UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ý Filed by a Party other than the Registrant ¨
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under Rule 14a-12
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Xilinx, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the appropriate box):
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No fee required
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
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(1)
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Title of each class of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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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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(1)
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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June 19, 2020
Dear Xilinx Stockholder:
You are cordially invited to attend the 2020 Annual Meeting of Stockholders to be held on Wednesday, August 5, 2020 at 11:00 a.m. Pacific Daylight Time, at the headquarters of Xilinx, Inc. (Xilinx or the Company) located at 2050 Logic Drive, San Jose, California 95124. We look forward to your attendance either in person or by proxy. At this meeting, the agenda includes:
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the annual election of directors;
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an advisory vote on executive compensation, as described in the attached proxy statement; and
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a proposal to ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending April 3, 2021.
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The agenda will also include any other business that may properly come before the meeting or any adjournment or postponement of the meeting. The Board of Directors recommends that you vote FOR the election of each of the director nominees; FOR the approval of the compensation of our named executive officers; and FOR the ratification of the appointment of Ernst & Young. Please refer to the proxy statement for detailed information on each of the proposals.
The 2020 Annual Meeting will be held solely to tabulate the votes cast and report the results of voting on the matters described in the attached proxy statement and any other business that may properly come before the meeting. Certain senior executives of Xilinx will be in attendance to answer questions following the Annual Meeting; however, there will be no formal presentation concerning the business of Xilinx.
Whether or not you plan to attend, please take a few minutes now to vote online or via telephone or, alternatively, request a paper proxy card and mark, sign and date your proxy and return it by mail so that your shares will be represented.
Thank you for your continuing interest in Xilinx.
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Very truly yours,
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/s/ Victor Peng
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Victor Peng
President and Chief Executive Officer
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IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO VOTE YOUR PROXY ONLINE OR BY TELEPHONE, OR, IN THE ALTERNATIVE, REQUEST, COMPLETE AND MAIL IN A PAPER PROXY CARD.
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XILINX, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Wednesday, August 5, 2020
TO OUR STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Xilinx, Inc., a Delaware corporation (Xilinx or the Company), will be held on Wednesday, August 5, 2020 at 11:00 a.m. Pacific Daylight Time, at the Company’s headquarters located at 2050 Logic Drive, San Jose, California 95124. The items of business are:
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Election of the following nine nominees for director to serve on the Board of Directors for the ensuing year and until their respective successors are duly elected and qualified: Dennis Segers, Raman K. Chitkara, Saar Gillai, Ronald S. Jankov, Mary Louise Krakauer, Thomas H. Lee, Jon A. Olson, Victor Peng and Elizabeth W. Vanderslice;
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An advisory vote on executive compensation, as described in the attached proxy statement;
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Ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending April 3, 2021; and
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Transaction of such other business as may properly come before the meeting or any adjournment or postponement thereof.
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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 June 10, 2020, are entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person. Certain senior executives of Xilinx will be in attendance to answer questions following the Annual Meeting; however, there will be no formal presentation concerning the business of Xilinx.
In order to ensure your representation at the meeting, you are urged to vote as soon as possible. You may vote your shares in one of the following ways: (1) by visiting the website shown on the Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 5, 2020 (Internet Notice) or proxy card and following the instructions; (2) by calling the telephone number shown in the Internet Notice or proxy card; (3) by voting in person at the Annual Meeting; or (4) by requesting, completing and mailing in a paper proxy card, as outlined in the Internet Notice. If you have internet access, we encourage you to record your vote on the internet.
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FOR THE BOARD OF DIRECTORS
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/s/ Catia Hagopian
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Catia Hagopian
Secretary
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San Jose, California
June 19, 2020
THIS PROXY STATEMENT AND THE ACCOMPANYING PROXY CARD ARE BEING PROVIDED ON OR ABOUT JUNE 19, 2020 IN CONNECTION WITH THE SOLICITATION OF PROXIES ON BEHALF OF THE BOARD OF DIRECTORS OF XILINX, INC. IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO VOTE YOUR PROXY ONLINE OR BY TELEPHONE, OR, IN THE ALTERNATIVE, REQUEST, COMPLETE AND MAIL IN A PAPER PROXY CARD.
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The Company is actively monitoring COVID-19 developments and following applicable government guidelines. The health and well-being of employees and stockholders are important to the Company. If it is determined that a change in the date, time or location of the 2020 Annual Meeting of Stockholders or a change to a virtual meeting format is advisable or required, an announcement of such changes will be made through a press release and additional proxy materials filed with the Securities and Exchange Commission, and on the Investor Relations page at www.xilinx.com. Please check this website in advance of the meeting date if you are planning to attend in person.
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XILINX, INC.
TABLE OF CONTENTS
FOR THE
2020 ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT
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-i-
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XILINX, INC.
TABLE OF CONTENTS
FOR THE
2020 ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT
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-ii-
PROXY STATEMENT SUMMARY
1
XILINX, INC.
PROXY STATEMENT FOR THE 2020 ANNUAL MEETING OF STOCKHOLDERS
ABOUT THE ANNUAL MEETING
Q: Who is soliciting my vote?
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A:
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The Board of Directors of Xilinx (Board) is soliciting your vote at the 2020 Annual Meeting of Stockholders (Annual Meeting).
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Q: When is the Annual Meeting?
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The Annual Meeting will take place on August 5, 2020, at 11:00 a.m. Pacific Daylight Time.
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Q: Where will the Annual Meeting be held?
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The Annual Meeting, including any adjournment or postponement of the meeting, will be held at our corporate headquarters located at 2050 Logic Drive, San Jose, California 95124.
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We are actively monitoring COVID-19 developments and following applicable government guidelines. The health and well-being of our employees and stockholders are important to us. If it is determined that a change in the date, time or location of the 2020 Annual Meeting of Stockholders or a change to a virtual meeting format is advisable or required, an announcement of such changes will be made through a press release and additional proxy materials filed with the Securities and Exchange Commission, and on the Investor Relations page at www.xilinx.com. Please check this website in advance of the meeting date if you are planning to attend in person.
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Q: How do I gain admittance to the Annual Meeting?
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Each stockholder must present valid picture identification, such as a driver’s license or passport, and proof of stock ownership as of the record date for entrance to the Annual Meeting.
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Q: What proposals are being presented for my vote?
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A:
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You will be asked to vote on:
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1.
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election of the following nine nominees to serve as a director on the Board for the ensuing year: Dennis Segers, Raman K. Chitkara, Saar Gillai, Ronald S. Jankov, Mary Louise Krakauer, Thomas H. Lee, Jon A. Olson, Victor Peng, and Elizabeth W. Vanderslice;
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an advisory vote on the compensation for our named executive officers;
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ratification of the appointment of Ernst & Young LLP (EY) to serve as our independent registered public accounting firm for the fiscal year ending April 3, 2021; and
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any other business that may properly come before the Annual Meeting.
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Q: What are the Board’s recommendations?
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The Board recommends that you vote your shares:
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FOR each of the Board’s nine nominees for director, who are Dennis Segers, Raman K. Chitkara, Saar Gillai, Ronald S. Jankov, Mary Louise Krakauer, Thomas H. Lee, Jon A. Olson, Victor Peng and Elizabeth W. Vanderslice;
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FOR the advisory vote on the compensation for our named executive officers; and
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FOR the ratification of the appointment of EY to serve as our independent registered public accounting firm for the fiscal year ending April 3, 2021.
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Q: What is the quorum requirement for the Annual Meeting?
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The required quorum to transact business at the Annual Meeting is a majority of the shares of our common stock outstanding on the record date. Shares of common stock entitled to vote and represented at the Annual Meeting by proxy or in person, as well as shares represented by abstentions and broker non-votes (see the answer to “What is a ‘broker non-vote’ and what is its effect?” below), will be counted towards the quorum. If there is a quorum, the stockholders present at the Annual Meeting may continue to do business, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. If there is no quorum, a majority of the votes present at the meeting may adjourn the Annual Meeting to another date.
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Q: What is the record date?
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The record date for determining shares outstanding and eligible to vote at the Annual Meeting was June 10, 2020.
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Q: How many shares of common stock are outstanding?
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As of the close of business on the record date, June 10, 2020, there were 243,194,363 shares of our common stock outstanding.
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ABOUT PROXY MATERIALS AND VOTING
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Why did I receive a one-page notice in the mail regarding internet availability of proxy materials instead of a full set of proxy materials?
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Instead of mailing a printed copy of our proxy materials to stockholders, we mailed an Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on August 5, 2020 (Internet Notice) to all stockholders entitled to vote at the meeting, as permitted by the rules of the Securities and Exchange Commission (SEC). We believe that it is in the best interests of our stockholders to take advantage of these rules and reduce the expenses associated with printing and mailing proxy materials to all of our stockholders. In addition, as a corporate citizen, we seek to reduce the use of natural resources and the environmental impact of printing and mailing the proxy materials. As a result, you will not receive paper copies of the proxy materials unless you specifically request them.
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The Internet Notice provides instructions on how you can (1) access the proxy materials on the internet, (2) access your proxy and (3) vote on the internet. If you would like to receive paper copies of the proxy materials, please follow the instructions on the Internet Notice. If you share an address with another stockholder and received only one Internet Notice, you may write or call us to request a separate copy of the proxy materials at no cost to you. We anticipate that the Internet Notice will be mailed on or about June 19, 2020 to all stockholders entitled to vote at the meeting.
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How many copies of the proxy materials will be delivered to stockholders sharing the same address?
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Stockholders who have the same address and last name will receive only one copy of the Internet Notice (or one copy of the printed proxy materials) unless one or more of these stockholders notifies us that they wish to continue receiving individual copies. We adopted this “householding” practice, which is permitted under SEC rules, in an effort to conserve natural resources and reduce printing costs and postage fees.
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If you share an address with another stockholder and received only one Internet Notice and would like to request a copy of the proxy materials, please send your request to: Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, Attn: Investor Relations; call Investor Relations at (408) 879-6558; or visit the Company’s website at www.investor.xilinx.com. We will deliver a separate copy of these materials promptly upon receipt of your written or verbal request. Similarly, you may also contact us if you received multiple copies of the proxy materials and would prefer to receive a single copy in the future.
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How do I vote?
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The way in which you may vote by proxy depends on how you hold your shares.
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If your shares were registered directly in your name with our transfer agent, Computershare Trust Company, N.A., then you hold your shares directly and are a registered stockholder or a stockholder of record. In this case, you may vote by proxy in one of three ways:
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Vote by telephone (instructions are on the Internet Notice and proxy card);
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Vote over the internet (instructions are on the Internet Notice and proxy card); or
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Fill out the enclosed proxy card, date and sign it, and return it in the enclosed postage pre-paid envelope. You may request a proxy card as outlined in the Internet Notice.
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If you hold your Xilinx stock through a brokerage firm, bank, broker-dealer, trust or other similar organization (that is, in street name), you are a beneficial owner of your shares and should have received an Internet Notice from the broker or other nominee holding your shares. You should follow the instructions in the Internet Notice or voting instructions provided by your broker or nominee in order to instruct your broker or other nominee on how to vote your shares. The availability of telephone and internet voting will depend on the voting process of the broker or nominee.
Regardless how you hold your Xilinx stock, you may vote in person at the Annual Meeting; however, if you hold your Xilinx stock in street name, i.e., through a brokerage firm, bank, broker-dealer, trust or other similar organization, you must obtain a legal proxy from your broker or nominee and bring that proxy to the Annual Meeting.
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How many votes do I have?
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You have one vote for every share of Xilinx common stock you owned as of the close of business on the record date, which is June 10, 2020.
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Who will count my votes?
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The inspector of elections appointed for the Annual Meeting will separately count “FOR” and “AGAINST” votes, abstentions and broker non-votes.
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How will my shares be voted and what happens if I do not give specific voting instructions?
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Shares of common stock for which proxy cards are properly voted via the internet or by telephone, or are properly executed and returned, will be voted at the Annual Meeting in accordance with the directions given or, in the absence of directions, will be voted “FOR” the election of each of the nominees to the Board named herein, “FOR” the approval of the advisory vote on compensation of our named executive officers, and “FOR” the ratification of the appointment of EY as the Company’s independent registered public accounting firm for fiscal 2021. It is not expected that any other matters will be brought before the Annual Meeting. If, however, other matters are properly presented, the persons named as proxy holders on the proxy card will vote in accordance with their discretion with respect to such matters.
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Any stockholder entitled to vote on any matter may vote a portion of their shares in favor of the proposal and refrain from voting the remaining shares or, except when the matter is the election of directors, may vote the remaining shares against the proposal, provided that if the stockholder fails to specify the number of shares which the stockholder is voting affirmatively, it will be conclusively presumed that the stockholder’s approving vote is with respect to all shares that the stockholder is entitled to vote.
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What is a “broker non-vote” and what is its effect?
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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 proposal and has not received instructions with respect to that proposal from the beneficial owner, despite voting on at least one other proposal for which it does have discretionary authority or for which it has received instructions. Broker non-votes will not be counted towards the vote total for any non-routine proposal and will have no effect except where the affirmative votes with respect to such proposal, though a majority of the votes represented and voting, do not constitute a majority of the required quorum.
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Which ballot measures are considered “non-routine” or “routine”?
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Brokers that do not receive voting instructions from their clients have the discretion to vote uninstructed shares on “routine” matters but have no discretion to vote them on “non-routine” matters. Therefore, if you hold your shares through a broker or nominee, it is critical that you cast your vote if you want it to count for non-routine matters.
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Proposal One (election of directors) and Proposal Two (advisory vote on executive compensation) are non-routine matters. If you hold your shares through a broker or nominee and you do not instruct your broker or nominee how to vote on “non-routine” matters, such as Proposals One and Two, no votes will be cast on your behalf.
Proposal Three (ratification of independent registered public accounting firm) is a routine matter. Brokers or nominees may generally vote on routine matters, and therefore no broker non-votes are expected in connection with Proposal Three.
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How are abstentions treated?
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Abstentions are treated as represented and entitled to vote for purposes of determining a quorum, but have no effect on the outcome except where the affirmative votes with respect to a proposal, though a majority of the votes represented and voting, do not constitute a majority of the required quorum.
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How many votes are needed to approve each proposal?
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The following table sets forth the voting requirement with respect to each of the proposals:
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PROPOSAL
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VOTE REQUIRED
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BROKER
DISCRETIONARY
VOTE ALLOWED
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Proposal One:
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Election of nine directors
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Majority of votes cast, except that in contested elections, directors will be elected by the plurality standard whereby those directors with the highest number of votes cast are elected
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No
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Proposal Two:
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Annual advisory vote to approve the compensation of our named executive officers
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Advisory vote; majority of shares represented and voting on such matter, so long as the shares voting affirmatively constitute a majority of a quorum
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No
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Proposal Three:
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Ratification of EY as our independent registered public accounting firm for fiscal 2021
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Majority of shares represented and voting on such matter, so long as the shares voting affirmatively constitute a majority of a quorum
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Yes
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In the absence of instructions, shares of common stock represented by valid proxies will be voted in accordance with the recommendations of the Board as shown on the proxy and in this proxy statement.
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Q:
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What is the advisory vote to approve the compensation of our named executive officers?
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A:
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The non-binding advisory vote on the compensation of our named executive officers in Proposal Two will provide us insight into our stockholders’ views on our compensation practices pertaining to our named executive officers.
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How can I change my vote or revoke my proxy?
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A:
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A stockholder of record giving a proxy may revoke it at any time before it is voted by delivering to the Secretary of the Company at 2100 Logic Drive, San Jose, CA 95124, a written notice of revocation or a duly executed proxy bearing a later date, or by appearing at the Annual Meeting and voting in person. Attendance at the Annual Meeting will not, by itself, be sufficient to revoke a proxy. Any beneficial stockholder wishing to revoke his or her voting instructions must contact the bank, brokerage firm or other custodian who holds his or her shares and obtain a legal proxy from such bank or brokerage firm to vote such shares in person at the Annual Meeting.
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How much did this proxy solicitation cost and who will pay for the cost?
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A:
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We have retained the services of Alliance Advisors, LLC to assist in obtaining proxies from brokers and nominees of stockholders for the Annual Meeting. We will pay the cost of these services and other proxy management services, which is estimated to be approximately $10,000 plus out-of-pocket expenses. We will also pay brokers or other persons holding stock in their names or the names of their nominees for costs to forward soliciting materials to their principals. In addition, we pay the cost of preparing, assembling and delivering the notice of Annual Meeting, proxy statement and form of proxy. Proxies
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may also be solicited in person, by telephone or electronically by Xilinx personnel, who will not receive any additional compensation for such solicitation.
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Q:
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May I nominate a director for inclusion in next year’s proxy materials?
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A:
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Our Bylaws permit eligible stockholders to make use of proxy access to nominate director candidates, subject to all the requirements set forth in our Bylaws, a summary of which is as follows. In order to be eligible to nominate a director candidate, the stockholder must hold at least 3% of our outstanding shares of common stock continuously for three years at the time the nomination notice is received by us and the stockholder must continue to hold those shares through the date of the annual meeting. A group of up to 20 stockholders, each of whom meets the requirements of the Bylaws, may form a group to reach the 3% ownership threshold. Eligible stockholders who meet the proxy access requirements set forth in our Bylaws may nominate up to the greater of two candidates or 20% of the directors in office as of the last date on which a nomination notice may be received by us. Such nominations must meet the notice and other requirements set forth in our Bylaws. In order for a proxy access nomination to be timely, it must be received by the Secretary of the Company at our principal executive offices not less than 120 days nor more than 150 days prior to the anniversary of the date when we first distributed our proxy statement to stockholders for the immediately preceding annual meeting of stockholders. To be considered timely for next year’s annual meeting of stockholders, proxy access nominations would need to be received by the Secretary of the Company at our principal executive offices at 2100 Logic Drive, San Jose, CA 95124 no earlier than January 20, 2021 and no later than February 19, 2021.
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How and when may I submit proposals for consideration at next year’s Annual Meeting of Stockholders?
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A:
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Pursuant to Rule 14a-8 under the Securities Exchange Act of 1934 (Exchange Act), to be eligible for inclusion in the Company’s proxy materials for the 2021 Annual Meeting of Stockholders, stockholder proposals must be received by the Secretary of the Company at our principal executive offices at 2100 Logic Drive, San Jose, CA 95124 no later than February 19, 2021. Pursuant to Rule 14a-4(c) under the Exchange Act, if a stockholder proposal submitted outside of Rule 14a-8 is not received by the Secretary at our principal executive offices by the close of business on May 5, 2021, the Company may exercise discretionary voting authority under proxies it solicits to vote in accordance with its best judgment on any such stockholder proposal submitted by a stockholder. In addition, under the advance notice provision in our Bylaws, stockholder proposals made outside of Rule 14a-8 under the Exchange Act and director nominations that are not intended for inclusion in our proxy materials must be submitted in accordance with the requirements of the Company’s Bylaws, not later than April 7, 2021, and not earlier than March 8, 2021; provided, however, that if our 2021 Annual Meeting of Stockholders is called for a date that is not within 25 days before or after the anniversary of the Annual Meeting, then, to be considered timely, stockholder proposals must be received by the Secretary of the Company at our principal executive offices not later than the close of business on the tenth day following the day on which notice of the date of our 2021 Annual Meeting of Stockholders was mailed or publicly disclosed, whichever occurs first. The full text of the Company’s Prior Notice for Inclusion on Agenda Bylaw provision described above may be obtained by writing to the Secretary of the Company.
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6
DIRECTORS AND CORPORATE GOVERNANCE
Board Leadership
The Company’s Board of Directors currently consists of 11 individuals who are elected at each annual meeting and hold office until the next annual meeting of stockholders and until his or her successor has been elected and qualified. Two such individuals, J. Michael Patterson and Marshall C. Turner, will not be standing for election at the Annual Meeting. In addition, Jon A. Olson was appointed to the Board in May 2020. Mr. Olson had previously served as the Company’s Chief Financial Officer and was well known to several of the Company’s independent directors, who recommended him as a candidate for the Board. His election was subsequently recommended by the Nominating and Governance Committee and approved by the Board.
The Board seeks to have members with a variety of background and experiences. Set forth below are the names and a brief description of the experience, qualifications, attributes or skills of each of our director nominees that led the Board to conclude that the individual should serve on the Board. There are no family relationships among any of our director nominees or executive officers. Each of the following is a nominee for election or reelection at the Annual Meeting:
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Name: Raman K. Chitkara
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Age: 61
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Committee Membership:
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Director Since: 2018
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• Audit (Chair)
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Mr. Chitkara joined the Board in August 2018. From 1984 until his retirement in June 2018, Mr. Chitkara worked at PricewaterhouseCoopers LLP (PwC), a public accounting firm, where he served as its Global Technology Industry Leader and previously served as the firm’s Global Semiconductor Industry Leader. During his tenure at PwC, he held a number of additional leadership positions, including membership of the Audit Quality Board and Leader of the Global Assurance TICE (Technology, Information, Communication, Entertainment and Media) Practice. Mr. Chitkara also serves on the board of SiTime Corporation, a supplier of silicon timing solutions.
