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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 §240.14a-12
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FormFactor, 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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•
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Leadership in Core Markets: Increase market share in the advanced probe
card market segment and in engineering systems, and leverage existing key roadmap technologies and investments across all markets.
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•
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Drive Profitability: Maintain and continuously improve efficiency by
capitalizing on our leadership positions and economies of scale.
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•
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Enter and Develop in Adjacent Markets: Continue long-term
diversification of revenue streams and customer mix through M&A and product extensions in semiconductor test and measurement.
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When:
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May 15, 2020 at 3:00 p.m., Pacific Daylight Time
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Where:
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The Annual Meeting will be a virtual meeting of stockholders, which will be
conducted online via a live webcast. You will be able to attend the Annual Meeting, submit your questions and vote online during the meeting by visiting www.virtualshareholdermeeting.com/FORM2020. We believe a virtual meeting will enable
expanded access and increased stockholder attendance and participation in light of the public health and travel concerns relating to the 2019 novel coronavirus (COVID-19) and the related recommendations and protocols issued by federal,
state and local government.
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Items of Business:
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1.
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Election of the five directors named in the Proxy Statement;
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2.
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Advisory approval of the company’s executive compensation;
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3.
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Approval of an amendment and restatement of the company’s 2012 Equity Incentive Plan
to increase the number of shares reserved for issuance under the 2012 Equity Incentive Plan by 3,500,000 shares and to extend the term of the 2012 Equity Incentive Plan to 2030;
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4.
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Ratification of the selection of KPMG LLP as FormFactor’s independent registered
public accounting firm for fiscal year 2020; and
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5.
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Action upon such other matters as may properly come before the Annual Meeting or any
adjournment or postponement thereof.
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Who Can Vote:
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Stockholders of FormFactor, Inc. Common Stock at the close of business on March 20,
2020. Your vote is important.
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Record Date:
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The record date for determining those stockholders of our company who will be
entitled to notice of, and to vote at, the Annual Meeting, and at any adjournment or postponement thereof, is March 20, 2020. A list of those stockholders entitled to vote at the Annual Meeting will be available for inspection by any of
our stockholders for any purpose germane to the Annual Meeting during regular business hours at FormFactor’s principal executive offices for ten days prior to the Annual Meeting.
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INTERNET AVAILABILITY
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We are taking advantage of the Securities and Exchange Commission (the “SEC”)
rules that allow companies to furnish proxy materials to their stockholders through the Internet. This Proxy Statement and our 2019 Annual Report on Form 10-K are available at http://proxyvote.com. We believe these rules allow us to
provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting. On or about April 3, 2020, we mailed to stockholders on the record date a Notice of Internet
Availability of Proxy Materials (the “Notice”). If you received a Notice by mail, you will not receive a printed copy of the proxy materials unless you specifically request one. Instead, the Notice instructs you on how to access and
review all the important information contained in this Proxy Statement and in our 2019 Annual Report on Form 10-K (which we posted on the Internet on the same date), as well as how to submit your proxy over the Internet. If you received
the Notice and would still like to receive a printed copy of our proxy materials, you may request a printed copy of the proxy materials by following the instructions on the Notice. We will also provide, without charge, a copy of the 2019
Annual Report on Form 10-K, including the financial statements and the financial statement schedules, to any stockholder who submits a written request to us at our principal executive offices at FormFactor, Inc. Attn: General Counsel,
7005 Southfront Road, Livermore, CA 94551.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION
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Certain statements contained in this Proxy Statement and accompanying materials
constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts are forward-looking statements. These forward-looking statements include,
but are not limited to, statements regarding the company’s expectations or objectives regarding future financial and operational results, the company’s successful development and execution of strategic and operational plans and growth
objectives, and the company’s achievement and execution of its corporate social responsibility objectives and standards, and other statements regarding the company’s business. Forward-looking statements also include statements regarding
the company’s management or governance practices that may indicate an intent or expectation to continue such practices in the future. Forward-looking statements may contain words such as “may,” “might,” “will,” “expect,” “plan,”
“anticipate,” and “continue,” the negative or plural of these words and similar expressions and include the assumptions that underlie such statements. Where forward-looking statements are expressions of an intent or expectation to
continue any management or governance practices, such continuation is subject to future change or cessation except as may be otherwise required by law. The forward-looking statements included in this Proxy Statement and accompanying
materials are based on our current beliefs and expectations and speak only as of the date hereof. These statements may also be based on standards for measuring progress that are still developing and on assumptions that are subject to
change in the future. These statements are also aspirational and are not guarantees or indicators of future actions, targets or results. Important assumptions and other factors that could cause actual results to differ materially from
those forward-looking statements include, but are not limited to, those risks, uncertainties and factors described under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 28, 2019 and in our other
filings with the SEC. We do not intend, and, except as required by law, we undertake no obligation, to update any of our forward-looking statements after the date of this Proxy Statement to reflect any future events or circumstances.
Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
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2020 Proxy Statement
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ii
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2020 Proxy Statement
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PROPOSAL
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DESCRIPTION
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BOARD RECOMMENDATION
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Proposal 1: Election of
Directors (page 9)
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We are asking our stockholders to elect three Class II directors, one Class III
director and one Class I director. We recommend voting in favor of the nominees named in this Proxy Statement.
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✔
FOR each nominee |
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Proposal 2: Advisory
approval of the company’s executive compensation (page 29)
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We are asking our stockholders to cast a non-binding advisory vote regarding the
compensation of our named executive officers. We recommend that you review the “Compensation Discussion and Analysis” section in this Proxy Statement for additional details on FormFactor’s executive compensation.
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✔
FOR |
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Proposal 3: Approval of an amendment and restatement of the company’s 2012 Equity Incentive Plan to increase the number of shares reserved for issuance under the 2012 Equity Incentive Plan by 3,500,000 shares and to extend the term of the 2012 Equity Incentive Plan to 2030 (page 49)
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We are asking our stockholders to approve an increase of 3,500,000 shares of common
stock to be authorized for issuance under the 2012 Equity Plan and to extend the term of the 2012 Equity Incentive Plan to 2030.
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✔
FOR |
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Proposal 4: Ratification of
the selection of KPMG LLP as the company’s independent registered
public accounting firm for fiscal year 2020 (page 55)
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We are asking our stockholders to ratify our Audit Committee’s selection of KPMG LLP
as our independent registered public accounting firm.
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✔
FOR |
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2020 Proxy Statement
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1
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Q:
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Why am I receiving FormFactor’s proxy materials?
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A:
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Our Board of Directors has made FormFactor’s proxy materials available to you on the Internet on or about April 3, 2020 or, upon your
request, has delivered a printed set of the proxy materials to you by mail in connection with the solicitation of proxies by our Board for our 2020 Annual Meeting of Stockholders. FormFactor’s proxy materials are available on the Internet
at http://proxyvote.com. We will hold the Annual Meeting on Friday, May 15, 2020, at 3:00 p.m., Pacific Daylight Time. The Annual Meeting will be a virtual meeting of stockholders, which will be conducted online via a live webcast. You
will be able to attend the Annual Meeting, submit your questions and vote online during the meeting by visiting www.virtualshareholdermeeting.com/FORM2020. We believe a virtual meeting will enable expanded access and increased stockholder
attendance and participation in light of the public health and travel concerns relating to the 2019 novel coronavirus (COVID-19) and the related recommendations and protocols issued by federal, state and local governments. Our intention
is to resume holding in person meetings under normal circumstances. Additional information regarding procedures for asking appropriate questions during the meeting will be made available on the Investor Relations section of our website
prior to the meeting.
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Q:
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What is included in the proxy materials?
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A:
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The proxy materials include our company’s Notice of Annual Meeting of Stockholders, Proxy Statement and the 2019 Annual Report on
Form 10-K, which includes our audited consolidated financial statements. If you requested a printed set of the proxy materials by mail, the proxy materials also included a proxy card for the Annual Meeting.
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Q:
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Why did I receive a notice in the mail regarding the Internet availability of the proxy materials?
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A:
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We mailed a Notice of Internet Availability of Proxy Materials to our stockholders of record and beneficial owners of our common
stock on or about April 3, 2020 to notify you that you can access the proxy materials over the Internet. Instructions for accessing the proxy materials through the Internet are set forth in the Notice of Internet Availability of Proxy
Materials. As we did last year for our 2019 Annual Meeting of Stockholders, we sent the Notice instead of mailing a printed set of the proxy materials in accordance with the “Notice and Access” rules adopted by the U.S. Securities and
Exchange Commission. If you wish to receive a printed set of the proxy materials, please follow the instructions set forth on the Notice of Internet Availability of Proxy Materials.
