, will be reviewed andpre-approved in writing by the Board. We will report all such material related party transactions under applicable
accounting rules, federal securities laws and SEC rules and regulations. Any dealings with a related party must be conducted in such a way that does not give us or the related party preferential treatment. For purposes of these procedures, “related person” and “transaction” have the meanings contained in Item 404 of RegulationS-K.
52 | | | | | | 2020 PROXY STATEMENT |
SECURITY OWNERSHIP BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial ownership of our ordinary shares as of
September 30, 2019,October 14, 2020, for:
each person (or group of affiliated persons) who is known by us to beneficially own more than 5% of our ordinary shares;
each of our Named Officers;
each of our directors and director nominees; and
all of our directors and current executive officers as a group.
We have determined beneficial ownership in accordance with SEC rules. Except as indicated in the footnotes below, and subject to applicable community property laws, we believe, based on the information furnished to us, the persons and entities named in the table below have sole voting and investment power with respect to all ordinary shares shown as beneficially owned by them. Percentage of beneficial ownership is based on 37,001,49736,937,866 ordinary shares outstanding as of October 7, 201914, 2020 (excluding 1,389,1031,744,103 ordinary shares held by us as a treasury shares). In computing the number of ordinary shares beneficially owned by a person or entity and the percentage ownership of that person or entity, we deemed to be outstanding all ordinary shares as to which such person or entity has the right to acquire within 60 days of October 7, 2019,14, 2020, through the exercise of any option or other right. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person or entity. Unless otherwise noted below, the address of each beneficial owner named below is c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054.
| | | | | | | | |
Name and Address of Beneficial Owner | | Shares Beneficially Owned (#) | | | Percentage Beneficially Owned (%) | |
5% Shareholders: | | | | | | | | |
BlackRock, Inc.(1) | | | 5,366,878 | | | | 14.5 | |
55 East 52nd Street New York, NY 10022 | | | | | | | | |
Dimensional Fund Advisors LP(2) | | | 2,931,627 | | | | 7.9 | |
Building One 6300 Bee Cave Road Austin, TX 78746 | | | | | | | | |
FMR LLC(3) | | | 2,740,360 | | | | 7.4 | |
245 Summer Street Boston, MA 02210 | | | | | | | | |
The Vanguard Group(4) | | | 2,275,449 | | | | 6.1 | |
100 Vanguard Blvd. Malvern, PA 19355 | | | | | | | | |
| | |
Named Officers: | | | | | | | | |
Seamus Grady | | | 6,081 | | | | * | |
Dr. Harpal Gill | | | 12,942 | | | | * | |
Toh-Seng Ng | | | — | | | | * | |
Dr. Hong Hou(5) | | | 40,338 | | | | * | |
| | |
Non-Employee Directors: | | | | | | | | |
Dr. Homa Bahrami | | | 27,090 | | | | * | |
Gregory P. Dougherty | | | — | | | | * | |
Thomas F. Kelly | | | 37,216 | | | | * | |
Dr. Frank H. Levinson | | | 52,361 | | | | * | |
David T. Mitchell(6) | | | 174,271 | | | | * | |
Rollance E. Olson | | | 43,303 | | | | * | |
| | |
All directors and current executive officers as a group (10 persons) | | | 353,264 | | | | 1.0 | |
| 5% Shareholders:
| | | | | | | |
| BlackRock, Inc.(1) | | | 5,523,422 | | | 14.95 | |
| The Vanguard Group(2) | | | 4,103,886 | | | 11.11 | |
| Dimensional Fund Advisors LP(3) | | | 2,931,627 | | | 7.93 | |
| FMR LLC(4) | | | 2,469,415 | | | 6.68 | |
| Wasatch Advisors, Inc.(5) | | | 2,238,148 | | | 6.06 | |
| | | | | | | | |
| Named Officers:
| | | | | | | |
| Seamus Grady | | | 6,081 | | | * | |
| Dr. Harpal Gill | | | 13,235 | | | * | |
| Csaba Sverha | | | 3,341 | | | * | |
| Edward T. Archer | | | — | | | — | |
| TS Ng | | | — | | | — | |
| | | | | | | | |
| Non-Employee Directors:
| | | | | | | |
| Dr. Homa Bahrami | | | 24,650 | | | * | |
| Gregory P. Dougherty | | | 2,677 | | | * | |
| Thomas F. Kelly | | | 35,823 | | | * | |
| Dr. Frank H. Levinson | | | 46,592 | | | * | |
| David T. Mitchell(6) | | | 71,889 | | | * | |
| Rollance E. Olson | | | 42,410 | | | * | |
| | | | | | | | |
| All directors and current executive officers as a group (11 persons) | | | 246,698 | | | * | |
*
| Represents less than 1% of the total. |
(1)
| Based on a Schedule 13G/A filed with the SEC byon February 4, 2020. The address of BlackRock, Inc. on January 28, 2019.is 55 East 52nd Street, New York, NY 10022. |
(2)
| Based on a Schedule 13G/A filed with the SEC by Dimensional Fund Advisors LP on February 8, 2019. July 10, 2020. The address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. |
(3)
| Based on a Schedule 13G/A filed with the SEC by FMR LLC on February 13, 2019. 12, 2020. The address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746. |
(4)
| Based on a Schedule 13G/A filed with the SEC on February 7, 2020. The address of FMR LLC is 245 Summer Street, Boston, MA 02210. |
(5)
| Based on a Schedule 13G filed with the SEC by The Vanguard Group on February 11, 2019. |
(5) | Dr. Hou’s employment with us terminated on August 25, 2018. We have provided his ownership information based on the last information known to us. 10, 2020. The address of Wasatch Advisors, Inc. is 505 Wakara Way, Salt Lake City, UT 84108. |
(6)
| All shares are held by the David T. Mitchell Separate Property Trust, of which Mr. Mitchell is the sole trustee. |
