Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549
 

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

Filed by the Registrant   ☒  

Filed by a Party other than the Registrant   ☐

Check the appropriate box:

Payment of Filing Fee (Check the appropriate box):

☐         Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

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April 29, 201630, 2019

Dear Stockholder:

You are invited to attend the 20162019 Annual Meeting of Stockholders of Monolithic Power Systems, Inc. to be held on Thursday, June 16, 2016,13, 2019, at 10:00 a.m., Pacific Daylight Time, at our corporate headquarters, 79 Great Oaksprincipal executive office at 4040 Lake Washington Boulevard San Jose, CA 95119.NE, Suite 201, Kirkland, Washington 98033.

It is important that your shares be represented and voted whether or not you plan to attend the Annual Meeting in person. We continue using the Securities and Exchange Commission rule that permits companies to furnish proxy materials to stockholders over the Internet. If you are viewing the Proxy Statement on the Internet, you may grant your proxy electronically viaover the Internet by following the instructions on the Notice Regarding the Availability of Proxy Materials previously mailed to you and the instructions listed on the Internet site. If you have received a paper copy of the Proxy Statement and proxy card, you may grant a proxy to vote your shares by completing and mailing the proxy card enclosed with the Proxy Statement, or you may grant your proxy electronically viaover the Internet or by telephone by following the instructions on the proxy card.  If your shares are held in “street name,” which means shares held of record by a broker, bank, trust or other nominee, you should review the Notice Regarding the Availability of Proxy Materials or Proxy Statement and voting instruction form used by that firm to determine whether and how you will be able to submit your proxy by telephone or over the Internet. Submitting a proxy over the Internet, by telephone or by mailing a proxy card, will ensure your shares are represented at the Annual Meeting.

Your vote is important, regardless of the number of shares that you own.

On behalf of the Board of Directors, I thank you for your participation. We look forward to seeing you on June 16th.13, 2019.

	Sincerely,
	Michael R. Hsing
	Chairman of the Board, President and Chief Executive Officer

MONOLITHIC POWER SYSTEMS, INC.

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on June 16, 201613, 2019

To the Stockholders of Monolithic Power Systems, Inc.:

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Monolithic Power Systems, Inc. (the “Company”), a Delaware corporation, will be held on Thursday, June 16, 2016,13, 2019, at 10:00 a.m., Pacific Daylight Time, at the Company’s corporate headquartersour principal executive office located at 79 Great Oaks4040 Lake Washington Boulevard San Jose, CA 95119,NE, Suite 201, Kirkland, Washington 98033, for the following purposes:

The foregoing items of business are more fully described in the Proxy Statement accompanying this Notice.

Only stockholders of record at the close of business on April 19, 201616, 2019 are entitled to notice of and to vote at the meeting.

Your vote is important.  All stockholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, we encourage you to submit your proxy as soon as possible using one of three convenient methods: (i) by accessing the Internet site described in thisthe Notice Regarding the Availability of Proxy StatementMaterials (the “Notice”) or in the proxy card or the voting instruction form provided to you; (ii) by calling the toll-free number described in this Proxy Statementthe proxy card or the voting instruction form provided to you; or (iii) by signing, dating and returning the enclosed proxy card or the instruction form provided to you. By submitting your proxy promptly, you will save the Company the expense of further proxy solicitation. Any stockholder of record attending the meeting may vote in person even if he or she has already returned a proxy.

	By Order of the Board of Directors,
	Saria Tseng
	Vice President, Strategic Corporate Development, General Counsel and Corporate Secretary

San Jose, CaliforniaKirkland, Washington

April 29. 201630, 2019

MONOLITHIC POWER SYSTEMS, INC.

PROXY STATEMENT

FOR

20162019 ANNUAL MEETING OF STOCKHOLDERS

INFORMATION CONCERNING SOLICITATION AND VOTING

Index

Page

General

This Proxy Statement is being furnished to holders of common stock, par value $0.001 per share (the “Common Stock”), of Monolithic Power Systems, Inc., a Delaware corporation (the “Company” or “MPS”), in connection with the solicitation of proxies by our Board of Directors (the “Board”) for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Thursday, June 16, 201613, 2019 at 10:00 a.m., Pacific Daylight Time, and at any adjournment or postponement thereof for the purpose of considering and acting upon the matters set forth herein.  

The Annual Meeting will be held at our corporate headquartersprincipal executive office located at 79 Great Oaks4040 Lake Washington Boulevard San Jose, CA 95119.NE, Suite 201, Kirkland, Washington 98033. The telephone number at that location is (408) 826-0600.(425) 296-9956.

Internet Availability of Proxy Materials

Pursuant to the rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the Internet. Accordingly, we are sending a Notice Regarding the Availability of Proxy Materials (the “Notice”) to certain of our stockholders of record, and upon request, we will send a paper copy of the proxy materials and proxy card to other stockholders of record. Brokers and other nominees who hold shares on behalf of beneficial owners will be sending their own similar notice. Stockholders will have the ability to access the proxy materials on the website referred to in the noticeNotice or request to receive a printed set of the proxy materials. Instructions on how to request a printed copy by mail or electronically may be found on the noticeNotice and on the website referred to in the notice,Notice, including an option to request paper copies on an ongoing basis. We intend to make this Proxy Statement available on the Internet and to mail the notice, or to mail the Proxy Statement and proxy card, as applicable, on or about May 4, 20163, 2019 to all stockholders of record at the close of business on April 19, 201616, 2019 (the “Record Date”).

Our website is not intended to function as a hyperlink, and the information contained on our website is not intended to be part of this Proxy Statement and is not incorporated by reference into this Proxy Statement. 

Record Date; Outstanding Shares

Only stockholders of record at the close of business on the Record Date are entitled to notice of, and to vote at, the Annual Meeting and any adjournment thereof. These stockholders are entitled to cast one vote for each share of Common Stock held as of the Record Date on all matters properly submitted for the vote of stockholders at the Annual Meeting. On the Record Date, 40,240,31643,036,450 shares of Common Stock were issued and outstanding. No shares of our Preferred Stock were issued and outstanding. For information regarding security ownership by management, directors, and beneficial owners of more than 5% of the Common Stock, see the section“Security Ownership of Certain Beneficial Owners and Management.”

Procedure for Submitting Stockholder Proposals

Requirements for stockholder proposals to be considered for inclusion in our proxy materials. Proposals of stockholders which are to be presented by such stockholders at our 20172020 annual meeting of stockholders must meet the stockholder proposal requirements contained in Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and must be received by us no later than January 4, 20173, 2020 in order that they may be included in the proxy statement and form of proxy relating to that meeting. Such stockholder proposals should be submitted to our principal executive office located at 79 Great OaksMonolithic Power Systems, Inc., 4040 Lake Washington Boulevard San Jose, CA 95119,NE, Suite 201, Kirkland, Washington 98033, Attention: Corporate Secretary. No such stockholder proposals were received by us prior to the deadline for this year’s Annual Meeting.