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Q:
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How can I get electronic access to the proxy materials?
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A:
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The Notice of Internet Availability of Proxy Materials contains instructions on how to review our company’s proxy materials on the
Internet and instruct us to send future proxy materials to you by e-mail. Your election to receive future proxy materials by e-mail will remain in effect until you terminate it in writing.
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2
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2020 Proxy Statement
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Q:
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What is “householding” and how does it affect me?
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A:
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The proxy rules of the U.S. Securities and Exchange Commission permit companies and intermediaries, such as brokers and banks, to
satisfy proxy statement delivery requirements for two or more stockholders sharing an address by delivering one proxy statement to those stockholders. This procedure, known as “householding,” reduces the amount of duplicate information
that stockholders receive and lowers our printing and mailing costs.
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Q:
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Where will the Annual Meeting be held?
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A:
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We will hold the Annual Meeting entirely online via live webcast on Friday, May 15, 2020, at 3:00 p.m., Pacific Daylight Time. You
will not be able to physically attend the Annual Meeting.
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Q:
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What specific proposals will be considered and acted upon at FormFactor’s 2020 Annual Meeting?
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A:
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The specific proposals to be considered and acted upon at the Annual Meeting are:
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2020 Proxy Statement
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3
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Q:
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What do I need to do to attend the Annual Meeting?
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A:
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You may attend, vote and ask questions at the Annual Meeting online by following the instructions provided on the Notice to log in to
www.virtualshareholdermeeting.com/FORM2020. If you are a stockholder of record of shares of our common stock, you will be asked to provide the control number from your Notice. If you are a beneficial owner of shares registered in the name
of your broker, bank or other nominee, follow the instructions from your broker, bank or other nominee.
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Q:
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Who can vote at the Annual Meeting?
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A:
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Only stockholders of record of our common stock at the close of business on March 20, 2020, which is the record date, are entitled to
notice of, and to vote at, the Annual Meeting. If you own shares of FormFactor common stock as of the record date, then you can vote at the Annual Meeting. At the close of business on the record date, we had 76,158,251 shares of our
common stock outstanding and entitled to vote, which were held by 157 stockholders of record.
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Q:
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How many votes am I entitled per share of common stock?
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A:
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Holders of our common stock are entitled to one vote for each share held as of the record date.
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Q:
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What is the difference between holding FormFactor shares as a stockholder of record and a beneficial owner?
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A:
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Most of our stockholders hold their shares of our common stock as a beneficial owner through a broker, bank or other nominee in
“street name” rather than directly in their own name. As summarized below, there are some important distinctions between shares held of record and those owned beneficially in “street name.”
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Q:
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If I am a stockholder of record of FormFactor shares, how do I vote?
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A:
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Voting by Internet. You can vote through the Internet by following the instructions provided
in the Notice of Internet Availability of Proxy Materials that you received. Go to http://proxyvote.com, follow the instructions on the screen to log in, make your selections as instructed and vote.
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4
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2020 Proxy Statement
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Q:
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If I am a beneficial owner of shares held in “street name,” how do I vote?
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A:
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Voting by Internet. You can vote over the Internet by following the voting instruction card
provided to you by your broker, bank or other nominee.
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Q:
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What if I submit a proxy but I do not give specific voting instructions?
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A:
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Stockholder of Record: If you are a stockholder of record of shares of our common stock, and
if you indicate when voting through the Internet that you wish to vote as recommended by our Board of Directors, or if you sign and return a proxy without giving specific voting instructions, then the proxy holders designated by our
Board, who are officers of our company, will vote your shares FOR the Class II, Class III and Class I nominees for director, FOR the advisory approval of the company’s executive compensation, FOR the amendment and restatement of the 2012
Equity Incentive Plan to increase the number of shares reserved for issuance under the 2012 Equity Incentive Plan by 3,500,000 shares and to extend the term of the 2012 Equity Incentive Plan to 2030 and FOR the ratification of the
selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2020, all as recommended by our Board of Directors and as presented in this Proxy Statement.
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Q:
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Which ballot measures are considered “routine” or “non-routine”?
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A:
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The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2020 (Proposal
No. 4) is a matter considered routine under applicable rules. A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected to exist in connection with Proposal No. 4. The election of
directors (Proposal No. 1), the advisory approval of the company’s executive compensation (Proposal No. 2), and the approval of an amendment and restatement
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2020 Proxy Statement
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5
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Q:
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What is the quorum requirement for the Annual Meeting?
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A:
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A quorum is required for our stockholders to conduct business at the Annual Meeting. A majority of the shares of our common stock
entitled to vote must be present online or represented by proxy at the Annual Meeting in order to hold the meeting and conduct business. We will count your shares for purposes of determining whether there is a quorum if you are present
online at the Annual Meeting, if you have voted through the Internet, if you have voted by properly submitting a proxy card, or if the nominee holding your shares submits a proxy card. We will also count broker non-votes for the purpose
of determining if there is a quorum.
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Q:
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What is the voting requirement to approve each of the proposals?
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A:
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For Proposal No. 1, each of the three Class II directors, the Class III director and the Class I director will be elected if holders
of shares of our common stock entitled to vote who are present online or represented by proxy at the Annual Meeting cast more votes “for” such nominee’s election than the votes “against” such nominee’s election. You may not cumulate votes
in the election of directors. If a nominee for director is not elected, the director shall offer to tender his or her resignation to the Board of Directors. The Governance and Nominating Committee will make a recommendation to the Board
of Directors to accept or reject the resignation or whether other action should be taken. The Board of Directors will act on the Governance and Nominating Committee’s recommendation and publicly disclose its decision and the rationale
behind it within 90 days from the date of the certification of the election results. The director who has so tendered his or her resignation will not participate in the Board of Directors’ decision.
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How are abstentions treated?
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A:
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Abstentions are counted for the purposes of determining whether a quorum is present at the Annual Meeting. Abstentions will not be
counted either in favor of or against any of the proposals.
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Q:
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Can I change my vote or revoke my proxy after I have voted?
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A:
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You may change your vote or revoke your proxy at any time before the final vote at the Annual Meeting: (a) through the Internet (only
your latest Internet proxy submitted prior to the Annual Meeting will be counted), (b) by signing and returning a new proxy card with a later date if you are a stockholder of record, or (c) by attending the Annual Meeting and voting
online if you are a stockholder of record or if you are a beneficial owner and have obtained a proxy from the nominee holding your shares giving you the right to vote your shares. Your attendance at the Annual Meeting will not
automatically revoke your proxy unless you vote again at the Annual Meeting or specifically request in writing that your prior proxy be revoked.
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6
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2020 Proxy Statement
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Q:
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What happens if there are insufficient votes in favor of the proposals?
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A:
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In the event that sufficient votes in favor of the proposals are not received by the date of the Annual Meeting, the proxy holders,
who are officers of our company, may propose one or more adjournments of the Annual Meeting to permit further solicitations of proxies. Any such adjournment would require the affirmative vote of holders of the majority of the shares of
common stock present online or represented by proxy at the Annual Meeting.
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Q:
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What happens if additional matters are presented at the Annual Meeting?
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A:
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We are not aware of any other matters to be presented for a vote at the Annual Meeting. If you grant a proxy, the proxy holders, who
are officers of our company, will have the authority in their discretion to vote your shares on any other matters that are properly presented for a vote at the Annual Meeting. If for any reason any of the Class II nominees, the Class III
nominee or the Class I nominee are not available as a candidate for director, the proxy holders will vote your proxy for such other candidate or candidates as may be recommended by our Board of Directors.
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Q:
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Is my vote confidential?
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A:
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Proxy instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your
voting privacy. Your vote will not be disclosed either within our company or to third parties, except (a) as necessary to meet applicable legal requirements, (b) to allow for the tabulation and certification of votes, and (c) to
facilitate a successful proxy solicitation. If stockholders provide written comments on their proxy cards, we may forward the proxy card(s) to our company’s Corporate Secretary.
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Q:
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Who is making the solicitation?
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A:
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We are soliciting the enclosed proxy for use at our Annual Meeting to be held on May 15, 2020 at 3:00 p.m., Pacific Daylight Time or
at any adjournment thereof for the purposes set forth in this Proxy Statement.
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Q:
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Who is paying for the cost of this proxy solicitation?