TABLE OF CONTENTS
| | | | | | | | |
(in thousands of U.S. dollars) | | Twelve Months Ended | |
| | June 28, 2019 | | | June 29, 2018 | |
Revenue | | $ | 1,584,335 | | | $ | 1,371,925 | |
Gross profit (GAAP) | | $ | 179,224 | | | $ | 153,412 | |
Share-based compensation expenses | | | 5,655 | | | | 6,784 | |
Depreciation of fair value uplift | | | 341 | | | | 330 | |
ASC 606 adoption impact on gross profit | | | (31 | ) | | | — | |
| | | | | | | | |
Gross profit(non-GAAP) | | $ | 185,189 | | | $ | 160,526 | |
| | | | | | | | |
Gross margin (GAAP) | | | 11.3 | % | | | 11.2 | % |
Gross margin(non-GAAP) | | | 11.7 | % | | | 11.7 | % |
GAAP operating profit and operating margin to
non-GAAP operating profit and operating margin
| | | | | | | | |
(in thousands of U.S. dollars) | | Twelve Months Ended | |
| | June 28, 2019 | | | June 29, 2018 | |
Revenue | | $ | 1,584,335 | | | $ | 1,371,925 | |
Operating profit (GAAP) | | $ | 122,641 | | | $ | 93,824 | |
Share-based compensation expenses | | | 17,157 | | | | 22,581 | |
Depreciation of fair value uplift | | | 341 | | | | 330 | |
ASC 606 adoption impact on operating profit | | | (31 | ) | | | — | |
Expenses related to reduction in workforce | | | 1,516 | | | | 1,776 | |
Expenses related to CFO/CEO search | | | 290 | | | | 204 | |
Amortization of intangibles | | | 694 | | | | 780 | |
Business combination expenses | | | 552 | | | | 117 | |
Severance payment | | | 1,120 | | | | 2,142 | |
| | | | | | | | |
Operating profit(non-GAAP) | | $ | 144,280 | | | $ | 121,754 | |
| | | | | | | | |
Operating margin (GAAP) | | | 7.7 | % | | | 6.8 | % |
Operating margin(non-GAAP) | | | 9.1 | % | | | 8.9 | % |
| Revenue | | | $1,641,836 | | | $1,584,335 | |
| | | | | | | | |
| Operating profit (GAAP) | | | $117,402 | | | $122,641 | |
| Share-based compensation expenses | | | 22,203 | | | 17,157 | |
| Depreciation of fair value uplift | | | 327 | | | 341 | |
| ASC 606 adoption impact on operating profit | | | — | | | (31) | |
| Expenses related to reduction in workforce | | | 329 | | | 1,516 | |
| Expenses related to CFO/CEO search | | | — | | | 290 | |
| Amortization of intangibles | | | 562 | | | 694 | |
| Goodwill impairment charge | | | 3,514 | | | — | |
| Business combination expenses | | | — | | | 552 | |
| Severance payment | | | 150 | | | 1,120 | |
| Operating profit (non-GAAP) | | | $144,487 | | | $144,280 | |
| | | | | | | | |
| Operating margin (GAAP) | | | 7.2% | | | 7.7% | |
| Operating margin (non-GAAP) | | | 8.8% | | | 9.1% | |
GAAP net income and net income per diluted share tonon-GAAP net income and net income per diluted share
| | | | | | | | | | | | | | | | |
(in thousands of U.S. dollars, except per share data) | | Twelve Months Ended | |
| | June 28, 2019 | | | June 29, 2018 | |
| | Net income | | | Diluted EPS | | | Net income | | | Diluted EPS | |
Net income (GAAP measure) | | $ | 120,955 | | | $ | 3.23 | | | $ | 84,167 | | | $ | 2.21 | |
Items reconciling GAAP net income & EPS tonon-GAAP net income & EPS: | | | | | | | | | | | | | | | | |
Related to cost of revenues: | | | | | | | | | | | | | | | | |
Share-based compensation expenses | | | 5,655 | | | | 0.15 | | | | 6,784 | | | | 0.18 | |
Depreciation of fair value uplift | | | 341 | | | | 0.01 | | | | 330 | | | | 0.01 | |
ASC 606 adoption impact on gross profit | | | (31 | ) | | | (0.00 | ) | | | — | | | | — | |
| | | | | | | | | | | | | | | | |
Total related to gross profit | | | 5,965 | | | | 0.16 | | | | 7,114 | | | | 0.19 | |
| | | | | | | | | | | | | | | | |
Related to selling, general and administrative expenses: | | | | | | | | | | | | | | | | |
Share-based compensation expenses | | | 11,502 | | | | 0.31 | | | | 15,797 | | | | 0.42 | |
Expenses related to CFO/CEO search | | | 290 | | | | 0.01 | | | | 204 | | | | 0.01 | |
Amortization of intangibles | | | 694 | | | | 0.02 | | | | 780 | | | | 0.02 | |
Business combination expenses and consulting fee | | | 552 | | | | 0.01 | | | | 117 | | | | 0.00 | |
Severance payments | | | 1,120 | | | | 0.03 | | | | 2,142 | | | | 0.06 | |
| | | | | | | | | | | | | | | | |
Total related to selling, general and administrative expenses | | | 14,158 | | | | 0.38 | | | | 19,040 | | | | 0.50 | |
| | | | | | | | | | | | | | | | |
Related to other income and other expense: | | | | | | | | | | | | | | | | |
Expenses related to reduction in workforce | | | 1,516 | | | | 0.04 | | | | 1,776 | | | | 0.05 | |
Amortization of debt issuance costs | | | — | | | | — | | | | 1,412 | | | | 0.04 | |
| | | | | | | | | | | | | | | | |
Total related to other income and other expense | | | 1,516 | | | | 0.04 | | | | 3,188 | | | | 0.08 | |
| | | | | | | | | | | | | | | | |
Total related to net income & EPS | | | 21,639 | | | | 0.58 | | | | 29,342 | | | | 0.77 | |
| | | | | | | | | | | | | | | | |
Non-GAAP net income | | $ | 142,594 | | | $ | 3.81 | | | $ | 113,509 | | | $ | 2.98 | |
| | | | | | | | | | | | | | | | |
Shares used in computing diluted net income per share | | | | | | | | | | | | | | | | |
GAAP diluted shares | | | | | | | 37,415 | | | | | | | | 38,035 | |
Non-GAAP diluted shares | | | | | | | 37,415 | | | | | | | | 38,035 | |
FABRINET
2020 EQUITY INCENTIVE PLAN
1.Purposes of the Plan. The purposes of this Plan are:
to attract and retain the best available personnel for positions of substantial responsibility,
to provide additional incentive to Employees, Directors and Consultants, and
to promote the success of the Company’s business.