Requirements for stockholder proposals to be brought before an annual meeting but not included in our proxy materials. If a stockholder wishes to present a proposal at our 20172020 annual meeting, and the proposal is not intended to be included in our proxy statement relating to that meeting, the stockholder must give advance notice to us prior to the deadline for such meeting as determined in accordance with our Bylaws (which are attached as Exhibit 3.4 to our Form S-1/A Registration Statement filed with the SEC on November 15, 2004). Under our Bylaws, in order to be deemed properly presented, notice of proposed business must be delivered to or mailed and received by our Corporate Secretary at theour principal executive officesoffice not fewer than 90 or more than 120 calendar days before the one yearone-year anniversary of the date on which we first mailed the proxy statement to stockholders in connection with the previous year’s annual meeting of stockholders (the “Notice Period”). As a result, the Notice Period for our 20172020 annual meeting will begin on January 4, 20173, 2020 and end on February 3, 2017.2020.  However, in the event the date of the 20172020 annual meeting will be changed by more than 30 days from the date of this year’s meeting, notice by the stockholder to be timely must be so received not later than the close of business on the later of: (1) 90 calendar days in advance of the 20172020 annual meeting and (2) 10 calendar days following the date on which public announcement of the date of the 20172020 annual meeting is first made. A stockholder’s notice to our Corporate Secretary shall set forth as to each matter the stockholder proposes to bring before the 20172020 annual meeting: (a) a brief description of the business desired to be brought before the 20172020 annual meeting and the reasons for conducting such business at the 20172020 annual meeting, (b) the name and address, as they appear on our books, of the stockholder proposing such business, (c) the class and number of shares of Common Stock that are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business, and (e) any other information that is required to be provided by the stockholder pursuant to Regulation 14A of the 1934 Act, in his or her capacity as a proponent to a stockholder proposal. If a stockholder gives notice of such a proposal after the Notice Period, the stockholder will not be permitted to present the proposal to the stockholders for a vote at the 20172020 annual meeting.

Voting

Voting prior to the Annual Meeting. If you are the record holder of your stock, you have three options for submitting your votes prior to the Annual Meeting:

If you have Internet access, we encourage you to record your vote on the Internet. It is convenient, and it saves us significant postage and processing costs. In addition, when voting viaover the Internet or by telephone prior to the meeting date, your vote is recorded immediately, and there is no risk that postal delays will cause your vote to arrive late, and therefore not be counted. All shares entitled to vote and represented by properly executed proxy cards or properly granted proxies submitted electronically over the Internet or telephone received prior to the Annual Meeting, and not revoked, will be voted at the Annual Meeting in accordance with the instructions indicated on those proxy cards.provided.  If no instructions are indicated, on a properly executed proxy card, the shares represented by that proxy card will be voted as recommended by the Board. If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named as proxies in the enclosed proxy card and acting thereunder will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any matters other than the proposals described herein will be raised at the Annual Meeting.  If your shares are held in a stock brokerage account or by a bank, trust or other nominee, you will receive a notice from your broker, bank, trust or other nominee that includes instructions on how to vote your shares.  Your broker, bank, trust or other nominee will allow you to deliver your voting instructions over the Internet and may also permit you to submit your voting instructions by telephone.

YOUR VOTE IS IMPORTANT.  You should submit your proxy even if you plan to attend the Annual Meeting.

Voting by attending the Annual Meeting. A stockholder of record may also vote his or her shares in person at the Annual Meeting.  A stockholder planning to attend the Annual Meeting should bring proof of identification for entrance to the Annual Meeting. If a stockholder of record attends the Annual Meeting, he or she may also submit his or her vote in person, and any previous votes that were submitted by the stockholder, whether by Internet, telephone or mail, will be superseded by the vote that such stockholder casts at the Annual Meeting. If you wish to attend the Annual Meeting in person but you hold your shares through someone else, such as a broker, bank, trust or other nominee, you must bring proof of your ownership to the Annual Meeting. For example, you could bring an account statement showing that you beneficially owned shares of our Common Stock as of the Record Date as acceptable proof of ownership. You must also contact your broker, bank, trust or other nominee, and follow its instructions in order to vote your shares at the Annual Meeting. You may not vote your shares at the Annual Meeting unless you have first followed the procedures outlined by your broker.broker, bank, trust or other nominee.

Changing vote; revocability of proxy. Any proxy given by a stockholder of record pursuant to this solicitation may be revoked by the person giving it at any time before it is voted at the Annual Meeting. Proxies submitted by stockholders of record may be revoked by:

Any written notice of revocation or subsequent proxy card must be received by our Corporate Secretary prior to the taking of the vote at the Annual Meeting. Such written notice of revocation or subsequent proxy card should be hand delivered to our Corporate Secretary or should be sent so as to be delivered to Monolithic Power Systems, Inc., 79 Great Oaks4040 Lake Washington Boulevard San Jose, CA 95119,NE, Suite 201, Kirkland, Washington 98033, Attention: Corporate Secretary, prior to the date of the Annual Meeting.

If you hold your shares through a broker, bank, trust or other nominee, you may change your vote by submitting new voting instructions to your broker, bank, trust or other nominee.

Expenses of Solicitation

We will bear all expenses of this solicitation, including the cost of preparing and mailing this solicitation material.  We may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners of Common Stock for their reasonable expenses in forwarding solicitation material to such beneficial owners.  Our directors, officers and employees may also solicit proxies in person or by telephone, letter, e-mail messenger facsimile or other means of communication. Such directors, officers and employees will not be additionally compensated, but they may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation. We may engage the services of a professional proxy solicitation firm to aid in the solicitation of proxies from certain brokers, bank nominees and other institutional owners. OurIf we hire a professional proxy solicitation firm, we expect our costs for such services would be approximately $10,000.

Quorum; Required Votes; Abstentions; Broker Non-Votes

Holders of a majority of the outstanding shares entitled to vote must be present at the Annual Meeting in order to have the required quorum for the transaction of business.  Stockholders are counted as present at the meeting if they: (1) are present in person or (2) have properly submitted a proxy card by mail or voted by telephone or by using the Internet.  If the shares present at the Annual Meeting do not constitute the required quorum, the Annual Meeting may be adjourned to a subsequent date for the purpose of obtaining a quorum.

The required votes to approve the proposals to be considered at this Annual Meeting are as follows:

Under the General Corporation Law of the State of Delaware, both abstaining votes and broker non-votes are counted as present and entitled to vote and are, therefore, included for purposes of determining whether a quorum is present at the Annual Meeting. An abstaining vote is not counted as a vote cast for the election of directors, but has the same effect as a vote cast against proposals requiring approval by a majority of the shares of stock entitled to vote thereon which are present in person or represented by proxy at the Annual Meeting, such as the ratification of our independent registered public accounting firm. A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.  A broker non-vote is not counted as a vote cast for the election of directors or as being present and entitled to vote for proposals requiring approval by a majority of the shares of stock entitled to vote thereon which are present in person or represented by proxy at the Annual Meeting and, therefore, does not have the effect of a vote against such proposals. For purposes of ratifying our independent registered public accounting firm, brokers have discretionary authority to vote.

Stockholder List

A list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for any purpose germane to the Annual Meeting during ordinary business hours at our corporate headquarters located at 79 Great Oaks4040 Lake Washington Boulevard San Jose, CA 95119NE, Suite 201, Kirkland, Washington 98033 for the ten days prior to the Annual Meeting, and also at the Annual Meeting.

PROPOSAL ONE

ELECTION OF DIRECTORS

Classified Board of Directors; Nominees

The Board currently consists of sevensix members. Under our certificate of incorporation and bylaws, the Board has the authority to set the number of directors from time to time by resolution. In addition, our certificate of incorporation provides for a classified Board consisting of three classes of directors, each serving staggered three-year terms.  As a result, a portion of the Board will be elected each year for three-year terms.

ThreeTwo Class III directors are to be elected to the Board at the Annual Meeting. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the Board’s nominees, Michael R. Hsing, Herbert Chang and Eugen ElmigerMichael Hsing. Mr. Hsing, Mr. Chang and Mr. ElmigerHsing are standing for re-election to the Board. Each person nominated for election has agreed to serve if elected, and the Board has no reason to believe that any nominee will be unavailable or will decline to serve. In the event, however, that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any nominee who is designated by the current Board to fill the vacancy. The term of office of each person elected as a Class III director will continue for three years or until his or her successor has been duly elected and qualified.  If elected, the term for Mr. Hsing, Mr. Chang and Mr. ElmigerHsing will expire at the 20192022 annual meeting.meeting of stockholders.