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A:
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We will pay the entire cost for soliciting proxies to be voted at the Annual Meeting. We will pay brokers, banks and other nominees
representing beneficial owners of shares of our common stock held in “street name” certain fees associated with delivering the Notice of Internet Availability of Proxy Materials, delivering printed proxy materials by mail to beneficial
owners who request them and obtaining beneficial owners’ voting instructions. In addition, our directors, officers and employees may also solicit proxies on our behalf by mail, telephone, online or in person. We will not pay any
compensation to our directors, officers and employees for their proxy solicitation efforts, but we may reimburse them for reasonable out-of-pocket expenses in connection with any solicitation.
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Q:
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What are the voting recommendations of our Board of Directors?
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A:
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Our Board of Directors recommends a vote FOR each of the nominees in Proposal 1 and FOR Proposal Nos. 2, 3 and 4. Specifically, our
Board recommends a vote:
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2020 Proxy Statement
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7
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Q:
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Where can I find the voting results of the Annual Meeting?
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A:
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We intend to announce the voting results at the Annual Meeting and to report the results on a Form 8-K that we file with the U.S.
Securities and Exchange Commission within four business days of the Annual Meeting.
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8
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2020 Proxy Statement
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Our Board of Directors recommends a vote FOR the election to
our Board of Directors of Raymond A. Link, Michael D. Slessor and Thomas St. Dennis, as Class II directors; Rebeca Obregon-Jimenez, as a Class III director; and Sheri Rhodes, as a Class I director.
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2020 Proxy Statement
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9
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Name of Director
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Age
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Class
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Position with FormFactor
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Director Since
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Raymond A. Link*(1)(3)
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66
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II
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Director
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June 2016
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Lothar Maier(1)(3)
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65
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I
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Director
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November 2006
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Rebeca Obregon-Jimenez*(2)
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51
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III
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Director
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September 2019
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Sheri Rhodes*(3)
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51
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I
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Director
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December 2019
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Edward Rogas, Jr.(2)
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79
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III
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Director
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October 2010
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Michael D. Slessor*
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50
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II
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Director and Chief Executive Officer
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October 2013
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Kelley Steven-Waiss(1)(2)
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50
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I
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Director
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August 2015
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Thomas St. Dennis*
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66
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II
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Director and Chairperson
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September 2010
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*
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Current nominee for election.
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(1)
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Current member of the Governance and Nominating Committee.
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(2)
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Current member of the Compensation Committee.
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(3)
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Current member of the Audit Committee.
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10
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2020 Proxy Statement
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2020 Proxy Statement
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11
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12
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2020 Proxy Statement
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2020 Proxy Statement
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13
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14
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2020 Proxy Statement
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Leadership and Senior Management
Directors who have served in senior leadership roles understand strategy and risk management and have the experience and perspective to evaluate and oversee the execution of operational and policy issues. |
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International Business Operations
Experience in a variety of geographic, political, economic, and cultural environments outside of the U.S. is important in understanding and overseeing our global business and strategies. |
Board Practices of Public Companies
Depth of experience in public companies and boards provides insight on existing and emerging trends and issues important to ensuring excellent board performance. |
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Financial and Risk Management
Directors with an outstanding background in complex financial and accounting matters supports effective capital management, and oversight of financial reporting and internal controls. |
Sales & Marketing
Expertise in sales and marketing, with knowledge of customer relationships and demands, enables Board-level guidance to oversee and enable important customer-related strategies and market dynamics. |
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Information Technology & Cybersecurity
Extensive skills in information systems and network security is important to assessing and guiding our continuous investments in information technologies and infrastructure. |
Manufacturing Operations
Knowledge of the unique challenges presented in developing and operating manufacturing technologies and volume production capabilities with precision and efficiency is highly valued in the oversight of our operations and strategies. |
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Human Capital Management
Managing talent is key to ensuring our continued success, and directors with human resources and human capital management expertise also bring important guidance to our talent acquisition and succession planning. |
Engineering & Product Development
Directors with experience in engineering and developing new products and technologies provide critical perspectives for the oversight of our R&D projects and investments to address rapidly changing customer technology requirements. |
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Mergers & Acquisitions
Directors with experience in providing timely and objective financial and commercial analyses of prospective mergers and acquisitions provide significant advantages, including in the structuring transactions and the integration of businesses. |
2020 Proxy Statement
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15
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16
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2020 Proxy Statement
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The summary of the Board assessment questionnaires and related topics and
observations are discussed at the following meeting of the Governance and Nominating Committee with all members of the Board present, including suggestions for updating policies and Board practices in accordance with the results of the
assessment.
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Taking into account the results of the Board assessment, each committee of the Board
conducts an evaluation of its charter and performance under its charter annually.
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Each director submits to the Chairperson a written summary of their performance
including within four attributes:
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•
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Functional Expertise (remaining current and well-informed in relevant areas of
committee and Board responsibilities)
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•
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Engagement (investing time in addition to Board proceedings to be knowledgeable
about the company, including its financial performance, organization, products, markets, customers, and competitors)
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•
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Communication (contributing critically and constructively during meetings and in
writing to the Board and management)
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•
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Enthusiasm (demonstrating strong interest in continuing to serve as a director of
the company)
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The Chairperson completes a one-on-one feedback session with each director regarding
their summary of performance and other observations.
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The Chairperson presents an aggregated summary of the director evaluations and
provides any resulting recommendations to the full Board.
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2020 Proxy Statement
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17
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•
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amount of risk that the company should be willing to accept in the pursuit of its business plans and strategies;
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•
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ability of the company to withstand the negative occurrences arising out of risks;
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•
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company’s approaches to the transfer of risks to third parties; and,
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•
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ongoing attention and resources that the company devotes to risk assessment and mitigation.
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18
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2020 Proxy Statement
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•
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7 of 8 independent directors
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•
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Diversity of Board skills and experience
|
•
|
Stock ownership guidelines for directors and executive officers
|
•
|
Independent Chairperson, separate from Chief Executive Officer
|
•
|
Thoughtful Board refreshment, with half the Board added in the past five years
|
•
|
Voting rights proportional to economic interests - one share equals one vote
|
•
|
No stockholder rights plan/poison pill
|
•
|
Succession planning process
|
•
|
Majority voting with director resignation policy for uncontested elections
|
•
|
Resignation policy in uncontested elections if a director fails to receive a majority of votes
|
•
|
Board and committee oversight of sustainability and corporate social responsibility
|
•
|
Annual Board and director evaluations
|
•
|
Board risk oversight and assessment
|
•
|
Strict policy prohibiting the pledging or hedging of company shares or similar transactions
|
2020 Proxy Statement
|
| |
|
| |
19
|
•
|
Size of the Board
|
•
|
Requirement that the Board be comprised of a majority of independent directors
|
•
|
Limits on the number of other public company boards on which directors may serve
|
•
|
Tender of resignation in the event of change in principal occupation or position
|
•
|
Requirement that each committee of the Board be comprised entirely of independent directors
|
•
|
Annual CEO performance assessments
|
•
|
Stock holding requirements for directors and executive officers
|
•
|
Individual directors performance reviews
|
•
|
Other matters germane to the structure, operation and responsibilities of the Board
|
20
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
21
|
|
Audit Committee
|
| ||||||
|
Members
|
| |
Primary Oversight Responsibilities
|
| |||
|
Raymond Link, Chairperson
(appointed Chairperson December 2019) Lothar Maier (transitioned from Compensation Committee September 2019) Sheri Rhodes (appointed December 2019) |
| |
•
|
| |
Selection, compensation, and evaluation and termination of our independent
registered public accounting firm
|
|
|
•
|
| |
Represents and assists the Board in fulfilling its responsibility to oversee the:
|
| |||
|
|
| |
• quality and integrity of our financial statements
|
| |||
|
|
| |
• adequacy and effectiveness of our internal controls over
financial reporting and disclosure controls and procedures |
| |||
|
|
| |
• nature of any identified deficiencies and the implementation of
corrective actions in relation to our internal controls over financial reporting |
| |||
|
|
| |
• financial and accounting policies, judgments, decisions and
risks relating to significant transactions and structures |
| |||
|
|
| |
• compliance with laws and regulations affecting the company’s
financial condition or financial reporting |
| |||
|
|
| |
• results of the independent auditors’ audits of the
company’s annual financial statements and interim reviews |
| |||
|
|
| |
|
| |||
|
Our Board has determined that each member of the Audit Committee is independent
under the rules of the Securities and Exchange Commission and the Nasdaq Stock Market for purposes of determining independence of directors generally and of directors who serve on the audit committee of a company listed on the Nasdaq
Stock Market, and is able to read and understand financial statements as contemplated by such rules. Our Board has also determined that Raymond Link is an audit committee financial expert under the rules of the Securities and Exchange
Commission, and that each member of the Audit Committee is financially sophisticated under the rules of the Nasdaq Stock Market. The Audit Committee met six times during fiscal year 2019.
