Pennsylvania
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000-00121
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23-1498399
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(State or Other Jurisdiction
of Incorporation)
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(Commission File Number)
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(I.R.S. Employer
Identification No.)
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23A Serangoon North Avenue 5, #01-01 K&S Corporate Headquarters, Singapore
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554369
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(Address of Principal Executive Offices)
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(Zip Code)
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¨
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 5.02
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Entry into a Material Definitive Agreement
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Item 9.01
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Financial Statements and Exhibits
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(d)
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Exhibits
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Exhibit No.
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Description
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Exhibit 10.1
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Amended and Restated Incentive Compensation Plan
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May 8, 2014
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KULICKE AND SOFFA INDUSTRIES, INC.
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By:
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/s/ Jonathan H. Chou
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Name:
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Jonathan H. Chou
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Title:
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Senior Vice President, Chief Financial Officer
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and Principal Accounting Officer
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Exhibit Number
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Description
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Exhibit 10.1
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Amended and Restated Incentive Compensation Plan
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Plan Objectives
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•
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focus the efforts of plan participants to achieve quarterly and annual financial goals and individual objectives consistent with the Company’s business strategy;
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•
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provide plan participants with the opportunity to earn quarterly, and an annual, incentive payment based on corporate and Business Unit (if appropriate) financial, and individual performance, and;
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•
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align the interests of our employees and K&S shareholders by providing awards that are commensurate with business performance.
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Effective Date
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Plan Governance
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•
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determining the criteria and mechanism for funding the Plan;
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•
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determination of suspension or reduction of aggregate incentive payments due to current or projected business performance;
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•
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determining the primary financial performance metrics;
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•
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approving any adjustments to BU ROIC performance for transition, start-up or extraordinary costs and circumstances;
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•
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approving the aggregate quarterly, and annual, payout amounts;
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•
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approving all objectives, weightings, targets and payouts to individual executive officers;
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•
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approving any discretionary adjustments to incentive awards, and
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•
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delegating routine Plan administration responsibilities to Company management.
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•
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providing summary information and analysis to the MDCC on a quarterly, and annual, basis and presenting the aggregate pool for review and approval by the MDCC;
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•
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facilitating the collection of financial and individual performance results and payout recommendations;
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•
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recommending and enforcing eligibility and administration rules, individual incentive target assignments and the relative performance weightings of Company versus Business Unit versus Individual performance;
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•
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recommending performance metrics and payout scales (including threshold, target and maximum performance) for Company, Business Units and individual payouts;
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•
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financial planning and accruals as necessary;
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•
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reviewing and verifying all proposed payments before such payments are made;
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•
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determination of suspension or reduction of non-executive officer individual incentive payments due to performance;
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•
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counseling to the MDCC on the determination of suspension or reduction of aggregate incentive payments due to current or projected business performance;
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•
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determining the extent to which internal transfers, promotions, changes in full-or-part-time status and approved leaves of absence impact accruals, targets and actual payouts;
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•
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interpreting the Incentive Compensation Plan document and establishing, adopting, or amending any provisions as are necessary for proper administration, consulting where appropriate with the MDCC.
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Plan Funding
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•
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A minimum positive net operating income threshold
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•
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A minimum Corporate Return on Invested Capital (ROIC) (see Appendix 1)
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•
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are employed by K&S or one of its affiliates as a regular full-time or part-time employee and;
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•
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do not participate in the Sales Incentive Plan (SIP)
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•
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do not participate in the Success Shares Plan
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•
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Each fiscal quarter is measured independently, with commensurate payouts based on performance. Each quarter is worth 20% of the annual target.
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•
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An annual, 5
th
payment, based on a full year’s results, is also worth 20% of the annual target.
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Quarterly Payout Eligibility for New Hires
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•
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Eligible for 100% of the quarterly payout provided they joined in days 1-15 of the first full month of the quarter
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•
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Eligible for 66.7% of the quarterly payout provided they joined after the 16
th
day of the first full month of the quarter, up to the last day of the first full month of the quarter.
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•
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Are not eligible if they joined in the second or third month of the quarter.
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Annual ‘5
th
Payment’ Eligibility for New Hires
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•
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eligible for 100% of the payout provided they first participated in the ICP in the first quarter
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•
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eligible for 75% of the payout provided they first participated in the ICP in the second quarter
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•
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eligible for 50% of the payout provided they first participated in the ICP in the third quarter
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•
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eligible for 25% of the payout provided they first participated in the ICP in the fourth quarter
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1.
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When ROIC is below threshold (see Appendix 3)
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2.
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When all funds in the ICP pool are not utilized for incentive payments and discretionary amount is created for the CEO to allocate with the MDCC approval. (see Appendix 3)
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3.
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Special functional or organizational incentives with MDCC approval (see Appendix 3)
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Quarterly Payout Treatment for Changes in Job or Employment Status
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•
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Participants who terminate during the first full calendar month of the quarter are not eligible for a payment for that quarter.