Our directors are elected by a “plurality” vote. The nominees for each of the threetwo Board seats to be voted on at the Annual Meeting receiving the greatest number of votes cast will be elected. Abstentions and shares held by brokers that are not voted in the election of directors will have no effect. In addition, we have adopted a corporate governance policy requiring each director nominee to submit a resignation letter if more “Withheld” than “For” votes are received. See the section“Director Voting Policy” for more details on this policy.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE ELECTION TO THE BOARD OF EACH OF THE PROPOSED NOMINEES.

Information Regarding Nominees and Other Directors

The following table summarizes certain information regarding the nominees and other directors:

____________________ 

Nominees for Class III Directors Whose Term ExpiresWill Expire in 20162019

Michael R. Hsing has served on our Board and as our President and Chief Executive Officer since founding MPS in August 1997. Prior to founding MPS, Mr. Hsing was a Senior Silicon Technology Developer at several analog ICintegrated circuits (“IC”) companies, where he developed and patented key technologies, which set new standards in the power electronics industry. Mr. Hsing is an inventor on numerous patents related to the process development of bipolar mixed-signal semiconductor manufacturing. Mr. Hsing holds a B.S.E.E. from the University of Florida.

Herbert Chang has served on our Board since September 1999. Since March 2014, Mr. Chang has been the Presidentgeneral manager of InveStar Capital, Inc. since April 1996, Chief Executive Officer of C Squared ManagementMutto Optronics Corporation, since April 2004, andan OEM/ODM knife manufacturer listed in on the Taiwan OTC. Mr. Chang is currentlyalso a Managing Member of Growstar Associates, Ltd., which iswas the General Partner and the Fund Manager of VCFA Growth Partners, L.P. from 2007 to 2013 and is the Chief Executive Officer of C Squared Management Corporation. Mr. Chang’s companies focus on investing in companies in the semiconductor, telecommunications, networking, software, and/or Internet industries. Mr. Chang was the President of InveStar Capital Inc. from April 1996 until 2015 and serves on the board of directors of a number of private companies. Mr. Chang received a B.S. in geology from National Taiwan University and an M.B.A. from National Chiao Tung University in Taiwan.

Eugen Elmiger has served on our Board since October 2012.  Mr. Elmiger currently serves as Chief Executive Officer of Maxon group, a leading advanced motion company, a position that he has held since January 2011.  From 1991 to 2011, Mr. Elmiger held senior executive positions in the sales, marketing and engineering divisions of Maxon motor. Mr. Elmiger holds a B.S. in Electrical Engineering from the Lucerne (Horw) University of Applied Science and Art.

Incumbent Class I Directors Whose Term ExpiresTerms Will Expire in 20172020

Victor K. Leehas served on our Board since September 2006. Mr. Lee served as Chief Financial Officer of Ambarella, Inc., a fabless semiconductor company from August 2007 to March 2011. From December 2002 through June 2007, Mr. Lee served as Chief Financial Officer and Secretary of Leadis Technology Inc., a fabless semiconductor company. From December 1999 to January 2001, Mr. Lee served as the Chief Financial Officer and Secretary of SINA Corporation, an Internet media company. From September 1998 to August 1999, Mr. Lee was the Vice President and Acting Chief Financial Officer of VLSI Technology, Inc., a semiconductor manufacturer, and from 1997 to 1998, Vice President, Corporate Controller of VLSI Technology, Inc. From 1989 to 1997, Mr. Lee was a finance director at Advanced Micro Devices, Inc. Mr. Lee is currently a director of MoSys, Inc. Mr. Lee holds a B.S. in Industrial Engineering and Operations Research and an M.B.A. from the University of California, Berkeley.

James C. Moyerhas served on our Board since October 1998 and served as our Chief Design Engineer from September 1997 to January 2016. Before joining MPS, from June 1990 to September 1997, Mr. Moyer held senior technical positions at Micrel, Inc. Prior to that, Mr. Moyer held senior design engineering positions at Hytek Microsystems Inc., National Semiconductor Corporation, and Texas Instruments Inc. Mr. Moyer holds a B.A.E.E. from Rice University. 

Incumbent Class II Directors Whose Term ExpiresWill Expire in 20182021

Karen A. Smith BogartEugen Elmiger has served on our Board since May 2007. Dr. Smith Bogart is PresidentOctober 2012.  Mr. Elmiger currently serves as Chief Executive Officer of Smith Bogart Consulting,Maxon group, a business advisory firm located in Santa Barbara, CA,leading advanced motion company, a position that shehe has held since 2006.  She also teaches business strategyJanuary 2011.  From 1991 to 2011, Mr. Elmiger held senior executive positions in the sales, marketing and leadership atengineering divisions of Maxon motor. Mr. Elmiger holds a B.S. in Electrical Engineering from the Lucerne (Horw) University of California at Santa Barbara.  From 2003 to 2006, Dr. Smith Bogart was ChairmanApplied Science and President, Greater Asia Region and Senior Vice President of Eastman Kodak Company, located in Shanghai, China.  Dr. Smith Bogart managed many of Eastman Kodak’s largest global businesses, including Kodak Professional Imaging, Consumer Printing, and Consumer Cameras and Batteries. Dr. Smith Bogart is currently a director of Mohawk Industries, Inc. and several private companies.  Dr. Smith Bogart holds a B.A. in Political Science from the State University of New York at Geneseo; a Masters in Industrial and Labor Relations from Cornell University; an M.B.A. from the University of Rochester; and a Master of Arts and Ph.D. in Human Organizational Systems from Fielding Graduate University.Art.

Dr. Jeff Zhou has served on our Board since February 2010. Dr. Zhou currently serves as Chiefthe Executive OfficerVice Chairman of MiaSoléMiasolé, which develops thin film solar technology, a position he has held since 2013.2018. Dr. Zhou served as the Chief Executive Officer of MiaSolé from 2013 to 2018.  Dr. Zhou also served as Executive Chairman of Alta Devices, a developer of flexible mobile power technology, from 2014 to 2015. Before joining MiaSolé, Dr. Zhou was President of Hanergy Holding America, Inc., a developer and operator of solar power plants, from 2012 to 2013. Dr. Zhou was Vice President of Product Engineering of Nanosolar, Inc., a developer of solar power technology, from 2011 to 2012. Dr. Zhou was Chief Operating Officer at NDS Surgical Imaging, a medical imaging technology company, during 2010. From 2008 to 2009, Dr. Zhou was Vice President of Global Engineering and General Manager of Asia Pacific Business at NDS Surgical Imaging.  From 2005 to 2007, Dr. Zhou was Vice President of Engineering for several business divisions and General Manager of the China and India Design Centers at Flextronics Inc. From 2000 to 2005, Dr. Zhou was Vice President and General Manager of several divisions at Honeywell International Inc. Dr. Zhou holds a Ph.D. degree in Electrical Engineering from the University of Florida.

There is no family relationship among any of our executive officers, directors and nominees.

Director Independence

The Board has determined that each of Herbert Chang, Eugen Elmiger, Victor K. Lee, Karen A. Smith BogartJames C. Moyer and Jeff Zhou are “independent” under the applicable listing standards of The NASDAQ Stock Market.

Director Qualifications

Our Board includes sevensix members who are well-qualified to serve on the Board and represent our stockholders’ best interests. Our Board consists of directors who have the following characteristics:

5.

Have high ethical standards;

We believe that each of the director nominees and the rest of the directors possess these attributes. In addition, the directors bring to the Board a breadth of experience, including extensive financial and accounting expertise, public company board experience, knowledge of the semiconductor business and technology, broad global experience, and extensive operational and strategic planning experience in complex, high-growth global companies.

The following describes the key qualifications, business skills, experience and perspectives that each of our directors and director nominees brings to the Board, in addition to the general qualifications described above and described in their individual biographies:

Board Leadership Structure

The Board currently consists of sevensix members, five of which the Board has determined are independent..independent. The Board has designated one of the independent directors, Mr. Chang, as the Lead Director because our President and Chief Executive Officer, Mr. Hsing, also serves as the Chairman of the Board. We believe that the number of independent, experienced directors that make up our Board, along with the independent oversight of our Lead Director, benefits us and our stockholders by providing a counterbalance to the management perspective provided by Mr. Hsing during Board deliberations. 