The Plan permits the grant of Incentive Share Options, Nonstatutory Share Options, Restricted Shares, Restricted Share Units, Share Appreciation Rights, Performance Units and Performance Shares.
2.Definitions. As used herein, the following definitions will apply:
(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.
(b) “Applicable Laws” means the legal and regulatory requirements relating to the administration of equity-based awards, including without limitation the related issuance of Ordinary Shares, including without limitation under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Ordinary Shares are listed or quoted and the applicable laws of anynon-U.S. country or jurisdiction where Awards are, or will be, granted under the Plan and the requirements imposed by all applicable Company policies.
(c) “Award” means, individually or collectively, a grant under the Plan of Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units, Performance Units or Performance Shares.
(d) “Award Agreement” means the written or electronic agreement between the Company and Participant setting forth the terms and provisions applicable to an Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.
(e) “Board” means the Board of Directors of the Company.
(f) “Change in Control” means the occurrence of any of the following events:
(i)Change in Ownership of the Company. A change in the ownership of the Companywhich occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the shares of the Company that, together with the shares held by such Person, constitutes more than fifty percent (50%) of the total voting power of the shares of the Company; provided, however, that for purposes of this subsection, the acquisition of additional shares by any one Person, who is considered to own more than fifty percent (50%) of the total voting power of the shares of the Company will not be considered a Change in Control. Further, if the shareholders of the Company immediately before such change in ownership continue to retain immediately after the change in ownership, in substantially the same proportions as their ownership of shares of the Company’s voting shares immediately prior to the change in ownership, direct or indirect beneficial ownership of fifty percent (50%) or more of the total voting power of the shares of the Company or of the ultimate parent entity of the Company, such event will not be considered a Change in Control under this subsection (i). For this purpose, indirect beneficial ownership will include, without limitation, an interest resulting from ownership of the voting securities of one or more corporations or other business entities which own the Company, as the case may be, either directly or through one or more subsidiary corporations or other business entities; or
(ii)Change in Effective Control of the Company. A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this subsection (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii)Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such Person) assets from the Company that have a total gross fair market value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s shareholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s shares, (2) an entity, fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding shares of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
For purposes of this definition, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of shares, or similar business transaction with the Company.
Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Section 409A.
Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (x) its sole purpose is to change the jurisdiction of the Company’s incorporation, or (y) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.
(g) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code or regulation thereunder will include such section or regulation, any valid regulation or other official guidance promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing, or superseding such section or regulation.
(h) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board, or a duly authorized committee of the Board, in accordance with Section 4 hereof.
(i) “Company” means Fabrinet, an exempted company incorporated under the laws of the Cayman Islands, or any successor thereto.
(j) “Consultant” means any natural person, including an advisor, engaged by the Company or a Parent or Subsidiary of the Company to render bona fide services to such entity, provided the services (i) are not in connection with the offer or sale of securities in acapital-raising transaction, and (ii) do not directly promote or maintain a market for the Company’s securities, in each case, within the meaning of FormS-8 promulgated under the Securities Act, and provided, further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under FormS-8 promulgated under the Securities Act.
(k) “Director” means a member of the Board.
(l) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code, provided that in the case of Awards other than Incentive Share Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform andnon-discriminatory standards adopted by the Administrator from time to time.
(m) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.
(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(o) “Exchange Program” means a program under which (i) outstanding Awards are surrendered or cancelled in exchange for awards of the same type (which may have higher or lower exercise prices and different terms), awards of a different type, and/or cash, (ii) Participants would have the opportunity to transfer any outstanding Awards to a financial institution or other person or entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is reduced. For the avoidance of doubt, as set forth in Section 4(c), the Administrator will not be permitted to implement an Exchange Program.
(p) “Fair Market Value” means, as of any date, the higher of the par value of an Ordinary Share and the value of an Ordinary Share determined as follows:
(i) If the Ordinary Shares are listed on any established stock exchange or a national market system, including without limitation the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market or the Nasdaq Capital Market of The Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such shares (or the closing bid, if no sales were reported) (during regular trading) as quoted on such exchange or system on the day of determination, as reported inThe Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Ordinary Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share will be the mean between the high bid and low asked prices for the Ordinary Shares on the day of determination (or, if no bids and asks were reported on that date, as applicable, on the last Trading Day such bids and asks were reported) (during regular trading), as reported inThe Wall Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Ordinary Shares, the Fair Market Value will be determined in good faith by the Administrator.
(q) “Fiscal Year” means the fiscal year of the Company.
(r) “Incentive Share Option” means an Option intended to qualify, and actually qualifies, as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.