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Participants who terminate after the first full calendar month of the quarter are eligible for a pro-rata payout based on the number of calendar days worked in the quarter. Actual corporate and BU results are used. Individual results will be scored as 80 out of 100 when no score is provided by management.
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Participants whose employment with K&S is terminated for Cause or due to a voluntary resignation prior to the end of the fiscal quarter will not be eligible for a full or prorated Incentive Award for that quarter.
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Participants who terminate during the first 3 quarters of the fiscal year are not eligible for a payment for the annual component.
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Participants who terminate during the fourth quarter of the fiscal year are eligible for a pro-rata payout, based on the number of full months completed in the year, divided by 12. Actual results are used for the corporate and BU components. Individual results are scored at 100%.
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A full quarterly award for the quarter of transition if the transition is effective during the first full calendar month of the quarter
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If the transition is after the first full calendar month of the quarter the participant will remain in Success Shares until the next quarter
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•
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Proration of the annual “5
th
” payment will be proportionate to the number of full quarters in ICP
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Performance Metrics
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•
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Company:
Corporate Return on Invested Capital (“ROIC”) results at the close of each Fiscal Quarter, and at the close of the Fiscal Year;
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Business Units (BUs):
Business Unit ROIC results at the close of each Fiscal Quarter, and at the close of the Fiscal Year; and,
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Individual:
specific qualitative or quantitative goals established for each Eligible Employee for each Fiscal Quarter and scored from 0-100.
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Incentive Calculations
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Quarter
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Estimated Payout Date
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Q1 (~Oct, Nov, Dec)
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February
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Q2 (~Jan, Feb, Mar)
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May
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Q3 (~April, May, June)
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August
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Q4 (~July, August, Sept)
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December
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Annual “5
th
” Payment
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December
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Other Important Details:
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Dispute Resolution
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Definitions
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Appendix 1
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ROIC
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ICP Funding
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Maximum
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42
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%
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200
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%
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38
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%
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183
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%
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34
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%
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167
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%
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30
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%
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150
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%
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26
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%
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133
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%
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22
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%
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117
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%
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Target
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18
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%
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100
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%
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15
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%
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84
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%
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12
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%
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68
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%
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9
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%
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52
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%
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7
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%
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41
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%
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5
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%
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30
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%
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Appendix 2
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Appendix 3
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1.
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When quarterly corporate ROIC funding is below threshold:
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management discretion to allocate to key, top performers in professional tier a discretionary bonus
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not to exceed 25% of eligible participants
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cost not to exceed US$ 500,000 (per annum)
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eligible participants predominantly Technical / Engineering at levels P1- P5
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2.
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When all funds in the ICP pool are not utilized for incentive payments a discretionary amount is created for the CEO to allocate with the MDCC approval. An example is:
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a.
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Key Performer ‘CEO Award’ of 5% of the final full year end pool to allocate to year’s stars
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Approximately US$ 150,000 at target
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3.
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Special functional or organizational incentives
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In order to incentivize and reward for the attainment of critical organizational goals, the company may establish a special incentive for a group or sub-group of the company
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Programs will be approved by the MDCC
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ICP Plan Rider 1
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•
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Current tax law in China allows for preferential tax treatment for bonuses paid to employees.
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◦
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Tax is calculated by 1st dividing the bonus amount by 12 and determining the effective tax rate applicable to one twelfth using the progressive tax rate table
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◦
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This marginal tax rate is then applied to the entire bonus
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◦
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This treatment is applicable to ONE bonus received per year only
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◦
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Individuals receiving multiple bonuses during the year would be preferentially taxed on one bonus payment and the remaining payments would be treated as salary and subject to progressive tax rates along with other salary earned during the month
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Employees can elect only for either an annual payout option, or quarterly payouts.
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Employees who opt for an annual payment shall voluntarily apply through a standard written requisition (prepared by our external legal firm) for deferment of their quarterly incentive payouts to December for ICP employees and Oct for SIP employees.
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The application shall remain valid for the calendar year and employees cannot opt out of the scheme during that year.
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Application is opened in Dec each year for employees to opt in or out; elections for a tax year cannot change for that year
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If an employee does not make their elections in the time allotted, and in the absence of an election, the default payout approach will be quarterly payouts
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For those electing the annual payout, the payouts will be made in December and represent the accrued quarterly payouts for the entire year
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If an employee who so elects resigns or retires during the year, or is involuntarily terminated, they will receive their accrued awards as soon as administratively practicable.
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No dollar impact on K&S as no interest income needs to be paid on the deferred ICP payouts.
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No impact on K&S financials or accounting as funds are budgeted and expensed in the same year
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Employees continue to pay their income tax in the same tax year which does not have any legal impact on K&S
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FY14
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