We recognize that different board leadership structures may be appropriate for different companies. We believe that our current Board leadership structure is optimal for us. Our leadership structure demonstrates to our employees, suppliers, customers and other stakeholders that we are governed by strong, balanced leadership, with a single person setting the tone for the Board and management and having primary responsibility for managing our day-to-day operations. This message is increasingly important as we continue to seek to achieve business success through new product releases and gaining market share in our industry. At the same time, our leadership structure sends the message that we also value strong, independent oversight of our management operations and decisions in the form of our Lead Director. Further, having a single leader for both MPS and the Board eliminates the potential for strategic misalignment or duplication of efforts, and provides clear leadership for us.

As discussed above, the positions of Chairman of the Board, and President and Chief Executive Officer are held by Mr. Hsing, and the Board has appointed a Lead Director, Mr. Herbert Chang.  Mr. Chang’s roles and responsibilities as the Lead Director include:

Our independent directors meet in executive session during a portion of every regularly scheduled Board meeting, and otherwise as needed. Our Lead Director presides over meetings of our independent directors and we believe that these meetings help to ensure an appropriate level of independent scrutiny of the functioning of the Board. 

Board Oversight of Risk

The Board is primarily responsible for the oversight of risks that could affect MPS. Our senior management team, which conducts our day-to-day risk management, is responsible for assisting the Board with its risk oversight function.  This oversight is conducted principally through committees of the Board, as disclosed in the descriptions of each of the committees below and in the charters of each of the committees, but the full Board has retained responsibility for general oversight of risk. The Board satisfies its responsibility by requiring each committee chair to regularly report regarding the committee’s considerations and actions, as well as by requiring officers responsible for oversight of particular risks within MPS to submit regular reports. As these reports are submitted independent of review by Mr. Hsing, our President, and Chief Executive Officer and the Chairman of the Board, the Board believes that its conduct of its risk oversight function has no impact on the Board’s leadership structure other than to reinforce the involvement of the Board in ongoing management of MPS.

In addition to requiring regular reporting from committees and officers, the Board also hears from third-party advisors in order to maintain oversight of risks that could affect us, including our independent auditors, outside counsel, compensation consultants and others. These advisors are consulted on a periodic basis and as particular issues arise in order to provide the Board with the benefit of independent expert advice and insights on specific risk-related matters.

At its regularly scheduled meetings, the Board also receives management updates on the business, including operational issues, financial results, and business outlook and strategy.

Our Audit Committee also assists the full Board in its oversight of risk by discussing with management our compliance with legal and regulatory requirements, our policies with respect to risk assessment and management of risks that may affect us, and our system of disclosure control and system of controls over financial reporting.  Risks related to our company-wide compensation programs are reviewed by our Compensation Committee. For more information on the Compensation Committee’s compensation risk assessment, see the section“Executive Officer Compensation – Compensation Risk Management.” Our Nominating and Governance Committee provides compliance oversight and reports to the full Board on compliance and makes recommendations to our Board on corporate governance matters, including director nominees, the determination of director independence, and board and committee structure and membership.

We believe the division of risk management responsibilities described above is an effective approach for addressing the risks facing us and that the Board leadership structure supports this approach.

Board Meetings and Committees

The Board held a total of fivefour meetings during 2015,2018, and all directors attended at least 75% of the meetings of the Board and the committees upon which such director served.

Audit Committee. The Board has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the 1934 Act, which currently consists of three members: Herbert Chang, Victor K. Lee Karen A. Smith Bogart and Jeff Zhou. Mr. Lee is the chairman of the Audit Committee. This committee oversees our financial reporting process and procedures, is responsible for the appointment and terms of engagement of our independent registered public accounting firm, reviews and approves our financial statements, and coordinates and approves the activities of our independent registered public accounting firm. The Board has determined that Mr. Lee is an “audit committee financial expert,” as defined under the rules of the SEC, and all members of the Audit Committee are “independent” in accordance with the applicable SEC regulations and the applicable listing standards of NASDAQ. The Audit Committee held four meetings during 2015.2018. The Audit Committee acts pursuant to a written charter adopted by the Board, which is available in the “Investor Relations” section of our website at http://www.monolithicpower.com by clicking on the name of the applicable committee.  www.monolithicpower.com.  

Compensation Committee. The Board has designated a Compensation Committee consisting of three members: Herbert Chang, Eugen Elmiger and Jeff Zhou. Mr. Zhou is the chairman of the Compensation Committee. This committee is responsible for providing oversight of our compensation policies, plans and benefits programs and assisting the Board in discharging its responsibilities relating to (a) oversight of the compensation of our Chief Executive Officer and other executive officers, and (b) approving and evaluating the executive officer compensation plans, policies and programs of MPS. The committee also assists the Board in administering our stock plans and employee stock purchase plan. All members of the Compensation Committee are “independent” in accordance with the applicable listing standards of NASDAQ. The Compensation Committee held sixfour meetings during 2015.2018. The Compensation Committee acts pursuant to a written charter adopted by the Board, which is available in the “Investor Relations” section of our website at http://www.monolithicpower.com.

Nominating and Governance Committee. The Board has designated a Nominating and Governance Committee consisting of threetwo members: Herbert Chang and Eugen Elmiger.  Mr. Elmiger and Karen A. Smith Bogart.  Ms. Smith Bogart is the chairwomanchairman of the Nominating and Governance Committee.  This committee is responsible for the development of general criteria regarding the qualifications and selection of Board members, recommending candidates for election to the Board, developing overall governance guidelines and overseeing the overall performance of the Board. All members of the Nominating and Governance Committee are “independent” in accordance with the applicable listing standards of NASDAQ. The Nominating and Governance Committee held four meetings in 2015.2018. The Nominating and Governance Committee acts pursuant to a written charter adopted by the Board, which is available in the “Investor Relations” section of our website at http://www.monolithicpower.com.

The information contained on our website is not intended to be part of this Proxy Statement and is not incorporated by reference into this Proxy Statement.

Nomination Process

The Board has adopted guidelines for the identification, evaluation and nomination of candidates for director. The Nominating and Governance Committee considers the suitability of each candidate, including any candidates recommended by stockholders holding at least 5% of the outstanding shares of our voting securities continuously for at least 12 months prior to the date of the submission of the recommendation for nomination. If the Nominating and Governance Committee wishes to identify new independent director candidates for Board membership, it is authorized to retain and approve fees of third party executive search firms to help identify prospective director nominees.  Our policy on board diversity relates

In April 2018, in response to shareholders’ feedback, the Board considered and adopted an amendment to the selectionNominating Committee Charter (available in the “Investor Relations” section of nominees forour website at http://www.monolithicpower.com) on the Board. Our policy provides that while creating a Board with a varietyevaluation of experiences and viewpoints should always be considered byprospective candidates. In addition to the minimum qualifications the Nominating and Governance Committee when consideringhas established for director nominees, a director nominee should neither be chosen nor excluded because of race, color, gender, national origin or sexual orientation or identity. Instead, in selecting a director nominee, the Nominating Committee will also consider whether the prospective nominee will foster a diversity of genders, backgrounds, skills, perspectives and Governanceexperiences in the process of its evaluation of each prospective nominee. The Nominating Committee also focuses on skills, expertise or background that would complement the existing Board, recognizing that our businesses and operations are diverse and global in nature. While there are no specific minimum qualifications for director nominees, the ideal candidate should (a) exhibit independence, integrity, and qualifications that will increase overall Board effectiveness, and (b) meet other requirements as may be required by applicable rules, such as financial literacy or expertise for audit committee members. The Nominating and Governance Committee uses the same process for evaluating all nominees, regardless of the original source of the nomination.  After completing its review and evaluation of director candidates, the Nominating and Governance Committee recommends to the Board the director nominees for selection. 