(s) “Nonstatutory Share Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Share Option.
(t) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(u) “Option” means a share option granted pursuant to the Plan.
(v) “Ordinary Shares” means the ordinary shares of the Company.
(w) “Outside Director” means a Director who is not an Employee.
(x) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.
(y) “Participant” means the holder of an outstanding Award.
(z) “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 11.
(aa) “Performance Unit” means an Award which may be earned in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 11.
(bb) “Period of Restriction” means the period (if any) during which the transfer of Restricted Shares is subject to restrictions and therefore, the Restricted Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.
(cc) “Plan” means this Fabrinet 2020 Equity Incentive Plan.
(dd) “Restricted Share Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 9. Each Restricted Share Unit represents an unfunded and unsecured obligation of the Company.
(ee) “Restricted Shares” means Shares issued pursuant to a Restricted Shares Award under Section 8 of the Plan, or issued pursuant to the early exercise of an Option.
(ff) “Rule16b-3” means Rule16b-3 of the Exchange Act or any successor to Rule16b-3, as in effect when discretion is being exercised with respect to the Plan.
(gg) “Section 16(b)” means Section 16(b) of the Exchange Act.
(hh) “Section 409A” means Section 409A of the Code, as it has been and may be amended from time to time, and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time, or any state law equivalent.
(ii) “Securities Act” means the Securities Act of 1933, as amended.
(jj) “Service Provider” means an Employee, Director or Consultant.
(kk) “Share” means an Ordinary Share, as adjusted in accordance with Section 14 of the Plan.
(ll) “Share Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 10 is designated as a Share Appreciation Right.
(mm) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.
(nn) “Trading Day” means a day that the stock exchange, national market system, or other trading platform, as applicable, upon which the Ordinary Shares primarily are listed, is open for trading.
3.Shares Subject to the Plan.
(a)Shares Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is (i) 1,700,000 Shares, plus (ii) any Shares that, as of immediately prior to the termination of the Company’s Amended and Restated 2010 Performance Incentive Plan, as amended (the “2010 Plan”), have been reserved but not issued pursuant to any awards granted under the 2010 Plan and are not subject to any awards thereunder, with the maximum number of Shares to be added to the Plan pursuant to the foregoing clause (ii) equal to 1,300,000 Shares. The Shares may be authorized but unissued Ordinary Shares or Ordinary Shares held in treasury by the Company.
(b)Shares Subject to Awards. Shares subject to an Award will be counted against the share limits of this Plan and will not be returned to the Plan and will not become available for future distribution under the Plan, regardless of whether (i) the Award expires or becomes unexercisable without having been exercised in full, or, with respect to Restricted Shares, Restricted Share Units, Performance Units or Performance Shares, is forfeited to or repurchased by the Company due to failure to vest; (ii) the Shares are repurchased by the Company or are forfeited to the Company due to failure to vest; (iii) the Shares are used to pay the exercise price of an Award or to satisfy the tax withholding obligations related to an Award; or (iv) the Award is paid out (in any part) in cash or any form other than Ordinary Shares. For the avoidance of doubt, awards granted in substitution for or in connection with the assumption of equity awards granted by entities other than the Company, pursuant to a transaction described in Section 424(a) of the Code shall not be counted against the share limits of this Plan or other limits set forth in this Plan.
(c)Share Reserve. The Company, at all times during the term of this Plan, will reserve and keep available such number of authorized but unissued Shares or treasury Shares as will be sufficient to satisfy the requirements of the Plan.
4.Administration of the Plan.
(a)Procedure.
(i)Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.
(ii)Rule16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule16b-3.
(iii)Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws. Until and unless determined otherwise by the Board, the Compensation Committee of the Board will have full authority to act as Administrator.
(b)Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Awards may be granted hereunder;
(iii) to determine the number of Shares to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. The terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;
(vi) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating tosub-plans established for the purpose of satisfying applicablenon-U.S. laws or for qualifying for favorable tax treatment under applicablenon-U.S. laws;
(vii) to construe and interpret the terms of the Plan and Awards granted under the Plan;
(viii) to modify or amend each Award (subject to Section 19 of the Plan), including without limitation the discretionary authority to extend the post-termination exercisability period of Awards; provided, however, that in no event will the term of an Option or Share Appreciation Right be extended beyond its original maximum term;
(ix) to allow Participants to satisfy tax withholding obligations in a manner prescribed in Section 15 of the Plan;
(x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;
(xi) to temporarily suspend the exercisability of an Award if the Administrator deems such suspension to be necessary or appropriate for administrative purposes or to comply with Applicable Laws;
(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that otherwise would be due to the Participant under an Award, and provide for crediting of interest or other earnings on deferred payments, or the payment or crediting of dividend equivalents where the deferred amounts are denominated in Shares; and
(xiii) to make all other determinations deemed necessary or advisable for administering the Plan.
(c)No Exchange Program or Repricing. Notwithstanding the powers of the Administrator set forth herein, the Administrator will not be permitted to implement an Exchange Program.
(d)Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards and will be given the maximum deference permitted by Applicable Laws.
5.Eligibility. Nonstatutory Share Options, Share Appreciation Rights, Restricted Shares, Restricted Share Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Share Options may be granted only to Employees.
6.Limits.
(a)Outside Director Award Limitations. No Outside Director may be granted, in any Fiscal Year, Awards (the value of which will be based on their grant date fair value determined in accordance with U.S.
generally accepted accounting principles) that, in the aggregate, exceed $400,000, provided that such amount is increased to $600,000 in the Fiscal Year of his or her initial service as an Outside Director. Any Awards provided to an individual for his or her services as an Employee, or for his or her services as a Consultant other than as an Outside Director, will be excluded for purposes of this Section 6(a).