|
|
22
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
23
|
|
Name
|
| |
Fees Earned or
Paid in Cash ($) |
| |
Stock
Awards ($)(1)(2)(3) |
| |
Total
($) |
|
|
Richard DeLateur(4)
|
| |
56,788
|
| |
141,480
|
| |
198,268
|
|
|
Raymond A. Link
|
| |
66,000
|
| |
141,480
|
| |
207,480
|
|
|
Lothar Maier
|
| |
58,375
|
| |
141,480
|
| |
199,855
|
|
|
Rebeca Obregon-Jimenez(5)
|
| |
—
|
| |
115,406
|
| |
115,406
|
|
|
Sheri Rhodes(6)
|
| |
—
|
| |
93,381
|
| |
93,381
|
|
|
Edward Rogas, Jr.
|
| |
60,000
|
| |
141,480
|
| |
201,480
|
|
|
Thomas St. Dennis
|
| |
70,000
|
| |
141,480
|
| |
211,480
|
|
|
Kelley Steven-Waiss
|
| |
57,500
|
| |
141,480
|
| |
198,980
|
|
|
Michael W. Zellner(7)
|
| |
72,000
|
| |
141,480
|
| |
213,480
|
|
(1)
|
The stock awards are restricted stock units that we awarded to our non-executive directors under our 2012 Equity Incentive Plan. The
restricted stock units vest monthly over a one-year period and the vested portion settles in shares only at the earlier of the one year anniversary of the date of grant or upon the departure of the director from the Board.
|
(2)
|
The amounts shown reflect the aggregate grant date fair value of all awards granted in fiscal year 2019 for financial statement
reporting purposes in accordance with Financial Accounting Standards Board Topic No. ASC 718, Compensation - Stock Compensation. Assumptions used in the calculation of these amounts are described in Note 12, Stock-Based Compensation, to our company’s consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019.
|
24
|
| |
|
| |
2020 Proxy Statement
|
(3)
|
A summary of options and restricted stock units outstanding as of December 28, 2019 for each of our non-employee directors is as
follows:
|
|
Name
|
| |
Stock
Options Outstanding (#) |
| |
Restricted
Stock Units Outstanding (#) |
|
|
Richard DeLateur
|
| |
—
|
| |
6,000
|
|
|
Raymond A. Link
|
| |
—
|
| |
9,000
|
|
|
Lothar Maier
|
| |
—
|
| |
9,000
|
|
|
Rebeca Obregon-Jimenez
|
| |
—
|
| |
5,992
|
|
|
Sheri Rhodes
|
| |
—
|
| |
4,019
|
|
|
Edward Rogas, Jr.
|
| |
—
|
| |
9,000
|
|
|
Thomas St. Dennis
|
| |
—
|
| |
9,000
|
|
|
Kelley Steven-Waiss
|
| |
6,000
|
| |
9,000
|
|
|
Michael W. Zellner
|
| |
—
|
| |
9,000
|
|
(4)
|
Mr. DeLateur resigned from the Board in July 2019.
|
(5)
|
Ms. Obregon-Jimenez was appointed to the Board in September 2019. Newly appointed directors receive awards pro-rated based upon the
date the new director joins the Board.
|
(6)
|
Ms. Rhodes was appointed to the Board in December 2019. Newly appointed directors receive awards pro-rated based upon the date the
new director joins the Board.
|
(7)
|
Mr. Zellner resigned from the Board in December 2019.
|
|
Compensation
Element
|
| |
Fiscal Year 2019 Cash Compensation
|
|
|
Director Annual Retainer
|
| |
$45,000
|
|
|
Chairperson Annual Retainer
|
| |
$25,000 for Board Chairperson
|
|
|
|
| |
$22,000 for Audit Committee Chairperson
|
|
|
|
| |
$15,000 for Compensation Committee Chairperson
|
|
|
|
| |
$10,000 for all other committee chairpersons
|
|
|
Lead Independent Director Annual Retainer
|
| |
$15,000
|
|
|
Committee Member Annual Retainer
|
| |
$11,000 for Audit Committee member
|
|
|
|
| |
$7,500 for Compensation Committee member
|
|
|
|
| |
$5,000 for all other committee members
|
|
2020 Proxy Statement
|
| |
|
| |
25
|
26
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
27
|
|
Sustainable Technology
|
| |
We design products for a positive impact on
society and the environment
|
|
|
Our customers use our test and measurement products to reduce waste and improve
yield, and our products are designed for efficiency
|
| |||
|
Diversity and Inclusion
|
| |
We are committed to gender equality,
cultural, and disability inclusion
|
|
|
Our workforce is markedly diverse, and we treat the recruitment, retention and
promotion of a balanced employee population as an important driver of company performance, including through events, networking groups, and management objectives that help ensure real inclusiveness
|
| |||
|
Health and Safety
|
| |
We provide a safe workplace to ensure the
health and well-being of personnel
|
|
|
We have an array of programs to prevent and manage risks from our operations to the
wellbeing of our personnel and neighboring communities involving dedicated resources, diligent management systems and a range of training
|
| |||
|
Labor and Human Rights
|
| |
We have zero tolerance for forced labor and
promote labor and human rights
|
|
|
We operate under high global standards including with our pay practices, benefits,
employee leave and other working conditions, and all of our personnel enjoy freedom of expression, assembly and movement
|
| |||
|
Development and Engagement
|
| |
We provide rewarding employee experiences and
growth in all locations
|
|
|
Our employees have excellent opportunities to continuously grow and experience the
rewards of feedback, training, mentorships, team building, career progression, tuition reimbursements, and a culture of transparency
|
| |||
|
Energy and Climate Change
|
| |
We value energy efficiency and recognize the
critical importance of addressing climate change
|
|
|
We utilize a variety of state-of-the-art technologies to reduce our power
consumption in manufacturing and to maintain efficient environmental controls, and have measurable goals and progress towards our continuous reduction of our greenhouse gas emissions as part of Carbon Disclosure Project reporting
|
| |||
|
Supply Chain Responsibility
|
| |
We mitigate the sustainability risks in our
extended supply chain
|
|
|
Regular operational reviews involve oversight of key supplier performance including
sustainability risks; we expect our suppliers to commit to the Responsible Business Alliance Code of Conduct, and we conduct inquiries into their responsible sourcing
|
| |||
|
Waste and Chemicals
|
| |
We reduce waste in landfills, and carefully
manage our use of hazardous chemicals and materials
|
|
|
We have management systems for our use of chemicals to avoid unnecessary risks of
waste or threats to the environment which closely track usage, safe handling and environmentally conscious disposal
|
| |||
|
Education and Volunteering
|
| |
We support education in schools, and give
back to communities
|
|
|
Our scholarship and internship programs support educational opportunities: we
recruit from local schools, donate equipment to schools and other charitable causes, and run a wide variety of giving and community support programs including blood drives, fundraisers and disaster relief efforts
|
|
28
|
| |
|
| |
2020 Proxy Statement
|
1.
|
Focus on performance-based pay as the majority of overall compensation;
|
2.
|
Set aggressive performance targets to align the interests of our executives and our stockholders in near-term performance (through
our cash incentive plan) and long-term performance (through our equity compensation policy);
|
3.
|
Avoid policies that provide for excessive cash compensation and avoid cash-consuming practices such as tax gross-ups, generous
severance and retirement packages or guaranteed bonuses;
|
4.
|
Emphasize equity compensation to align the interests of our named executive officers with those of our stockholders and incentivize
them to improve operational performance and company value, including by granting performance-based restricted stock unit awards; and
|
5.
|
Emphasize executive compensation governance policies that are aligned with the interests of our stockholders, including change in
control benefits that are double-trigger (i.e., require termination of employment as well as a change in control) and that are within reasonable limits, a stock ownership policy, clawback provisions, and anti-hedging/pledging provisions.
|
2020 Proxy Statement
|
| |
|
| |
29
|
|
Our Board of Directors recommends a vote FOR the approval
of the compensation of our named executive officers as disclosed in this Proxy Statement. |
|
30
|
| |
|
| |
2020 Proxy Statement
|
What We Do
|
| |
|
Independence. The Compensation Committee is comprised solely of independent directors. Additionally, the Compensation Committee’s independent compensation consultant is retained directly by the Compensation Committee.