A stockholder that desires to recommend a candidate for election to the Board should direct such recommendation in writing to Monolithic Power Systems, Inc., 79 Great Oaks4040 Lake Washington Boulevard San Jose, CA 95119,NE, Suite 201, Kirkland, Washington 98033, Attention: Corporate Secretary, and must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and us within the last three years and evidence of the nominating person’s ownership of our stock.  Such stockholder nomination must be made pursuant to the notice provisions set forth in our Bylaws and for each proposed nominee who is not an incumbent director, the stockholder’s notice must set forth all of the information regarding such nominating person and proposed nominee set forth in our Bylaws.

Stockholder Communications

The Board has approved a Stockholder Communication Policy to provide a process by which stockholders may communicate directly with the Board or one or more of its members.  You may contact any of our directors by writing to them whether by mail or express mail,at c/o Monolithic Power Systems, Inc., 79 Great Oaks4040 Lake Washington Boulevard San Jose, CA 95119,NE, Suite 201, Kirkland, Washington 98033, Attention: Corporate Secretary. Any stockholder communications that the Board is to receive will first go to the Corporate Secretary, who will log the date of receipt of the communication as well as the identity of the correspondent in our stockholder communications log. The Corporate Secretary will review, summarize and, if appropriate, draft a response to the communication in a timely manner. The Corporate Secretary will then forward copies of the stockholder communication to the Board member(s) (or specific Board member(s) if the communication is so addressed) for review, provided that such correspondence concerns the functions of the Board or its committees, or otherwise requires the attention of the Board or its members.

Attendance at Annual Meetings of Stockholders by the Board of Directors

We do not have a formal policy regarding attendance by members of the Board at our annual meetings of stockholders. In 2015, two2018, no Board members attended the Annual Meeting.

Code of Ethics and Business Conduct

We have adopted a Code of Ethics and Business Conduct, which is applicable to our directors and employees, including our principal executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions. The Code of Ethics and Business Conduct is available in the “Investor Relations – Corporate Governance” section of our website at http://www.monolithicpower.com. We will disclose on our website any amendment to the Code of Ethics and Business Conduct, as well as any waivers of the Code of Ethics and Business Conduct, that are required to be disclosed by the rules of the SEC or NASDAQ. 

Director Voting Policy

The Board has adopted a director voting policy, which can be foundin the “Investor Relations – Corporate Governance” section of our website at http://www.monolithicpower.com. The policy establishes that any director nominee who receives more “Withheld” votes than “For” votes in an uncontested election held in an annual meeting of stockholders shall promptly tender his or her resignation. The independent directors of the Board will then evaluate the relevant facts and circumstances and make a decision, within 90 days after the election, on whether to accept the tendered resignation. The Board will promptly publicly disclose its decision and, if applicable, the reasons for rejecting the tendered resignation.

Director Compensation

Analysis of 20152018 Compensation Elements

For 2015,2018, the Compensation CommitteeBoard engaged Meyercord & AssociatesRadford, an Aon Hewitt company, to review the non-employee director compensation. In its analysis, Meyercord & AssociatesRadford gathered the market data on the size and type of compensation paid by our industry peer group for 20152018 (see the section“Executive Officer Compensation — Peer GroupGroup and Use of Peer Data for 2015”2018” for more information on the selection of the peer group). Based on the results of this market review and recommendations by Meyercord & Associates,Radford, the Board approved the following compensation changes for our non-employee directors for service in 2015, which did not change2018: (i) increase the annual board retainer fee from 2014:$45,000 to $50,000, (ii) increase the lead director fee from $12,000 to $18,000, (iii) increase the Audit Committee chairperson fee from $22,500 to $25,000, and (iv) increase the annual RSU grant to incumbent directors from 140,000 to 175,000. Accordingly, the compensation paid to our non-employee directors for service in 2018 was as follows:

For theThe initial grant of RSUs to new directors vest as to 50% vests one year fromof the dateunderlying shares of grantCommon Stock on each of the first and the remaining 50% vests two years fromsecond anniversaries of the date of grant. For theThe annual grant of RSUs to incumbent directors vests as to 100% vests one year fromof the underlying shares of Common Stock on the first anniversary of the date of the grant. All awards will become fully vested immediately in the event of a change in control.

All of our non-employee directors are subject to stock ownership guidelines that are described below in the section “Executive Officer Compensation — Compensation Discussion and Analysis — Stock Ownership Guidelines.”

The following table sets forth the total compensation paid to each non-employee director for service in 2015.2018. Mr. Hsing, who is our employee, diddoes not receive additional compensation for his services as a director. Mr. Hsing’s compensation as a named executive officer is reflected in the section“Executive Officer Compensation — Summary Compensation Table.”In addition, Mr. Moyer, who was an employee prior to January 5, 2016, did not receive additional compensation for his services as an inside director in 2015.

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The following table summarizes the number of shares of our Common Stock that are subject to outstandingunvested awards held by each of the non-employee directors as of December 31, 2015:2018:

Name		Stock Awards
Herbert Chang			1,590
Eugen Elmiger			1,590
Victor K. Lee			1,590
James C. Moyer			1,590
Jeff Zhou			1,590

PROPOSAL TWO

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TheChange in Independent Registered Public Accounting Firm

Our Audit Committee completed a process to review the appointment of our independent registered public accounting firm for the Board has appointedyear ending December 31, 2019. As a result of this process, on March 18, 2019, our Audit Committee approved the appointment of Ernst & Young LLP (“EY”) as our independent registered public accounting firm for the year ending December 31, 2019, and dismissed Deloitte & Touche LLP (“Deloitte & Touche”Deloitte”), who served as theour independent registered public accounting firm since 1999, from that role.

Deloitte’s reports on our consolidated financial statements as of MPSand for the fiscal year endingyears ended December 31, 2016.2018 and December 31, 2017 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. In addition, the audit reports of Deloitte & Toucheon the effectiveness of internal control over financial reporting as of December 31, 2018 and December 31, 2017 did not contain any adverse opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2018 and December 31, 2017, and the subsequent interim period through March 18, 2019, there were (i) no “disagreements” as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, between us and Deloitte on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Deloitte, would have caused Deloitte to make reference to the subject matter of the disagreement in their reports, and (ii) no “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

We provided Deloitte with a copy of the disclosures made in a Current Report on Form 8-K (the “Report”) prior to the filing of the Report with the SEC on March 22, 2019. In addition, we requested that Deloitte furnish a letter addressed to the SEC stating whether or not it agreed with the statements made in the Report. A copy of Deloitte’s letter dated March 22, 2019 was attached as Exhibit 16.1 to the Report.

During the fiscal years ended December 31, 2018 and December 31, 2017, and the subsequent interim period through March 18, 2019, neither we nor anyone acting on our behalf has auditedconsulted with EY with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, since 1999.  and neither a written report nor oral advice was provided to us that EY concluded was an important factor considered by us in reaching a decision as to any accounting, auditing, or financial reporting issue or (ii) any matter that was either the subject of a “disagreement” or “reportable event” as those terms are defined in Item 304(a)(1) of Regulation S-K.

Representatives of Deloitte & ToucheEY are expected to be present at the Annual Meeting with the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions.  We do not expect that a representative of Deloitte will be present at the Annual Meeting.

Although ratification by stockholders is not required by law, the Board has determined that it is desirable to request ratification of this selection by the stockholders. Notwithstanding its selection, the Audit Committee, in its discretion, may appoint a new independent registered public accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interest of us and our stockholders. If the stockholders do not ratify the appointment of Deloitte & Touche, theEY, our Audit Committee may reconsider its selection.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” RATIFICATION OF THE APPOINTMENT OF DELOITTEERNST & TOUCHE,YOUNG, LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THETHE YEAR ENDING DECEMBER 31, 2016.2019.