(b)One-Year Vesting Requirement. Awards will vest no earlier than the one (1) year anniversary of the Award’s date of grant; provided that the Administrator, in its sole discretion, may provide that an Award may accelerate vesting by reason of the Participant’s death, Disability, termination of employment, reaching retirement age, or an event described in Section 14(c); and provided further that, notwithstanding anything in the Plan to the contrary, Awards up to a maximum of five percent (5%) of the Ordinary Shares available for issuance pursuant to Section 3(a) may be granted without regard to the minimum one (1) year vesting requirements set forth in this Section 6(b).
(c)Dividends. No dividends may be paid to a Participant with respect to an Award (or portion thereof, as applicable), prior to the vesting of such Award (or portion thereof, as applicable).
7.Share Options.
(a)Grant of Options. Subject to the terms and provisions of the Plan, including without limitation, Section 6(b) with respect to vesting requirements, the Administrator, at any time and from time to time, may grant Options to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b)Share Option Agreement. Each Award of an Option will be evidenced by an Award Agreement that will specify the exercise price, the number of Shares subject to the Option, the exercise restrictions, if any, applicable to the Option, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(c)Limitations. Each Option will be designated in the Award Agreement as either an Incentive Share Option or a Nonstatutory Share Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Share Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary of the Company) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Share Options. For purposes of this Section 7(c), Incentive Share Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.
(d)Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Share Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Share Option granted to a Participant who, at the time the Incentive Share Option is granted, owns shares representing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or any Parent or Subsidiary of the Company, the term of the Incentive Share Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.
(e)Option Exercise Price and Consideration.
(i)Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:
(1) In the case of an Incentive Share Option
(A) granted to an Employee who, at the time the Incentive Share Option is granted, owns shares representing more than ten percent (10%) of the voting power of all classes of shares of the
Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(2) In the case of a Nonstatutory Share Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.
(ii)Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.
(iii)Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Share Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (1) cash (or cash equivalents); (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment.
(f)Exercise of Option.
(i)Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share. Unless determined otherwise by the Administrator, to the extent an Option is exercisable, the minimum number of Shares subject to the Option that the Participant may exercise is the lesser of (x) one hundred (100) Shares subject to the Option, or (y) the total number of Shares subject to the Option that is exercisable.
An Option will be deemed exercised when the Company receives: (i) notice of exercise (in accordance with the procedures that the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with any applicable tax withholdings). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued (and recorded in the Company’s register of members) in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry in the register of members and on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.
Exercising an Option in any manner will decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
(ii)Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the cessation of the Participant’s Service Provider status as the result of the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). Unless otherwise provided by the Administrator, if on the date of cessation of the Participant’s Service Provider status the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will be forfeited to the Company. If, after cessation of the Participant’s Service Provider status, the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will return to the Company.
(iii)Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following cessation of the Participant’s Service Provider status (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). Unless otherwise provided by the Administrator, if on the date of cessation of the Participant’s Service Provider status the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will be forfeited to the Company. If, after cessation of the Participant’s Service Provider status, the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will return to the Company.
(iv)Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to the Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s death (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). Unless otherwise provided by the Administrator, if at the time of death, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will be forfeited to the Company immediately. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will return to the Company.
(v)Tolling Expiration. A Participant’s Award Agreement also may provide that:
(1) if the exercise of the Option following the cessation of Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would result in liability under Section 16(b), then the Option will terminate on the earlier of (A) the expiration of the term of the Option set forth in the Award Agreement, or (B) the tenth (10th) day after the last date on which such exercise would result in liability under Section 16(b); or
(2) if the exercise of the Option following the cessation of the Participant’s status as a Service Provider (other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of Shares would violate the registration requirements under the Securities Act, then the Option will terminate on the earlier of (A) the expiration of the term of the Option or (B) the expiration of a period of thirty (30) days after the cessation of the Participant’s status as a Service Provider during which the exercise of the Option would not be in violation of such registration requirements.
8.Restricted Shares.
(a)Grant of Restricted Shares. Subject to the terms and provisions of the Plan, including without limitation, Section 6(b) with respect to vesting requirements, the Administrator, at any time and from time to time, may grant Restricted Shares to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.
(b)Restricted Shares Agreement. Each Award of Restricted Shares will be evidenced by an Award Agreement that will specify any Period of Restriction, the number of Restricted Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Restricted Shares until the restrictions on such Restricted Shares have lapsed.
(c)Transferability. Except as provided in this Section 8 or the Award Agreement, Restricted Shares may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of any applicable Period of Restriction.
(d)Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Restricted Shares as it may deem advisable or appropriate.
(e)Removal of Restrictions. Except as otherwise provided in this Section 8, Restricted Shares covered by each Restricted Shares grant made under the Plan will be released from escrow as soon as practicable after the last day of any applicable Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.
(f)Voting Rights. During any applicable Period of Restriction, Service Providers holding Restricted Shares granted hereunder may exercise full voting rights with respect to those Restricted Shares, unless the Administrator determines otherwise.
(g)Dividends and Other Distributions. During any applicable Period of Restriction, Service Providers holding Restricted Shares will be entitled to receive all dividends and other distributions paid with respect to such Restricted Shares, unless the Administrator provides otherwise; provided, however, that in all cases, any such dividends or other distributions will be subject to the same restrictions on transferability and forfeitability as the Restricted Shares with respect to which they were paid.
(h)Return of Restricted Shares to Company. On the date set forth in the Award Agreement, the Restricted Shares for which restrictions have not lapsed will be forfeited to the Company.
9.Restricted Share Units.
(a)Grant. Subject to the terms and provisions of the Plan, including without limitation, Section 6(b) with respect to vesting requirements, Restricted Share Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Share Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions related to the grant, including the number of Restricted Share Units.