Mr. Chitkara’s qualifications to serve on the Board include his extensive experience with public and financial accounting matters for complex global organizations. His financial experience enables Mr. Chitkara to contribute meaningfully to the Board’s role in the oversight of our financial reporting, accounting and executive compensation practices. In addition, Mr. Chitkara’s extensive knowledge of the technology sector and semiconductor industry bring valuable insight to the Company’s strategic plans and investments.
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Skills & Qualifications:
• Leadership Experience
• Technology / Industry Experience
• Finance / Financial Literacy
• Strategic Growth
• Board of Directors Experience
• Corporate Governance
• Risk Management
• International Experience
• Investor Experience
• Human Capital Management / Compensation
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7
8
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Name: Thomas H. Lee
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Age: 60
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Committee Membership:
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Director Since: 2016
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• Nominating and Governance
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Dr. Lee joined the Board in May 2016. Dr. Lee is a Professor of Electrical Engineering at Stanford University. He joined the Stanford faculty in 1994 and founded the Stanford Microwave Integrated Circuits Laboratory. From April 2011 through October 2012, he served as the Director of the Microsystems Technology Office at the Defense Advanced Research Projects Agency (DARPA). He has also co-founded three startups: Matrix Semiconductor, Inc. (acquired by SanDisk), ZeroG Wireless (acquired by Microchip Technology) and Ayla Networks. Dr. Lee received his S.B., S.M. and doctorate of Electrical Engineering from the Massachusetts Institute of Technology. He has written and co-authored numerous books and papers and is widely recognized for his expertise in high performance analog circuit designs and wireless communications technology. He is a Fellow of the Institute of Electrical and Electronics Engineers and has been the recipient of many honors and awards including the United States Secretary of Defense Medal for Exceptional Civilian Service for his service at DARPA. He was also awarded the 2011 Ho-Am Prize in Engineering. He has been granted 65 patents. Dr. Lee also serves on the board of directors of Humatics Corporation, a privately-held company focusing on microlocation technology.
Dr. Lee brings to the Board a unique blend of technical expertise pertaining to many of the technology trends shaping the growth of the markets the Company serves, along with entrepreneurial experience and senior leadership capabilities in creating innovative programs in a variety of defense and military communication markets. His extensive knowledge helps the Board shape the Company’s strategic research and development plans and provides valuable insights into the driving technology trends within the Company’s industry and target markets.
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Skills & Qualifications:
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Leadership Experience
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Technology / Industry Experience
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Entrepreneurial Experience
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Board of Directors Experience
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Corporate Governance
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International Experience
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Investor Experience
•
Government Experience
•
Academia
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9
10
Director Qualifications, Skills and Experience
The Nominating and Governance Committee has determined that it is important for an effective Board to have directors with a balance of the qualifications, skills and experience set forth in the table below.
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Skills and Experience
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Dennis Segers
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Raman K. Chitkara
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Saar Gillai
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Ronald S. Jankov
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Mary Louise Krakauer
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Thomas H. Lee
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Jon A. Olson
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Victor Peng
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Elizabeth W. Vanderslice
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Leadership Experience(1)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Technology / Industry Experience(2)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Finance /Financial Literacy(3)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Marketing / Sales Experience(4)
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ü
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ü
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ü
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ü
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ü
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ü
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Strategic Growth(5)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Entrepreneurial Experience(6)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Board of Directors Experience(7)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Risk Management(8)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Corporate Governance(9)
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ü
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ü
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ü
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ü
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ü
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ü
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International Experience(10)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Investor Experience(11)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Human Capital Management / Compensation(12)
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ü
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ü
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ü
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ü
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ü
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ü
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ü
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Government
Experience (13)
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ü
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ü
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ü
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Academia(14)
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ü
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Diversity and Board Tenure
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Diversity of Gender, Race, Ethnicity, National
Origin (15)
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ü
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ü
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ü
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ü
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ü
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ü
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11
Board Independence
The Nasdaq listing standards require that a majority of the members of a listed company’s board of directors must qualify as “independent” as affirmatively determined by its board of directors. The Board annually reviews information relating to the members of the Board to ensure that a majority of the Board is independent under the Nasdaq listing requirements and the rules of the SEC.
After review of all relevant transactions and relationships between each director or nominee, his or her family members and entities affiliated with each director or nominee and Xilinx, our senior management and our independent registered public accounting firm, the Board has determined that 10 of our 11 directors are independent directors as defined in the Nasdaq listing standards and SEC rules. Victor Peng, our President and CEO, is not an independent director because he is a current employee of Xilinx.
In making a determination of the independence of each director or nominee, the Board reviewed relationships and transactions occurring since the beginning of fiscal 2018 between each such individual, his or her family members and entities affiliated with each director or nominee and Xilinx, our senior management and our independent registered public accounting firm, as well as, in the case of Mr. Olson, prior service as a Xilinx executive officer. In making its determination, the Board applied the standards for independence adopted by Nasdaq and the SEC. Based on those standards, the Board has determined that, because of the nature of the relationship or the amount involved in the transaction, the relationship or transaction did not impair the director’s independence.
Board Meetings and Committees
The Board held a total of nine meetings during the fiscal year ended March 28, 2020. All directors are expected to attend each meeting of the Board and the committees on which he or she serves and are also expected to attend the Annual Meeting. All of the 10 directors then serving on the Board attended the 2019 Annual Meeting of Stockholders held in August 2019 or participated via teleconference. Each incumbent director attended at least 75% of the aggregate of all meetings of the Board or its committees on which such director served during the fiscal year. The Board holds four pre-scheduled meetings per fiscal year.
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The Board has four standing committees, consisting of the Audit Committee, Compensation Committee, Nominating and Governance Committee, and Committee of Independent Directors. The Board and its committees have authority to engage independent advisors and consultants and have used such services. The primary responsibilities of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee are set forth in the respective committee charters approved by the Board, which are posted on the investor relations page of our website located at www.investor.xilinx.com under “Corporate Governance.”
Set forth below are the directors currently serving on each of the Board’s four standing committees as well as a description of each committee.
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Audit
Committee
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Compensation
Committee
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Nominating and
Governance
Committee
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Committee of
Independent
Directors
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Non-Employee Directors:
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Dennis Segers
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Raman K. Chitkara
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Chair
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Saar Gillai
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Ronald S. Jankov
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Mary Louise Krakauer
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Thomas H. Lee
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Jon A. Olson
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J. Michael Patterson
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Chair
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Marshall C. Turner
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Elizabeth W. Vanderslice
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Chair
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Employee Director:
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Victor Peng
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Audit Committee
The current members of the Audit Committee are Raman K. Chitkara, J. Michael Patterson and Marshall C. Turner. Messrs. Patterson and Turner will not be standing for election at the Annual Meeting and will be replaced on the committee by Saar Gillai and Dennis Segers. During fiscal 2020, the Audit Committee held seven meetings. The Audit Committee assists the Board in fulfilling its oversight responsibilities to the stockholders relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls and the audit process. The Board has determined that each Audit Committee member meets the independence and financial knowledge requirements under the SEC rules and the corporate governance listing standards of Nasdaq. The Audit Committee operates in accordance with a written charter adopted by the Board, which complies with Nasdaq listing standards and SEC rules.
The Board has further determined that each member of the Audit Committee qualifies as an “audit committee financial expert” as defined by SEC rules. Stockholders should understand that this designation is a disclosure requirement of the SEC related to the Audit Committee members’ individual experience and understanding with respect to certain accounting and auditing matters and does not impose upon any of the Audit Committee members any duties, obligations or liabilities that are greater than those generally imposed on each of them as members of the Board, nor does it alter the duties, obligations or liability of any other member of the Board.
Compensation Committee
The current members of the Compensation Committee are J. Michael Patterson, Ronald S. Jankov, Mary Louise Krakauer and Elizabeth W. Vanderslice. Mr. Patterson, the chairperson of the committee, will not be standing for election at the Annual Meeting. Following the Annual Meeting, Mr. Jankov will serve as chairperson of the committee. The Board has determined that each member of the Compensation Committee meets the independence requirements under the SEC rules and the Nasdaq listing standards. During fiscal 2020, the Compensation Committee held eight meetings. The Compensation Committee has responsibility for establishing our compensation policies. The Compensation Committee determines the compensation for our Board members and executive officers and has exclusive authority to grant equity-based awards, including options and restricted stock units (RSUs), to our executive officers under our 2007 Equity Incentive Plan (2007 Equity Plan). The Compensation Committee evaluates the CEO’s performance and determines CEO compensation, including base salary, incentive pay and equity awards. The CEO is not present during the Compensation Committee’s deliberations or voting on CEO compensation, but may be present during voting and deliberations related to compensation of other executive officers. For further information about the processes and procedures
13
for the consideration and determination of executive compensation, please refer to the section of this proxy statement entitled “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis.”
Nominating and Governance Committee
The current members of the Nominating and Governance Committee are Elizabeth W. Vanderslice, Saar Gillai and Thomas H. Lee. During fiscal 2020, the Nominating and Governance Committee held four meetings. The Nominating and Governance Committee has responsibility for identifying, evaluating and recommending individuals to serve as members of the Board and establishing policies affecting corporate governance. The Nominating and Governance Committee, among other things, makes suggestions regarding the size and composition of the Board and ensures that the Board reviews our management organization, including management succession plans.
Committee of Independent Directors
All independent directors are members of the Committee of Independent Directors. This Committee met four times during fiscal 2020. The Committee’s principal focus is succession planning, but it also addresses other topics as deemed necessary and appropriate. The Committee of Independent Directors typically meets outside the presence of management.
Nomination Criteria and Board Diversity
The Board believes in bringing a diversity of backgrounds and viewpoints to the Board and desires that its directors and nominees possess critical skills and experience in the areas of semiconductor design and marketing, manufacturing, software and finance. The Board also believes having directors of diverse gender, race and ethnicity, along with varied skills and experiences, contributes to a balanced and effective Board. Our Significant Corporate Governance Principles affirm our commitment to a policy of inclusiveness. To further that commitment, in any director candidate search, the Nominating and Governance Committee commits to actively seek out director candidates reflecting a diversity of backgrounds, perspectives, experiences, genders, races and ethnicities.
These factors, and any other qualifications considered useful by the Board, are reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. As a result, the priorities and focus of the Nominating and Governance Committee may change from time to time to take into account changes in business and other trends, as well as the portfolio of skills and experience of current and prospective Board members. Therefore, while focused on the achievement and the ability of potential candidates to make a positive contribution with respect to such factors, the Nominating and Governance Committee has not established any specific minimum criteria or qualifications that a director or nominee must possess.
As part of the annual evaluation of current Board members, and as otherwise deemed appropriate, the Nominating and Governance Committee considers each director’s skills, experience, viewpoints previously mentioned as desirable director qualifications, independence, job changes, if any, amount of time spent on Xilinx matters and to what extent, if any, other commitments the director may have outside of Xilinx impact the director’s service to Xilinx. In connection with its evaluation of Board composition, the Nominating and Governance Committee also considers rotating directors’ positions on the Committees.
Consideration of new Board candidates typically involves a series of internal discussions, review of information concerning candidates and interviews with selected candidates. The Board has engaged search firms to assist the Nominating and Governance Committee in identifying and assessing director candidates with a specific focus on potential qualified candidates who are women or from underrepresented minorities. The Nominating and Governance Committee will also consider candidates proposed by stockholders using the same process it uses for a candidate recommended by a member of the Board, an employee or a search firm. A stockholder seeking to recommend a prospective nominee for the Nominating and Governance Committee’s consideration should submit the candidate’s name and qualifications by mail addressed to the Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, by email to corporate.secretary@xilinx.com or by fax to (408) 377-6137.
Board’s Role in Risk Oversight
The Board has overall responsibility for risk oversight at the Company and may delegate particular risk areas to the appropriate committees of the Board. The Board’s role in risk oversight builds upon management’s risk management process. The Company conducts a formal annual risk assessment, as well as coordinating ongoing risk management activities throughout the year, to identify, analyze, respond to, monitor and report on risks. Risks reviewed by the Company include operational risks, financial risks, legal and compliance risks, IT and cybersecurity risks and strategic risks. The management team then reviews with the Board any significant risks identified during the process, together with plans to mitigate such risks. In response, the Board or the relevant committee may request that management conduct additional review of or reporting on select enterprise risks. The process and risks are reviewed at least annually with the Board, and additional review or reporting of significant enterprise risks will be conducted as needed or as requested by the Board or any of its committees.
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Corporate Governance Principles
The Company and the Board, through the Nominating and Governance Committee, regularly review and evaluate our corporate governance principles and practices. Our Significant Corporate Governance Principles, Code of Conduct, Directors’ Code of Ethics and charters for the Audit Committee, Compensation Committee and Nominating and Governance Committee are posted on our website at www.investor.xilinx.com. Printed copies of these documents are also available upon written request addressed to the Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124 or by email to corporate.secretary@xilinx.com.
Board Leadership Structure and Independence
The Board believes there should be a substantial majority of independent directors on the Board. The Board also believes that it is useful and appropriate to have members of management as directors, including the CEO. Independent directors are given an opportunity to meet outside the presence of members of management, and hold such meetings regularly.
It is the policy of the Board that if the Chairman is not an “independent director” as defined in the Nasdaq listing standards, the Board will designate an independent director to serve as Lead Independent Director. We believe that having an independent Chairman or a Lead Independent Director, either of whom is responsible for coordinating the activities of the independent directors and chairing the meetings of the Committee of Independent Directors, among other duties, allows the Company’s CEO to better focus on the day-to-day management and leadership of the Company, while better enabling the Board to advise and oversee the performance of the CEO. Our Chairman, Dennis Segers, is an independent director, so we currently do not have a Lead Independent Director.
Majority Vote Standard
All directors are elected annually at the annual stockholder meeting. As set forth in our Bylaws, directors are elected based on the majority of votes cast for each nominee, except in the case of a contested election in which the number of nominees exceeds the number of directors to be elected. In such contested elections, directors are elected by the plurality standard, which means those directors with the highest number of votes cast are elected. For the purposes of this paragraph, the majority of votes cast means that the number of shares voted “FOR” a director must exceed the number of shares voted “AGAINST” that director. Any director who receives more “AGAINST” votes than “FOR” votes is required to tender his or her resignation to the Board, which will announce its decision whether to accept such resignation within 120 days following the certification of election results.
Board Evaluation
The Board conducts an annual evaluation of its performance, which is overseen by the Nominating and Governance Committee. The process varies from year-to-year, including self-evaluations and/or one-on-one meetings with each Board member and the chairperson of the Nominating and Governance Committee. Results of the evaluation are formally presented to the Board. The Board has made changes in Board procedures based on feedback from the process.
Board Service Limits and Terms
The Board has set a limit on the number of public company boards on which a director may serve to three for our Chief Executive Officer and four for all other directors, including service on the Xilinx Board.
The Board believes that term limits on directors’ service and a mandatory retirement age do not serve the best interests of the Company. While such policies could help ensure that fresh ideas and new viewpoints are addressed by the Board, such limits have the disadvantage of losing the contribution of directors who over time have developed increased insight and knowledge into the Company’s operations and who remain active and contributing members of the Board. The Board evaluation process plays a significant role in determining our Nominating and Governance Committee’s recommendation regarding Board tenure.
Change of Principal Occupation or Association
When a director’s principal occupation or business association changes substantially during his or her tenure as director, that director is required to tender his or her resignation for consideration by the Nominating and Governance Committee. The Nominating and Governance Committee will recommend to the Board the action, if any, to be taken with respect to the resignation.
Director Education
The Company offers internal and external course selections for new-director orientation as well as continuing education. Directors attend director education programs and report back to the entire Board on key learnings.
Stock Ownership Requirements
Directors
The Board has established minimum stock ownership guidelines for non-employee directors. Under these guidelines, non-employee directors are required to own Xilinx common stock having a value equal to at least five times the base annual cash retainer offered equally to all non-employee directors for service as a director (excluding any retainers paid for service as Chairman of the Board
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or on a committee). The base annual cash retainer for directors is currently $72,500, and therefore directors are currently required to own common stock with a value of at least $362,500. Based on a price of $86.59, the closing price of our common stock on May 22, 2020, $362,500 would purchase 4,186 shares of our common stock.
Directors are required to retain half of the shares of our common stock derived from awards of RSUs until this ownership requirement is met. Half of the RSUs that are vested but are not settled pursuant to a pre-arranged deferral program will count toward the ownership requirement. To date, nine of our ten non-employee directors have met the stock ownership requirements. Mr. Chitkara, who joined the Board in August 2018, has not yet met the stock ownership requirements.
Executive Officers
The Board has also established minimum stock ownership guidelines for executive officers. Our CEO is required to own shares of our common stock having a value of at least $4.5 million. Any person serving as Chief Operating Officer is required to own shares of our common stock having a value of at least $1.5 million. Executive vice presidents are required to own shares of our common stock having a value of at least $1.0 million. Senior vice presidents who are Section 16 officers (i.e., any such individual who is deemed to be an officer under SEC rules for purposes of Section 16 of the Exchange Act) are required to own shares of our common stock having a value of at least $750,000, and corporate vice presidents who are Section 16 officers are required to own shares of our common stock having a value of at least $500,000. Until their stock ownership requirements are met, the CEO and all other Section 16 officers must retain 45% of the shares of our common stock derived from RSU awards. To date, of our named executive officers, Messrs. Madden and Boppana have not yet met the stock ownership requirements.
Succession Planning
The Board plans for succession to the position of the Chairman of the Board, the position of CEO and other senior management positions to help ensure continuity of leadership. To assist the Board, the CEO provides the Board with an assessment of other senior managers and their potential as a suitable successor. The CEO also provides the Board with an assessment of persons considered potential successors to certain senior management positions.
Codes of Conduct and Ethics
The Board has adopted a Code of Conduct applicable to our directors, officers, employees and contractors. The Code of Conduct includes a Non-Retaliation Policy that prohibits retaliation against any person for providing information in good faith or otherwise assisting in an investigation concerning conduct that may constitute a violation of law, regulation, the Code of Conduct, or other Company policies. The Company also provides an anonymous reporting system for reports of perceived violations. Independent directors receive complaints and reports of violations regarding accounting, internal accounting controls, auditing, legal and other matters reported through the anonymous reporting process. Our Chief Compliance Officer provides a quarterly report to the Audit Committee of incident reports identified through the anonymous reporting process or otherwise.
The Board has adopted a separate Code of Ethics that applies specifically to the Board, which covers matters including insider trading, confidentiality, conflicts of interests and compliance with other laws.
The Code of Conduct and the Code of Ethics are available on the investor relations page of our website at www.investor.xilinx.com. Printed copies of these documents are also available to stockholders upon written request directed to Corporate Secretary, Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124.
A waiver of any violation of the Code of Conduct by an executive officer or director and a waiver of any violation of the Directors’ Code of Ethics may only be granted by the Board. The Company will post any such waivers, as well as amendments to the Code of Conduct, on our website under the Corporate Governance page at www.investor.xilinx.com.
Anonymous Reporting and Whistleblower Protection
Our Code of Conduct includes protections for employees who report violations of the Code of Conduct, other policies, laws, rules and regulations. We have implemented an internet-based anonymous reporting process for employees to report violations they do not otherwise bring directly to management. The site can be accessed from our intranet as well as from the internet.
Stockholder Value
The Board recognizes the interests of stockholders and, accordingly, as related to the Company’s equity plans:
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All employee stock plans are submitted to the stockholders for approval prior to adoption;
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The 2007 Equity Plan includes a provision that prohibits repricing of options, whether through direct reduction of exercise prices, cancellation of the option or stock appreciation right (SAR) in exchange for a new option or SAR having a lower exercise price, or replacement of options or SARs with full value awards (i.e., awards of restricted stock or RSUs);
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The 2007 Equity Plan includes an annual limit on the aggregate dollar value of equity awards and cash that may be granted to non-employee directors; and
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16
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The Company is committed to keeping dilution under its stock plans for employees below industry standards.
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Stockholder Communications to the Board
Stockholders may initiate any communication with the Board in writing sent in care of the Company’s Corporate Secretary to Xilinx, Inc., 2100 Logic Drive, San Jose, CA 95124, by email to corporate.secretary@xilinx.com, or by fax to the Corporate Secretary at (408) 377-6137. The name of any specific intended recipient, group, or committee should be noted in the communication. The Board has instructed the Corporate Secretary to forward such correspondence only to the intended recipients; however, the Board has also instructed the Corporate Secretary, prior to forwarding any correspondence, to review such correspondence and, in her discretion, not to forward certain items if they are deemed of a commercial or frivolous nature or otherwise inappropriate for the Board’s consideration. In such cases, and as necessary for follow up at the Board’s direction, correspondence may be forwarded elsewhere in the Company for review and possible response. This centralized process will assist the Board in reviewing and responding to stockholder communications in an appropriate manner.
Compensation of Directors
Directors who are not actively employed as employees of the Company receive compensation for their service as directors. Directors who are actively employed as employees by the Company receive no additional compensation for their service as directors. Mr. Peng is currently the only employee director of the Company.
Cash Compensation
Our non-employee directors are paid in installments on a quarterly and pro-rated basis depending on such director’s service during the quarter. The following is a schedule of annual cash compensation for service on the Board:
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Director Position
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Annual Cash Retainer
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Chairpersons:
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Board
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$115,000
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Audit Committee
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$30,000
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Compensation Committee
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$20,000
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Nominating and Governance Committee
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$15,000
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Members:
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Board
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$72,500
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Audit Committee
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$12,500
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Compensation Committee
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$10,000
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Nominating and Governance Committee
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$7,500
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Lead Independent Director
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$10,000
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For fiscal 2020, we did not have a Lead Independent Director, because Dennis Segers, an independent director, served as Chairman of the Board.
Equity Compensation
Non-employee directors participate in an equity compensation program under our 2007 Equity Plan. Under this program, non-employee directors are eligible to receive automatic restricted stock unit awards (RSUs). The terms of those automatic RSU grants are as follows:
Annual Grant
Each non-employee director is eligible for an RSU award having a target value of $210,000 on the date of each annual stockholders’ meeting, provided the director continues in office following the meeting. The number of shares subject to such RSUs is based on the average of the closing prices on each of the trading days occurring during the three calendar months immediately prior to the month in which the grant occurs, rounded up to the next 100 shares. The annual RSU awards vest on the day immediately preceding the subsequent annual meeting, subject to the director’s continuous service on the Board through that date. On August 8, 2019, the date of the 2019 Annual Meeting of Stockholders, each non-employee director continuing in office after the meeting was automatically granted RSUs having a value of $210,000. On that date, the average of the closing prices during the three preceding calendar months was $112.92; accordingly, each non-employee director received a grant of 1,900 RSUs that will vest in full on August 4, 2020, the day immediately preceding the Annual Meeting.
17
Initial Grant
A non-employee director who is joining the Board between annual meetings of stockholders, and who has not previously served as an employee director, will receive a grant of RSUs on or about the tenth day of the month following the director’s initial appointment or election to the Board. The new director will receive RSUs having a value of $210,000 on the date of grant, prorated based on the number of days from the initial appointment or election until the anniversary of the most recently-held annual meeting. The RSUs vest in full on the day immediately preceding the subsequent annual meeting of stockholders.
Limit on Non-Employee Director Compensation
Our 2007 Equity Plan limits cash and equity compensation for each non-employee director to no more than $750,000 per fiscal year.
Stock Ownership Guidelines
Under our stock ownership guidelines, each non-employee director is required to own shares of Xilinx common stock having a value equal to at least $362,500, which is equal to five times his or her base annual cash retainer. Non-employee directors are required to retain half of the shares of common stock derived from awards of RSUs until their ownership requirements are met. Half of the RSUs that are vested but are not settled pursuant to a pre-arranged deferral program will count toward the ownership requirement. For more information about stock ownership guidelines for directors, please see “DIRECTORS AND CORPORATE GOVERNANCE—Corporate Governance Principles—Stock Ownership Requirements.”
Deferred Compensation
We also maintain a nonqualified deferred compensation plan which allows each director as well as eligible employees to voluntarily defer receipt of a portion or all of their cash compensation until the date or dates elected by the participant, thereby allowing the participating director or employee to defer taxation on such amounts. For a discussion of this plan, please see “EXECUTIVE COMPENSATION—Nonqualified Deferred Compensation Plan.” In addition, pursuant to the 2007 Equity Plan, non-employee directors may elect to defer the receipt of shares issuable pursuant to RSUs that are automatically granted to them each year.
Director Compensation for Fiscal 2020
The following table provides information on director compensation in fiscal 2020:
|
Name
|
|
Fees Earned
or Paid
in Cash
($)
|
|
Stock
Awards
($) (1)
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($) (2)
|
|
Total
($)
|
||||
|
Dennis Segers (Chairman)
|
|
187,500
|
|
|
205,933
|
|
|
|
—
|
|
—
|
|
393,433
|
|
|
Raman K. Chitkara
|
|
102,500
|
|
|
205,933
|
|
|
|
—
|
|
—
|
|
308,433
|
|
|
Saar Gillai
|
|
80,000
|
|
|
205,933
|
|
|
|
—
|
|
—
|
|
285,933
|
|
|
Ronald S. Jankov
|
|
82,500
|
|
|
205,933
|
|
|
|
—
|
|
—
|
|
288,433
|
|
|
Mary Louise Krakauer
|
|
82,500
|
|
|
205,933
|
|
|
|
—
|
|
—
|
|
288,433
|
|
|
Thomas H. Lee
|
|
80,000
|
|
|
205,933
|
|
|
|
—
|
|
—
|
|
285,933
|
|
|
J. Michael Patterson
|
|
105,000
|
|
|
205,933
|
|
|
|
—
|
|
1,000
|
|
311,933
|
|
|
Marshall C. Turner
|
|
85,000
|
|
|
205,933
|
|
|
|
(3)
|
|
—
|
|
290,933
|
|
|
Elizabeth W. Vanderslice
|
|
97,500
|
|
|
205,933
|
|
|
|
(3)
|
|
—
|
|
303,433
|
|
|
(1)
|
The amount represents the grant date fair value for stock awards granted in fiscal 2020 as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2020 filed with the SEC on May 8, 2020. On the date of the 2019 annual meeting of stockholders, each director was granted an RSU for 1,900 shares of our Common Stock. These RSUs will vest in full on August 4, 2020, the day immediately preceding the Annual Meeting. These RSUs represent the only outstanding stock awards held by each of our directors as of the end of fiscal 2020.
|
|
(2)
|
Represents charitable contributions made by the Company on the director’s behalf.
|
|
(3)
|
This director participated in the Company’s nonqualified deferred compensation plan in fiscal 2020. For more information about this plan see the section below entitled “EXECUTIVE COMPENSATION—Nonqualified Deferred Compensation Plan.”
|
18
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of our common stock beneficially owned as of May 22, 2020 by (i) each stockholder known to the Company to be a beneficial owner of more than 5% of our common stock, (ii) each of the Company’s directors and director nominees, (iii) each of the named executive officers identified in the section entitled “Executive Compensation” and (iv) all current directors and executive officers as a group, including shares that such beneficial owners have the right to acquire within 60 days after May 22, 2020. We believe that each of the beneficial owners of our common stock listed below, based on information furnished by such beneficial owners, has sole voting power and sole investment power with respect to such shares, except as otherwise set forth in the footnotes below and subject to applicable community property laws.
|
Beneficial Owners
|
|
Amount and Nature of
Beneficial Ownership
|
|
Percent of
Class (1)
|
||||
|
Greater-than-5% Stockholders
|
|
|
|
|
|
|
||
|
The Vanguard Group, Inc.
|
|
30,343,864
|
|
(2)
|
|
12.5
|
%
|
|
|
100 Vanguard Boulevard
Malvern, PA 19355
|
|
|
|
|
|
|
||
|
BlackRock, Inc.
|
|
24,336,561
|
|
(3)
|
|
10.0
|
%
|
|
|
55 East 52nd Street
New York, NY 10022
|
|
|
|
|
|
|
||
|
Non-Employee Directors
|
|
|
|
|
|
|
||
|
Dennis Segers
|
|
10,304
|
|
|
|
*
|
|
|
|
Raman K. Chitkara
|
|
3,400
|
|
|
|
*
|
|
|
|
Saar Gillai
|
|
7,712
|
|
|
|
*
|
|
|
|
Ronald S. Jankov
|
|
11,112
|
|
|
|
*
|
|
|
|
Mary Louise Krakauer
|
|
5,165
|
|
|
|
*
|
|
|
|
Thomas H. Lee
|
|
8,112
|
|
|
|
*
|
|
|
|
Jon A. Olson
|
|
4,467
|
|
(4)
|
|
*
|
|
|
|
J. Michael Patterson
|
|
28,470
|
|
(5)
|
|
*
|
|
|
|
Marshall C. Turner
|
|
45,440
|
|
(6)
|
|
*
|
|
|
|
Elizabeth W. Vanderslice
|
|
35,089
|
|
|
|
*
|
|
|
|
Named Executive Officers
|
|
|
|
|
|
|
||
|
Victor Peng
|
|
130,740
|
|
(7)
|
|
*
|
|
|
|
Lorenzo A. Flores
|
|
60,828
|
|
(8)
|
|
*
|
|
|
|
William Madden
|
|
30,106
|
|
(9)
|
|
*
|
|
|
|
Salil Raje
|
|
46,129
|
|
(10)
|
|
*
|
|
|
|
Vamsi Boppana
|
|
17,479
|
|
(11)
|
|
*
|
|
|
|
All current directors and executive officers as a group (19 persons)
|
|
474,927
|
|
(12)
|
|
*
|
|
|
* Less than 1%
|
(1)
|
The beneficial ownership percentage of each stockholder is calculated on the basis of 243,194,363 shares of common stock outstanding as of May 22, 2020. Any additional shares of common stock that a stockholder has the right to acquire within 60 days after May 22, 2020 that are not already outstanding at such time are deemed to be outstanding and beneficially owned for the purpose of calculating that stockholder’s percentage beneficial ownership. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Xilinx, Inc., 2100 Logic Drive, San Jose, California 95124.
|
|
(2)
|
Based on information contained in a Schedule 13G, reflecting stock ownership information as of December 31, 2019, which was filed by this stockholder on February 11, 2020, reporting beneficial ownership of 33,343,864 shares of common stock, consisting of 393,144 shares as to which it has sole voting power, 67,671 shares as to which it has shared voting power, 29,909,928 shares as to which it has sole dispositive power and 433,936 shares as to which it has shared dispositive power.
|
|
(3)
|
Based on information contained in a Schedule 13G, reflecting stock ownership information as of December 31, 2019, which was filed by this stockholder on February 10, 2020, reporting beneficial ownership of 24,336,561 shares of common stock,
|
19
consisting of shares as to which it has sole dispositive power, and including 21,520,115 shares as to which it has sole voting power and no shares as to which it has shared dispositive or voting power.
|
(4)
|
The shares are held in the Jon A. Olson and Annette L. Olson Revocable Trust dated 12/28/1994, of which Mr. Olson and his wife are co-trustees and as to which Mr. Olson exercises shared voting and investment power.
|
|
(5)
|
Consists of 26,470 shares held directly and 2,000 shares held by Mr. Patterson’s spouse.
|
|
(6)
|
Consists of 44,690 shares held directly and 750 shares held by Mr. Turner’s spouse.
|
|
(7)
|
Consists of 69,519 shares held directly and 61,221 shares issuable upon vesting of RSUs within 60 days after May 22, 2020.
|
|
(8)
|
Mr. Flores resigned as an executive officer effective October 25, 2019. The information in this table relating to Mr. Flores is based on beneficial ownership reports filed by Mr. Flores pursuant to Section 16 of the Exchange Act.
|
|
(9)
|
Consists of 8,690 shares held directly and 21,416 shares issuable upon vesting of RSUs within 60 days after May 22, 2020.
|
|
(10)
|
Consists of 24,713 shares held directly and 21,416 shares issuable upon vesting of RSUs within 60 days after May 22, 2020.
|
|
(11)
|
Consists of 5,378 shares held directly and 12,101 shares issuable upon vesting of RSUs within 60 days after May 22, 2020.
|
|
(12)
|
Includes an aggregate of 147,661 shares issuable upon exercise of options or vesting of RSUs within 60 days after May 22, 2020.
|
For certain information concerning our Executive Officers, see “Information about our Executive Officers” in Item 1 of Part I of our Form 10-K.
20
EQUITY COMPENSATION PLAN INFORMATION AT FISCAL YEAR-END 2020
The table below sets forth certain information, as of March 28, 2020, about our common stock that may be issued upon the exercise of options, RSUs, warrants and rights under all of our existing equity compensation plans including the Employee Stock Purchase Plan:
|
(Shares in thousands)
|
|
A
|
|
B
|
|
C
|
|||||||
|
Plan Category
|
|
Number of Securities
to be Issued upon
Exercise of
Outstanding Options,
Warrants and Rights
|
|
Weighted-average
Exercise Price of
Outstanding Options,
Warrants and Rights
|
|
Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation
Plans (excluding securities
reflected in Column A)
|
|||||||
|
Equity Compensation Plans Approved by Security Holders
|
|||||||||||||
|
2007 Equity Plan
|
|
6,668
|
|
(1)
|
|
$
|
—
|
|
(2)
|
|
15,049
|
|
(3)
|
|
Employee Stock Purchase Plan
|
|
N/A
|
|
|
|
N/A
|
|
|
|
12,644
|
|
|
|
|
Total - Approved Plans
|
|
6,668
|
|
|
|
$
|
—
|
|
|
|
27,693
|
|
|
|
Equity Compensation Plans Not Approved by Security Holders
|
|
—
|
|
|
|
$
|
—
|
|
|
|
—
|
|
|
|
Total - All Plans
|
|
6,668
|
|
|
|
$
|
—
|
|
|
|
27,693
|
|
|
|
(1)
|
Includes approximately 6.7 million shares issuable upon vesting of RSUs that were granted under the 2007 Equity Plan, and assumes 100% performance achievement for performance-based RSUs granted in fiscal 2020. In May 2020, the Compensation Committee determined the actual number of RSUs earned based on performance achievement for performance-based RSUs awarded in fiscal 2020. For more information on the number of RSUs at 100% performance achievement and the actual performance achievement for performance-based RSUs awarded in fiscal 2020, see the table under “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Compensation Elements—Long-Term Equity Incentive Compensation.”
|
|
(2)
|
No outstanding options, warrants and rights exist as of fiscal ended as of March 28, 2020.
|
|
(3)
|
On July 26, 2006, our stockholders approved the adoption of the 2007 Equity Plan and authorized 10.0 million shares to be reserved for issuance thereunder. The 2007 Equity Plan became effective on January 1, 2007. It replaced both the Company’s 1997 Stock Plan (which expired on May 8, 2007) and the Supplemental Stock Option Plan. On August 9, 2007, August 14, 2008, August 12, 2009, August 11, 2010, August 10, 2011, August 8, 2012, August 14, 2013, August 13, 2014, August 10, 2016, August 9, 2017, August 1, 2018 and August 8, 2019, our stockholders authorized the reserve of an additional 5.0 million shares, 4.0 million shares, 5.0 million shares, 4.5 million shares, 4.5 million shares, 3.5 million shares, 2.0 million shares, 3.0 million shares, 2.5 million shares, 1.9 million shares, 3.0 million shares and 6.0 million shares, respectively. All of the shares reserved for issuance under the 2007 Equity Plan may be granted as stock options, stock appreciation rights, restricted stock or RSUs.
|
21
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section of the proxy statement explains our executive compensation program in general and how it operates with respect to our executive officers and, in particular, our named executive officers. For fiscal 2020, our named executive officers consisted of our Chief Executive Officer, each individual who served as our Chief Financial Officer at any time during fiscal 2020 and our three other most highly-compensated executive officers serving at the end of fiscal 2020.
These named executive officers are as follows:
|
▪
|
Victor Peng, President and Chief Executive Officer;
|
|
▪
|
William Madden, Executive Vice President and General Manager, Wired and Wireless Group;
|
|
▪
|
Salil R. Raje, Executive Vice President and General Manager, Data Center Group;
|
|
▪
|
Vamsi Boppana, our Senior Vice President, Central Products Group; and
|
|
▪
|
Lorenzo Flores, our former Executive Vice President and Chief Financial Officer, who served in that role until October 25, 2019.
|
Management Transition
In September 2019, Mr. Flores resigned as our Executive Vice President and Chief Financial Officer in order to pursue another executive opportunity, effective immediately following the filing of our Quarterly Report on Form 10-Q on October 25, 2019. Following Mr. Flores’s departure, Mr. Peng, our President and Chief Executive Officer, assumed the responsibilities of principal financial officer while we conducted a search for a new chief financial officer.
On April 9, 2020, our Board of Directors appointed Brice Hill as our Executive Vice President and Chief Financial Officer. For more information about Mr. Hill, please see our Current Report on Form 8-K filed with the Securities and Exchange Commission on April 9, 2020.
Executive Summary
Fiscal 2020 Business Highlights
We achieved success on many fronts during fiscal 2020, including increased net revenues over the prior fiscal year. Our key financial and product highlights from fiscal 2020 were as follows:
|
•
|
Overall net revenues were $3.16 billion, up 3% from the prior fiscal year, despite material impacts from U.S. export restrictions affecting sales to a large customer early in our fiscal year, as well as the overall challenging global trade environment and general weakness in the semiconductor market in 2019.
|
|
•
|
Operating cash flow was $1.2 billion, due to both solid profitability and working capital management.
|
|
•
|
Driven by increased adoption with hyperscale customers, Data Center Group revenues increased 22% compared to the prior fiscal year. We continued to demonstrate strong design-win momentum across compute, networking and storage workloads, and the Xilinx software ecosystem continues to expand with over 10,000 developers trained, nearly 1,000 independent software vendor partners and over 130 applications published for Alveo.
|
|
•
|
Wired and Wireless Group revenue declined 1% compared to the prior fiscal year, despite trade restrictions and slower-than-expected 5G ramp. We continue to maintain strong engagements with global OEMs across a variety of deployments and applications across all major regions.
|
|
•
|
Core Markets grew 6%, with strength across all markets, reflecting the strength and stability of Xilinx’s broad and robust end markets. Aerospace & Defense, Industrial and Test & Measurement revenue grew 5% over the prior fiscal year, driven by solid A&D business, while Automotive, Broadcast and Consumer revenue grew 8% over the prior fiscal year, with growth in all markets.
|
|
•
|
We acquired Solarflare Communications, Inc., to enable new converged SmartNIC solutions, accelerating our “data center first” strategy and accelerate our transition to a platform company. Solarflare was a leading provider of high-performance, low latency networking solutions for customers spanning FinTech to cloud computing. We also completed an acquisition of NGCodec Inc., a provider of hardware-accelerated video encoding technology, to provide differentiated video solutions to cloud customers. In addition to our acquisitions, we continued to support our Alveo ecosystem through our corporate venture initiatives, significantly increasing our investments to more than 25 portfolio companies across a variety of key applications including data analytics, networking, machine learning and video streaming acceleration.
|
22
|
•
|
We released Vitis, a unified software platform that enables a broad new range of developers—including software engineers and AI scientists—to take advantage of the power of hardware adaptability. The Vitis platform tailors Xilinx hardware architecture to the software or algorithmic code without the need for hardware expertise, enabling developers to focus on their algorithms in familiar software environments.
|
|
•
|
We continued to expand our Alveo product offerings, including Alveo U25, the first SmartNIC platform delivering true convergence of network, storage and compute acceleration functions on a single device.
|
|
•
|
We paid our stockholders a record $371.8 million in dividends and repurchased 12.9 million shares of our stock.
|
Fiscal 2020 Compensation Highlights
Fiscal 2020 was a significant year for us with respect to compensation actions and decisions. The Compensation Committee took the following compensation actions with respect to our named executive officers:
|
•
|
Base salaries - Increased the annual base salaries of certain of our named executive officers (other than Mr. Peng, our CEO) in amounts ranging from 7.3% to 14.1% and increased the annual base salary of Mr. Peng to $950,000, an increase of approximately 35.7% from its fiscal 2019 level.
|
|
•
|
Target annual cash incentive opportunities - Maintained the target annual cash incentive compensation of our named executive officers at their fiscal 2019 levels.
|
|
•
|
Annual cash incentive payments - Based on the performance outcomes with respect to revenue growth, operating profit and individual performance during fiscal 2020, Mr. Peng earned an annual cash incentive payment in an amount equal to to 71% of his target amount, and our other named executive officers earned annual cash incentive payments in amounts ranging from 75% to 76% of their target amounts.
|
|
•
|
Long-term incentive compensation - Granted our named executive officers long-term incentive compensation in the form of performance-based and time-based restricted stock unit (RSU) awards effective in July 2019, which are settled for shares of our common stock as they vest. Mr. Peng received a performance-based RSU award and a time-based RSU award with an aggregate target value of $9,500,000, while our other named executive officers received performance-based and time-based RSU awards with aggregate target values ranging from $1,500,000 to $2,500,000.
|
The performance-based RSU awards granted to our named executive officers were to be earned based on the achievement of pre-established financial and operational performance goals at the end of a one-year performance period corresponding to our fiscal year, with any earned shares subject to vesting in three equal annual installments, beginning on the first anniversary of the date of grant.
In determining the incentive awards earned by our executive officers during fiscal 2020, the Compensation Committee made certain adjustments to our financial results to offset the effects of U.S. government actions that, in the Committee’s view, represented a change in the circumstances underlying the performance targets on which these awards were based. In 2018, escalating trade tensions between the U.S. and China led to some uncertainty regarding our ability to sell our products to key Chinese customers in the near future. Notwithstanding such developments, we did not adjust our performance targets to account for such potential trade risks for fear that, if those risks did not materialize, we would be locked into a compensation plan that could be viewed as over-rewarding the performance we achieved during the fiscal year. In May 2019, however, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce imposed export restrictions that severely restricted sales of our products to one of our largest customers in China, which had a significant adverse impact on our revenues during fiscal 2020. As a result, our financial performance applicable to our annual cash incentive compensation program and performance-based RSU awards fell below the thresholds applicable to some of the components that determine award eligibility. The Compensation Committee determined that to hold our executive officers to our original financial performance goals would unfairly penalize them for developments that were outside their control and, more importantly, would be inconsistent with our pay-for-performance philosophy. The Committee sought the advice of its compensation consultant as to what types of discretionary adjustments might be reasonable in light of the BIS action and its effects on our financial performance. Based on the foregoing factors and the advice of the compensation consultant, for the purpose of determining the amount of annual cash incentive compensation and performance-based RSUs earned by our executive officers during fiscal 2020, the Committee adjusted certain financial results to include the projected revenue that was lost as a result of the BIS action, as discussed in greater detail below.
Pay-for-Performance Analysis
Our executive compensation program is designed to motivate, engage and retain a talented leadership team and to appropriately reward them for their contributions to our business. Our performance measurement framework consists of a combination of financial, operational and strategic/individual performance measures that provide a balance between short-term results and drivers of long-term value.
23
We provide our executive officers with three primary elements of pay: base salary, annual cash incentive compensation and long-term incentive compensation in the form of equity awards. The variable compensation components, consisting of an annual cash incentive and annual equity awards, together constitute the largest portion of the target total direct compensation for our executive officers.
|
•
|
Base salary - Base salary accounts for approximately 8.0% of our Chief Executive Officer’s target total compensation and, on average, approximately 16.8% of our other named executive officers’ target total compensation.
|
|
•
|
Annual cash incentive compensation - Annual short-term cash incentive compensation accounts for approximately 12.0% of our Chief Executive Officer’s target total compensation and, on average, approximately 15.9% of our other named executive officers’ target total compensation. Annual cash incentive compensation awards are based on corporate performance relative to pre-established financial objectives selected by the Compensation Committee and an evaluation of each named executive officer’s individual performance.
|
|
•
|
Long-term incentive compensation - Long-term incentive compensation consists of performance-based RSU awards and time-based RSU awards, and accounts for approximately 80.0% of our Chief Executive Officer’s target total compensation and, on average, approximately 67.3% of our other named executive officers’ target total compensation.
|
The following charts show the fiscal 2020 pay mix for (i) Mr. Peng and (ii) our other named executive officers, in the aggregate:
The foregoing percentages were calculated using annual base salary, target annual cash incentive compensation, the grant date fair value of equity awards and all other compensation as reported for fiscal 2020 in the Summary Compensation Table below. As shown in the above charts, our named executive officers’ compensation is weighted heavily toward “at-risk” compensation, which consists of (1) performance-based cash and equity awards that align each named executive officer’s interests with those of the Company and our stockholders and (2) time-based equity awards whose value is tied to the creation of long-term stockholder value.
Governance Policies and Practices
We maintain several policies and practices to help ensure that our overall executive compensation program reflects sound governance standards and drives financial performance. We have also made the decision not to implement some practices that many companies have historically followed because we believe they would not serve the long-term interests of our stockholders.
24
|
What We Do
|
|
What We Don't Do
|
||
|
þ
|
Fully-Independent Compensation Committee. The Compensation Committee determines our compensation strategy for executive officers and consists solely of independent directors.
|
|
ý
|
Excise Tax Gross-Ups Related to a Change of Control. We do not provide excise tax gross-ups related to a change of control of the Company.
|
|
|
|
|
|
|
|
þ
|
Independent Compensation Advisor. The Compensation Committee engages an independent compensation consultant to provide independent analysis, advice and guidance on executive compensation.
|
|
ý
|
Hedging. We prohibit employees, including our executive officers, from engaging in transactions or arrangements that are intended to increase in value based on a decrease in value of Company securities.
|
|
|
|
|
|
|
|
þ
|
Annual Executive Compensation Review. The Compensation Committee performs an annual review of our executive compensation strategy, including a review of our compensation peer group and a review of our compensation-related risk profile.
|
|
ý
|
Perquisites. We do not generally provide perquisites to officers other than benefits with broad-based employee participation that are standard in the technology sector, except when specifically determined to be appropriate in light of the executive officer’s circumstances.
|
|
|
|
|
|
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þ
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Pay-for-Performance Philosophy. Our cash incentive compensation and long-term equity programs for executives are based on the Company’s and individual executive’s performance.
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ý
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Option Repricing. Our 2007 Equity Plan prohibits repricing of out-of-the-money options or stock appreciation rights to a lower exercise or strike price without approval of our stockholders.
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þ
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At-Risk Compensation. A significant portion of compensation for our executives is based on the performance of both the Company and the individual executive.
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ý
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Dividends or Dividend Equivalents Payable on Unvested Equity Awards. We do not pay dividends or dividend equivalents on unvested equity awards.
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þ
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Robust Stock Ownership Guidelines. We have executive stock ownership guidelines and holding requirements that cover our executive officers.
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ý
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Pledging. We prohibit our employees, including executive officers, from pledging Company stock or holding it in a margin account.
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þ
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Clawback Policy. We have a clawback, or recoupment, policy that covers all elements of our incentive compensation program.
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ý
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SERP or Defined Benefit Plans. We do not provide a Supplemental Executive Retirement Plan (SERP) or a defined benefit plan.
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þ
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Annual Stockholder Advisory Votes on Executive Compensation. We conduct an annual stockholder advisory vote on our executive compensation program.
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þ
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Double-Trigger Change-of-Control Benefits. Change-of control benefits require a change in control and termination of employment (double trigger) rather than benefits triggered solely on the change of control (single trigger).
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2019 Stockholder Advisory Vote on Named Executive Officer Compensation
At our 2019 Annual Meeting of Stockholders, the most recent non-binding stockholder vote on the compensation of our named executive officers (the Say-on-Pay vote), approximately 96% of the votes cast by our stockholders were voted in favor of the compensation of our named executive officers. The Compensation Committee was mindful of this strong stockholder support of our compensation philosophy and objectives when evaluating our executive compensation policies and practices throughout fiscal 2020. Accordingly, and as a result of the favorable Say-on-Pay vote, the Committee continued its general approach to executive compensation, emphasizing both annual and long-term performance-based compensation.
We value the opinions of our stockholders and will continue to consider the outcome of future Say-on-Pay votes, as well as feedback received throughout the year, when making compensation decisions for our executive officers.
25
Our Board of Directors has adopted a policy providing for an annual Say-on-Pay vote. This policy is consistent with our stockholders’ preference as expressed at our 2017 Annual Meeting of Stockholders in August 2017 on the frequency of future advisory votes on the compensation of our named executive officers. Following the Annual Meeting to which this proxy statement relates, our next Say-on-Pay vote will be held at our 2021 Annual Meeting of Stockholders.
Compensation Objectives and Decision-Making Process
Role of the Compensation Committee
The Compensation Committee is responsible for establishing our compensation and benefits philosophy and strategy, working in consultation with our Chief Executive Officer for our executive officers (other than himself). The Committee also oversees our general compensation policies and sets specific compensation levels for our Chief Executive Officer and other executive officers. In determining our compensation strategy, the Committee reviews competitive market data to ensure that we are able to attract, motivate, reward and retain talented executive officers and other employees. The Committee engages its own independent advisors to assist in carrying out its responsibilities, but is not permitted to delegate its authority to such advisors.
The primary objectives of the Compensation Committee with respect to determining executive compensation are to attract, motivate and retain talented employees and to align the interests of our executive officers with those of our stockholders, with the ultimate objective of enhancing stockholder value. It is the philosophy of the Committee that the best way to achieve this is to provide our executive officers with compensation that is based on their level of performance against specific goals, which are aligned with our overall strategy, thereby compensating executives on a “pay-for-performance” basis.
To achieve these objectives, the Compensation Committee has implemented compensation plans that tie a significant portion of our executive officers’ overall compensation to our financial and product-related performance, including revenue growth, operating profit, product revenue, product leadership and strategic objectives. Overall, the total compensation opportunity of our executive officers is intended to create an executive compensation program that is competitive with comparable companies.
Role of the Compensation Consultant
In fiscal 2020, the Compensation Committee retained Compensia, a national compensation consulting firm, to serve as its compensation consultant. Compensia reported directly to the Committee. Compensia provided the Committee with general advice on compensation matters, including reviewing the composition of the compensation peer group, providing compensation data related to executives at the selected companies in the peer group and providing advice on our executive officers’ compensation generally.
Compensia did not provide any additional services to us other than the services for which it was retained by the Committee, and the Committee is not aware of any conflict of interest that exists that would otherwise prevent Compensia from having been independent during fiscal 2020. We pay the costs for Compensia’s services. Based on the above and its review of the factors set forth under SEC rules and in the Nasdaq listing requirements, the Committee assessed the independence of Compensia and concluded that no conflict of interest exists that would prevent Compensia from independently advising the Committee during fiscal 2020.
In fiscal 2020, the Committee met regularly in executive session with Compensia without management present.
Use of Compensation Peer Group
Each year, the Compensation Committee directs its compensation consultant to develop a group of peer companies for purposes of evaluating, determining and setting compensation for our executive officers. The criteria for determining which companies to include in the peer group include some or all of the following criteria: (i) they operate in a similar industry to ours; (ii) they are of approximately similar size (as measured by revenues and aggregate market capitalization); (iii) they have profitability similar to ours; and (iv) they are companies with whom we compete for executive talent.
After receiving and discussing the compensation consultant’s report, the Committee approved the peer group companies for fiscal 2020 in the third quarter of fiscal 2019. For fiscal 2020, the Committee removed Brocade Communications and Microsemi Corporation from the peer group because they had been acquired. No additional companies were added at that time.
The compensation peer group for fiscal 2020 consisted of the following companies:
26
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• Advanced Micro Devices, Inc.
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• Cypress Semiconductor Corporation
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• Nvidia Corporation
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• Analog Devices, Inc.
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• Juniper Networks Inc.
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• ON Semiconductor Corporation
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• Arista Networks
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• Marvell Technology Group Ltd.
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• Palo Alto Networks Inc.
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• Autodesk, Inc.
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• Maxim Integrated Products Inc.
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• Qorvo, Inc.
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• Broadcom Limited
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• Microchip Technology Inc.
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• Skyworks Solutions, Inc.
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• Cadence Design Systems, Inc.
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• NetApp, Inc.
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• Synopsys, Inc.
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This compensation peer group was used by the Compensation Committee during fiscal 2020 as a reference for understanding the competitive market for executive positions in our industry sector.
A summary of the four-quarter trailing revenue by quartile and market capitalization of the peer companies at the time the Compensation Committee approved the compensation peer group for use in fiscal 2020 is as follows:
Based on the foregoing, our revenue was approximately in the 36th percentile of the peer group companies and our market capitalization was approximately in the 60th percentile of the peer group companies at the time the peer group was approved.
Data on the compensation practices of the peer group was generally gathered through searches of publicly available information, including publicly available databases. In preparing its report, the compensation consultant reviewed data from the Radford Global Technology Survey, including a custom analysis of the companies in the compensation peer group, as well as the proxy statements filed by each of the peer group companies. Peer group data was gathered with respect to base salary, bonus targets and equity awards. When the peer group data yielded insufficient data, the compensation consultant used a custom data analysis of the companies in the compensation peer group and/or a cross-section of broad technology companies with revenue between $1 billion and $6 billion and market capitalization of more than $6 billion.
In determining adjustments to executive compensation, the Compensation Committee not only considers the compensation advice and analysis provided by its compensation consultant and publicly available information of compensation offered by the applicable comparative market data, but also reviews the Radford survey data and takes into consideration other relevant factors as described in this Compensation Discussion and Analysis. While the Committee considers external market data (both the Radford survey data and peer company data), it does not target any specific pay percentile within those companies for purposes of setting cash and equity compensation levels. Rather, the Committee uses this information merely as a guide to determine whether we are generally competitive in the market.
Compensation Determination for Chief Executive Officer
Each year, the Compensation Committee reviews the performance of our Chief Executive Officer and approves his compensation in light of the goals and objectives of our executive compensation program. The review of the performance and compensation of our CEO and our other executive officers is conducted annually during the period that usually commences in mid-May, which we call our Focal Review Period. The Committee uses both objective data from peer group companies and subjective policies and practices, including an assessment of our CEO’s achievements and contribution, to determine his compensation. In determining the long-term equity incentive component of our CEO’s compensation, the Committee considers a number of factors, including our performance and relative stockholder return, the value of similar awards to CEOs at the companies in the compensation peer group, the equity awards granted to our CEO in prior years and feedback from the independent members of our Board of Directors.
To provide further assurance of independence, the Compensation Committee’s compensation consultant provides its own recommendation regarding CEO compensation. The compensation consultant prepares an analysis showing competitive CEO
27
compensation at the companies in the compensation peer group for the individual elements of compensation and total direct compensation. Next, the compensation consultant provides the Committee with a range of recommendations for any change in our CEO’s base salary, target annual cash incentive compensation and equity award value. These recommendations take into account the peer group competitive pay analysis, expected future pay trends and, importantly, the position of our CEO in relation to other senior executives and proposed pay actions for all our other key employees. The range allows the Committee to exercise its discretion based on our CEO’s individual performance and other factors.
Compensation Determination for Other Executive Officers
Our Chief Executive Officer works with the Compensation Committee in establishing the compensation and benefits philosophy and strategy for our other executive officers and makes specific recommendations to the Committee with respect to the individual compensation for each of such executive officers. Each year, the Committee reviews with our CEO each executive officer’s performance in light of our goals and objectives and approves their compensation. The Committee also considers other relevant factors in approving the level of such compensation, including the executive officer’s performance during the year, focusing on his or her accomplishments, areas of strength and areas of development, scope of responsibility and contributions, and experience and tenure in the position.
During the Focal Review Period, our CEO evaluates each executive officer’s performance during the year based on a review of his or her performance, an individual self-assessment and feedback provided by his or her peers, direct reports and other employees. Our CEO also reviews compensation data gathered from Radford and from other publicly-available information and identifies trends and competitive factors to consider in adjusting compensation levels of our executive officers. Our CEO then makes a recommendation to the Compensation Committee as to each element of each executive officer’s compensation.
28
Compensation Elements
Our executive compensation program consists of three principal elements: base salary, performance-based cash incentive compensation and long-term incentive compensation in the form of equity awards. The following table summarizes these elements of compensation:
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Objectives
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Key Features
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Base Salary
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Provides a fixed baseline level of compensation earned during the fiscal year.
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Fixed cash compensation is based on scope of responsibility, breadth of knowledge, experience and tenure in the position and individual performance.
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Performance-Based Incentive Cash Compensation
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Rewards achievement of corporate and individual performance objectives and serves to attract and retain highly-qualified executives.
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Calculated as a percentage of the executive officer’s annual base earnings. Payouts are based on achievement of pre-established corporate objectives and individual performance goals.
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Long-Term Equity Incentive Awards
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Establishes a corporate culture that supports strong long-term corporate performance and provides an important retention tool through vesting of equity awards over several years.
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Performance-based RSUs are granted in amounts that reflect company performance against pre-established goals, and vest over a three-year period. Time-based RSUs are granted in fixed amounts and vest over a four-year period.
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Base Salary
In May 2019, the Compensation Committee reviewed the base salaries of our executive officers, focusing on the competitiveness of their salaries. After comparing their current salaries to the base salary levels based on the data drawn from the companies in our compensation peer group and the applicable Radford survey data, as well as considering the roles and responsibilities and potential performance of our executive officers and the recommendations of our Chief Executive Officer (with respect to our executive officers other than himself), the Committee determined to increase the base salaries of our named executive officers.
In the case of our Chief Executive Officer, the Compensation Committee determined to increase his base salary to bring it into line with the competitive market as reflected by the base salaries of the chief executive officers at the companies in the compensation peer group, to address the shortfall in his base salary when he was promoted to the CEO position in 2018 and to acknowledge our outstanding performance in fiscal 2019 under his leadership, including our record revenue growth. As a result of the increase, our CEO’s base salary rose from the 15th percentile relative to our peer group to above the 60th percentile. With respect to our other named executive officers, the Committee determined to increase their base salaries in response to its review of competitive market data for individuals in comparable positions at other technology companies, including companies in our peer group, to recognize the increase in each individual’s scope of responsibilities and expected deliverables in the current year and to acknowledge their individual contributions to our outstanding performance in fiscal 2019.
The fiscal 2019 and 2020 base salaries of our named executive officers were as follows:
Named Executive Officer Fiscal 2019 and 2020 Base Salaries
These base salary adjustments were effective July 1, 2019.
29
Annual Cash Incentive Compensation
In May 2019, our Board of Directors approved the Xilinx, Inc. Executive Incentive Plan for fiscal 2020 (the 2020 Incentive Plan). The 2020 Incentive Plan was designed to link the annual cash incentives of our executive officers to the company-wide achievement of pre-established financial objectives involving annual revenue growth and operating profit and their achievement of individual performance goals. The way these components factor into the annual cash incentive compensation is illustrated in the following chart:
Target Annual Cash Incentives
In connection with the adoption of the 2020 Incentive Plan, the Compensation Committee reviewed the target annual cash incentives of our executive officers, focusing on the competitiveness of their target total cash compensation opportunities. After comparing their current target annual cash incentives to the target cash incentive levels at the companies in our compensation peer group and the Radford survey data, as well as considering the roles and responsibilities and potential performance of our executive officers and the recommendations of our CEO (with respect to our executive officers other than himself), the Committee determined to maintain the target annual cash incentives of our executive officers for fiscal 2020 at their fiscal 2019 levels.
The fiscal 2019 and 2020 target annual cash incentives of our named executive officer were as follows:
Performance Components
Under the 2020 Incentive Plan, annual cash incentive payments for our executive officers were determined using three components, each with a different weighting:
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•
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annual revenue growth (Growth Component), weighted at 40%;
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30
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•
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operating profit margin, determined in accordance with generally accepted accounting principles, excluding accrued compensation expense for estimated incentive compensation (Operating Profit Component), weighted at 35%; and
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•
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individual performance, based on the achievement of performance goals pertaining to each executive officer’s position and responsibilities (Individual Performance Component), weighted at 25%.
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These components and their respective weightings were the same as those used for fiscal 2019.
For each of our executive officers other than our Chief Executive Officer, the Operating Profit Component and the Individual Performance Component were to be paid on a semi-annual basis and the Growth Component was to be paid on an annual basis. For our CEO, the Operating Profit Component was to be paid on a semi-annual basis and the Growth Component and the Individual Performance Component were to be paid on an annual basis. The Compensation Committee generally has discretion to exclude extraordinary or one-time charges for purposes of calculating annual cash incentive payments under the 2020 Incentive Plan, but no such exclusions were made in fiscal 2020. However, as discussed above under “Executive Summary—Fiscal 2020 Compensation Highlights,” in considering our financial performance for purposes of determining the incentive awards earned in fiscal 2020, the Compensation Committee, with the advice of its compensation consultant, made certain adjustments to offset the effects of the export restrictions imposed by the BIS in May 2019.
For purposes of the 2020 Incentive Plan, the Growth Component, Operating Profit Component and Individual Performance Component were designed as follows:
Growth Component. The Growth Component was designed to reward our year-over-year revenue growth. In light of the continued importance of achieving our revenue goal for fiscal 2020, the weighting of the Growth Component was maintained at 40%. The Growth Component was subject to a threshold performance level for any payout and a multiplier that increased the target payout depending on our actual performance. For fiscal 2020, the threshold revenue growth was 5.0% and the target revenue growth was 14.0% to 15.0%. The Growth Component multiplier was 0.10 if the threshold revenue growth percentage was met and 1.00 if the target revenue growth percentage was met. If revenue growth exceeded the threshold, the multiplier generally increased in increments of 0.05 to 0.20 for every percentage point in increased revenue growth, up to 22.0%, at which point the multiplier reached the maximum of 2.00. The Growth Component was measured and paid on an annual basis.
The following table summarizes the general progression of the Growth Component multiplier for fiscal 2020:
31
In fiscal 2020, we did not achieve our threshold revenue growth of 5%, and thus the nominal multiplier for the Growth Component was 0.00. As adjusted to offset the effects of the export restrictions imposed by the BIS in May 2019, our adjusted revenue growth was determined to be 8%, resulting in a Growth Component multiplier of 0.40.
Operating Profit Component. The Operating Profit Component was determined by a formula that rewarded our achievement of targeted operating profit margins. For purposes of the 2020 Incentive Plan, the Operating Profit Component was calculated on a semi-annual basis using the financial results for each fiscal six-month period. The Operating Profit Component was designed to emphasize the importance of continually managing costs, increasing efficiencies and enhancing profitability. The Operating Profit Component was subject to a threshold performance level for any payout and a multiplier that increased the target payout depending on our actual performance. For the Operating Profit Component, achievement of the threshold performance level resulted in a multiplier of 0.10, and the multiplier increased to 1.00 when the target range of operating profit margins was met. Thereafter, the multiplier increased incrementally until it reached the maximum of 2.00 for each semi-annual measurement period.
The following table shows the progression of the Operating Profit Component multiplier for fiscal 2020:
In fiscal 2020, we achieved an operating profit margin of 31% in the first half of the year, resulting in an Operating Profit Component multiplier of 1.05, while in the second half of the year we achieved an operating profit percentage of 28%, resulting in an Operating Profit Component multiplier of 0.85.
Individual Performance Component. Under the Individual Performance Component, each of our executive officers is evaluated against up to ten individual performance goals, measured over the full annual performance period in the case of our Chief Executive Officer and over two semi-annual performance periods in the case of each other executive officer. Each goal was assigned a weighting depending on the value of the goal as recommended by each executive officer and approved by our CEO. For each executive officer, the threshold performance level to earn a payout of the Individual Performance Component was 50% for overall achievement, and the maximum payout was capped at 150%.
32
Each individual goal under the Individual Performance Component was directly related to our business objectives and corresponded to each executive officer’s position and responsibilities. The goals for our executive officers related to the broader corporate goals generally within the following categories:
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Operational excellence and quality of results. This category consisted of goals related to adherence to product development plans and schedules, product delivery timeliness, product sales and gross margin achievement and sales achievement by geographic region.
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•
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Strategic initiatives and performance. This category consisted of goals related to product and portfolio assessment, including customer and end market sub-segment identification.
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•
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Leadership effectiveness. This category consisted of goals related to strategic leadership, responding to changes in the market and economic environment, organizational effectiveness and managing our relationship with stockholders.
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For each executive officer, our Chief Executive Officer, in consultation with the individual, assigned a weight to each goal that reflected the importance of the business objective involved. These goals and assigned weightings were submitted to the Compensation Committee for its review at the beginning of each semi-annual period. At the end of each such period, each executive officer prepared a self-assessment of his or her level of achievement of each goal on a scale of 0% to 150%. Our CEO then reviewed with such executive officer his or her performance for the period and determined his or her level of achievement for each goal on the same scale. Based on our CEO’s determination of the level of achievement, he then recommended to the Committee an overall Individual Performance multiplier, on a scale of 0.00 to 1.50 (subject to a threshold of 0.50). After reviewing our CEO’s semi-annual assessment and recommendation, the Committee determined and approved the multiplier and semi-annual payout for each executive officer.
For our Chief Executive Officer, the Compensation Committee, in consultation with him, determined each of his goals, which were measured in proportion to the importance of that goal to our business. After the end of the fiscal year, our CEO prepared a self-assessment of his level of achievement of each goal on the same 0.00 to 1.50 scale and submitted this self-assessment to the Committee. After reviewing the self-assessment and making its own evaluation of our CEO’s performance, the Committee determined the final multiplier. In assessing our CEO’s achievements and determining and approving his compensation, the Committee, in consultation with independent members of our Board of Directors, considered his achievements within a broader set of expectations including strategic leadership, organizational quality and effectiveness, management abilities and responsiveness to economic conditions.
The payout relating to the Individual Performance Component was paid annually for our Chief Executive Officer and semi-annually for each of our other executive officers in fiscal 2020. A summary of each named executive officer’s individual performance goals is set forth in the footnotes to the table below titled “Named Executive Officer Incentive Cash Awards for Fiscal 2020.”
Payment Calculations for Executive Officers
Under the 2020 Incentive Plan, annual cash incentive payments were calculated slightly differently for our Chief Executive Officer compared to our other executive officers, given that the Individual Performance Component was determined on an annual basis for our CEO and on a semi-annual basis for all other executive officers.
Annual Cash Incentive Payment for Chief Executive Officer. The calculation to determine the annual cash incentive payment for our Chief Executive Officer was as follows:
33
Annual Cash Incentive Payments for Other Named Executive Officers. The calculation to determine the annual cash incentive payments for our named executive officers, other than our Chief Executive Officer, was as follows:
Annual Cash Incentive Payments for Fiscal 2020
We did not achieve our threshold revenue growth objective for fiscal 2020, and thus, the nominal multiplier for the fiscal year under the Growth Component was 0.00. As adjusted to offset the effects of the export restrictions adopted in May 2019, however, our revenue growth resulted in a multiplier of 0.40.
We achieved the operating profit margin objective in both the first half and the second half of fiscal 2020, resulting in multipliers of 1.05 and 0.85, respectively, for these two periods under the Operating Profit Component.
The performance of our named executive officers (other than our Chief Executive Officer) with respect to the Individual Performance Component for the first half of the fiscal year resulted in multipliers ranging from 0.94 to 1.05. In the second half of the fiscal year, the performance of our incumbent named executive officers resulted in multipliers ranging from 1.05 to 1.10. The performance of our CEO with respect to the Individual Performance Component for the full fiscal year resulted in a multiplier of 1.06.
The target and actual annual cash incentive payments for fiscal 2020 for our named executive officers, based on their achievement against our financial goals and their individual performance goals, were as follows:
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Named Executive Officer Incentive Cash Awards for Fiscal 2020
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Named
Executive
Officer
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Annual Base
Salary (1)
($)
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Target Annual Cash Incentive (as a percentage of base salary)
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Target Annual Cash Incentive Payment (1)
($)
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Cash Incentive Actually Paid (1) ($)
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|||||||||||||||||
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First-Half
Financial Metrics (2)
($)
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First-Half
Individual
Performance
($)
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Second-Half
Financial Metrics (3)
($)
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Second-Half Individual Performance
($)
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Actual Annual Cash Incentive Payment
($)
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Victor Peng
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887,500
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150
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1,331,250
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227,391
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N/A
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424,969
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352,781
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(4)
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1,005,141
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Lorenzo A. Flores
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477,500
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100
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477,500
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85,444
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54,638
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(5)
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N/A
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N/A
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(6)
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140,082
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William Madden
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508,750
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100
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508,750
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90,497
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64,641
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(7)
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159,494
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68,906
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(8)
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383,538
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Salil Raje
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508,750
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100
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508,750
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90,497
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64,641
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(9)
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159,494
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68,906
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(10)
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383,538
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Vamsi Boppana
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432,500
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80
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346,000
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62,475
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44,625
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(11)
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107,720
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48,400
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(12)
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263,220
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(1)
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Target payments and amounts paid are based on percentages of actual base salaries earned during fiscal 2020, except in the case of Mr. Flores, whose base salary and target cash incentive payments, as shown in this table, represent annualized amounts based on his remaining employed through the end of the fiscal year. For purposes of determining cash incentive payouts, salaries are split between the first half and the second half of fiscal 2020 as follows: Mr. Peng - 1H: $412,500, 2H: $475,000; Mr. Flores - 1H: $232,500, 2H: N/A; Mr. Madden - 1H: $246,250, 2H: $262,500; Mr. Raje - 1H: $246,250, 2H: $262,500; and Mr. Boppana - 1H: $212,500, 2H: $220,000.
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(2)
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The first-half financial metric included only the Operating Profit Component, which was scored at 31% and resulted in a multiplier of 1.05. For more information on the Operating Profit Component, see the section above titled “Performance Components—Operating Profit Component,” and for more information on the calculation of the annual cash incentive payments for the first half of fiscal 2020, see the section above titled “Payment Calculations for Executive Officers.”
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(3)
|
The second-half financial metrics included both the Growth Component and the Operating Profit Component. We did not achieve our revenue growth objective for fiscal 2020 and, thus, the nominal multiplier for the fiscal year under the Growth Component was 0.00. As adjusted to offset the effects of the export restrictions adopted in May 2019, however, our revenue growth resulted in a multiplier of 0.40. The Operating Profit Component for the second half was scored at 28% and resulted in a multiplier of 0.85. For more information on the Growth Component and the Operating Profit Component, see the sections above titled “Performance Components—Growth Component” and “Performance Components—Operating Profit Component.” For more information on the calculation of the annual cash incentive payments for the second half of fiscal 2020, see the section above titled “Payment Calculations for Executive Officers.”
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(4)
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Represents the actual cash incentive paid to Mr. Peng for fiscal 2020 based on achievement against his specific individual performance goals. For fiscal 2020, Mr. Peng earned 106% of his target bonus attributable to the Individual Performance Component based on: (1) refinement of growth plans with an operating margin and defining a new long-term financial model; (2) achievement of the fiscal 2020 operating plan and completion of the transition to a new organizational structure; (3) execution on corporate development, investor relations and integration goals; and (4) leadership with respect to building, developing and retaining talent and increased focus on company culture, including diversity and workforce productivity.
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(5)
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Represents the actual cash incentive paid to Mr. Flores for the first half of fiscal 2020 based on achievement against his specific individual performance goals. For the first half of fiscal 2020, Mr. Flores earned 94% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) ensuring readiness to achieve financial growth goals; (2) effectively integrating inorganic activities, including systems, financial reporting and relevant operations (e.g. purchasing) as measured by execution to integration plans including IP/Legal entity structure; (3) developing capital strategy for fiscal 2020 and beyond, including debt, capital allocation and share repurchase method; (4) re-architecting ongoing information support infrastructure for maximum speed, efficiency and value; and (5) achieving goals related to organizational alignment and development.
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(6)
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Mr. Flores resigned as our Executive Vice President and Chief Financial Officer effective October 25, 2019 and did not participate in the 2020 Incentive Plan for the second half of fiscal 2020.
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(7)
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Represents the actual cash incentive paid to Mr. Madden for the first half of fiscal 2020 based on achievement against his specific individual performance goals. For the first half of fiscal 2020, Mr. Madden earned 105% of his target annual cash incentive attributable to the Individual Performance Component based on: (1) drafting and execution of a comprehensive growth plan for all end markets, sales and marketing strategies and operating plans, including gross margin improvement; (2) drafting and execution on the revenue road map, including account, margin and key customer strategy; (3) delivery of products and intellectual property specific to the Wired and Wireless Group; (4) engagement with customers and product planning for ACAP; and (5) team alignment and development activities, including enhanced communication, surveys and training.
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(8)
|
Represents the actual cash incentive paid to Mr. Madden for the second half of fiscal 2020 based on achievement against his specific individual performance goals. For the second half of fiscal 2020, Mr. Madden earned 105% of his target annual cash incentive attributable to the Individual Performance Component based on: (1) drafting and execution on a comprehensive growth plan for all end markets, sales and marketing strategies and operating plans, including gross margin improvement; (2) drafting and execution on the revenue road map, including account, margin and key customer strategy; (3) delivery of products and intellectual property specific to the Wired and Wireless Group; (4) engagement with customers and product planning for ACAP; and (5) team alignment and development activities, including enhanced communication, surveys and training.
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(9)
|
Represents the actual cash incentive paid to Mr. Raje for the first half of fiscal 2020 based on achievement against his specific individual performance goals. For the first half of fiscal 2020, Mr. Raje earned 105% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) drafting and execution on a comprehensive growth plan for all end markets, sales and marketing strategies and operating plans, including gross margin improvement; (2) delivery of key sales initiatives across hyperscalers and proliferation of Alveo board; (3) delivering new product beta in first quarter and production launch in second quarter of fiscal 2020 per release criteria including specific support capabilities; (4) completing planning reviews for various new products and preparing marketing deliverables; and (5) strengthening his organizational capabilities and enhancing workforce strategy.
|
35
|
(10)
|
Represents the actual cash incentive paid to Mr. Raje for the second half of fiscal 2020 based on achievement against his specific individual performance goals. For the second half of fiscal 2020, Mr. Raje earned 105% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) drafting and execution on a comprehensive growth plan for all end markets, sales and marketing strategies and operating plans, including gross margin improvement; (2) delivery of key sales initiatives across hyperscalers, and driving revenue target and proliferation of Alveo boards; (3) execution on engineering deliverables for key data center group projects; (4) completion of product planning reviews and execution for key data center group projects; and (5) driving organizational excellence and workforce strategy, including greater management ownership, alignment, efficiencies and collaboration.
|
|
(11)
|
Represents the actual cash incentive paid to Mr. Boppana for the first half of fiscal 2020 based on achievement against his specific individual performance goals. For the first half of fiscal 2020, Mr. Boppana earned 105% of his target annual cash incentive attributable to the Individual Performance Component based on: (1) drafting and execution on a comprehensive growth plan for all end markets, sales and marketing strategies and operating plans, including gross margin improvement; (2) driving innovation, ease-of-use, expansion of user-base, agility and productivity; (3) extending product leadership with 16nm, software and AI program execution; (4) driving the Versal program to production and support for customer engagements for competitive positioning and future product planning; and (5) increasing employee productivity and driving diversity, hiring and cross-functional initiatives, including employee development and learning.
|
|
(12)
|
Represents the actual cash incentive paid to Mr. Boppana for the second half of fiscal 2020 based on achievement against his specific individual performance goals. For the second half of fiscal 2020, Mr. Boppana earned 110% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) drafting and execution on a comprehensive growth plan for all end markets, sales and marketing strategies and operating plans, including gross margin improvement; (2) driving innovation, ease-of-use, expansion of user-base, agility and productivity; (3) extending product leadership with 16nm, software and AI program execution; (4) driving the Versal program to production and support for customer engagements for competitive positioning and future product planning; and (5) increasing employee productivity and driving diversity, hiring and cross-functional initiatives, including employee development and learning.
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Long-Term Equity Incentive Compensation
The Compensation Committee regularly monitors the environment in which we operate and reviews and makes changes to our long-term equity incentive compensation program as necessary to help us meet our goals, including generating long-term stockholder value and attracting, motivating and retaining talent. For fiscal 2020, the Committee granted a mix of performance-based and time-based RSUs to our executive officers, with performance-based RSUs making up the bulk of the equity awards granted to our named executive officers; for fiscal 2020, the mix consisted of 70% performance-based RSUs and 30% time-based RSUs for our Chief Executive Officer and 60% performance-based RSUs and 40% time-based RSUs for our other executive officers. The Committee believes that performance-based RSUs are an important means of aligning pay with performance, but also believes that time-based RSUs serve as a retention tool while still aligning the interests of our executive officers with the interests of our stockholders. For this reason, in fiscal 2020 we began granting time-based RSUs to our CEO, as we did the previous year with respect to our other named executive officers. In general, we prefer to grant our executive officers RSUs rather than stock options, as the higher value of RSU awards allows us to issue fewer shares of our common stock, thereby reducing dilution to our stockholders.
The total value of each RSU award granted to our executive officers during the Focal Review Period (including the value of performance-based RSUs at target) was determined by the Compensation Committee based on an evaluation of corporate and individual performance, internal parity for executive officers at certain levels, a review of compensation peer group data, the pay mix between cash and equity compensation, the Committee’s assessment of the retention value of existing and new equity awards and the recommendations of our Chief Executive Officer (except with respect to his own equity award). The awards granted to our named executive officers during fiscal 2019 had fallen significantly below the 50th percentile relative to awards granted by our peer group companies to officers in comparable positions. The awards granted for fiscal 2020 were above the 60th percentile. Our CEO received the largest target RSU award based on his overall responsibility for our performance and success. His award was in the 75th percentile compared to similar awards granted to other CEOs in our peer group. The size of this award reflected our financial performance in fiscal 2019 compared to other companies in our peer group and the fact that Mr. Peng’s award for the previous year was only in the 15th percentile. For fiscal 2019, our financial performance was near or above the 75th percentile of our peer group on several key metrics, including operating margin, growth in operating income, and total shareholder return, and close to the 70th percentile with respect to revenue growth. Further differentiation was made among our executive officers based on the Committee’s review of the competitive market data for the compensation peer group for their respective positions and its assessment of each individual’s potential future contributions to the Company.
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Focal Review Equity Awards
In May 2019, the Compensation Committee established the total award value of the RSU awards granted to each our executive officers for fiscal 2020, with the value of performance-based RSUs reflecting performance at target. The number of units subject to each award, including performance-based RSUs reflecting target performance, was to be determined based on the total award value divided by the average closing price of our common stock as reported on the Nasdaq Stock Market during the three-month period starting on April 1, 2019 and ending on June 30, 2019, rounded up to the nearest 500 shares. For fiscal 2020, the tentative total award value of the performance-based RSU awards at target and time-based RSU awards granted effective July 10, 2019 for each of our named executive officers was as follows:
Fiscal 2020 Time-Based RSU Awards
In May 2019, the Compensation Committee approved the grant of time-based RSU awards to our executive officers, effective July 10, 2019. The following table sets forth the number of units that may be settled for shares of our common stock awarded to each of our named executive officers in fiscal 2020 with respect to their time-based RSU awards based on the above criteria:
Named Executive Officer Fiscal 2020 Time-Based RSU Awards
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Named Executive Officer
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|
Shares Subject to Time-Based RSU Award (1)
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|
Victor Peng
|
|
24,450
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|
|
|
|
Lorenzo A. Flores (2)
|
|
5,200
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|
|
|
|
William Madden
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|
8,600
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|
|
|
|
Salil Raje
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|
8,600
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|
|
|
|
Vamsi Boppana
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|
5,200
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|
|
|
|
|
|
||||
|
(1)
|
Represents 30% of the tentative total share amount shown for Mr. Peng and 40% of the tentative total share amount shown for each of the other named executive officers in the table above titled “Named Executive Officer Fiscal 2020 Tentative Total RSU Share Amounts.”
|
||||
|
(2)
|
Mr. Flores’s employment terminated on October 31, 2019, at which time he forfeited the RSU awards granted to him effective July 10, 2019.
|
||||
These RSU awards vest in four equal annual installments, the first of which occurs on the first anniversary of the effective date of the grant, subject to the officer’s continuous service over the vesting period. Upon vesting, they are settled for shares of our
37
common stock. Our executive officers are required to retain 45% of the shares of our common stock issued in settlement of these RSU awards until their respective stock ownership requirements are satisfied.
Fiscal 2020 Performance-Based RSU Awards
In May 2019, the Compensation Committee also approved grants of performance-based RSU awards to our executive officers, effective July 10, 2019. The units subject to the performance-based RSU awards were to be earned based on our achievement of pre-established financial and operational goals over a one-year performance period corresponding with our 2020 fiscal year. The number of earned units could increase with over-achievement of the applicable performance goals, to an aggregate maximum of 187.5% of the target number of units subject to the awards, or could decrease for under-achievement of the performance goals, with the possibility of no units being earned. Once the number of earned units is determined, they vest in three equal annual installments, the first of which occurs on the first anniversary of the effective date of the grant, subject to the officer’s continuous service over the vesting period. Upon vesting, they are settled for shares of our common stock.
The four performance components applicable to the fiscal 2020 performance-based RSU awards were:
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•
|
Overall revenue, weighted at 25% (the Overall Revenue Component);
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|
•
|
New product revenue, weighted at 25% (the New Product Revenue Component);
|
|
•
|
EBITDA growth, weighted at 25% (the EBITDA Growth Component); and
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|
•
|
Strategic Market and Product Execution, weighted at 25% (the Strategic Market and Product Execution Component).
|
As discussed above under “Executive Summary—Fiscal 2020 Compensation Highlights,” in considering our financial performance for purposes of determining the incentive awards earned in fiscal 2020, the Compensation Committee, with the advice of its compensation consultant, made certain adjustments to offset the effects of the export restrictions imposed by the BIS in May 2019. For purposes of determining the amounts of performance-based RSU awards earned during fiscal 2020, these adjustments affected the Overall Revenue Component, the New Product Revenue Component and the EBITDA Growth Component.
The four performance components operated as follows:
Overall Revenue Component. The Overall Revenue Component was designed to measure and reward achievement of certain levels of our total overall revenue from all sources. The Overall Revenue Component was selected as a metric because of its importance to achieving our overall financial results and driving stockholder value.
The Overall Revenue Component was subject to a revenue threshold requirement and a multiplier that increased to a maximum of 2.00 depending on the revenue attainment for our overall total revenue for fiscal 2020. For fiscal 2020, the Overall Revenue Component threshold was $3.185 billion, at which point the payout multiplier was 0.10, with any revenue level below this threshold resulting in a payout multiplier of 0.00. At the target total revenue level of $3.5 billion or above, but less than $3.555 billion, the Overall Revenue Component payout multiplier was 1.00. Then, at total revenue of $3.735 billion or above, the Overall Revenue Component multiplier was 2.00. In fiscal 2020, we did not achieve our threshold of $3.185 billion in total revenue, and thus the nominal multiplier for the Overall Revenue Component was 0.00. As adjusted to offset the effects of the export restrictions described above, our total revenue was determined to be $3.305 billion, resulting in an Overall Revenue Component multiplier of 0.50.
New Product Revenue Component. The New Product Revenue Component was designed to measure and reward achievement of certain levels from new products as identified by management and approved by the Compensation Committee, including Ultrascale, Ultrascale+, XBB and Versal. The New Product Revenue Component was selected as a metric because of the importance of these products to our overall technology and product strategy.
The New Product Revenue Component was subject to a revenue threshold requirement and a multiplier that increased to a maximum of 2.00 depending on the revenue attainment for our identified new products for fiscal 2020. For fiscal 2020, the New Product Revenue Component threshold was $1.535 billion, at which point the payout multiplier was 0.10, with any product revenue level below this threshold resulting in a payout multiplier of 0.00. At the target product revenue level of $1.7 billion, the New Product Revenue Component payout multiplier was 1.00. Then, at product revenue of $1.895 billion or above, the New Product Revenue Component multiplier was 2.00. In fiscal 2020, we did not achieve our threshold of $1.535 million in product revenue for the New Product Revenue Component, and thus the nominal multiplier for the New Product Revenue Component was 0.00. As adjusted to offset the effects of the export restrictions described above, our new product revenue was determined to be $1.55 billion, resulting in a New Product Revenue Component multiplier of 0.20.
EBITDA Growth Component. The EBITDA Growth Component was designed to measure and reward improvement in the growth of the Company’s earnings before interest, taxes, depreciation and amortization. The EBITDA Growth Component was selected as a metric because it was considered an efficient way to measure the Company’s operating performance.
The EBITDA Growth Component was subject to a threshold requirement and a multiplier that increased to a maximum of 2.00 depending on our EBITDA growth for 2020. For fiscal 2020, the EBITDA Growth Component threshold was 0.25%, at which
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point the payout multiplier was 0.10, with any EBITDA growth level below this threshold resulting in a payout multiplier of 0.00. At the target EBITDA growth level of 7.50%, the EBITDA Growth Component payout multiplier was 1.00. Then, at EBITDA growth of 15.00% or above, the EBITDA Growth Component multiplier was 2.00. In fiscal 2020, we did not achieve our threshold EBITDA growth, and thus the nominal multiplier for the EBITDA Growth Component was 0.00. As adjusted to offset the effects of the export restrictions described above, our EBITDA growth was determined to be 3.25%, resulting in an EBITDA Growth Component multiplier of 0.50.
Strategic Market and Product Execution Component. The Strategic Market and Product Execution Component was designed to measure and reward significant achievements in four distinct categories: product leadership, core vertical markets, data center group and wired and wireless group. These categories were equally weighted. For the product leadership category, this involved enhancing our software leadership as measured by various third party scorecards, increasing our efficiency in executing on various timelines against product schedules and growing adoption of our Versal platform based on designated metrics. For the core vertical markets category, this involved achieving strategic design wins in several designated categories, executing on test, measurement and emulation goals for a key partner and growing adoption for our Versal platform based on designated metrics. For the data center group category, this involved recording strategic wins in three designated market areas, successfully executing on various software and hardware milestones against schedule and successfully completing a variety of marketing deliverables. For the wired and wireless group category, this involved achieving one targeted and several additional strategic design wins, successfully executing on various software and hardware milestones against schedule and furthering the adoption of a new technology by launching production on various new components.
At the end of the fiscal year, we evaluated the Company’s performance in each category according to a scale that reflected the targeted outcome and the range of outcomes we considered achievable and assigned a numeric score based on this evaluation. The Strategic Market and Product Execution Component was subject to a threshold score requirement and a multiplier that increased to a maximum of 1.50 depending on the level of achievement of the desired outcomes for fiscal 2020. For fiscal 2020, the Strategic Market and Product Execution Component threshold score was 40 points, at which point the payout multiplier was 0.50, with any score below this threshold resulting in a payout multiplier of 0.00. At the target score of 80 points, the Strategic Market and Product Execution Component payout multiplier was 1.00. Then, at any score above 112 points, the Strategic Market and Product Execution Component multiplier was 1.50. For fiscal 2020, we achieved a score of 64 for the Strategic Market and Product Execution Component, and thus the multiplier for this component was 0.80.
The long-term incentive compensation framework as described above is illustrated in the following chart:
The following table sets forth the long-term incentive compensation performance goals, their percentage weightings and achievements, and the total multiplier for fiscal 2020, based on the nominal performance levels achieved during the fiscal year and the performance levels as adjusted to offset the effects of the export restrictions that took effect in May 2019:
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|
Long-Term Equity Incentive Performance Goals for Fiscal 2020
|
|||||||||||
|
|
|
|
|
Nominal
|
|
Adjusted
|
|||||
|
Metric
|
|
Weight
|
|
Achievement
|
|
Multiplier
|
|
Achievement
|
|
Multiplier
|
|
|
Overall Revenue
|
|
25%
|
|
0.00
|
|
0.00
|
|
0.50
|
|
0.125
|
|
|
New Product Revenue
|
|
25%
|
|
0.00
|
|
0.00
|
|
0.20
|
|
0.05
|
|
|
EBITDA Growth
|
|
25%
|
|
0.00
|
|
0.00
|
|
0.50
|
|
0.125
|
|
|
Strategic Market and Product Execution
|
|
25%
|
|
0.80
|
|
0.20
|
|
0.80
|
|
0.20
|
|
|
Total
|
|
|
|
|
|
0.20
|
|
|
|
0.50
|
|
The following table sets forth the target and actual number of shares of our common stock awarded to each of our named executive officers in fiscal 2020 with respect to their performance-based RSU awards, based on the considerations described above:
These RSU awards vest in three equal annual installments for periods ending on the first three anniversaries of July 10, 2019, subject to the officer’s continuous service over the vesting period. Our executive officers are required to retain 45% of the shares of our common stock issued in settlement of these RSU awards until their respective stock ownership requirements are satisfied.
Generally Available Benefit Plans
We maintain generally available benefit programs in which our executive officers may participate. Under our employee stock purchase plan, employees are able to purchase shares of our common stock at a discounted price. We also maintain a tax-qualified 401(k) plan for employees in the U.S., which provides for broad-based employee participation. Under the 401(k) plan, we match up to 50% of an employee’s first 8% of compensation that the employee contributes to his or her 401(k) account, up to a maximum per calendar year of $4,500 per employee. We also provide a “true-up” for participants who did not receive their maximum matching contribution during a 401(k) plan year as a result of meeting their contribution limits early in the year. We make matching contributions to help attract and retain employees, and to provide an additional incentive for our employees to save for their retirement in a tax-favored manner. We do not maintain any guaranteed pension plan or other defined benefit plan.
We also offer a number of other benefits to our executive officers pursuant to benefits programs that provide for broad-based employee participation, which includes medical, dental and vision insurance, disability insurance, various other insurance
40
programs, health and dependent care flexible spending accounts, educational assistance, employee assistance and certain other benefits. The terms of these benefits are essentially the same for all eligible employees.
Deferred Compensation Plan
We maintain an unfunded, nonqualified deferred compensation plan which allows eligible participants, including our executive officers and members of the Board, to voluntarily defer receipt of a portion or all of their base salary, annual cash incentive payment or director fees, as the case may be, until the date or dates elected by the participants, thereby allowing the participating employees and directors to defer taxation on such amounts. For more information about this plan, see the section below entitled “Nonqualified Deferred Compensation Plan.” We do not maintain a supplemental executive retirement plan (SERP) or similar defined benefit deferred compensation plan for any of our employees.
Perquisites and Other Personal Benefits
We generally do not provide perquisites or other personal benefits to our executive officers except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective and for recruitment and retention purposes.
Consistent with our compensation philosophy, we intend to continue to maintain market-competitive benefits for all employees, including our executive officers, provided that the Compensation Committee may revise, amend or augment an executive officer’s perquisites or other personal benefits if it deems it advisable in order to remain competitive with comparable companies or retain an individual whose services are critical to us. We believe the benefits we offer are currently at competitive levels with comparable companies.
Employment and Change of Control Severance Arrangements
We have entered into an employment agreement with Mr. Peng, our CEO. This agreement governs the terms of his compensation and, in addition, provides for certain payments and benefits in the event of certain qualifying terminations of employment, including a termination of employment in connection with a change in control of the Company. The terms of Mr. Peng’s employment agreement are discussed in greater detail below in the section entitled “Potential Payments upon Termination or Change in Control.”
In filling each of our executive positions, we have recognized the need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, in formulating these compensation packages, we have been sensitive to the need to integrate new executive officers into the executive compensation structure that we have developed, balancing both competitive and internal equity considerations. Each of these arrangements provides for “at will” employment.
We have approved post-employment compensation arrangements for each of our executive officers in the event of a change of control. We believe that having in place reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly-qualified executive officers. These arrangements are designed to provide reasonable compensation to executive officers whose employment terminates under certain circumstances following a change of control.
Under our post-employment compensation arrangements with our CEO and our other executive officers, payments and benefits in the event of a change in control of the Company are payable only if there is a subsequent qualifying loss of employment by a named executive officer (commonly referred to as a “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.
We believe that these arrangements are designed to offer compensation packages that are competitive and to align the interests of our executive officers and our stockholders when considering our long-term future. The primary purpose of these arrangements is to keep our most senior executive officers focused on pursuing all corporate transaction activity that is in the best interests of our stockholders regardless of whether those transactions may result in their own job loss. Reasonable post-acquisition payments and benefits should serve the interests of both the executive officer and our stockholders.
Historically, we have avoided the use of excise tax payments (or “gross-ups”) relating to a change in control of the Company and have no such obligations in place with respect to any of our named executive officers. Consistent with our historical practice, we intend to continue to refrain from providing excise tax payments relating to a change in control of the Company.
For detailed descriptions of the post-employment compensation arrangements we maintained with our named executive officers for fiscal 2020, as well as an estimate of the potential payments and benefits payable under these arrangements, see the section below entitled “Potential Payments upon Termination or Change in Control.”
41
Equity Award Grant Guidelines
We have adopted written procedures for the grant of equity awards. With respect to grants to executive officers and other employees, the Compensation Committee reserves the authority to make grants at such time and with such terms as it deems appropriate in its discretion, subject to the terms of our 2007 Equity Plan. The 2007 Equity Plan requires that all awards be subject to either time-based vesting (with no portion of the award vesting earlier than one year after the date of grant) or performance-based vesting. Generally, grants of equity awards are made to our executive officers based on and in connection with the annual review during the Focal Review Period.
The Compensation Committee determines individual grants to each executive officer based on a variety of factors that it determines to be relevant and appropriate at the time of grant. These factors typically have included the executive officer’s job performance, skill set, prior experience and time in the position, as well as external market data, internal equity, the size and value of the individual’s unvested equity awards, the desire to attract and retain talent, dilutive effect of grant size and business conditions. The Committee also periodically grants equity awards for new hires and promotions.
We have not granted, nor do we intend to grant in the future, equity awards to executive officers in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement. Similarly, the Compensation Committee has not timed, nor does it intend to time in the future, the release of material non-public information based on equity grant dates. In any event, because equity compensation awards typically vest over three or four-year periods, the effect of any immediate increase in the price of our common stock following grant is minimal.
The Board has delegated to our Chief Executive Officer and Chief Financial Officer limited authority to approve equity award grants to non-officer employees pursuant to the terms of the 2007 Equity Plan, subject to pre-determined guidelines. The Compensation Committee is responsible for determining and granting all equity awards to executive officers.
Other Compensation Policies
Stock Ownership Guidelines
We have adopted stock ownership guidelines for our executive officers to align more closely their interests with those of our stockholders. Under these guidelines:
|
•
|
our Chief Executive Officer is required to own shares of our stock having a value of at least $4.5 million;
|
|
•
|
executive vice presidents are required to own shares of our common stock having a value of at least $1.0 million; and
|
|
•
|
senior vice presidents who are executive officers for purposes of Section 16 of the Exchange Act are required to own shares of our common stock having a value of at least $750,000.
|
All such executive officers must retain 45% of the shares issued in settlement of their RSU awards until their respective stock ownership requirements are met. To date, of our named executive officers (other than Mr. Flores, who is no longer with the Company), Messrs. Peng and Raje have satisfied the applicable stock ownership guidelines and Messrs. Boppana and Madden have not yet satisfied the applicable guidelines.
Clawback Policy
The Board has adopted a policy for seeking the return (clawback) from our executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated, subject to the terms described below. The policy provides that to the extent the Board (or any committee thereof) and the Company determine appropriate, we may require reimbursement of all or a portion of any bonus, incentive payment, commission, equity-based award or other compensation granted to and received by or for an executive officer beginning in fiscal 2009, where:
|
•
|
the compensation was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of financial statements filed with the SEC;
|
|
•
|
the Board (or a committee thereof) determines that the executive officer engaged in intentional misconduct that was directly responsible for the substantial restatement; and
|
|
•
|
a reduced amount of compensation would have been paid to the executive officer based upon the restated financial results.
|
We intend for such policy to comply with the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 pertaining to the recovery of executive compensation once the SEC adopts final rules implementing this provision.
42
Policy Against Hedging and Pledging Transactions
All employees, including our executive officers, as well as all directors, are subject to our Insider Trading Policy. Our Insider Trading Policy prohibits any employee or director from hedging, engaging in short sales, participating in exchange funds or entering into any transaction, investment or arrangement that is intended or may be expected to increase in value if the market value of our common stock falls (such as buying “put” options). In addition, our Insider Trading Policy prohibits any employee, including any executive officer, from holding shares of our common stock in a margin account or pledging shares of our common stock.
Trading Plans
We have a corporate policy regarding Exchange Act Rule 10b5-1 trading plans, pursuant to which key terms of the 10b5-1 trading plans adopted by any of our executive officers or members of the Board are disclosed on our website at www.investor.xilinx.com.
Tax and Accounting Treatment of Compensation
Generally, Section 162(m) of the Internal Revenue Code disallows a federal income tax deduction for public corporations with respect to remuneration in excess of $1 million paid in any fiscal year to “covered employees.” Under Section 162(m), “covered employees” are any individuals who served as the principal executive officer or principal financial officer at any time during the taxable year, each of the three other most highly-compensated executive officers whose compensation may be required to be disclosed to stockholders under the Exchange Act in any taxable year, and each person who was a covered employee for any taxable year beginning after December 31, 2016.
Prior to the effectiveness of the Tax Cuts and Jobs Act, the limitation on deductibility pursuant to Section 162(m) did not apply to compensation that qualified under applicable regulations as “performance-based compensation.” Under the Tax Cuts and Jobs Act, the performance-based compensation exception to Section 162(m) was repealed, effective for tax years beginning after December 31, 2017. Accordingly, commencing with our fiscal year ended March 30, 2019, compensation to our covered employees in excess of $1 million is generally not deductible. Remuneration in excess of $1 million will remain exempt from this deduction limit if it qualifies as “performance-based compensation” within the meaning of Section 162(m) as in effect prior to the enactment of the Tax Cuts and Jobs Act and is payable pursuant to a binding written agreement in effect on November 2, 2017 that has not been modified in any material respect on or after that date. Also, all remuneration paid to our principal financial officer pursuant to a binding written agreement in effect on November 2, 2017 that has not been modified in any material respect on or after that date is exempt from the deduction limitation of Section 162(m). Because of the technical nature of the application and interpretation of Section 162(m) and the regulations and guidance issued thereunder, there is no assurance that any compensation granted in the past that was intended to satisfy the requirements for deductibility under Section 162(m) actually was or will ultimately be deductible.
In designing our executive compensation program and determining the compensation of our executive officers, the Compensation Committee considers a variety of factors, including the possibility that certain forms of compensation may be deductible for tax purposes. However, interpretations of and changes in the tax law and other factors beyond the Committee’s control also affect the deductibility of compensation.
To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and long-term corporate goals, the Compensation Committee has not adopted a policy that all compensation must be deductible. The Committee believes that our stockholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expense. From time to time, the Committee may approve compensation for our named executive officers that is not deductible when it believes that such compensation is consistent with the goals of our executive compensation program and is in the best interests of the Company and our stockholders.
Accounting Considerations
We account for the equity awards granted to our employees, including executive officers, and the non-employee members of our Board of Directors in accordance with FASB ASC Topic 718, which requires us to estimate and record expense for each award of equity compensation over the service period of the award.
Compensation-Related Risks
The Compensation Committee considers potential risks when reviewing and approving our executive and general employee compensation programs. The Committee, in cooperation with management, has reviewed our existing compensation programs and believes that the mix and design of the elements of such programs does not encourage management to assume excessive risks and accordingly are not reasonably likely to have a material adverse effect on the Company. Our programs have been balanced to focus on both short-term and long-term financial and operational performance through prudent business judgment and appropriate, measured risk-taking.
Our annual cash incentive plans are designed to reward financial and operational performance in areas we consider critical to our short-term and long-term success. The annual cash incentive plan for our executive officers is based on a combination of corporate
43
financial performance and individual strategic and operational goals. The financial performance component is based on multiple financial metrics that counterbalance each other, decreasing the likelihood that our executive officers will pursue any one metric to the detriment of overall financial performance. The Operating Profit Component is designed to reward improvements in our operating profit, and the Growth Component is designed to measure and reward increases in our revenue growth year over year. These metrics limit the likelihood that an executive officer may be rewarded for taking excessive risk on our behalf by, for example, seeking revenue-enhancing opportunities at the expense of profitability. In addition, there are caps on annual cash incentive payments in all the components of the annual cash incentive plan; for fiscal 2020, the Operating Profit Component and Growth Component multipliers were each capped at 2.00, and the Individual Performance Component multiplier was capped at 1.50. These limitations and caps eliminate the risk of compensation windfalls resulting from uncapped annual cash incentives.
The individual strategic and operational goals established at the beginning of the fiscal year for our Chief Executive Officer are reviewed and discussed with the Board and approved by the Compensation Committee, and the individual strategic and operational goals established at the beginning of the fiscal year for each of our other executive officers are reviewed and discussed with the Committee and approved by our CEO.
Further, annual cash incentive payments for our executive officers are approved by the Compensation Committee. This multi-layer approval process in the goal-setting and payment approval process reduces the risk of improper awards.
The annual cash incentive plan for employees other than executive officers is based on our corporate financial performance using operating profit margin, weighted at 80%, and revenue growth, weighted at 20%. This measure is intended to align the interests of participating employees with enhancement of profitability and revenue growth. For each period, participating employees establish individual goals that support key company objectives and are assigned a bonus multiplier. They earn cash awards from the available incentive pool based on the extent of their goal achievement and the applicable multipliers for financial and individual performance. Individual bonus award opportunities are expressed as a percentage of an employee’s eligible earnings (ranging from 8% up to 30% of eligible earnings), and payments are capped at 150% of the employee’s bonus target for the applicable performance period. The modest size of the potential bonuses, the fact that bonuses are funded solely by actual financial performance, and the overall cap eliminate the risk of compensation windfalls resulting from uncapped annual cash incentives.
Our equity incentive program is designed to promote long-term performance. During fiscal 2020, our equity incentive program contained a mix of time-based RSU awards and performance-based RSU awards. Time-based RSU awards vest annually over a four-year vesting period. Performance-based RSU awards granted to our executive officers are earned over a one-year performance period, and the earned shares then vest in three equal annual installments, beginning on the first anniversary of the grant date.
We have also adopted stock ownership guidelines that further align the interests of our executive officers and stockholders and promote long-term focus on our growth since these guidelines ensure that our executive officers retain the downside risk of stock ownership for an extended period of time. Therefore, the Compensation Committee believes that our equity incentive program does not encourage unnecessary or excessive risk taking by our executive officers since their equity awards are subject to long-term vesting schedules and the ultimate value of the awards is tied to the changes in value of our common stock. The stock ownership guidelines combined with our long-term vesting schedules help to ensure that our executive officers and other employees have significant value tied to long-term stock price performance.
Our Board of Directors has also adopted a clawback policy (as described above) whereby we may seek a return from our executive officers of compensation to the extent such compensation was paid due to financial results that later had to be restated.
We have also adopted corporate policies to encourage diligence, prudent decision-making and oversight during the goal-setting and review process. The processes that are in place to manage and control risk include the following:
|
•
|
The Compensation Committee approves the payment scale for the Operating Profit Component and Growth Component.
|
|
•
|
The Compensation Committee sets the financial metrics at reasonable levels in light of past performance and market conditions.
|
|
•
|
Payments under the annual cash incentive plan for our executive officers are subject to approval of the Compensation Committee.
|
|
•
|
The Compensation Committee retains discretion in administering all awards and in determining performance achievement.
|
We also have implemented a number of controls such as our Code of Conduct, our clawback policy and quarterly sub-certification process for all executive officers in order to mitigate the risk of unethical behavior.
44
Summary Compensation Table
The following table provides compensation information for the named executive officers:
|
Name and Position
|
|
Year
|
|
Salary (1)
($)
|
|
Stock
Awards (2)
($)
|
|
Non-Equity
Incentive Plan
Compensation
(3) ($)
|
|
All Other
Compensation (4) ($)
|
|
Total
($)
|
|||||||||
|
Victor Peng (5)(6)
President and Chief Executive Officer
|
|
2020
|
|
887,500
|
|
|
|
9,324,173
|
|
|
|
1,005,141
|
|
|
|
5,438
|
|
|
|
11,222,252
|
|
|
|
2019
|
|
700,000
|
|
|
|
4,181,520
|
|
|
|
1,703,625
|
|
|
|
4,662
|
|
|
|
6,589,807
|
|
|
|
|
2018
|
|
576,731
|
|
|
|
2,664,235
|
|
|
|
861,116
|
|
|
|
7,588
|
|
|
|
4,109,670
|
|
|
|
Lorenzo A. Flores (7)
Former Executive Vice President and Chief Financial Officer
|
|
2020
|
|
275,218
|
|
|
|
1,486,386
|
|
|
|
140,081
|
|
|
|
100
|
|
|
|
1,901,785
|
|
|
|
2019
|
|
440,000
|
|
|
|
1,127,160
|
|
|
|
675,400
|
|
|
|
4,584
|
|
|
|
2,247,144
|
|
|
|
|
2018
|
|
415,417
|
|
|
|
917,270
|
|
|
|
390,587
|
|
|
|
4,817
|
|
|
|
1,728,091
|
|
|
|
William Madden
Executive Vice President and General Manager, Wired and Wireless Group
|
|
2020
|
|
508,750
|
|
|
|
2,458,254
|
|
|
|
383,538
|
|
|
|
6,488
|
|
|
|
3,357,030
|
|
|
|
2019
|
|
445,000
|
|
|
|
1,471,570
|
|
|
|
699,688
|
|
|
|
4,950
|
|
|
|
2,621,208
|
|
|
|
|
2018
|
|
398,750
|
|
|
|
917,270
|
|
|
|
375,640
|
|
|
|
4,538
|
|
|
|
1,696,198
|
|
|
|
Salil Raje (6)(8)
Executive Vice President and General Manager, Data Center Group
|
|
2020
|
|
508,750
|
|
|
|
2,458,254
|
|
|
|
383,538
|
|
|
|
5,708
|
|
|
|
3,356,250
|
|
|
|
2019
|
|
445,000
|
|
|
|
1,471,570
|
|
|
|
699,688
|
|
|
|
5,829
|
|
|
|
2,622,087
|
|
|
|
Vamsi Boppana (8)
Senior Vice President, Central Products Group
|
|
2020
|
|
432,500
|
|
|
|
1,486,386
|
|
|
|
263,220
|
|
|
|
—
|
|
|
|
2,182,106
|
|
|
(1)
|
Amounts shown reflect salaries earned in the applicable fiscal year. This column includes the portion of salary deferred at the respective named executive officer’s election under the Company’s 401(k) Plan and/or nonqualified deferred compensation plan, as applicable.
|
|
(2)
|
Amounts shown reflect the grant date fair value for stock awards as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2020 filed with the SEC on May 8, 2020. These compensation costs as they relate to stock awards reflect costs associated with stock awards granted in fiscal 2020. For fiscal 2020, this includes the following numbers of performance-based RSUs based on achievement at 100% of target level performance: Mr. Peng, 57,050 shares; Mr. Flores, 7,800 shares; Messrs. Madden and Raje, 12,900 shares each; and Mr. Boppana, 7,800 shares. The maximum number of performance-based RSUs that could be earned by these named executive officers based on achievement at 187.5% of target level performance is as follows: Mr. Peng, 106,969 shares; Mr. Flores, 14,625 shares; and Messrs. Madden and Raje, 24,188 shares each. The amounts shown for fiscal 2020 also include RSUs subject only to time-based vesting, in the amounts of 24,450 shares granted to Mr. Peng, 5,200 shares granted to Mr. Flores, 8,600 shares granted to each of Messrs. Madden and Raje, and 5,200 shares granted to Mr. Boppana.
|
|
(3)
|
This column includes the portion of cash incentive bonus deferred at the respective named executive officer’s election under the Company’s 401(k) Plan and/or nonqualified deferred compensation plan, as applicable.
|
|
(4)
|
Except as otherwise noted, amounts in this column for fiscal 2020 represent the Company’s 401(k) matching contributions. The amount shown for Mr. Madden for fiscal 2020 also includes a $1,500 matching charitable contribution made on his behalf.
|
|
(5)
|
Mr. Peng became President and Chief Executive Officer in January 2018 after having served in a variety of other executive officer roles during fiscal years 2016 through 2018.
|
|
(6)
|
The named executive officer participates in the Company’s nonqualified deferred compensation plan. For more information about this plan see the section below entitled “Nonqualified Deferred Compensation Plan.”
|
|
(7)
|
Mr. Flores served as Executive Vice President and Chief Financial Officer until October 2019. Thereafter, Mr. Peng served as acting principal financial officer during the remainder of fiscal 2020. Our current principal financial officer, Brice Hill, joined the Company as Executive Vice President and Chief Financial Officer in April 2020.
|
|
(8)
|
Messrs. Raje and Boppana became named executive officers in fiscal 2019 and 2020, respectively.
|
45
Grants of Plan-Based Awards for Fiscal Year 2020
The following table provides information on equity and non-equity awards granted to our named executive officers during fiscal 2020:
|
|
|
Type
|
|
|
|
Approval
Date
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards (2)
|
|
All Other Stock Awards: Number of Shares of Stock or Units (3)
(#)
|
|
Grant
Date
Fair Value of Stock
and Option
Awards (4)
($)
|
||||||||||||||||
|
Name
|
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
||||||||||||||
|
Victor Peng
|
|
EIP
|
|
—
|
|
5/16/19
|
|
46,594
|
|
|
1,331,250
|
|
|
2,496,094
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,426
|
|
|
57,050
|
|
|
106,969
|
|
|
—
|
|
|
6,538,842
|
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,450
|
|
|
2,785,331
|
|
|
Lorenzo A. Flores
|
|
EIP
|
|
—
|
|
5/16/19
|
|
16,713
|
|
|
477,500
|
|
|
895,313
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
7,800
|
|
|
14,625
|
|
|
—
|
|
|
894,005
|
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,200
|
|
|
592,381
|
|
|
|
William Madden
|
|
EIP
|
|
—
|
|
5/16/19
|
|
17,806
|
|
|
508,750
|
|
|
953,906
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
323
|
|
|
12,900
|
|
|
24,188
|
|
|
—
|
|
|
1,478,546
|
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,600
|
|
|
979,707
|
|
|
|
Salil Raje
|
|
EIP
|
|
—
|
|
5/16/19
|
|
17,806
|
|
|
508,750
|
|
|
953,906
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
323
|
|
|
12,900
|
|
|
24,188
|
|
|
—
|
|
|
1,478,546
|
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,600
|
|
|
979,707
|
|
|
|
Vamsi Boppana
|
|
EIP
|
|
—
|
|
5/16/19
|
|
12,110
|
|
|
346,000
|
|
|
648,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195
|
|
|
7,800
|
|
|
14,625
|
|
|
—
|
|
|
894,005
|
|
|
|
|
RSU
|
|
7/10/19
|
|
5/16/19
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,200
|
|
|
592,381
|
|
|
|
(1)
|
Actual payouts have been made under the 2020 Incentive Plan, as disclosed in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.”
|
|
(2)
|
Represents performance-based RSU awards granted in fiscal 2020, which became earned based on performance in fiscal 2020. These columns show the number of performance-based RSU awards that may become earned at threshold, target, and maximum levels of performance. In May 2020, the Compensation Committee determined the actual number of RSUs earned based on performance for fiscal 2020, as adjusted to offset the effects of the export restrictions imposed in May 2019, was 50% of the target number RSUs listed for each named executive officer. These RSUs are subject to further time-based vesting, as described above under “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Compensation Elements—Long-Term Equity Incentive Compensation—Performance-Based RSUs.” The awards were granted under our 2007 Equity Plan.
|
|
(3)
|
Represents time-based RSUs that vest at the rate of 1/4 of the shares on each anniversary of the grant date.
|
|
(4)
|
Amounts in this column represent the grant date fair value of RSUs granted in fiscal 2020 calculated in accordance with FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2020 filed with the SEC on May 8, 2020.
|
46
Outstanding Equity Awards at Fiscal Year End 2020
The following table provides information on outstanding RSUs held by the named executive officers as of March 28, 2020:
|
|
|
|
|
Stock Awards
|
||||||
|
Name
|
|
Grant Date
|
|
Number of Shares or Units of Stock that Have Not Vested (1)
(#)
|
|
Market Value of Shares or Units of Stock that Have Not Vested (2)
($)
|
||||
|
Victor Peng
|
|
7/3/17
|
|
9,691
|
|
|
|
728,957
|
|
|
|
|
|
2/1/18
|
|
7,250
|
|
(3)
|
|
545,345
|
|
|
|
|
|
7/2/18
|
|
71,821
|
|
|
|
5,402,376
|
|
|
|
|
|
7/10/19
|
|
28,525
|
|
|
|
2,145,651
|
|
|
|
|
|
7/10/19
|
|
24,450
|
|
(3)
|
|
1,839,129
|
|
|
|
Lorenzo A. Flores
|
|
N/A
|
|
—
|
|
(4)
|
|
—
|
|
|
|
William Madden
|
|
7/5/16
|
|
1,641
|
|
|
|
123,436
|
|
|
|
|
|
7/3/17
|
|
5,511
|
|
|
|
414,537
|
|
|
|
|
|
7/2/18
|
|
15,229
|
|
|
|
1,145,525
|
|
|
|
|
|
7/2/18
|
|
7,050
|
|
(3)
|
|
530,301
|
|
|
|
|
|
7/10/19
|
|
6,450
|
|
|
|
485,169
|
|
|
|
|
|
7/10/19
|
|
8,600
|
|
(3)
|
|
646,892
|
|
|
|
Salil Raje
|
|
7/5/16
|
|
1,641
|
|
|
|
123,436
|
|
|
|
|
|
7/3/17
|
|
5,511
|
|
|
|
414,537
|
|
|
|
|
|
7/2/18
|
|
15,229
|
|
|
|
1,145,525
|
|
|
|
|
|
7/2/18
|
|
7,050
|
|
(3)
|
|
530,301
|
|
|
|
|
|
7/10/19
|
|
6,450
|
|
|
|
485,169
|
|
|
|
|
|
7/10/19
|
|
8,600
|
|
(3)
|
|
646,892
|
|
|
|
Vamsi Boppana
|
|
7/5/16
|
|
1,750
|
|
|
|
131,635
|
|
|
|
|
|
12/12/16
|
|
750
|
|
|
|
56,415
|
|
|
|
|
|
7/3/17
|
|
3,801
|
|
|
|
285,911
|
|
|
|
|
|
7/2/18
|
|
3,750
|
|
(3)
|
|
282,075
|
|
|
|
|
|
7/2/18
|
|
5,401
|
|
|
|
406,263
|
|
|
|
|
|
7/10/19
|
|
3,900
|
|
|
|
293,358
|
|
|
|
|
|
7/10/19
|
|
5,200
|
|
(3)
|
|
391,144
|
|
|
|
(1)
|
Except as noted, these awards represent performance-based RSUs that have been earned based on achievement of pre-established performance goals. Once earned, performance-based RSUs vest in equal annual installments over a three-year period from the grant date, subject to continued employment with the Company.
|
|
(2)
|
Market value is computed by multiplying the closing price of the Company’s stock on the last trading day of the fiscal year by the number of shares reported in the adjacent column. The closing price of the Company’s stock on March 27, 2020 (the last trading day of our fiscal year) was $75.22.
|
|
(3)
|
The award is a time-based RSU that vests in equal annual installments over a four-year period from the grant date, subject to continued employment with the Company.
|
|
(4)
|
All of Mr. Flores’s unvested equity awards were terminated as of the effective time of his resignation in October 2019.
|
47
Option Exercises and Stock Vested for Fiscal Year 2020
The following table provides information on stock option exercises and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the named executive officers during fiscal 2020:
|
|
|
Stock Awards
|
||
|
Name
|
|
Number of Shares Acquired on Vesting
(#)
|
|
Value Realized on Vesting (1)
($)
|
|
Victor Peng
|
|
62,095
|
|
7,151,409
|
|
Lorenzo A. Flores
|
|
26,012
|
|
3,033,166
|
|
William Madden
|
|
23,433
|
|
2,737,193
|
|
Salil Raje
|
|
23,433
|
|
2,737,193
|
|
Vamsi Boppana
|
|
12,749
|
|
1,485,157
|
|
(1)
|
The value realized upon vesting is equal to the number of shares of stock multiplied by the market value of a share of common stock on the vesting date.
|
48
Nonqualified Deferred Compensation Plan
The Company maintains an unfunded, nonqualified deferred compensation plan which allows our employees in positions of director-level or above, including executive officers, as well as our non-employee directors, to voluntarily defer receipt of a portion or all of their salary, cash bonus payment, sales incentive payment or director fees, as the case may be, until the earliest “distribution event” (e.g., specific date, termination of employment, death or change of control) elected by the participants or provided for by the plan, thereby allowing participating employees and directors to defer taxation on such amounts. Distributions may be made in a lump sum payment or in installments (not to exceed 15 years). This deferred compensation plan is offered to allow participants to defer more compensation than they would otherwise be permitted to defer under a tax-qualified retirement plan, such as our 401(k) Plan. Further, we offer the deferred compensation plan as a competitive practice to enable us to attract and retain top talent by providing employees with an opportunity to save in a tax efficient manner.
Amounts credited to the deferred compensation plan consist only of cash compensation that has been earned and payment of which has been timely and properly deferred by the participant. Under the deferred compensation plan, the Company is obligated to deliver on a future date the deferred compensation credited to the relevant participant’s account, adjusted for any positive or negative notional investment results from hypothetical investment alternatives selected by the participant under the deferred compensation plan (Obligations). The Obligations are unsecured general obligations of the Company and rank in parity with other unsecured and subordinated indebtedness of the Company.
In addition, the Company, acting through the Board, may make discretionary contributions to the accounts of one or more deferred compensation plan participants. There were no such discretionary contributions in fiscal 2020. We do not guarantee minimum returns to any participant in the deferred compensation plan. We incur only limited administration expenses to maintain the deferred compensation plan. The deferred compensation plan is evaluated for competitiveness in the marketplace from time to time, but the level of benefits provided is not typically taken into account in determining an executive officer’s overall compensation package for a particular year.
Nonqualified Deferred Compensation Table for Fiscal Year 2020
The following table provides information on nonqualified deferred compensation for the named executive officers during fiscal 2020:
|
Name
|
|
Executive
Contributions in
Last FY
($)
|
|
|
Registrant
Contributions in
Last FY
($) (1)
|
|
Aggregate
Earnings in
Last FY
($) (1)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($)
|
||||
|
Victor Peng
|
|
—
|
|
|
|
—
|
|
(382,941
|
)
|
|
|
—
|
|
4,344,740
|
|
(2)
|
|
Lorenzo A. Flores
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
William Madden
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
Salil Raje
|
|
—
|
|
|
|
—
|
|
(80,850
|
)
|
|
|
—
|
|
708,214
|
|
(3)
|
|
Vamsi Boppana
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
—
|
|
—
|
|
|
|
(1)
|
Amounts included in this column are not reported as compensation in the Summary Compensation Table.
|
|
(2)
|
The fiscal year-end balance reported for Mr. Peng includes $3,578,172 that was previously reported in the Summary Compensation Table as compensation earned in fiscal years prior to fiscal 2020.
|
|
(3)
|
The fiscal year-end balance reported for Mr. Raje includes $507,150 that was previously reported in the Summary Compensation Table as compensation earned in fiscal years prior to fiscal 2020.
|
Potential Payments Upon Termination or Change in Control
We maintain an employment agreement with Mr. Peng that we entered into as part of an arm’s length negotiation with the Compensation Committee when he became Chief Executive Officer in January 2018. The terms of Mr. Peng’s employment agreement are summarized below.
In January 2016, after reviewing market data, including change in control arrangements provided by some of the Company’s competitors in connection with the recent consolidation in the semiconductor industry, the Compensation Committee approved change of control agreements for our officers. The change of control agreements with Messrs. Madden, Raje and Boppana provide certain benefits if the executive’s employment is terminated in connection with a change of control of the Company, as more fully described below.
The 2007 Equity Plan does not provide for automatic acceleration of vesting of stock awards upon termination or a change of control; however, the agreement with Mr. Peng and the change of control agreements with the other named executive officers
49
provides for acceleration under certain conditions. The narrative and tables that follow describe potential payments and benefits to the named executive officers under their existing agreements, including payments and benefits that would be due to them in connection with the occurrence of a change of control, assuming their employment terminated on March 28, 2020, the last day of the Company’s fiscal year.
Employment Agreement with Victor Peng
Effective January 29, 2018, we entered into an Employment Agreement with Mr. Peng providing for Mr. Peng’s employment with the Company as President and Chief Executive Officer.
Under the employment agreement, if the Company terminates Mr. Peng’s employment at any time due to disability or other than for “Cause” or if Mr. Peng voluntarily terminates his employment for “Good Reason” (as each such term is defined in his agreement and described below in the section entitled “Definitions of Good Reason, Cause, Constructive Termination, and Change of Control”) then, subject to Mr. Peng’s execution of a release of claims in favor of the Company, he will be eligible for:
|
(i)
|
a pro rata portion of his bonus for the fiscal year during which his employment was terminated based on (a) his termination date, (b) the determination by the Compensation Committee whether Company performance objectives have been met (such performance to be determined by the Committee within two and one-half months after the end of the fiscal year in which termination occurs) and (c) an assumption that any individual performance objectives have been achieved at target;
|
|
(ii)
|
a lump sum payment equal to one year of his then-current base salary;
|
|
(iii)
|
a lump sum payment equal to one year of his annual target bonus;
|
|
(iv)
|
at the Company’s election, a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance; and
|
|
(v)
|
24 months’ accelerated vesting of all equity grants received from the Company prior to his termination of employment, provided that (a) in the case of performance-based RSUs for which the number of earned RSUs has not been determined as of the date of termination, the number of accelerated shares will be the actual number of RSUs earned for actual performance achievement that would have vested in the 24 months following termination of employment (such performance to be determined by the Compensation Committee within two and one-half months after the end of the fiscal year in which termination occurs), had the original vesting schedule provided for monthly rather than annual vesting, and (b) in the case of any outstanding awards of RSUs that are not subject to performance metrics and that are subject to “cliff” vesting on one or more anniversaries of the date of grant, such RSUs will be treated as instead being subject to monthly vesting in equal installments from the applicable date of grant, and Mr. Peng will become vested in that number of RSUs which would have vested during the period commencing from the date of grant and continuing up to his termination date and during an additional 24-month period following his termination date.
|
Notwithstanding the foregoing, if Mr. Peng’s employment is terminated at any time within 90 days prior to or two years following a Change of Control and he executes a release of claims in favor of the Company, he will be eligible for:
|
(i)
|
a pro rata portion of his bonus for the fiscal year during which his employment was terminated based on (a) his termination date, (b) the determination by the Compensation Committee whether Company performance objectives have been met and (c) an assumption that any individual performance objectives have been achieved at target;
|
|
(ii)
|
a lump sum payment equal to 24 months of his then-current base salary;
|
|
(iii)
|
a lump sum payment equal to two years of his annual target bonus;
|
|
(iv)
|
a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance;
|
|
(v)
|
100% accelerated vesting of all non-performance-based equity awards; and
|
|
(vi)
|
100% accelerated vesting of performance-based RSUs.
|
50
Potential Payments upon Termination of Mr. Peng’s Employment
The following table sets forth all payments that would have been made to Mr. Peng assuming his employment was terminated without Cause or Good Reason on March 28, 2020 and Mr. Peng signed a release in favor of the Company:
Change of Control Agreements with the Other Named Executive Officers
Under the change of control agreements entered into with Messrs. Madden, Raje and Boppana, if the employment of the executive is terminated without Cause or the executive resigns pursuant to a Constructive Termination at any time within 90 days prior to or two years following a Change of Control of the Company (in each case, as defined in his agreement and described below under “Definitions of Good Reason, Cause, Constructive Termination, and Change of Control”), and subject to his execution of a release of claims in favor of the Company, the executive will be eligible for: (i) a lump sum payment equal to 150% of his then-current base salary; (ii) a lump sum payment equal to 150% of his annual target bonus; (iii) a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance, if the executive elects continuation coverage under COBRA; (iv) 100% accelerated vesting of all non-performance-based equity awards; and (v) 100% accelerated vesting of performance-based RSUs at 100% of target.
Potential Payments upon Change of Control and Termination of Messrs. Madden, Raje and Boppana
The following table sets forth all payments that would have been made to Messrs. Madden, Raje and Boppana, assuming the employment of each such individual been terminated without Cause or as a result of a Constructive Termination during the period from 90 days before to two years following a Change of Control on March 28, 2020 and each executive signed a release in favor of the Company:
|
|
|
150% Annual Base Salary
|
|
150% Annual
Target Bonus
|
|
Medical and Dental
Insurance
|
|
Value of
RSUs
|
|
Total
|
|
William Madden
|
|
$787,500
|
|
$787,500
|
|
$27,913
|
|
$916,480
|
|
$2,519,393
|
|
Salil Raje
|
|
$787,500
|
|
$787,500
|
|
$28,999
|
|
$916,480
|
|
$2,520,479
|
|
Vamsi Boppana
|
|
$660,000
|
|
$528,000
|
|
$31,626
|
|
$554,221
|
|
$1,773,847
|
Definitions of Good Reason, Cause, Constructive Termination, and Change of Control
Under Mr. Peng’s employment agreement “Good Reason” means (i) a reduction of $50,000 or more in his base compensation or target cash incentive or guaranteed bonus, (ii) a material reduction in his authority, duties or responsibilities, (iii) his no longer being Chief Executive Officer of the Company reporting to the Board or (iv) a relocation of the Company’s headquarters outside of the San Francisco Bay Area, provided that Mr. Peng gives written notice to the Board of the first to occur of any of the foregoing events within 90 days following the first occurrence of such event and the Company fails to remedy the event within 30 days of such notice.
51
Under Mr. Peng’s employment agreement, “Cause” means (i) continued neglect of or willful failure in the performance of his duties, which, if curable, continues for a period of 20 days following written notice by the Company, (ii) a material breach of the Company’s Proprietary Information and Inventions Agreement, (iii) a material breach of the Company’s Code of Conduct or other Company policies, which, if curable, continues for a period of 20 days following written notice by the Company, (iv) fraud against or embezzlement or material misappropriation from the Company or its affiliates, (v) conviction of, or entering a plea of no contest or nolo contendere to a charge of, a crime constituting a felony, (vi) willful malfeasance or willful misconduct in connection with his duties, which, if curable, continues for a period of 20 days following written notice by the Company, or (vii) any willful and wrongful act or omission which is materially injurious to the financial condition or business reputation of the Company and its subsidiaries, which, if curable, continues for a period of 20 days following written notice by the Company.
Under the agreements with Messrs. Madden, Raje and Boppana, “Constructive Termination” means the executive’s resignation following the occurrence of any of the following events without the executive’s approval: (i) a material reduction in the executive’s base salary, target bonus or benefits, other than a reduction that is applied across-the-board to all employees at the executive’s level; (ii) a material reduction in the executive’s title, authority or responsibilities; or (iii) the requirement that the executive relocate to a place of employment more than 50 miles from the executive’s primary work location; provided that the executive provides written notice of a condition described in (i), (ii) or (iii) within 90 days of the initial occurrence of the condition and the Company fails to remedy such condition within 30 days of such notice (or, if later, the executive’s actual termination of employment).
Under Mr. Peng’s employment agreement and the change of control agreements with Messrs. Madden, Raje and Boppana, a “Change of Control” will generally be deemed to have occurred in the event of any of the following: (i) the acquisition by any person or group (other than the Company, a subsidiary of the Company or a Company employee benefit plan) of more than 50% of the voting power of the Company’s outstanding securities; (ii) the closing of (a) a sale of all or substantially all of the Company’s assets if the holders of all voting power for election of directors before the transaction hold less than a majority of the total voting power for election of directors of all entities which acquire the assets or (b) the merger of the Company with or into another corporation if the holders of Company securities representing all voting power for the election of directors before the transaction hold less than a majority of the total voting power for the election of directors of the surviving entity; (iii) any issuance of securities that would give a person or group beneficial ownership of Company securities representing 50% or more of all voting power for election of directors; or (iv) a change in the board of directors over a period of 24 months such that the incumbent directors as of the beginning of any such 24-month period and nominees of the incumbent directors are no longer a majority of the total number of directors.
None of the employment and change of control agreements described above provide any named executive officer with a gross-up or other reimbursement for tax amounts the named executive officer might be required to pay pursuant to Section 280G of the Internal Revenue Code. The agreements described above are intended to comply, to the extent applicable, with Section 409A of the Internal Revenue Code.
Pay Ratio
Under rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to calculate and disclose the annual total compensation paid to our median employee, as well as the ratio of the annual total compensation paid to our median employee as compared to the annual total compensation paid to our Chief Executive Officer, Mr. Peng.
For fiscal 2020:
|
•
|
the median of the annual total compensation of all our employees (other than our CEO) was $133,233; and
|
|
•
|
the annual total compensation of our CEO for purposes of this calculation was $11,222,252.
|
Based on this information, for fiscal 2020 the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee (other than our CEO) was 84 to 1.
This ratio represents our reasonable estimate calculated in a manner consistent with Item 402(u). This rule, which addresses the identification of the “median employee” and the calculation of the pay ratio based on that employee’s annual total compensation, allows companies to adopt a variety of methodologies, apply certain exclusions and make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported by us, as other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
Under Item 402(u), we are required to identify our median employee only once every three years, provided that, during our last-completed fiscal year, there have been no changes in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio. In light of the significant growth in our employee population during fiscal 2020, we could not rule out the likelihood that such growth would result in a significant change to our pay ratio, absent the type of analysis that is required to identify the median employee; accordingly, we have identified a new median employee
52
for fiscal 2020. To identify the median of the annual total compensation of all our employees and the annual total compensation of our median employee, we used the following methodology and material assumptions, adjustments and estimates and continued using the last day of our fiscal year as the date for identifying the median employee:
|
•
|
In determining our employee population, we considered the individuals, excluding our CEO, who were employed by us and our consolidated subsidiaries on March 28, 2020 (the last day of fiscal 2020), whether employed on a full-time, part-time or temporary basis. We did not include any contractors or other non-employee workers in our employee population.
|
|
•
|
As of March 28, 2020, our employee population consisted of approximately 4,790 individuals, including approximately 2,730 individuals located outside of the United States.
|
|
•
|
To identify the “median employee,” we compared the annual base salary or wages, as applicable, of each employee as of March 28, 2020, the target annual incentive compensation award of each employee for fiscal 2020 and the grant date fair value of each employee’s equity award (if any) granted in fiscal 2020 as the most appropriate measure of compensation. Target incentive compensation represents a fixed measure of each employee’s compensation arrangements that is not subject to fluctuation as a result of financial or operational performance in a given year.
|
|
•
|
For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using the applicable exchange rates in effect on March 1, 2020. For permanent employees hired during fiscal 2020, we annualized their compensation as if they had been employed for the entire measurement period.
|
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are J. Michael Patterson, Ronald S. Jankov, Mary Louise Krakauer and Elizabeth W. Vanderslice. No member of the Compensation Committee is, or was during fiscal 2020, an officer or employee of the Company or any of its subsidiaries, was formerly an officer of the Company or any of its subsidiaries, or had any relationship disclosed in the section below entitled “RELATED PARTY TRANSACTIONS.” No member of the Compensation Committee is, or was during fiscal 2020, an executive officer of another company whose board of directors has a comparable committee on which one of the Company’s executive officers serves.
RELATED PARTY TRANSACTIONS
Our Audit Committee is responsible for reviewing and approving all related party transactions, as provided in the Audit Committee charter. Related parties include any of our directors or executive officers, beneficial owners of more than five percent of our outstanding common stock and immediate family members of the foregoing. The Audit Committee reviews related party transactions due to the potential for a conflict of interest. A conflict of interest arises when an individual’s personal interest interferes with the Company’s interests. All transactions identified through our disclosure controls and procedures as potential related party transactions, or transactions that may create a conflict of interest or the appearance of a conflict of interest, are brought to the attention of the Audit Committee for its review. In reviewing related party transactions, the Audit Committee applies the standards set forth in the Company’s Code of Conduct and the Directors’ Code of Ethics, which provide that directors, officers and employees are to avoid any activity, investment or association that would cause or even appear to cause a conflict of interest. Copies of the Audit Committee Charter, Code of Conduct and Directors’ Code of Ethics are available on our website at www.investor.xilinx.com under “Corporate Governance.” For further discussion regarding transactions with related parties, see the section above entitled “DIRECTORS AND CORPORATE GOVERNANCE—Board Independence.”
In fiscal 2011, the Audit Committee pre-approved our engagement of BlackRock, Inc. (BlackRock) as an investment manager. At the time we entered into this engagement, BlackRock was the beneficial owner of more than five percent of our outstanding common stock, and it continues to be a beneficial owner of more than five percent of our outstanding common stock at present. Xilinx paid BlackRock $285,438 in management fees during fiscal 2020.
53
COMMITTEE REPORTS
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the management of the Company and, based on such review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020.
The Compensation Committee
J. Michael Patterson, Chairman
Ronald S. Jankov
Mary Louise Krakauer
Elizabeth W. Vanderslice
The foregoing Report of the Compensation Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.
54
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company’s financial reporting process on behalf of the Board. It assists the Board in fulfilling its oversight responsibilities to the stockholders relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, and the audit process. While the Audit Committee sets the overall corporate tone for quality financial reporting, management has the primary responsibility for the preparation, presentation and integrity of the Company’s financial statements and implementation of the reporting process including the systems of internal controls and procedures designed to reasonably assure compliance with accounting standards, applicable laws and regulations. In accordance with the law, the Audit Committee has ultimate authority and responsibility to select, compensate, evaluate and, when appropriate, replace the Company’s independent auditors. The Charter of the Audit Committee can be found at www.investor.xilinx.com under “Corporate Governance.”
The Company’s independent registered public accounting firm, Ernst & Young LLP (EY), is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with generally accepted auditing standards and expressing opinions on the conformity of the Company’s audited financial statements to generally accepted accounting principles in the United States and the effectiveness of the Company’s internal control over financial reporting. In carrying out its responsibilities, the Audit Committee has the power to retain outside counsel or other experts and is empowered to investigate any matter with full access to all books, records, facilities, and personnel of the Company. The Audit Committee members are not currently practicing accountants or auditors, and their functions are not intended to duplicate or certify the activities of management and the independent auditors. The Audit Committee also provides oversight of the performance of the internal audit function.
In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited consolidated financial statements for the fiscal year ended March 28, 2020, with management and EY, including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The Audit Committee also discussed with EY matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (PCAOB) and the Securities and Exchange Commission (SEC), including, among other things, matters related to the conduct of the audit of the Company’s consolidated financial statements and other required communications with audit committees. In addition, the Audit Committee has received and reviewed the written disclosures and the letter from EY required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the audit committee concerning independence. The Audit Committee also discussed EY’s independence with EY and management and considered whether the provision of certain non-audit services by EY is compatible with EY’s independence. For each proposed service, EY provides the Audit Committee with a description of the service and sufficient information to confirm EY’s determination that the provision of such service will not impair its independence. The Audit Committee reviewed and preapproved all audit and non-audit services performed by EY during fiscal year 2020 in accordance with established procedures.
The Audit Committee reviewed and discussed with management its assessment and report on the effectiveness of the Company’s internal control over financial reporting as of March 28, 2020. The Audit Committee has also reviewed and discussed with EY its audit of and report on the Company’s internal control over financial reporting. The Company published these reports in its Annual Report on Form 10-K for the fiscal year ended March 28, 2020.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 28, 2020 for filing with the SEC.
The Audit Committee
Raman K. Chitkara, Chairman
J. Michael Patterson
Marshall C. Turner
The foregoing Report of the Audit Committee of the Board of Directors is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of Xilinx under the Securities Act of 1933, as amended, or under the Exchange Act, whether made before or after the date of this proxy statement and irrespective of any general incorporation language in any such filing.
55
PROPOSALS REQUIRING YOUR VOTE
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
As recommended by the Nominating and Governance Committee, the Board’s nominees for election by the stockholders are the following individuals: Dennis Segers, Raman K. Chitkara, Saar Gillai, Ronald S. Jankov, Mary Louise Krakauer, Thomas H. Lee, Jon A. Olson, Victor Peng, and Elizabeth W. Vanderslice.
Unless a stockholder instructs otherwise, the shares represented by a properly-executed proxy in the form enclosed will be voted FOR the election of the nominees for election as directors to the Board of Directors. If any of the nominees should be unwilling or unable to serve as of the Annual Meeting, the proxies will be voted for the election of such other person as the Board of Directors may designate, if any, in place of such nominee.
Required Vote
Each nominee receiving more votes “FOR” than “AGAINST” shall be elected as a Director. If you do not wish your shares to be voted with respect to a nominee, you may “ABSTAIN,” in which case your shares will have no effect on the election of that nominee. Broker non-votes will also have no effect on the outcome of this proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES.
56
PROPOSAL TWO
ADVISORY VOTE ON EXECUTIVE COMPENSATION
Section 14A of the Securities Exchange Act of 1934 and the related rules of the SEC enables our stockholders to vote to approve, on an advisory (non-binding) basis, the compensation of our named executive officers as disclosed in this proxy statement.
Our executive compensation program is designed to attract and retain talented and qualified senior executives to manage and lead our Company and to motivate them to pursue and meet our corporate objectives. Under this program, our named executive officers are rewarded for individual and collective contributions to our success consistent with our “pay for performance” orientation. Furthermore, the executive officer total compensation program is aligned with the nature and dynamics of our business, which focuses management on achieving the Company’s annual and long-term business strategies and objectives. Additional details about our executive compensation programs are described under the section titled “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis.”
Our Compensation Committee regularly reviews the executive compensation program to ensure that it achieves the desired goals of emphasizing long-term value creation and aligning the interests of management and stockholders through the use of equity-based awards.
We are asking our stockholders to indicate their support for our named executive officer compensation as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies, and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2020 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosure.”
Required Vote
The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board. The affirmative vote a majority of the shares present or represented by proxy and voting on such matter (which shares voting affirmatively also constitute a majority of the required quorum) would indicate stockholder approval of the resolution. The Board and the Compensation Committee value the opinions of our stockholders, and, to the extent there is any significant vote against the named executive officer compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns, and the Compensation Committee will evaluate whether any actions are necessary to address those concerns.
THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THIS PROXY STATEMENT PURSUANT TO THE COMPENSATION DISCLOSURE RULES OF THE SEC.
57
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected Ernst & Young LLP (EY), an independent registered public accounting firm, to audit the consolidated financial statements of Xilinx for the fiscal year ending April 3, 2021 and recommends that stockholders vote for ratification of such appointment. Although we are not required to submit to a vote of the stockholders the ratification of the appointment of EY, the Company, the Board and the Audit Committee, as a matter of good corporate governance, have determined to ask the stockholders to ratify the appointment. If the appointment of EY is not ratified, the Audit Committee will take the vote under advisement in evaluating whether to retain EY.
Representatives of EY attend meetings of the Audit Committee, including executive sessions of the Audit Committee at which no members of Xilinx management are present. EY has audited the Company’s financial statements for each fiscal year since the fiscal year ended March 31, 1984. Representatives of EY are expected to be present at the Annual Meeting. In addition, they will have an opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions from stockholders.
Fees Paid to EY
The following table shows the fees billed or to be billed for audit and other services provided by EY for fiscal years 2020 and 2019:
|
|
2020
|
|
2019
|
||||
|
Audit Fees
|
$
|
3,387,100
|
|
|
$
|
3,151,717
|
|
|
Audit-Related Fees
|
—
|
|
|
544,508
|
|
||
|
Tax Fees
|
217,000
|
|
|
240,836
|
|
||
|
All Other Fees
|
70,251
|
|
|
—
|
|
||
|
Total
|
$
|
3,674,351
|
|
|
$
|
3,937,061
|
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Audit Fees
This category includes fees for the audit of the Company’s annual financial statements and internal control over financial reporting, review of the Company’s interim financial statements on Form 10-Q and services that are typically provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years. This category also includes, but is not limited to, statutory audits required by non-U.S. jurisdictions, consultation and advice on new accounting pronouncements, technical advice on various accounting matters related to the consolidated financial statements or statutory financial statements that are required to be filed by non-U.S. jurisdictions and comfort letters and consents issued in connection with SEC filings.
Audit-Related Fees
This category consists of assurance and related services that are reasonably related to the performance of the annual audit or interim financial statement review and are not reported under “Audit Fees.” These fees include due diligence and accounting consultations in connection with acquisition-related activities. No such service was provided by EY during fiscal year 2020.
Tax Fees
This category consists of fees for tax compliance, tax advice and tax planning services, including preparation of tax returns and assistance and representation in connection with tax audits and appeals.
All Other Fees
This category consists of services that are not included in the category descriptions defined above under “Audit Fees,” “Audit-Related Fees” or “Tax Fees” and includes permissible supply chain integration advisory services. No such service was provided by EY during fiscal year 2019.
Audit Committee’s Pre-approval Policy and Procedures
The Audit Committee has adopted policies and procedures for approval of audit, audit-related, tax and all other services performed by EY. Pursuant to its charter and those policies, the policy of the Audit Committee is that any and all services to be provided to the Company by EY are subject to pre-approval by the Audit Committee. The Audit Committee pre-approves annual audit fees, quarterly reviews and tax compliance fees at the beginning of the fiscal year. The Audit Committee may, in its discretion, delegate all or a portion of its duties and responsibilities to a subcommittee of the Audit Committee. The Audit Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed
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by the independent registered public accounting firm, provided that any pre-approvals made under delegated authority are presented to the Audit Committee at its next scheduled meeting. In its review of non-financial audit, tax consulting and other services, the Audit Committee considers whether the provision of such services is consistent with SEC guidance, and whether the service facilitates the performance of the financial audit, improves the Company’s financial reporting process, and is otherwise in the Company’s best interests and compatible with maintaining EY’s independence.
The Audit Committee did not waive its pre-approval policies and procedures during the fiscal year ended March 28, 2020.
All of the services described in the fee table above were approved pursuant to the Audit Committee’s pre-approval policy.
Required Vote
Affirmative votes constituting a majority of the shares present or represented by proxy and voting on such matter (which shares voting affirmatively also constitute a majority of the required quorum) will be required to approve this proposal.
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF EY AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2021.
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OTHER MATTERS
The Company is not aware of any other matters to be submitted for consideration at the Annual Meeting. If any other matters properly come before the Annual Meeting, it is the intention of the persons named in the enclosed proxy card to vote the shares they represent as the Board may recommend.
THE BOARD OF DIRECTORS
Dated: June 19, 2020
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