Risk Analysis. Compensation programs are structured to avoid inappropriate risk taking by our executives and all employees by having the appropriate pay philosophy, peer group and market positioning to support reasonable business objectives. Incentive Award Opportunities Capped. We limit our non-equity incentive plan awards to 200% of the target, and we limit our performance-based equity incentive awards to 150% of the target. Performance-Based Compensation. The majority of executive officer compensation is aligned with pre-determined, objective measures of company performance with both cash incentives and performance-based equity being earned based upon levels of achievement of goals. |
| |
Double-Trigger Change in Control Provisions. The change in control severance agreements provided to senior executives have “double-trigger” provisions and the level of severance is within or below standard levels.
Annual Executive Compensation Strategy Review. The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes and other factors. Annual Stockholder Advisory Vote on Named Executive Officer Compensation. We conduct the stockholder advisory vote on the compensation of our named executive officers every year. Stock Ownership Guidelines. We have adopted strict stock ownership guidelines for our Chief Executive Officer and other executive officers. Clawback Policy. The Compensation Committee has adopted a clawback policy directed to incentive-based cash compensation. |
What We Don’t Do
|
| |
|
No Special Perquisites. We did not provide any special benefits or perquisites to our named executive officers in fiscal year 2019.
|
| |
No Executive Defined Benefit or Retirement
Plans. We do not offer supplemental pension arrangements or defined benefit
retirement plans or arrangements to our executive officers that are different from or in addition to what is offered to our other employees.
|
No Hedging or Pledging. Our insider trading policy, available
on our website, strictly prohibits our directors and officers from purchasing
options on our securities, pledging our stock in a margin account or otherwise entering
into transactions designed to hedge or offset any decrease in the market value of our stock (such as exchange funds, equity swaps, zero-cost collars and forward sale contracts).
No Guarantees of Employment. We have no employment contracts with any executives that guarantee a term of employment, contain extraordinary severance provisions or guarantee salary increases or bonus amounts. |
| ||
|
No Dividends or Dividend Equivalents Payable
on Unvested Equity Awards. We do not pay dividends or dividend equivalents on unvested
or unearned equity compensation awards.
|
||
|
Prohibition of Repricings. Our Equity Plan prohibits repricings of any grants under the plan without the approval of stockholders.
|
2020 Proxy Statement
|
| |
|
| |
31
|
•
|
base salary;
|
•
|
performance-based cash incentives that will only be awarded based on achievement of pre-determined and objective financial goals as
approved by the Compensation Committee; and
|
•
|
long-term, equity incentive awards that are issued in the form of both performance-based RSUs, for encouraging long-term performance
and delivering value for our stockholders over time, and time-vested RSUs, for retention and reinforcing our ownership culture and alignment with stockholders.
|
32
|
| |
|
| |
2020 Proxy Statement
|
•
|
Attract, retain and motivate highly skilled individuals based upon their contribution to the success of our company, and that of our
stockholders;
|
•
|
Drive outstanding achievement of business objectives and reinforce our company’s strong pay-for-performance culture; and
|
•
|
Align our named executive officers’ interests with the long-term interests of our stockholders with a focus on performance that
drives value creation for our stockholders.
|
2020 Proxy Statement
|
| |
|
| |
33
|
(1)
|
Time-Vested RSU amount based on fair market value at time of grant.
|
(2)
|
Performance Based RSU valued at grant using Monte Carlo methodology.
|
|
Global Industry Classification Standard Code
|
| |
Trailing 12-Months
Revenue Range |
| |
Market
Capitalization Range |
|
|
Semiconductor—45301020 and
Semiconductor equipment— 45301010 |
| |
$210 million - $1.3 billion
(0.4x to 2.5x) |
| |
$300 million - $ 3 billion (0.3x to 3x)
|
|
|
Advanced Energy Industries
|
| |
Entegris
|
| |
Rudolph Technologies
|
|
|
Axcelis Technologies
|
| |
Ichor
|
| |
Ultra Clean Holdings
|
|
|
Brooks Automation
|
| |
MKS Instruments
|
| |
Veeco Instruments
|
|
|
Cabot Microelectronics
|
| |
Nanometrics
|
| |
XPeri
|
|
|
Coherent
|
| |
PDF Solutions
|
| |
|
|
|
Cohu
|
| |
Photronics
|
| |
|
|
34
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
35
|
|
Named Executive
Officers |
| |
2018 Target Bonus
as a % of Salary |
| |
2019 Target Bonus
as a % of Salary |
|
|
Michael D. Slessor
|
| |
100%
|
| |
100%
|
|
|
Shai Shahar
|
| |
67%
|
| |
70%
|
|
|
Period
|
| |
Adjusted Operating
Income Result (in thousands)(1) |
| |
Adjusted Operating
Income Target (in thousands)(1) |
| |
% Payout
Achieved(2) |
|
|
Q1
|
| |
$23,471
|
| |
$31,276
|
| |
65%
|
|
|
Q2
|
| |
$24,883
|
| |
$31,276
|
| |
71%
|
|
|
Q3
|
| |
$22,188
|
| |
$31,276
|
| |
59%
|
|
|
Q4
|
| |
$43,909
|
| |
$31,276
|
| |
157%
|
|
(1)
|
Adjusted Operating Income excludes bonus payments, stock compensation, acquisition and integration costs, intangible asset
amortization and one-time non-recurring charges or credits.
|
(2)
|
As a result of these quarterly achievement levels, each named executive officer earned 88% of his annual target cash incentive award
for fiscal year 2019. Achievement is calculated on a constant slope, where there is 0% achievement at $8,936 or below and 100% achievement at $31,276 in adjusted operating income (in thousands). The maximum achievement under the plan is
200% of target at $53,617 in adjusted operating income (in thousands).
|
36
|
| |
|
| |
2020 Proxy Statement
|
|
Objective
|
| |
Below Threshold
|
| |
Threshold
|
| |
Target
|
| |
Maximum
|
|
|
Percentile Rank
|
| |
Below the 25th percentile
|
| |
25th percentile
|
| |
50th percentile
|
| |
75th percentile or higher
|
|
|
Payout Percentage
|
| |
0% - No payout
|
| |
50%
|
| |
100%
|
| |
150%
|
|
(1)
|
Awards are calculated using linear interpolation between performance levels.
|
2020 Proxy Statement
|
| |
|
| |
37
|
|
Named Executive
Officer |
| |
2019 Annual Time-Based
Restricted Stock Unit Awards (#) |
| |
2019 Annual Performance-
Based Restricted Stock Unit Awards (#)(1) |
|
|
Michael D. Slessor
|
| |
62,000
|
| |
93,000
|
|
|
Shai Shahar
|
| |
22,000
|
| |
33,000
|
|
(1)
|
Performance-based restricted stock unit awards reflect the “target” number of units that can be earned based on relative TSR
Performance. Actual units earned may vary from 0% to 150% of the “target” number based upon relative TSR as described above.
|
|
Named Executive
Officer/Grant Year |
| |
Target Performance-Based Restricted Stock Unit Awards Scheduled to Vest in 2019
(#)
|
| |
Number of Performance-Based Restricted Stock Units Achieved (#)
|
| |
% of Target Achievement
|
|
|
Michael D. Slessor
|
| |
40,000
|
| |
47,880
|
| |
119.7%
|
|
|
Shai Shahar(1)
|
| |
—
|
| |
—
|
| |
—
|
|
(1)
|
Mr. Shahar joined the company in 2018, and as these awards have a three-year performance period no grants of performance-based
restricted stock units for Mr. Shahar were scheduled to vest in 2019.
|
|
Plan Year
|
| |
Performance Measurement Period
|
|
|
2017
|
| |
2017 to 2020
|
|
|
2018
|
| |
2018 to 2021
|
|
|
2019
|
| |
2019 to 2022
|
|
38
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
39
|
|
Plan Category
|
| |
Number of
securities to be issued under outstanding options, warrants and rights (a) |
| |
Weighted-average
exercise price of outstanding options, warrants and rights ($) (b) |
| |
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
|
|
Equity compensation plans approved by our stockholders(1)
|
| |
3,430,769(2)
|
| |
$8.35(3)
|
| |
7,211,265(4)
|
|
|
Equity compensation plans not approved by our stockholders
|
| |
—
|
| |
—
|
| |
—
|
|
|
Total
|
| |
3,430,769
|
| |
$8.35
|
| |
7,211,265
|
|
(1)
|
Includes our 2012 Equity Incentive Plan and the Employee Stock Purchase Plan.