Audit and Other Fees

The following table shows the fees paid by us for the audit and other services provided by Deloitte & Touche for 20142018 and 2015 (in thousands):2017.

Audit fees consist of fees billed for professional services rendered for the audit of our annual financial statements and review of the interim financial statements included in our quarterly reports and the audit of our internal control over financial reporting.

Audit fees also include services that are normally provided by the independent auditors in connection with foreign statutory and regulatory filings and advice on audit and accounting matters that arise during, or as a result of, the audit or the review of interim financial statements, including the application of proposed accounting rules, statutory audits required by non-U.S. jurisdictions and the preparation of an annual “management letter” containing observations and discussions on internal control matters. 

Audit-related feesrepresent assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under "Audit Fees." These services include accounting consultations in connection with attestation services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

Tax fees represent professional services for federal, state and international tax compliance, tax advice and tax planning.

Pre-Approval of Audit and Non-Audit Services

The charter of our Audit Committee requires that the Audit Committee pre-approve all audit and non-audit services provided to us by our independent registered public accounting firm or subsequently approve non-audit services in those circumstances where a subsequent approval is necessary and permissible. All such services for 20142018 and 20152017 were pre-approved by the Audit Committee. 

PROPOSAL THREE

ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION

As required under Section 14A of the Securities Exchange Act of 1934, we are asking stockholders to again cast an advisory (non-binding) vote on the following resolution at the Annual Meeting:

RESOLVED, that, on an advisory basis, the compensation of our named executive officers, as disclosed in the Compensation Discussion and Analysis, compensation tables and related narratives and descriptions of this Proxy Statement for the Annual Meeting, is hereby APPROVED.

This advisory vote, commonly known as a “say-on-pay” vote, gives our stockholders the opportunity to express their views about the compensation we paid to our named executive officers in the prior year, as described in this Proxy Statement.  Before stockholders vote on this proposal, they should review the Compensation Discussion and Analysis in this Proxy Statement and the tabular and narrative disclosure that follows it.  We currently conduct say-on-pay votes every year, and expect we will conduct the next say-on-pay vote at the 2017 Annual Meeting of Stockholders.year.

We are committed to responsible compensation practices and structures. As described more fully in the Compensation Discussion and Analysis section of this Proxy Statement, the primary goal of our named executive officer compensation program is the same as our goal for operating MPS — to create long-term value for our stockholders. To achieve this goal, we have regularly sought out the feedback of our major stockholders over the past several years to hear their suggestions on how we can better achieve our primary compensation goal. After taking their feedback into consideration, we have continued to update our compensation program for our named executive officers, implementing those recommendations of our stockholders that the BoardCompensation Committee believes will help us create long-term value for our stockholders. For example, in December 2015, based on feedback we received during 2015 from some of our larger stockholders, we implemented a special performance stock unit plan with stock price performance hurdles and operational goals. We believe these annual reviews of our programs, in coordination with our conversations with our stockholders, allow us to motivate and reward our executives for sustained financial and operating performance and leadership excellence, to align their interests with those of our stockholders, and to encourage them to remain with us for long and productive careers.

Stockholders may vote “for”“for” or “against”“against” the resolution or abstain from voting on the resolution.  The result of the say-on-pay vote will not be binding on us or the Board.  However, the Board values the views of the stockholders. The Board and the Compensation Committee will review the results of the vote and expect to take them into consideration in addressing future compensation policies and decisions.

The affirmative vote of a majority of the shares of stock entitled to vote thereon which are present in person or represented by proxy at the Annual Meeting is required to approve, on an advisory basis, the compensation of our named executive officers. While thisThe result of the say-on-pay vote is advisory andwill not be binding on us, or our Board, the Board or the Compensation Committee.  However, we value the views of the stockholders. The Board and the Compensation Committee intend to take into accountwill review the outcomeresults of the vote when consideringand expect to take them into consideration in addressing future executive compensation arrangements.policies and decisions.

FOR THESE REASONS, THE BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR” THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS, COMPENSATION TABLES AND RELATED NARRATIVES AND DESCRIPTIONS OF THIS PROXY STATEMENT FOR THE ANNUAL MEETING.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of April 19, 2016,16, 2019, information relating to the beneficial ownership of our Common Stock or securities exchangeable into our Common Stock by: (i) each person known by us to be the beneficial owner of more than five percent (5%) of the outstanding shares of our Common Stock, (ii) each director (or nominee), (iii) each of the named executive officers named in the Summary Compensation Table, and (iv) all directors and executive officers as a group.

Unless otherwise indicated, the address of each beneficial owner listed below is Monolithic Power Systems, Inc., 79 Great Oaks at 4040 Lake Washington Boulevard San Jose, CA 95119.NE, Suite 201, Kirkland, WA 98033.

* Represents beneficial ownership of less than 1%.

 ____________________

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the 1934 Act and regulations of the SEC thereunder require our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of initial ownership and changes in ownership with the SEC.  Based solely on our review of copies of such forms received by us, or on written representations from certain reporting persons that no other reports were required for such persons, we believe that, during 2015,2018, all of the Section 16(a) filing requirements applicable to our executive officers, directors and 10% stockholders were complied with.

Certain Relationships and Related Transactions

We have a written policy on related party transactions, as defined in our Code of Ethics and Business Conduct and the Audit Committee Charter. In accordance with our Code of Ethics and Business Conduct, it is the responsibility of our employees and directors to disclose any significant financial interest in a transaction between us and a third party, including an indirect interest, through, for example, a relative or significant other. It is also the responsibility of our Audit Committee, as described in the Audit Committee Charter, to review on an ongoing basis all related party transactions and approve these transactions before they are entered into.

Mr. Deming Xiao is a named executive officerFor 2018, we did not enter into any transactions with related persons that are required to be disclosed under Item 404(a) of MPS. Mr. Xiao’s spouse, Julia Chu, is employed by MPS as Director of Quality Improvement and Failure Analysis. In 2015, Ms. Chu received a base salary of $88,000 as a part-time employee and a non-equity incentive award of $29,000. In 2015, Ms. Chu was granted 569 shares of RSUs, which were approved by the Compensation Committee and had a grant date fair value of $28,000.Regulation S-K.

EXECUTIVE OFFICER COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes our compensation philosophy and programs, compensation decisions made under those programs, and factors considered in making these decisions for our “named executive officers” (“NEOs”) who, for 2015,2018, were:

_____________

For further information regarding our NEOs’each current NEO’s professional background, please refer to the section “Executive Officers of the Registrant” under Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2015,2018, filed with the SEC on February 29, 2016.March 1, 2019.

Executive Summary

Compensation Philosophy

The primary objective in designing our compensation program for our NEOs is the same as setting the primary objective for operating MPS — to create long-term value for our stockholders. To achieve this goal, we have designed and implemented our compensation programs for our NEOs to:

Each one of our executive compensation elements fulfills one or more of our performance, alignment and retention objectives. These elements primarily consist of salary, long-term equity awards and short-term cash incentive compensation, as well as severance benefits and broad-based employee benefits. In deciding on the type and amount of compensation for each executive, we focus on both current pay and the opportunity for future compensation. We believe that maintaining a balance of short-term and long-term compensation elements encourages decision-making that optimizes short-term results and, at the same time, advances our long-term goals. We combine the compensation elements for each NEO in a manner we believe optimizes the executive’s overall contribution to us and our stockholders.

Our Compensation Practices Are Built on Stockholder Feedback and Requests

In the 20142018 Annual Meeting of Stockholders, approximately 90%97% of the votes cast by 96% of our stockholders were in favor of our executive compensation program. In the 2017 Annual Meeting of Stockholders, approximately 98% of the votes cast by 95% of our stockholders were in favor of our executive compensation program, and inprogram. In the 20152016 Annual Meeting of Stockholders, approximately 99% of the votes cast by 94%97% of our stockholders were in favor of our executive compensation program.  While these say-on-pay votes are only advisory and not binding on us, the Board and the Compensation Committee discussdiscusses the vote results each year with our independent compensation consultant.