(b)Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Share Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, divisional, business unit, or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws or any other basis determined by the Administrator in its discretion.
(c)Earning Restricted Share Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Share Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.
(d)Form and Timing of Payment. Payment of earned Restricted Share Units will be made as soon as practicable after the date(s) determined by the Administrator and set forth in the Award Agreement. The Administrator, in its sole discretion, may settle earned Restricted Share Units only in cash, Shares, or a combination of both.
(e)Cancellation. On the date set forth in the Award Agreement, all unearned Restricted Share Units will be forfeited to the Company.
10.Share Appreciation Rights.
(a)Grant of Share Appreciation Rights. Subject to the terms and conditions of the Plan, including without limitation, Section 6(b) with respect to vesting requirements, a Share Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.
(b)Number of Shares. The Administrator will have complete discretion to determine the number of Share Appreciation Rights granted to any Service Provider.
(c)Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Share Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant, provided that the rules of Section 7(e)(i)(3) also will apply to Share Appreciation Rights. Otherwise, the Administrator, subject to the provisions of the Plan, will in its sole discretion determine the terms and conditions of Share Appreciation Rights granted under the Plan.
(d)Share Appreciation Right Agreement. Each Share Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Share Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.
(e)Expiration of Share Appreciation Rights. A Share Appreciation Right granted under the Plan will expire ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement, as determined by the Administrator, in its sole discretion. Notwithstanding the foregoing, the rules of Section 7(f) relating to exercise also will apply to Share Appreciation Rights.
(f)Payment of Share Appreciation Right Amount. Upon exercise of a Share Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined as the product of:
(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; and
(ii) The number of Shares with respect to which the Share Appreciation Right is exercised.
Unless determined otherwise by the Administrator, to the extent a Share Appreciation Right is exercisable, the minimum number of Shares subject to the Share Appreciation Right that the Participant may exercise is the lesser of (x) one hundred (100) Shares subject to the Share Appreciation Right, or (y) the total number of Shares subject to the Share Appreciation Right that is exercisable. At the discretion of the Administrator, the payment upon exercise of a Share Appreciation Right may be in cash, in Shares of equivalent value, or in some combination of both.
11.Performance Units and Performance Shares.
(a)Grant of Performance Units/Shares. Subject to the terms and provisions of the Plan, including without limitation, Section 6(b) with respect to vesting requirements, Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator, in its sole discretion, will determine the number of Performance Units and Performance Shares granted to each Participant.
(b)Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.
(c)Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, business unit or individual goals (including, but not limited to, continued employment or service), applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.
(d)Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Performance Unit/Share.
(e)Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination of both.
(f)Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company.
12.Leaves of Absence/Transfer Between Locations. Unless the Administrator provides otherwise or as otherwise required by Applicable Laws, vesting of Awards granted hereunder will be suspended during any unpaid leave of absence. A Participant will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any of its Subsidiaries. For purposes of Incentive Share Options, no such leave may exceed three (3) months, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then six (6) months following the first (1st) day of such leave any Incentive Share Option held by the Participant will cease to be treated as an Incentive Share Option and will be treated for tax purposes as a Nonstatutory Share Option.
13.Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent and distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.
14.Adjustments; Dissolution or Liquidation; Merger or Change in Control.
(a)Adjustments. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, share split, reverse share split, reorganization, merger, consolidation,split-up,spin-off, combination, reclassification, 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 (other than any ordinary dividends or other ordinary distributions), the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will adjust the number and class of shares that may be delivered under the Plan and/or the number, class, and price of shares covered by each outstanding Award, and the numerical Share limits in Section 3(a) of the Plan.
(b)Dissolution or Liquidation. In the event of a proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it previously has not been exercised, an Award will terminate immediately prior to the consummation of such proposed action.
(c)Merger or Change in Control. In the event of a merger of the Company with or into another corporation or other entity or a Change in Control, each outstanding Award will be treated as the Administrator determines (subject to the provisions of the following paragraph) without a Participant’s consent, including, without limitation, that (i) Awards will be assumed, or substantially equivalent awards will be substituted, by the acquiring or succeeding corporation (or an affiliate thereof) with appropriate adjustments as to the number and kind of shares and prices; (ii) upon written notice to a Participant, that the Participant’s Awards will terminate upon or immediately prior to the consummation of such merger or Change in Control; (iii) outstanding Awards will vest and become exercisable, realizable, or payable, or restrictions applicable to an Award will lapse, in whole or in part prior to or upon consummation of such merger or Change in Control, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of such merger or Change in Control; (iv) (A) the termination of an Award in exchange for an amount of cash and/or property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Participant’s rights as of the date of the occurrence of the transaction (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment), or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion; or (v) any combination of the foregoing. In taking any of the actions permitted under this Section 14(c), the Administrator will not be obligated to treat all Awards, all Awards held by a Participant, all Awards of the same type, or all portions of Awards, similarly.
In the event that the successor corporation does not assume or substitute for the Award (or portion thereof), the Participant will fully vest in and have the right to exercise the Participant’s outstanding Option and Share Appreciation Right (or portion thereof) that is not assumed or substituted for, including Shares as to which such Award would not otherwise be vested or exercisable, all restrictions on Restricted Share, Restricted Share Units, Performance Shares and Performance Units (or portions thereof) not assumed or substituted for will lapse,
and, with respect to such Awards with performance-based vesting (or portions thereof) not assumed or substituted for, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met, in each case, unless specifically provided otherwise under the applicable Award Agreement or other written agreement between the Participant and the Company or any of its Subsidiaries or Parents, as applicable. In addition, if an Option or Share Appreciation Right (or portion thereof) is not assumed or substituted for in the event of a merger or Change in Control, the Administrator will notify the Participant in writing or electronically that such Option or Share Appreciation Right (or its applicable portion) will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or Share Appreciation Right (or its applicable portion) will terminate upon the expiration of such period.
For the purposes of subsections (c) and (d) of this Section 14, an Award will be considered assumed if, following the merger or Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or Change in Control, the consideration (whether stock, shares, cash, or other securities or property) received in the merger or Change in Control by holders of Ordinary Shares for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock (or ordinary shares or the equivalent thereof) of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Share Appreciation Right or upon the payout of a Restricted Share Unit, Performance Unit or Performance Share, for each Share subject to such Award, to be solely common stock (or ordinary shares or the equivalent thereof) of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Ordinary Shares in the merger or Change in Control.
Notwithstanding anything in this subsection (c) to the contrary, and unless otherwise provided in an Award Agreement or other written agreement between the Participant and the Company or any of its Subsidiaries or Parents, as applicable, an Award that vests, is earned orpaid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a modification to such performance goals only to reflect the successor corporation’s post-Change in Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.
Notwithstanding anything in this subsection (c) to the contrary, and unless otherwise provided in an Award Agreement or other written agreement between the Participant and the Company or any of its Subsidiaries or Parents, as applicable, if a payment under an Award Agreement is subject to Section 409A and if the change in control definition contained in the Award Agreement or other agreement related to the Award does not comply with the definition of “change in control” for purposes of a distribution under Section 409A, then any payment of an amount that otherwise is accelerated under this Section will be delayed until the earliest time that such payment would be permissible under Section 409A without triggering any penalties applicable under Section 409A. Section 7.4 of the Company’s Amended and Restated 2010 Performance Incentive Plan shall not apply to any Awards or other payments, compensation or benefits that any Participant under the Plan would receive or has received from the Company or any other party, whether in connection with the Plan or otherwise, that may constitute a “parachute payment” within the meaning of Section 280G of the Code.
(d)Outside Director Awards. With respect to Awards granted to an Outside Director that are assumed or substituted for, if on the date of or following such assumption or substitution the Participant’s status as a Director or a director of the successor corporation, as applicable, is terminated other than upon a voluntary resignation by the Participant (unless such resignation is at the request of the acquirer), then the Outside Director will fully vest in and have the right to exercise Options and/or Share Appreciation Rights as to all of the Shares underlying such Award, including those Shares which otherwise would not be vested or exercisable, all restrictions on Restricted Share and Restricted Share Units will lapse, and, with respect to Awards with
performance-based vesting, all performance goals or other vesting criteria will be deemed achieved at one hundred percent (100%) of target levels and all other terms and conditions met, unless specifically provided otherwise under the applicable Award Agreement or other written agreement between the Participant and the Company or any of its Subsidiaries or Parents, as applicable.
15.Tax.
(a)Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or such earlier time as any tax withholding obligations are due, the Company (or any of its Subsidiaries, Parents or affiliates employing or retaining the services of a Participant, as applicable) will have the power and the right to deduct or withhold, or require a Participant to remit to the Company (or any of its Subsidiaries, Parents or affiliates, as applicable), an amount sufficient to satisfy U.S. federal, state and local,non-U.S., and other taxes (including the Participant’s FICA obligation) required to be withheld with respect to such Award (or exercise thereof).
(b)Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, check or other cash equivalents, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a fair market value equal to the minimum statutory amount required to be withheld or such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion, (iii) delivering to the Company already-owned Shares having a fair market value equal to the statutory amount required to be withheld or such greater amount as the Administrator may determine, in each case, provided the delivery of such Shares will not result in any adverse accounting consequences, as the Administrator determines in its sole discretion, (iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such means as the Administrator may determine in its sole discretion (whether through a broker or otherwise) equal to the amount required to be withheld, (v) such other consideration and method of payment for the meeting of tax withholding obligations as the Administrator may determine to the extent permitted by Applicable Laws, or (vi) any combination of the foregoing methods of payment. The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made, not to exceed the amount determined by using the maximum federal, state or local marginal income tax rates applicable to the Participant with respect to the Award on the date that the amount of tax to be withheld is to be determined or such greater amount as the Administrator may determine if such amount would not have adverse accounting consequences, as the Administrator determines in its sole discretion. The fair market value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.
(c)Compliance with Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A, except as otherwise determined in the sole discretion of the Administrator. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Section 409A and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Section 409A, the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Section 409A, such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Section 409A. In no event will the Company or any of its Subsidiaries or Parents have any responsibility, obligation or liability under the terms of this Plan to reimburse, indemnify, or hold harmless any Participant or any other person in respect of Awards, for any taxes, interest or penalties imposed, or other costs incurred, as a result of Section 409A.
16.No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider, nor interfere in any way with
the Participant’s right or the right of the Company and its Subsidiaries or Parents, as applicable, to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.
17.Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.
18.Term of Plan. Subject to Section 22 of the Plan, the Plan will become effective upon its adoption by the Board (or its designated committee). It will continue in effect for a term of ten (10) years from the date adopted by the Board, unless terminated earlier under Section 19of the Plan.
19.Amendment and Termination of the Plan.
(a)Amendment and Termination. The Administrator, at any time may amend, alter, suspend or terminate the Plan.
(b)Shareholder Approval. The Company will obtain shareholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.
(c)Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.
20.ConditionsUpon Issuance of Shares.
(a)Legal Compliance. Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.
(b)Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
21.Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction or to complete or comply with the requirements of any registration or other qualification of the Shares under any U.S. state or federal law ornon-U.S. law or under the rules and regulations of the Securities and Exchange Commission, the stock exchange on which Shares of the same class are then listed, or any other governmental or regulatory body, which authority, registration, qualification or rule compliance is deemed by the Company’s counsel to be necessary or advisable for the issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority, registration, qualification or rule compliance will not have been obtained.
22.Stockholder Approval. The Plan will be subject to approval by the shareholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such shareholder approval will be obtained in the manner and to the degree required under Applicable Laws.
23.Forfeiture Events. The Administrator may specify in an Award Agreement that the Participant’s rights, payments, and benefits with respect to an Award will be subject to reduction, cancellation, forfeiture,
recoupment, reimbursement, or reacquisition upon the occurrence of certain specified events, in addition to any otherwise applicable vesting or performance conditions of an Award. Notwithstanding any provisions to the contrary under this Plan, an Award will be subject to the Company’s clawback policy as may be established and/or amended from time to time to comply with Applicable Laws (including without limitation pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as may be required by theDodd-Frank wall Street Reform and Consumer Protection Act) (the “Clawback Policy”). The Administrator may require a Participant to forfeit, return or reimburse the Company all or a portion of the Award and any amounts paid thereunder pursuant to the terms of the Clawback Policy or as necessary or appropriate to comply with Applicable Laws. Unless this Section 23 specifically is mentioned and waived in an Award Agreement or other document, no recovery of compensation under a Clawback Policy or otherwise will constitute an event that triggers or contributes to any right of a Participant to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company or any Parent or Subsidiary of the Company.
* * *
C/O Intertrust Corporate Services (Cayman) Limited
190 Elgin Avenue
George Town
Grand Cayman
KY1-9005, Cayman Islands
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| | The Board of Directors recommends you
vote FOR the following:
| | For
All
| | Withhold
All
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Except
| | | | | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.
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| 1. Election of Directors
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| | | | Nominees
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| | 01 Dr. Homa Bahrami 02 Gregory P. Dougherty 03 Rollance E. Olson
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| | The Board of Directors recommends you vote FOR proposals 2, 3 and 4.
| | | | | | | | | For | | Against | | Abstain | | | | |
| | 2. Approval of the Fabrinet 2020 Equity Incentive Plan.
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| | 3. Ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as Fabrinet’s independent registered public
accounting firm for the fiscal year ending June 26, 2020.
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| | 4. Approval, on an advisory basis, of the compensation paid to Fabrinet’s named executive officers.
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| | NOTE: Such other business as may properly come before the meeting or any adjournment thereof.
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| Net income (GAAP measure) | | | $113,479 | | | $3.01 | | | $120,955 | | | $3.23 | |
| Items reconciling GAAP net income & EPS to non-GAAP net income & EPS:
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| Related to cost of revenues:
| | | | | | | | | | | | | |
| Share-based compensation expenses | | | 6,098 | | | 0.16 | | | 5,655 | | | 0.15 | |
| Depreciation of fair value uplift | | | 327 | | | 0.01 | | | 341 | | | 0.01 | |
| ASC 606 adoption impact on gross profit | | | — | | | — | | | (31) | | | (0.00) | |
| Total related to gross profit | | | 6,425 | | | 0.17 | | | 5,965 | | | 0.16 | |
| Related to selling, general and administrative expenses:
| | | | | | | | | | | | | |
| Share-based compensation expenses | | | 16,105 | | | 0.43 | | | 11,502 | | | 0.31 | |
| Expenses related to CFO/CEO search | | | — | | | — | | | 290 | | | 0.01 | |
| Amortization of intangibles | | | 562 | | | 0.01 | | | 694 | | | 0.02 | |
| Goodwill impairment charge | | | 3,514 | | | 0.09 | | | — | | | — | |
| Business combination expenses and consulting fee | | | — | | | — | | | 552 | | | 0.01 | |
| Severance payments | | | 150 | | | 0.00 | | | 1,120 | | | 0.03 | |
| Total related to selling, general and administrative expenses | | | 20,331 | | | 0.54 | | | 14,158 | | | 0.38 | |
| Related to other income and other expense:
| | | | | | | | | | | | | |
| Expenses related to reduction in workforce | | | 329 | | | 0.01 | | | 1,516 | | | 0.04 | |
| Amortization of debt issuance costs | | | 26 | | | 0.00 | | | — | | | — | |
| Total related to other income and other expense | | | 355 | | | 0.01 | | | 1,516 | | | 0.04 | |
| | | | | | | | | | | | | | |
| Total related to net income & EPS | | | 27,111 | | | 0.72 | | | 21,639 | | | 0.58 | |
| Non-GAAP net income | | | $140,590 | | | $3.73 | | | $142,594 | | | $3.81 | |
| Shares used in computing diluted net income per share | | | | | | | | | | | | | |
| GAAP diluted shares | | | | | | 37,655 | | | | | | 37,415 | |
| Non-GAAP diluted shares | | | | | | 37,655 | | | | | | 37,415 | |
A-2 | | |
| | FABRINET
Annual Meeting of Shareholders
December 12, 2019 9:00 AM, Pacific Time
This proxy is solicited by the Board of Directors
The undersigned shareholder of Fabrinet hereby appoints Colin R. Campbell and Toh-Seng Ng, and each of them, as proxies and attorneys-in-fact, with full power to each of substitution, on behalf and in the name of the undersigned, to represent the undersigned at the 2019 Annual Meeting of Shareholders of Fabrinet to be held on December 12, 2019 at 9:00 a.m., Pacific time, at the offices of Wilson Sonsini Goodrich & Rosati, PC, located at 650 Page Mill Road, Palo Alto, California 94304, and at any adjournments or postponements thereof, and to vote all ordinary shares which the undersigned would be entitled to vote if then and there personally present, on the matters set forth on the reverse side.
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations indicated on the reverse side, and according to the discretion of the proxy holders for any other matters that may properly come before the meeting or any postponement or adjournment thereof.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE | | 2020 PROXY STATEMENT |