|
(2)
|
Represents 361,769 shares subject to outstanding options, 2,222,900 shares subject to outstanding time-based restricted stock units,
and 846,100 shares subject to unearned performance-based restricted stock units. The unearned performance-based restricted stock units reflect the “target” number of units that can be earned based on the award metric. Actual units earned
under grants made prior to 2018 may vary from 0% to 125% of the “target” number, and from 0% to 150% thereafter. Excludes securities that may be issued under our Employee Stock Purchase Plan.
|
(3)
|
Excludes outstanding restricted stock units, both “time” and “performance” based awards, which do not have an exercise price.
|
(4)
|
Represents, as of December 28, 2019, 4,554,043 shares of our common stock reserved for future issuance under our 2012 Equity
Incentive Plan and 2,657,222 shares of our common stock reserved for future issuance under our Employee Stock Purchase Plan. Securities available for future issuance under the 2012 Equity Incentive Plan reflects unearned performance-based
restricted stock unit awards based on the metric “target” level. Securities available for issuance will be adjusted accordingly based on the actual units earned.
|
40
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
41
|
|
Name
|
| |
Age
|
| |
Position
|
|
|
Michael D. Slessor
|
| |
50
|
| |
Chief Executive Officer and Director
|
|
|
Shai Shahar
|
| |
48
|
| |
Chief Financial Officer
|
|
|
Named
Executive Officer and Principal Position |
| |
Year
|
| |
Salary
($) |
| |
Bonus
($) |
| |
Stock Awards
($)(1)(4) |
| |
Non-Equity
Incentive Plan Compensation ($)(2) |
| |
All Other
Compensation ($)(3) |
| |
Total
($) |
|
|
Michael D. Slessor,
President and Chief Executive Officer |
| |
2019
|
| |
500,000
|
| |
—
|
| |
3,165,100
|
| |
373,783
|
| |
10,835
|
| |
4,040,103
|
|
|
2018
|
| |
500,000
|
| |
—
|
| |
2,882,380
|
| |
294,289
|
| |
7,696
|
| |
3,684,365
|
| |||
|
2017
|
| |
500,000
|
| |
—
|
| |
1,899,625
|
| |
597,012
|
| |
9,300
|
| |
3,005,937
|
| |||
|
Shai Shahar,
Chief Financial Officer |
| |
2019
|
| |
287,714
|
| |
—
|
| |
1,123,100
|
| |
147,290
|
| |
4,838
|
| |
1,562,941
|
|
|
2018*
|
| |
222,115
|
| |
30,000
|
| |
1,540,635
|
| |
67,740
|
| |
4,795
|
| |
1,865,285
|
|
(1)
|
The dollar amounts shown are based on the fair value of the award as of the grant date. The fair
value of our fiscal year 2019 time-based stock awards was based on the closing fair market value of our common stock as reported on the Nasdaq Global Market
on the grant date. The fair value of our performance-based stock awards (which are market-based stock awards) was derived under a Monte Carlo simulation model. Assumptions used in the calculation
of these amounts are described in Note 12, Stock-Based Compensation, to our company’s
consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019.
|
(2)
|
Represents amounts earned for performance in the applicable year under our company’s Employee
Incentive Plan, which is described under “Compensation Discussion and Analysis” in this Proxy Statement.
|
(3)
|
The amounts in this column represent matching contributions under our company 401(k) Plan and
healthcare related benefits.
|
(4)
|
The dollar amount shown includes time-based and performance-based restricted stock unit awards. The payout range for the performance-based restricted stock unit awards granted prior to 2018
is 0% to 125%, and 0% to 150% for grants made
|
42
|
| |
|
| |
2020 Proxy Statement
|
*
|
Mr. Shahar joined the company in March 2018.
|
|
|
| |
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards(1) |
| |
Estimated Future Payouts
Under Equity Incentive Plan Awards |
| |
Grant
Date for Stock and Option Awards(2) |
| |
All
Other Stock Awards: Number of Shares of Stock or Units |
| |
Grant Date
Fair Value of Stock and Option Awards ($)(3) |
| ||||||||||||
|
Name
|
| |
Threshold
($) |
| |
Target
($) |
| |
Max
200% ($) |
| |
Threshold
50% (#) |
| |
Target
100% (#) |
| |
Max
150% (#) |
| |||||||||
|
Michael D. Slessor
|
| |
—
|
| |
500,000
|
| |
1,000,000
|
| |
46,500
|
| |
93,000
|
| |
139,500
|
| |
6/4/2019
|
| |
—
|
| |
2,248,740
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
6/4/2019
|
| |
62,000
|
| |
916,360
|
|
|
Shai Shahar
|
| |
—
|
| |
210,210
|
| |
420,420
|
| |
16,500
|
| |
33,000
|
| |
49,500
|
| |
6/4/2019
|
| |
—
|
| |
797,940
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
6/4/2019
|
| |
22,000
|
| |
325,160
|
|
(1)
|
The threshold calculations for fiscal year 2019 assume that our company met only the minimum
corporate performance under our Employee Incentive Plan for the period.
|
(2)
|
The awards granted were approved by the Compensation Committee of our Board of Directors.
|
(3)
|
The fair value of our time-based stock awards was based on the closing fair market value of our
common stock as reported on the Nasdaq Global Market on the grant date. The fair value of our performance-based stock awards (which are market-based awards)
was derived under a Monte Carlo simulation model.
|
2020 Proxy Statement
|
| |
|
| |
43
|
|
Name
|
| |
Number of Shares
or Units of Stock That Have Not Vested (#) |
| |
Market Value of
Shares or Units of Stock That Have Not Vested ($)(1) |
| |
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| |
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) |
|
|
Michael D. Slessor
|
| |
17,334(2)
|
| |
451,377
|
| |
78,000(5)
|
| |
2,031,120
|
|
|
|
| |
41,334(3)
|
| |
1,076,337
|
| |
93,000(6)
|
| |
2,421,720
|
|
|
|
| |
62,000(4)
|
| |
1,614,480
|
| |
93,000(7)
|
| |
2,421,720
|
|
|
Shai Shahar
|
| |
31,000(8)
|
| |
807,240
|
| |
38,500(6)
|
| |
1,002,540
|
|
|
22,000(4)
|
| |
572,880
|
| |
33,000(7)
|
| |
859,320
|
|
(1)
|
Market value was determined by multiplying the closing fair market value for a share of our
company’s common stock as of December 27, 2019, which was our company’s last business day of fiscal year 2019, of $26.04, by the number of unvested and
unearned units.
|
(2)
|
33.33% of the stock units vest each July 20 commencing July 20, 2018.
|
(3)
|
33.33% of the stock units vest each August 16 commencing August 16, 2019.
|
(4)
|
33.33% of the stock units vest each June 4 commencing June 4, 2020.
|
(5)
|
The number of units is based on a 100% achievement of the company’s TSR for the period from July 1, 2017 to June 30, 2020 relative to the TSR of the companies identified as being part of the S&P Semiconductor
Select Industry Index. The payout range for the market-based restricted stock unit award is 0% to 125%. 100% of the earned units will vest on the certification
date in 2020.
|
(6)
|
The number of units is based on a 100% achievement of the company’s TSR for the period from July 1, 2018 to June 30, 2021 relative to the TSR of the companies identified as being part of the S&P Semiconductor
Select Industry Index. The payout range for the market-based restricted stock unit award is 0% to 150%. All of the
earned units will vest on the certification date in 2021.
|
(7)
|
The number of units is based on a 100% achievement of the company’s TSR for the period from July 1, 2019 to June 30, 2022 relative to the TSR of the companies identified as being part of the S&P Semiconductor
Select Industry Index. The payout range for the market-based restricted stock unit award is 0% to 150%. All of the
earned units will vest on the certification date in 2022. These awards are scheduled to vest on the third anniversary of the grant date and achievement at 150% (maximum) would result in 139,500 and 57,750 shares earned for Dr. Slessor and Mr. Shahar, respectively.
|
(8)
|
33.33% of the stock units vest each March 15 commencing March 15, 2019.
|
|
Name
|
| |
Number of
Securities Underlying Unexercised Options Exercisable (#) |
| |
Number of
Securities Underlying Unexercised Options Unexercisable (#) |
| |
Option
Exercise Price ($) |
| |
Option
Expiration Date |
|
|
Michael D. Slessor
|
| |
350,000
|
| |
—
|
| |
8.44
|
| |
2/9/2022
|
|
|
Shai Shahar
|
| |
—
|
| |
—
|
| |
—
|
| |
—
|
|
44
|
| |
|
| |
2020 Proxy Statement
|
|
|
| |
Option Awards
|
| |
Stock Awards
|
| ||||||
|
Name
|
| |
Number of
Shares Acquired on Exercise (#) |
| |
Value
Realized on Exercise ($) |
| |
Number of
Shares Acquired on Vesting (#) |
| |
Value
Realized on Vesting ($) |
|
|
Michael D. Slessor
|
| |
100,000
|
| |
2,003,530
|
| |
47,999
|
| |
798,997
|
|
|
Shai Shahar
|
| |
—
|
| |
—
|
| |
15,500
|
| |
243,195
|
|
•
|
lump sum cash severance payment equal to one year’s annual base salary and the greater of (a) the annual target bonus or (b) the
annual target bonus multiplied by the average rate of annual bonus relative to target paid to officers covered by similar change of control severance agreements for the two most recently completed fiscal years (subject to the
participating officer’s compliance with a confidentiality agreement and an agreement not to solicit employees of our company for one year after termination);
|
•
|
continuation of health benefits for one year (subject to the participating officer’s compliance with a confidentiality agreement and
an agreement not to solicit employees of our company for one year after termination); and
|
•
|
fully accelerated vesting of all equity awards, with any forfeiture provisions and/or company right of repurchase automatically
lapsing in full.
|
•
|
“change of control” means the first to occur of any of the following events:
|
(i)
|
the consummation of a merger or consolidation of our company with any other corporation, other than a merger or consolidation which
would result in the voting securities of our company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into or exchanged for voting securities of the surviving entity)
more than 60% of the total voting power represented by the voting securities of our company or such surviving entity outstanding immediately after such merger or consolidation;
|
(ii)
|
(A) any approval by our stockholders of a plan of complete liquidation of our company, other than as a result of insolvency or (B)
the consummation of the sale or disposition (or the last in a series of sales or dispositions) by our company of all or substantially all of our company’s assets, other than a sale or disposition to a wholly-owned direct or indirect
subsidiary of our company and other than a sale or
|
2020 Proxy Statement
|
| |
|
| |
45
|
(iii)
|
any “person” (as defined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934)
becoming the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934), directly or indirectly, of securities of our company representing 40% or more of the total
voting power represented by our company’s then outstanding voting securities; or
|
(iv)
|
during any period of two consecutive years after the effective date of the change of control severance agreement, the incumbent
directors cease for any reason to constitute a majority of our Board of Directors.
|
•
|
“cause” means the occurrence of any of the following:
|
(i)
|
any act of personal dishonesty taken by the employee in connection with his or her responsibilities as an employee which is intended
to result in substantial personal enrichment of the employee and is reasonably likely to result in material harm to our company;
|
(ii)
|
the employee’s conviction of a felony;
|
(iii)
|
a willful act by the employee which constitutes misconduct and is materially injurious to our company; or
|
(iv)
|
continued willful violations by the employee of the employee’s obligations to our company after the employee has received a written
demand for performance from our company which describes the basis for our company’s belief that the employee has not substantially performed his or her duties.
|
•
|
“good reason” means the occurrence of any of the following:
|
(i)
|
without the employee’s express written consent, a material reduction of the employee’s duties, position or responsibilities relative
to the employee’s duties, position or responsibilities in effect immediately prior to the change of control;
|
(ii)
|
a reduction of more than 10% of the employee’s base salary or target bonus as in effect immediately prior to such reduction;
|
(iii)
|
without the employee’s express written consent, the relocation of the employee’s primary work location by more than 50 miles; or
|
(iv)
|
the failure of our company to obtain the assumption of the change of control severance agreement by a successor;
|
46
|
| |
|
| |
2020 Proxy Statement
|
|
|
| |
Michael D. Slessor
|
| |
Shai Shahar
|
|
|
Base salary ($)
|
| |
500,000
|
| |
300,300
|
|
|
Short-term incentive compensation ($)
|
| |
500,000
|
| |
210,210
|
|
|
Stock options ($)(1)
|
| |
—
|
| |
—
|
|
|
Stock awards ($)(1)
|
| |
12,946,255
|
| |
4,172,910
|
|
|
Health benefits ($)
|
| |
27,427
|
| |
19,708
|
|
|
Sub-Total ($)
|
| |
13,973,682
|
| |
4,703,128
|
|
|
280G Reduction in Severance Benefits ($)
|
| |
—
|
| |
—
|
|
|
Total ($)
|
| |
13,973,682
|
| |
4,703,128
|
|
(1)
|
Stock awards include time-based option and restricted stock unit awards and market (TSR) based
restricted stock unit awards. The change of control payouts for the market (TSR) based restricted stock unit awards are calculated at the maximum
achievement level for such grants.
|
2020 Proxy Statement
|
| |
|
| |
47
|
|
|
| |
Michael D. Slessor
|
|
|
Base salary ($)
|
| |
500,000
|
|
|
Short-term incentive compensation ($)
|
| |
500,000
|
|
|
Stock options ($)
|
| |
—
|
|
|
Stock awards ($)(1)
|
| |
4,066,589
|
|
|
Health benefits ($)
|
| |
27,427
|
|
|
Sub-Total ($)
|
| |
5,094,016
|
|
|
280G Reduction in Severance Benefits ($)
|
| |
—
|
|
|
Total ($)
|
| |
5,094,016
|
|
(1)
|
Stock awards include time-based restricted stock unit awards and market (TSR) based restricted stock unit awards.
|
48
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
49
|
|
Fiscal
Year |
| |
RSU Share Awards
Granted (in thousands) |
| |
Performance-Based RSU Share
Awards Granted (in thousands) |
| |
Basic Weighted Average
Shares Outstanding (in thousands) |
|
|
2019
|
| |
1,210
|
| |
300
|
| |
74,994
|
|
|
2018
|
| |
1,231
|
| |
318
|
| |
73,482
|
|
|
2017
|
| |
1,281
|
| |
333
|
| |
72,292
|
|
|
Fiscal Year
|
| |
Time-Based RSUs
Granted (in thousands) |
| |
Performance-Based
RSUs Vested (in thousands)(1) |
| |
Basic Weighted Average
Shares Outstanding (in thousands) |
| |
Burn
Rate |
|
|
2019
|
| |
1,210
|
| |
162
|
| |
74,994
|
| |
1.83%
|
|
|
2018
|
| |
1,231
|
| |
14
|
| |
73,482
|
| |
1.69%
|
|
|
2017
|
| |
1,281
|
| |
207
|
| |
72,292
|
| |
2.06%
|
|
(1)
|
We have not included the number of performance-based equity awards granted as they will only be
counted when and if earned.
|
50
|
| |
|
| |
2020 Proxy Statement
|
•
|
We had outstanding grants of approximately 306,000 stock options, with a weighted average exercise price of $8.41 and weighted
average remaining term of 1.9 years, and 2,175,005 unvested RSU awards and 846,100 unvested performance based RSU awards (at target);
|
•
|
We had 4,561,338 shares available for future issuance under our Equity Plan;
|
•
|
Our outstanding equity awards plus the shares available for future issuance under our Equity Plan (in each case, not including under
our Employee Stock Purchase Plan), as listed above, assuming grants with a mix of types comparable to historical rates for 2018 and 2019 represented approximately 11.6% of our outstanding shares of common stock (commonly referred to as
the “overhang”) as of March 20, 2020; and
|
•
|
Subject to approval of the amended and restated Equity Plan by our stockholders, we estimate that the outstanding awards as of the
record date plus the shares available for future issuance under our Equity Plan (including the 3,500,000 additional shares being requested under the Equity Plan) and assuming grants with a mix of types comparable to historical rates for
2018 and 2019 will result in overhang of approximately 15.76%.
|
|
Our Board of Directors recommends that you vote “FOR”
the amendment and restatement of the 2012 Equity Incentive Plan
|
|
•
|
| |
incentive stock options under Section 422 of the Internal Revenue Code
|
| |
•
|
| |
nonqualified stock options
|
|
•
|
| |
restricted shares
|
|||||
•
|
| |
stock appreciation rights (“SARs”)
|
| |
•
|
| |
performance shares
|
•
|
| |
restricted stock units (“RSUs”)
|
| |
•
|
| |
deferred stock units
|
•
|
| |
performance units
|
| |
|
| |
|
2020 Proxy Statement
|
| |
|
| |
51
|
•
|
Awards that are canceled, that expire or otherwise terminate without the issuance of shares;
|
•
|
RSUs, restricted shares, performance shares, performance units or deferred stock units that are forfeited; and
|
•
|
Unvested shares issued under the plan that are either forfeited by the participants or repurchased by us (at not more than the
original exercise or issue price paid per share) pursuant to our repurchase rights under the plan.
|
52
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
53
|
54
|
| |
|
| |
2020 Proxy Statement
|
|
Our Board of Directors recommends a vote FOR the ratification
of the selection of KPMG LLP as our independent registered public accounting firm for fiscal year 2020.
|
|
|
|
| |
2019
|
| |
2018
|
|
|
Audit Fees
|
| |
$1,951,126
|
| |
$1,880,250
|
|
|
Audit-Related Fees
|
| |
—
|
| |
110,635
|
|
|
Tax Fees
|
| |
—
|
| |
—
|
|
|
All Other Fees
|
| |
—
|
| |
—
|
|
|
Total
|
| |
$1,951,126
|
| |
$1,990,885
|
|
2020 Proxy Statement
|
| |
|
| |
55
|
56
|
| |
|
| |
2020 Proxy Statement
|
2020 Proxy Statement
|
| |
|
| |
57
|
•
|
each person or entity known by us to own beneficially more than 5% of our common stock;
|
•
|
each of our directors and nominees;
|
•
|
each of our named executive officers; and
|
•
|
all of our directors and named executive officers as a group.
|
|
Beneficial Owner
|
| |
Number of Shares
Beneficially Owned |
| |
Percentage of Shares
Beneficially Owned |
|
|
BlackRock, Inc.(1)
|
| |
11,770,081
|
| |
15.45%
|
|
|
The Vanguard Group, Inc.(2)
|
| |
7,949,127
|
| |
10.44%
|
|
|
Wellington Management Group LLP(3)
|
| |
6,683,176
|
| |
8.78%
|
|
|
EARNEST Partners, LLC(4)
|
| |
4,892,819
|
| |
6.42%
|
|
|
Dimensional Fund Advisors LP(5)
|
| |
4,727,159
|
| |
6.21%
|
|
|
PRIMECAP Management Company(6)
|
| |
4,446,875
|
| |
5.84%
|
|
|
Thomas St. Dennis(7)
|
| |
45,000
|
| |
*
|
|
|
Michael D. Slessor(8)
|
| |
620,767
|
| |
*
|
|
|
Raymond A. Link(9)
|
| |
60,602
|
| |
*
|
|
|
Lothar Maier(10)
|
| |
96,000
|
| |
*
|
|
|
Rebeca Obregon-Jimenez(11)
|
| |
5,992
|
| |
*
|
|
|
Sheri Rhodes(12)
|
| |
4,019
|
| |
*
|
|
|
Edward Rogas, Jr.(13)
|
| |
48,000
|
| |
*
|
|
58
|
| |
|
| |
2020 Proxy Statement
|
|
Beneficial Owner
|
| |
Number of Shares
Beneficially Owned |
| |
Percentage of Shares
Beneficially Owned |
|
|
Kelley Steven-Waiss(14)
|
| |
27,900
|
| |
*
|
|
|
Shai Shahar(15)
|
| |
22,327
|
| |
*
|
|
|
All current directors and executive officers as a group (9 persons)(16)
|
| |
930,607
|
| |
1.22%
|
|
*
|
Represents beneficial ownership of less than 1%.
|
(1)
|
As reported in Amendment No. 11 to Schedule 13G/A of BlackRock, Inc. reflecting beneficial ownership as of December 31, 2019, which
was filed on February 4, 2020 with the Securities and Exchange Commission. BlackRock, Inc. reported sole voting power with respect to 11,546,033 shares and sole dispositive power with respect to 11,770,081 shares. The address of
BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
|
(2)
|
As reported in Amendment No. 9 to Schedule 13G/A of The Vanguard Group, Inc. reflecting beneficial ownership as of December 31,
2019, which was filed on February 12, 2020 with the Securities and Exchange Commission. The Vanguard Group, Inc. reported sole voting power with respect to 81,472 shares, shared voting power with respect to 6,542 shares, sole dispositive
power with respect to 7,871,617 shares and shared dispositive power with respect to 77,510 shares. The address of The Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
|
(3)
|
As reported in Amendment No. 2 to Schedule 13G/A of Wellington Management Group LLP (“WMG”), Wellington Group Holdings LLP (“WGH”),
Wellington Investment Advisors Holdings LLP (“WIA”) and Wellington Management Company LLP (“WMC,” and collectively, the “Wellington Group”) reflecting beneficial ownership as of December 31, 2019, which was filed on January 27, 2020 with
the Securities and Exchange Commission. WMG, WGH and WIA reported shared voting power with respect to 5,420,052 shares and shared dispositive power over 6,683,176 shares. WMC reported shared voting power with respect to 5,302,762 shares
and shared dispositive power to 6,142,955 shares. The address of Wellington Management Group LLP is 280 Congress Street, Boston, Massachusetts 02210.
|
(4)
|
As reported in Amendment No. 1 to Schedule 13G/A of EARNEST Partners, LLC reflecting beneficial ownership as of December 31, 2019,
which was filed on February 7, 2020 with the Securities and Exchange Commission. EARNEST Partners, LLC reported sole voting power with respect to 2,901,493 shares and sole dispositive power with respect to 4,892,819 shares. The address of
Earnest Partners, LLC is 1180 Peachtree Street NE, Suite 2300, Atlanta, Georgia 30309.
|
(5)
|
As reported in Amendment No. 6 to Schedule 13G/A of Dimensional Fund Advisors LP (“Dimensional”) reflecting beneficial ownership as
of December 31, 2019, which was filed on February 12, 2020 with the Securities and Exchange Commission. Dimensional reported sole voting power with regard to 4,542,264 shares and sole dispositive power with respect to 4,727,159 shares.
The address of Dimensional is Building One, 6300 Bee Cave Road, Austin, Texas 78746.
|
(6)
|
As reported in Amendment No. 16 to Schedule 13G/A of PRIMECAP Management Company (“PRIMECAP”) reflecting beneficial ownership as of
December 31, 2019, which was filed on February 12, 2020 with the Securities and Exchange Commission. PRIMECAP reported sole voting and dispositive power with respect to 4,446,875 shares. The address of PRIMECAP Management Company is 177
E. Colorado Blvd., 11th Floor, Pasadena, California 91105.
|
(7)
|
Represents 36,000 shares held directly by Mr. St. Dennis, and 9,000 units convertible to common stock, 9,000 of which shares and
units will be vested within 60 days of March 20, 2020.
|
(8)
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Represents 320,767 shares held directly by Dr. Slessor, and 300,000 shares issuable upon exercise of options.
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(9)
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Represents 51,602 shares held directly by Mr. Link, and 9,000 units convertible to common stock, 9,000 of which shares and units
will be vested within 60 days of March 20, 2020.
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(10)
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Represents 12,000 shares held by the Maier Family Revocable Trust, 75,000 shares held directly by Mr. Maier, and 9,000 units
convertible to common stock, 9,000 of which shares and units will be vested within 60 days of March 20, 2020.
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(11)
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Represents 5,992 units convertible to common stock held directly by Ms. Obregon-Jimenez, 5,992 of which shares and units will be
vested within 60 days of March 20, 2020.
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(12)
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Represents 4,019 units convertible to common stock held directed by Ms. Rhodes, 4,019 of which shares and units will be vested
within 60 days of March 20, 2020.
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(13)
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Represents 39,000 shares held directly by Mr. Rogas, and 9,000 units convertible to common stock, 9,000 of which shares and units
will be vested within 60 days of March 20, 2020.
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(14)
|
Represents 12,900 shares held directly by Ms. Steven-Waiss, 6,000 shares issuable upon exercise of options and 9,000 units
convertible to common stock, 9,000 of which shares and units will be vested within 60 days of March 20, 2020.
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(15)
|
Represents 22,327 shares held directly by Mr. Shahar.
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(16)
|
Represents 569,596 shares held directly or in a revocable trust by the company’s directors and named executive officers as a group,
306,000 shares issuable upon exercise of options, and 55,011 units convertible into common stock, 55,011 of which shares and units will be vested and exercisable within 60 days of March 20, 2020.
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2020 Proxy Statement
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59
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60
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2020 Proxy Statement
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2020 Proxy Statement
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61
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62
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2020 Proxy Statement
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2020 Proxy Statement
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63
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