Our Compensation Practices Are Built on Stockholder Feedback and Requests

Our management team continued the practice of reaching out to our most significant stockholders from time to time to discuss how those stockholders view our executive compensation program, and what kind of changes they would like to see implemented in future years. As a result, whileBased on the Board andoverwhelming multi-year support by the stockholders in favor of our pay-for-performance compensation structure, the Compensation Committee decided to maintaincontinue to grant equity awards based on performance conditions under the general framework of our executive compensation program in 2015 and 2016, they also made important adjustments, including extending2018. In addition, the time-based vesting period for ourCompensation Committee granted equity awards decreasing the portion of our equity compensation awards that can be earned solely based on continued service, and adopting an additional market-based performance stock unit program that focusesmarket conditions, which will motivate our NEOs to focus on long-term stock price performance and operational metrics overappreciation. In the next four years. Since 2012,past several years, we have continued to work to improve our executive compensation policies and programs, incorporating the suggestions of our stockholders. We believe these improvements, as highlighted below, have supported our financial and strategic successes in the last several years.

We believe the significant increase in our stock price and year-over-year outperformance in revenue growth in the past several years demonstrate the effectiveness of our performance-based compensation program in motivating our NEOs to build a sustainable business model and to focus on long-term value creation for our stockholders.

Stock Performance:

Our one-year total stockholder return was approximately 4% and our three-year total stockholder return was approximately 88%, as shown in the graphs below in comparison to our peer group and the PHLX semiconductor sector index:

_________________

Market Capitalization:

Our strong financial performance in the past several years has led to a significant increase in our market capitalization, surpassing $4 billion in 2017. Because a significant portion of our NEOs’ total target compensation has been in the form of market-based stock units with stock price performance components, the value of our NEOs’ compensation is closely tied to our market performance. The following table illustrates our market capitalization compared to our CEO’s compensation (as reported in the Summary Compensation Table below) in the past three years:

Since 2014, ourOur Compensation Committee has capped maximum payouts under our annual non-equity incentive plans at 250% of target for the CEO and 175% of target for the remaining NEOs.

In the past several years, our stockholders indicated a preference for the use of different performance metrics across plans, so that not all performance-based plans relied on the same metric. In addition, our stockholders told us they wanted to see a greater connection between stock price performance and executive compensation. Therefore, we use non-GAAP operating income for our short-term cash incentive plan, and, to balance that metric, a mix of revenue, stock price performance and operating goals for our long-term performance equity incentive plan. By using a non-GAAP operating income metric in our short-term incentive plan and various performance and stock price appreciation metrics in our long-term incentive plan, we can reward our executives for achieving our short-term financial objectives while at the same time planning for long-term growth, without encouraging excessive risk taking.

The following table shows the three-year history of our performance in revenue and non-GAAP operating income, which demonstrates a balance of our overall financial health, compared to our CEO’s total compensation.  compensation:

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In 2011, we heard investors tell us that compensation recovery policies, or clawbacks, were a best practice and should be adopted. In February 2012, we adopted our Compensation Recoupment Policy, which permits the Board to recoup any excess performance-based cash compensation paid to key members of our executive team if the financial results on which the performance-based compensation awards were based are restated due to fraud or intentional misconduct by the executive.  

In 2011, we heard investors tell us that board members and officers should have ownership interests that are aligned with stockholders, and encouraged us to adopt stock ownership guidelines. In 2012, we adopted significant stock ownership guidelines for our officersNEOs and directors, requiring ownership levels by our officers of two to five times of base salary, and by our directors of two times of annual retainer. In 2016, we amended the stock ownership guideline by increasing the required levels for our directors from two times to three times of annual retainer.

Since 2008, we have not adopted any new employment agreements (or modified any existing employment agreements) to provide for tax gross-ups to our officers.

We have adopted a policy prohibiting our directors and officers (including our NEOs) from engaging in certain hedging and monetization transactions with respect to our securities that they hold without prior Board approval. The policy also prohibits our directors and officers (including our NEOs) from engaging in any short sales of our securities.

In short,summary, we regularly engage with our stockholders to exchange ideas on our existing executive compensation programs and potential future programs. We listen to their feedback and carefully consider it. Our engagement with stockholders does not begin and end with the “say-on-pay”say-on-pay vote – that vote is just one part of a larger dialogue and partnership we have with our investors.

20182015 Financial and Business Performance Highlights

As noted above, the Compensation Committee has focused our executives on accountability in revenue, operating income and earnings, andas well as maximizing stockholder return through the structure of our executive compensation program. We believe our 20152018 financial results, on both a GAAP and a non-GAAP basis, showand the benefit of theseresulting compensation decisions.for our NEOs demonstrate a strong pay-for-performance connection. Our financial results are summarized as follows (in millions, except per share amounts and percentages):

_______________

Our revenue growth rate of 18%24% in 20152018 outperformed the analog industry’s 2%11% growth rate determinedreported by the Semiconductor Industry Association (the “SIA”). OurWe also achieved significant success in our targeted market segment performanceend markets in 2015 is summarized2018 as follows:

Stock Buyback:Cash Dividends:

In 2015,February 2018, our Board of Directors approved an increase in our quarterly cash dividends to $0.30 per share and we repurchased 645,000 shares of our Common Stock forpaid a total of $32.3 million.$47.5 million of dividends to our stockholders in 2018. In February 2016, the2019, our Board of Directors approved a new stock repurchase program that authorizes us to repurchase up to $50 million of our Common Stock through December 31, 2016.

Cash Dividends:

In 2015, we increasedan increase in our quarterly dividend rate to $0.20 per common share from $0.15 per common share in 2014, which represents a 33% increase. In 2015, we paid approximately $30.0 million of cash dividends to our stockholders.$0.40 per share.

The Roles of the Compensation Committee and Our Officers in Setting Compensation

The Compensation Committee, which is comprised solely of independent directors, has primary responsibility for overseeing the design, development and implementation of the compensation program for our CEO and other NEOs. The Compensation Committee Charter, which is available in the “Investor Relations” section of our website at http://www.monolithicpower.com, was originally adopted on October 26, 2007, and is updated periodically. Pursuant to the Compensation Committee Charter, the Compensation Committee reviews and approves the compensation arrangements for our executive officers, including the CEO, and administers our equity compensation plans. The Compensation Committee meets on no less thanat least once a quarterly basis.quarter.  In 2015,2018, the Compensation Committee met sixfour times.

The Compensation Committee reviews the performance of each officer taking into account the evaluations provided by the CEO for all officers other than himself. The Compensation Committee makes the final determination of performance achievement for each officer. The CEO, Chief Financial Officer and General Counsel present information to the Compensation Committee as requested from time to time, including financial results, future budget information, business operations and legal developments. The Compensation Committee regularly meets in closed sessions without the CEO or other management personnel present. Our officers also provide information to the Compensation Committee’s independent compensation consultant, if requested to do so, to help the consultant perform its duties for the Compensation Committee. Our officers are responsible for implementing the decisions made by the Compensation Committee.

Compensation Consultants

In 2015,2018, the Compensation Committee engaged Meyercord & Associates and Radford, an Aon Hewitt company, as the compensation consultantsconsultant with respect to our non-employee director and executive compensation programs. Both firmsRadford did not perform any other work for us. In 2015,2018, the Compensation Committee assessed the independence of both firmsRadford pursuant to SEC rules and concluded that no conflict of interest exists that would prevent them from serving as independent consultantsconsultant to the Compensation Committee for 2015.2018.

In 2015,2018, the Compensation Committee requested and received the following services from Meyercord & Associates and/or Radford: (1) updates on evolving compensation trends, (2) recommendations for additions or deletions to the peer group used for 2015,2018, (3) compensation data for officers and directors (gathered from public filings for our peers and broader surveys), and (4) general advice on analyzing and responding to stockholder feedback on our compensation programs.  

Executive Compensation Components

The table below summarizes the core elements, objectives and key features of our 2015 compensation program for our NEOs:

Peer Group and Use of Peer Data for 20152018

In February 2015, Meyercord & Associates2018, Radford reviewed the peer group of companies selected by the Compensation Committeemanagement and recommended that the industry peer group continue to be determined by reference to publicly traded companies in the semiconductor industry with revenue primarily between 50% and 200%300% of our revenue for the most recent four quarters.  In addition, Meyercord & AssociatesRadford took into account that the market capitalization should be in similar range of us primarily from 50% to 200%. Guided by this set of parameters, and taking into account the recommendations of management, Meyercord & AssociatesRadford proposed the following peer group, which was reviewed and approved by the Compensation Committee approved as presented.Committee.  The peer group consisted of the following companies:

____________________

The following companies wereWe removed Cavium, Inc. from the peer group in February 2015for 2018 because these companies ceased to fit withinit was acquired during the desired parameters or have been acquired: Hittite Microwave Corporation, International Rectifier Corporation,year.

Named Executive Officer Compensation Components

The table below summarizes the core elements, objectives and RF Micro Devices, Inc.key features of our 2018 compensation program for our NEOs:

AAnalysis of 2018nalysis of 2015 Compensation Elements

Base Salaries.Salaries:

We provide base salary as a stable source of compensation for the NEOs’ day-to-day duties, and seek to set base salaries at levels that will attract and retain talented executive officers. To attract and retain talent, we have to understand the levels of salary offered by our peers. Accordingly, our Compensation Committee considers peer data as one key factor in reviewing base salary each year. Our Compensation Committee also considers each individual executive’s role and the scope of his or her responsibilities, the executive’s experience, his or her tenure with us, and size of recent salary changes. For 2015,2018, our Compensation Committee considered all of these factors and approved the following salaries for our NEOs:

In 2015,2018, based on the recommendation of the compensation consultant, the Compensation Committee approved an increase of Ms. Rao, Mr. Sciammas and Ms. Tseng’sHsing’s base salariessalary to better align theirhis pay with increased responsibilities,our peer group, given that thehis base salaries for Mr. Sciammas and Ms. Tsengsalary had not been increased insince 2014. In addition, the last six and three years, respectively.Compensation Committee approved an increase of Mr. Blegen’s base salary to better align his pay with our peer group.

Short-Term Cash Incentive Compensation.  Compensation:

We provide a short-term cash incentive opportunity to each of our NEOs to encourage them to achieve our corporate short-term operating income goals as well as individual management business objectives within their area of expertise and role.goals. Consistent with 2014,2017, the Compensation Committee used non-GAAP operating income as the sole corporate performance metric in 20152018 for determining the company performance element of the short-term cash incentive compensation.  The Compensation Committee believed that non-GAAP operating income would best reflect our short-term performance.  Please refer toSee Annexure A fora reconciliation of the GAAP operating income to the non-GAAP operating income and related disclosures.used in the short-term cash incentive plan.

In response to our stockholder feedback, the Compensation Committee removed the following components under the short-term cash incentive plan in 2018:

As a result of these changes, 100% of the short-term cash incentives were tied to a specific, pre-established non-GAAP operating income metric for all the NEOs. Our CEO’s target bonus was 100% of his annual base salary, and 100% of his bonus was tied to the achievement of the corporate performance metric due to the importance of his role in achieving this goal.salary.  The remaining NEOs’ target bonus was 80% of their annual base salary, with 50% of their target bonus tied to the achievement of the corporate performance metric and the other 50% tied to their individual performance as determined at the end of 2015 in the judgment of the Compensation Committee after consultation with the CEO.salary. For the individual performance component, an NEO could earn a maximum of 100% of the target bonus.

For the corporate performance metric, achievement of non-GAAP operating income determined the maximum award size that each executive could earn, with achievement of 120% of the non-GAAP operating income target resulting in the maximum 250% award level, achievement of 100% of the non-GAAP operating income target resulting in the 100% award level, and performance at or below 80% of the non-GAAP operating income target resulting in no bonus being earned. For 2015,2018, our non-GAAP operating income target was $66.4$145.6 million as established in the annual operating plan approved by the Board. Achievement of 120% of the non-GAAP operating income target would result in the maximum 250% bonus payout for each NEO, achievement of 100% of the non-GAAP operating income target would result in the 100% bonus payout, and performance below 80% of the non-GAAP operating income target would result in no bonus payout. For performance within the maximum, target and threshold range, the percentage achievementof payout would be determined based on a linear interpolation.

For 2015,2018, we achieved non-GAAP operating income which exceeded 120% of the target, resultingresulted in the achievement of the maximum 250% bonus payout for the corporate performance metric for each NEO.  In addition, our Compensation Committee reviewed the NEOs’ individual performance based on the CEO’s feedback as well as our operational and financial performance in a holistic manner and determined the level of achievement was 100%. The following table summarizes the bonus payout approved by the Compensation Committee for our NEOs:

Furthermore, after determining the performance under our short-term cash incentive program, our Compensation Committee reflected on the overall company performance in 2015, including revenue, earnings and stock price appreciation in addition to non-GAAP operating income. In recognition of MPS’s exceptional performance beyond the maximum target that was set initially in 2015, the Compensation Committee decided to use its authority to approve a discretionary cash bonus equal to 15% of the target bonus, which was the maximum payout guideline for the discretionary bonus under the plan, to each NEO, ranging from $37,000 to $90,000.

Long-Term Equity Incentive Compensation.Compensation:

We provide long-term equity compensation awards to reward and retain our valued executives, to help us effectively compete for executives who can strategically position us for future growth and financial success, and to encourage our executives to focus on achieving long-term development goals for the future.

In determining the number of RSUslong-term equity compensation awards granted to each of the NEOs, the Compensation Committee establishes the aggregate value of RSUssuch awards to be granted as a multiple of each NEO’s target cash compensation. The Compensation Committee believes these multiples properly reflect the relative position and responsibility of each NEO as well as the officer’s ability to develop the vision, drive the strategy and affecteffect certain cost savings for us.

Over the past several years, we have regularly engaged with our stockholders to take into account their opinions in setting performance metrics. In response to their recommendations, we have significantly increasedinvestor feedback and to align the executiveNEOs’ long-term compensation with our performance and stockholders’ interests, the Compensation Committee decided that 100% of the equity compensation awards granted to our NEOs in 2018 would vest based on the achievement of performance and market-based criteria. No equity awards that are tiedvest solely based on continued service were granted to performance from 50%our NEOs in 2012 to over 80% in 2015, and 100% beginning in 2016.2018.

In February 2015,2018, the BoardCompensation Committee granted the NEOs a target dollar amount of long-term equity compensation awards comprised of RSUs based on a three-year continued service requirement (“Time-Based RSUs”) andwhich included RSUs with performance conditionsbasedconditions based on revenue achievement as measured against the performance of the analog industry over a two-year period, with a total vesting period of four years (“PSUs”). Time-Based RSUs comprised 25% of

In addition, in October 2018, at a time when the target value ofoverall stock market was experiencing an unexpected downturn, the Compensation Committee decided to grant the NEOs a long-term, market-based equity compensation awards and PSUs comprised the remaining 75% of the target value of such awards.  In December 2015, the Board granted an additional award opportunity as RSUs with market and performance conditions based on the achievement of stock price targets and operating goals over a four-yearfive-year vesting period (“MPSUs”MSUs”). The Compensation Committee’s decision to implement this market-based equity awards in October 2018 was driven by management’s continued confidence in MPS’s future and long-term stock performance, despite challenging macro-economic conditions at the time.

The following table summarizes the target number of Time-Based RSUs, PSUs and MPSUsMSUs granted to our NEOs in 2015:2018: