DEF 14A: Definitive proxy statements
Published on July 10, 2009
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
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ý Definitive
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Material Pursuant to § 240.14a-12.
Microchip
Technology Incorporated
(Name of
Registrant as Specified In Its Charter)
____________________________________________________________________
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
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MICROCHIP
TECHNOLOGY INCORPORATED
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
August
14, 2009
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TIME:
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9:00
a.m. Mountain Standard Time
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PLACE:
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Microchip
Technology Incorporated
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2355
West Chandler Boulevard, Chandler, Arizona
85224-6199
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ITEMS OF
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(1)
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To
elect five directors to serve until the next annual meeting of
stockholders or until their
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BUSINESS:
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successors
are elected and qualified.
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(2) To
approve the amendment and restatement of our 2004 Equity Incentive Plan to (i)
modify the automatic grant provisions with respect to equity compensation for
non-employee directors to provide for annual awards of options and restricted
stock units (“RSUs”), rather than just options, and to provide for a one-time
award of RSUs to serve as a retention mechanism and (ii) revise the definition
of “performance goals” for purposes of Section 162(m) of the Internal Revenue
Code.
(3) To
ratify the appointment of Ernst & Young LLP as the independent registered
public accounting firm of Microchip for the fiscal year ending March 31,
2010.
(4) To
transact such other business as may properly come before the annual meeting or
any adjournment(s) thereof.
The
Microchip Board of Directors recommends that you vote for each of the foregoing
items.
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RECORD
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Holders
of Microchip common stock of record at the close of business on June 18,
2009 are
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DATE:
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entitled
to vote at the annual meeting.
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ANNUAL
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Microchip’s
fiscal 2009 Annual Report, which is not a part of the proxy soliciting
material, is
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REPORT:
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enclosed.
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PROXY:
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It
is important that your shares be represented and voted at the annual
meeting. You can vote your shares by completing and returning
the proxy card sent to you. Stockholders may have a choice of
voting their shares over the Internet or by telephone. If
Internet or telephone voting is available to you, voting instructions are
printed on the proxy card sent to you. You can revoke your
proxy at any time prior to its exercise at the annual meeting by following
the instructions in the accompanying proxy
statement.
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Kim van
Herk
Secretary
Important
Notice Regarding the Availability of Proxy Materials for the Annual
Meeting
of
Stockholders to be Held on August 14, 2009
The
Microchip Notice of Annual Meeting, Proxy Statement and Annual Report on Form
10-K for the fiscal year ended March 31, 2009 are available at www.microchip.com/annual_reports.
Chandler, Arizona
July 10, 2009
MICROCHIP
TECHNOLOGY INCORPORATED
2355
West Chandler Boulevard
Chandler,
Arizona 85224-6199
PROXY
STATEMENT
You are
cordially invited to attend our annual meeting on Friday, August 14, 2009,
beginning at 9:00 a.m., Mountain Standard Time. The annual
meeting will be held at our Chandler facility located at 2355 West Chandler
Boulevard, Chandler, Arizona 85224-6199.
We are
providing these proxy materials in connection with the solicitation by the Board
of Directors (the “Board”) of Microchip Technology Incorporated (“Microchip”) of
proxies to be voted at Microchip’s 2009 annual meeting of stockholders and at
any adjournment(s) thereof.
Our
fiscal year begins on April 1 and ends on March 31. References in
this proxy statement to fiscal 2009 refer to the 12-month period from April 1,
2008 through March 31, 2009, and references to fiscal 2008 refer to the
12-month period from April 1, 2007 through March 31, 2008.
We
anticipate first mailing this proxy statement and accompanying form of proxy on
July 10, 2009 to holders of Microchip’s common stock on June 18, 2009, the
Record Date for the annual meeting.
PROXIES
AND VOTING PROCEDURES
YOUR VOTE IS
IMPORTANT. Because many stockholders cannot attend the annual
meeting in person, it is necessary that a large number of stockholders be
represented by proxy. Stockholders may have a choice of voting over
the Internet, by using a toll-free telephone number or by completing a proxy
card and mailing it in the postage-paid envelope provided. Please
refer to your proxy card or the information forwarded by your bank, broker or
other holder of record to see which options are available to
you. Under Delaware law, stockholders may submit proxies
electronically. Please be aware that if you vote over the Internet,
you may incur costs such as telephone and Internet access charges for which you
will be responsible.
You can
revoke your proxy at any time before it is exercised by timely delivery of a
properly executed, later-dated proxy (including an Internet or telephone vote if
these options are available to you) or by voting by ballot at the annual
meeting.
The
method by which you vote will in no way limit your right to vote at the annual
meeting if you later decide to attend in person. If your shares are
held in the name of a bank, broker or other holder of record, you must obtain a
proxy, executed in your favor, from the holder of record, to be able to vote at
the annual meeting.
All
shares entitled to vote and represented by properly completed proxies received
prior to the annual meeting and not revoked will be voted at the annual meeting
in accordance with the instructions on such proxies. IF YOU DO NOT INDICATE HOW YOUR
SHARES SHOULD BE VOTED ON A MATTER, THE SHARES REPRESENTED BY YOUR PROPERLY
COMPLETED PROXY WILL BE VOTED AS OUR BOARD OF DIRECTORS
RECOMMENDS.
If any
other matters are properly presented at the annual meeting for consideration,
including, among other things, consideration of a motion to adjourn the annual
meeting to another time or place, the persons named as proxies and acting
thereunder will have discretion to vote on those matters according to their best
judgment to the same extent as the person delivering the proxy would be entitled
to vote. At the date this proxy statement went to press, we did not
anticipate that any other matters would be raised at the annual
meeting.
Stockholders
Entitled to Vote
Stockholders
of record at the close of business on the Record Date, June 18, 2009, are
entitled to notice of and to vote at the annual meeting. Each share
is entitled to one vote on each of the five director nominees and one vote on
each other matter properly brought before the annual meeting. On the
Record Date, there were 182,929,088 shares of our common stock issued and
outstanding.
In
accordance with Delaware law, a list of stockholders entitled to vote at the
annual meeting will be available at the annual meeting on August 14, 2009, and
for 10 days prior to the annual meeting at 2355 West Chandler Boulevard,
Chandler, Arizona, between the hours of 9:00 a.m. and 4:30 p.m., Mountain
Standard Time.
Required
Vote
Quorum,
Abstentions and Broker Non-Votes
The
presence, in person or by proxy, of the holders of a majority of the shares
entitled to vote at the annual meeting is necessary to constitute a quorum at
the annual meeting. Abstentions and broker “non-votes” are counted as
present and entitled to vote for purposes of determining a quorum. A
broker “non-vote” occurs when a nominee holding shares for a beneficial owner
(i.e., in “street name”) does not vote on a particular proposal because the
nominee does not have discretionary voting power with respect to that item and
has not received instructions from the beneficial owner. Under the
rules of the New York Stock Exchange (NYSE), which apply to NYSE member brokers
trading in non-NYSE stock, brokers have discretionary authority to vote shares
on certain routine matters if customer instructions are not
provided. Proposal One and Proposal Three to be considered at the
annual meeting may be treated as routine matters. Consequently, if
you do not return a proxy card, your broker may have discretion to vote your
shares on such matters.
Election
of Directors (Proposal One)
A
plurality of the votes duly cast is required for the election of directors
(i.e., the five nominees receiving the greatest number of votes will be
elected). Abstentions and broker “non-votes” will not affect the
election of directors.
Amendment
and Restatement of 2004 Equity Incentive Plan (Proposal Two)
The
affirmative vote of the holders of a majority of the shares of common stock
present in person or represented by proxy and entitled to vote at the annual
meeting is required to adopt the amendment and restatement of our 2004 Equity
Incentive Plan described in Proposal Two. An abstention will have the
same effect as voting against this proposal. Broker “non-votes” are
not counted for purposes of approving the amendment and restatement of our 2004
Equity Incentive Plan, and thus will not affect the outcome of the voting on
such proposal.
Ratification
of Accounting Firm (Proposal Three)
The
affirmative vote of the holders of a majority of the shares of common stock
present in person or represented by proxy and entitled to vote at the annual
meeting is required for ratification of the appointment of Ernst & Young LLP
as the independent registered public accounting firm of Microchip for the fiscal
year ending March 31, 2010. An abstention will have the same effect
as voting against this proposal. Broker “non-votes” are not counted
for purposes of approving the ratification of our accounting firm, and thus will
not affect the outcome of the voting on this proposal.
Electronic
Access to Proxy Statement and Annual Report
This
proxy statement and our fiscal 2009 Annual Report are available at www.microchip.com/annual_reports.
We will
post our future proxy statements and annual reports on Form 10-K
on our website as soon as reasonably practicable after they are electronically
filed with the Securities and Exchange Commission. All such filings
on our website are available free of charge. The information on our
website is not
incorporated into this proxy statement. Our Internet address is www.microchip.com.
2
Cost
of Proxy Solicitation
Microchip
will pay its costs of soliciting proxies. Proxies may be solicited on
behalf of Microchip by its directors, officers or employees in person or by
telephone, facsimile or other electronic means. We may also reimburse
brokerage firms and other custodians, nominees and fiduciaries for their
expenses incurred in sending proxies and proxy materials to beneficial owners of
Microchip common stock.
THE
BOARD OF DIRECTORS
Meetings
of the Board of Directors
Our Board
of Directors met seven times in fiscal 2009. During fiscal 2009, each
of Mr. Day, Mr. Hugo-Martinez, Mr. Meyercord and Mr. Sanghi attended 100% of the
meetings of the Board of Directors, and Mr. Chapman attended 6 of the 7 meetings
of the Board of Directors. Each director attended 100% of the
meetings of the committees on which such director served. During
fiscal 2003, the Board of Directors implemented the practice of meeting in
executive session on a periodic basis without management or management directors
(i.e., Mr. Sanghi) present, and continued this practice through fiscal
2009. The Board of Directors has determined that each of Mr. Chapman,
Mr. Day, Mr. Hugo-Martinez and Mr. Meyercord is an independent director as
defined by applicable SEC rules and NASDAQ listing standards.
Communications
from Stockholders
Stockholders
may communicate with the Board of Directors or individual members of the Board
of Directors, provided that all such communication is submitted in writing to
the attention of the Secretary at Microchip Technology Incorporated, 2355 West
Chandler Boulevard, Chandler, Arizona 85224-6199, who will then forward such
communication to the appropriate director or directors.
Committees
of the Board of Directors
The
following table lists our three Board committees, the directors who served on
them and the number of committee meetings held in fiscal 2009:
Membership
on Board Committees in Fiscal 2009
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Name
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Audit
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Compensation (1)
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Nominating
and Governance
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Mr.
Chapman
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C
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·
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Mr.
Day
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C
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·
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Mr.
Hugo-Martinez
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·
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·
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·
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Mr.
Meyercord
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·
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·
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C
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Meetings
held in fiscal 2009
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8
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7
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1
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C = Chair
· = Member
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(1)
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From
April 1, 2008 through August 14, 2008, the Compensation Committee was
comprised of Mr. Day (Chair) and
Mr.
Meyercord.
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Audit
Committee
The
responsibilities of our Audit Committee are to appoint, compensate, retain and
oversee Microchip’s independent registered public accounting firm, oversee the
accounting and financial reporting processes of Microchip and audits of its
financial statements, and provide the Board of Directors with the results of
such monitoring. These responsibilities are further described in the
committee charter. A copy of the Audit Committee Charter, as last
amended on May 13, 2007, is available at the Corporate/Investors section under
Mission Statement/Corporate Governance on www.microchip.com.
3
Our Board
of Directors has determined that all members of the Audit Committee are
independent directors as defined by applicable SEC rules and NASDAQ listing
standards. The Board of Directors has also determined that each of
Mr. Chapman, Mr. Hugo-Martinez and Mr. Meyercord meet the requirements for
being an “audit committee financial expert” as defined by applicable SEC
rules.
In fiscal
2005, our Audit Committee adopted a policy with respect to (i) the receipt,
retention and treatment of complaints received by us regarding questionable
accounting, internal accounting controls or auditing matters; (ii) the
confidential, anonymous submission by our employees of concerns regarding
questionable accounting, internal accounting controls or auditing matters; and
(iii) the prohibition of harassment, discrimination or retaliation arising from
submitting concerns regarding questionable accounting, internal accounting
controls or auditing matters or participating in an investigation regarding
questionable accounting, internal accounting controls or auditing
matters. This policy, called “Legal Compliance,” was created in
accordance with applicable SEC rules and NASDAQ listing
requirements. A copy of this policy is available at the
Corporate/Investors section under Mission Statement/Corporate Governance on
www.microchip.com.
Compensation
Committee
Our
Compensation Committee has oversight responsibility for the compensation and
benefit programs for our executive officers and other employees, and for
administering our equity incentive and employee stock purchase plans adopted by
our Board of Directors. The responsibilities of our Compensation
Committee are further described in the committee charter as adopted on January
29, 2007. A copy of the Compensation Committee Charter is available
at the Corporate/Investors section under Mission Statement/Corporate Governance
on www.microchip.com.
The Board
of Directors has determined that the members of our Compensation Committee are
independent directors as defined by applicable SEC rules and NASDAQ listing
standards. For more information on our Compensation Committee, please
turn to the “Compensation
Discussion and Analysis” at page 18.
Nominating
and Governance Committee
Our
Nominating and Governance Committee has the responsibility of ensuring that our
Board is properly constituted to be able to meet its fiduciary obligations to
our stockholders. In so doing, the Nominating and Governance
Committee identifies and recommends director candidates, develops and recommends
governance principles, and recommends director nominees to serve on committees
of the Board of Directors. The responsibilities of our Nominating and
Governance Committee are further described in the committee charter which is
available at the Corporate/Investors section under Mission Statement/Corporate
Governance on www.microchip.com. The Board of Directors has
determined that the members of the Nominating and Governance Committee are
independent directors as defined by applicable SEC rules and NASDAQ listing
standards.
When
considering a candidate for a director position, the Nominating and Governance
Committee looks for demonstrated character, judgment, relevant business,
functional and industry experience, and a high degree of skill. The
Nominating and Governance Committee evaluates director nominees recommended by a
stockholder in the same manner as it would any other nominee. The
Nominating and Governance Committee will consider nominees recommended by
stockholders provided such recommendations are made in accordance with
procedures described in this proxy statement under “Requirements, Including Deadlines,
for Receipt of Stockholder Proposals for the 2010 Annual Meeting of
Stockholders; Discretionary Authority to Vote on Stockholder Proposals”
at page 40. We do not pay any third party to identify or assist in
identifying or evaluating potential nominees for director.
Attendance
at the Annual Meeting of Stockholders
All
directors are encouraged, but not required, to attend our annual meeting of
stockholders. All directors attended our 2008 annual meeting of
stockholders.
4
REPORT
OF THE AUDIT COMMITTEE (1)
The Board
of Directors has adopted a written charter setting out the purposes and
responsibilities of the Audit Committee. The Board of Directors and
the Audit Committee review and assess the adequacy of the charter on an annual
basis. A copy of the Audit Committee Charter, as last amended on May
13, 2007, is available at the Corporate/Investors section under Mission
Statement/Corporate Governance on www.microchip.com.
Each of
the directors who serves on the Audit Committee meets the independence and
experience requirements of the SEC rules and NASDAQ listing
standards. What this means is the Microchip Board of Directors has
determined that no member of the Audit Committee has a relationship with
Microchip that may interfere with such member’s independence from Microchip and
its management, and that all members have the required knowledge and experience
to perform their duties as committee members.
We have
received from Ernst & Young LLP the written disclosure and the letter
required by Rule 3526 of the Public Company Accounting Oversight Board (Communication with Audit Committees
Concerning Independence) and have discussed with Ernst & Young LLP
their independence from Microchip. We also discussed with Ernst &
Young LLP all matters required to be discussed by the Statement on Auditing
Standards No. 61, as amended (Professional Standards). We have
considered whether and determined that the provision of the non-audit services
rendered to us by Ernst & Young LLP during fiscal 2009 was compatible with
maintaining the independence of Ernst & Young LLP.
We have
reviewed and discussed with management the audited annual financial statements
included in Microchip’s Annual Report on Form 10-K for the fiscal year ended
March 31, 2009 and filed with the SEC, as well as the unaudited financial
statements filed with Microchip’s quarterly reports on Form 10-Q. We
also met with both management and Ernst & Young LLP to discuss those
financial statements.
Based on
these reviews and discussions, we recommended to the Board of Directors that
Microchip’s audited financial statements be included in Microchip’s Annual
Report on Form 10-K for the fiscal year ended March 31, 2009 for filing with the
SEC.
By the
Audit Committee of the Board of Directors:
Matthew
W. Chapman
(Chairman) Albert
J.
Hugo-Martinez Wade
F. Meyercord
Director
Compensation
Procedures
Regarding Director Compensation
The Board
of Directors, upon the recommendation of the Compensation Committee, sets
non-employee director compensation. Microchip does not pay employee
directors for services provided as a member of the Board of
Directors. The current program of cash and equity compensation for
non-employee directors has been in effect for several years, and is designed to
achieve the following goals: compensation should fairly pay directors for work
required for a company of Microchip’s size and scope; compensation should align
directors’ interests with the long-term interests of stockholders; compensation
should be competitive so as to attract and retain qualified non-employee
directors; and the structure of the compensation should be simple, transparent
and easy for stockholders to understand. Non-employee director
compensation is typically reviewed once per year to assess whether any
adjustment is needed to further such goals. The Board of Directors
has not used outside consultants in setting non-employee director
compensation.
(1) The Report of the Audit Committee is
not “soliciting” material and is not deemed “filed” with the Securities and
Exchange Commission, and is not incorporated by reference into any filings of
Microchip under the Securities Act of 1933 or the Securities Exchange Act of
1934, whether made before or after the date of this proxy statement and
irrespective of any general incorporation language contained in such
filings.
5
Director
Fees
Effective
November 3, 2008, non-employee directors receive an annual retainer of $28,500,
paid in quarterly installments, $3,000 for each meeting attended in person and
do not receive any additional amounts for serving as a committee
chair. Also, directors do not receive any compensation for telephonic
meetings of the Board of Directors or for meetings of committees of the
Board. From April 1, 2008 to November 3, 2008, non-employee directors
received an annual retainer of $26,000, paid in quarterly installments, $2,800
for each meeting attended in person, the Chairman of the Audit Committee
received an annual retainer of $3,250 paid in quarterly installments, and the
Chair of the Compensation Committee, and the Chair of the Nomination and
Governance Committee each received an annual retainer of $1,600 paid in
quarterly installments.
Equity
Compensation
Under the
terms of our current 2004 Equity Incentive Plan, each non-employee director is
automatically granted:
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·
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an
option to purchase 12,000 shares of common stock upon his or her first
election to the Board of Directors,
and
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·
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an
option to purchase 6,000 shares of common stock on the date of our annual
stockholders’ meeting, provided that he or she has served as a
non-employee director for at least three months on that date and has been
elected by the stockholders to serve as a member of the Board at that
annual meeting.
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In
accordance with the foregoing, on August 15, 2008, each of Mr. Chapman, Mr. Day,
Mr. Hugo-Martinez and Mr. Meyercord was granted an option to acquire 6,000
shares of common stock at an exercise price of $33.90 per share. Each
such option vests in 12 equal and successive monthly installments following the
grant date.
On June
1, 2009, our Board of Directors approved our amended and restated 2004 Equity
Incentive Plan which, among other things, would change the equity compensation
for our non-employee directors to provide (a) on first appointment as a
director, an initial grant of an option to purchase 6,000 shares of common stock
and $60,000 in RSUs (based on the market price of our stock on the grant date),
each subject to four-year vesting, (b) an annual grant of an option to purchase
3,000 shares of common stock subject to vesting over 12 months and $30,000 in
RSUs (based on the market price of our stock on the grant date) subject to
two-year vesting; and (c) for non-employee directors who as of the 2009 annual
meeting have served as our director for at least five years, a one-time grant of
$100,000 in RSUs (based on the market price of our stock on the grant date)
subject to four-year vesting. These changes are subject to approval
by our stockholders at the annual meeting as described in Proposal
Two.
The
following table details the total compensation for Microchip’s non-employee
directors for fiscal 2009.
DIRECTOR
COMPENSATION
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Name
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Fees
Earned or Paid
in
Cash
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Stock
Awards
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Option
Awards
(1)
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Non-Equity
Incentive Plan Compensation
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All
Other Compensation
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Total
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||||||||||||||||||
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Steve
Sanghi (2)
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$ | --- | $ | --- | $ | --- | $ | --- | $ | --- | $ | --- | ||||||||||||
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Matthew
W. Chapman
(3)
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40,542 | --- | 66,688 | --- | --- | 107,230 | ||||||||||||||||||
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L.B.
Day (4)
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39,569 | --- | 66,688 | --- | --- | 106,257 | ||||||||||||||||||
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Albert
J. Hugo-Martinez (5)
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38,626 | --- | 66,688 | --- | --- | 105,314 | ||||||||||||||||||
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Wade
F. Meyercord (6)
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39,569 | --- | 66,688 | --- | --- | 106,257 | ||||||||||||||||||
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(1)
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The
amounts shown in the column labeled Option Awards represent the amount of
compensation cost we recognized in fiscal 2009, in accordance with
Statement of Financial Accounting Standards No. 123, as revised,
“Share-Based Payment” (“SFAS No. 123R”) and thus may include amounts from
awards granted in and prior to fiscal 2009. This includes
amounts related to the annual stock option grants of 6,000 shares of
common stock on August 15, 2008 at an exercise price per share of
$33.90. The grant date fair value of such equity award made to
each of the non-employee directors on August 15, 2008 is
$62,355. The annual stock option awards were made pursuant to
our 2004 Equity Incentive Plan. Each option vests in 12 equal
and successive monthly installments following the grant
date. For information on the valuation assumptions made with
respect to the foregoing option grants, please refer to the assumptions
for fiscal years ended March 31, 2009, 2008, and 2007 stated in Note 15,
“Equity Incentive Plans” to Microchip’s audited financial statements for
the fiscal year ended March 31, 2009, included in Microchip’s Annual
Report on Form 10-K filed with the Securities and Exchange Commission on
May 29, 2009.
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6
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(2)
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Mr.
Sanghi, our Chairman of the Board, President and Chief Executive Officer,
does not receive any additional compensation for his services as a member
of the Board of Directors.
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(3)
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As
of March 31, 2009, Matthew W. Chapman had 58,750 options outstanding, of
which 52,750 were exercisable.
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(4)
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As
of March 31, 2009, L.B. Day had 55,500 options outstanding, of which
49,500 were exercisable.
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(5)
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As
of March 31, 2009, Albert J. Hugo-Martinez had 63,750 options outstanding,
of which 57,750 were exercisable.
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(6)
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As
of March 31, 2009, Wade F. Meyercord had 50,500 options outstanding, of
which 44,500 were
exercisable.
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Compensation
Committee Interlocks and Insider Participation
The
Compensation Committee is currently comprised of Mr. Day (Chair), Mr.
Hugo-Martinez and Mr. Meyercord, three of our independent
directors. From April 1, 2008 through August 14, 2008, the
Compensation Committee was comprised of Mr. Day and Mr.
Meyercord. None of Mr. Day, Mr. Hugo-Martinez nor Mr. Meyercord had
any related-party transaction with Microchip during fiscal 2009 other than
service as a director. In addition, none of such directors has a
relationship which would constitute a compensation committee interlock under
applicable SEC rules.
Further,
during the most recent fiscal year, no Microchip executive officer served on the
compensation committee (or equivalent) or the board of directors, of another
entity whose executive officer(s) served either on Microchip’s Compensation
Committee or Board of Directors.
CERTAIN
TRANSACTIONS
During
fiscal 2009, Microchip had no related-party transactions within the meaning of
the applicable SEC rules.
Pursuant
to its charter, the Audit Committee reviews issues involving potential conflicts
of interest and reviews and approves all related-party transactions as
contemplated by NASDAQ and SEC rules and regulations. The Audit
Committee may consult with the Board of Directors regarding certain conflict of
interest matters that do not involve a member of the Board.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) and related rules under the Securities Exchange Act of 1934 require our
directors, executive officers and stockholders holding more than 10% of our
common stock to file reports of holdings and transactions in Microchip stock
with the SEC and to furnish us with copies of all Section 16(a) forms they
file. Based solely on our review of the copies of such forms received
by us during fiscal 2009, and written representations from our directors and
executive officers that no other reports were required, we believe that all
Section 16(a) filing requirements applicable to our directors, executive
officers and stockholders holding more than 10% of our common stock were met for
fiscal 2009, except for the following: Mr. Moorthy filed one Form 4 in May 2008
that omitted two grants of RSUs and, later in May 2008, filed an amended
Form 4 to include such grants; Mr. Sanghi filed a Form 4 one day late
in June 2008 with respect to two transactions; and Mr. Meyercord filed one late
Form 4 in December 2008 with respect to one transaction.
PROPOSAL
ONE
ELECTION
OF DIRECTORS
A board
of five directors will be elected at the annual meeting. Unless proxy
cards are otherwise marked, the persons named in the proxy card will vote such
proxy for the election of the nominees named below. Each of the
nominees is currently serving as a director and has agreed to continue serving
if re-elected. If any of the nominees becomes unable or declines to
serve as a director at the time of the annual meeting, the persons named in the
proxy card will vote such proxy for any nominee designated by the current Board
of Directors to fill the vacancy. We do not expect that any of the
nominees will be unable or will decline to serve as a director.
Our Board
of Directors has determined that each of the following nominees for director is
an independent director as defined by applicable SEC rules and NASDAQ listing
standards: Mr. Chapman, Mr. Day, Mr. Hugo-Martinez and
Mr. Meyercord.
The term
of office of each person who is elected as a director at the annual meeting will
continue until the 2010 annual meeting of stockholders or until a successor has
been elected and qualified.
7
The
Board of Directors recommends that stockholders vote FOR the nominees listed
below.
Information
on Nominees for Director (as of June 30, 2009)
|
Name
|
Age
|
Position(s)
Held
|
|
Steve
Sanghi
|
53
|
Chairman,
President and CEO
|
|
Albert
J. Hugo-Martinez
|
63
|
Director
|
|
L.B.
Day
|
64
|
Director
|
|
Matthew
W. Chapman
|
58
|
Director
|
|
Wade
F. Meyercord
|
68
|
Director
|
Steve Sanghi is currently,
and has been since August 1990, a director and President of Microchip Technology
Incorporated. Since October 1991, he has served as CEO of Microchip,
and since October 1993, as Chairman of the Board of Directors. Since
May 2004, he has been a member of the Board of Directors of Xyratex Ltd., a
storage and network technology company. In September 2004, Mr. Sanghi
was appointed to the Board of Trustees of Kettering University in Flint,
Michigan. In May 2007, Mr. Sanghi was appointed to the Board of
Directors of FIRST Organization, a not-for-profit public charity founded in 1989
to develop young people’s interest in science and technology.
Albert J. Hugo-Martinez has
served as a director of Microchip since October 1990. Since February
2000, he has served as CEO of Hugo-Martinez Associates, a consulting and
advisory firm. During 2007, he became Chairman of two companies he
co-founded, HVVi Semiconductors, Inc., which is developing a CMOS High
Voltage/Frequency RF transistor and also PCN Technology, Inc., which has
developed software and hardware which transceives data, audio and video over
power lines. In June 2007, Mr. Hugo-Martinez became a member of the
Board of Directors of Lynguent, Inc., a supplier of integrated analog and
mixed-signal design development products. In his career, Mr.
Hugo-Martinez has served as COO of Burr-Brown Corp., Sr. VP and GM at TRW, and
CEO of Applied Micro Circuits Corporation and GTI Corporation. He has
previously served on the public company boards of Amkor Technology, Inc., ON
Semiconductor Corp. and as Chairman of Ramtron International
Corporation.
L.B. Day has served as a
director of Microchip since December 1994. Mr. Day serves as
President of L.B. Day & Company, Inc., a consulting firm whose parent
company he co-founded in 1977, which provides strategic planning, strategic
marketing and organization design services to the elite of the high-technology
world. He also serves on the Board of Advisors of Willamette
University’s Atkinson Graduate School of Management. In September
2006, he became a member of the Board of Directors of Lynguent, Inc., a supplier
of integrated analog and mixed-signal design development products.
Matthew W. Chapman has served
as a director of Microchip since May 1997. Since December 2006, he
has served as President and CEO of Northwest Evaluation Association, an
education service organization providing computer adaptive testing for millions
of students throughout the United States. From January 2002 to
February 2006, he served as President and CEO of Centrisoft Corporation, a
software provider for application performance management. From August
2000 to January 2002, Mr. Chapman served as an advisor to early-stage technology
companies in connection with developing business plans and securing
funding. In his career, Mr. Chapman has served as CEO and Chairman of
Concentrex Incorporated, a supplier of software solutions and service to U.S.
financial institutions.
Wade F. Meyercord has served
as a director of Microchip since June 1999. Since October 2002, he
has served as President of Meyercord & Associates, Inc., a management
consulting firm specializing in executive compensation matters and stock plan
consulting for technology companies, a position he previously held part time
beginning in 1987. Mr. Meyercord has been a member of the Board
of Directors of California Micro Devices Corporation since January 1993 and of
Endwave Corporation since March 2004. Mr. Meyercord served as a
member of the Board of Directors of Magma Design Automation, Inc. from January
2004 to June 2005. From June 1999 to October 2002, Mr. Meyercord
served as Sr. VP and CFO of Rioport.com, an Internet applications service
provider for the music industry.
8
PROPOSAL
TWO
APPROVAL
OF AMENDMENT AND RESTATEMENT OF OUR 2004 EQUITY INCENTIVE PLAN
Our 2004
Equity Incentive Plan was approved by our stockholders in August 2004 and
provides for the grant of stock options, stock appreciation rights, restricted
stock (which may be granted in the form of restricted stock shares or RSUs),
performance shares, performance units, and deferred stock units to our employees
and consultants as well as for automatic grants of awards to the non-employee
members of our Board of Directors. As of March 31, 2009, there were
approximately 4,895 employees (including
executive officers) who were eligible to participate in the 2004 Equity
Incentive Plan.
On June
1, 2009, our Board of Directors approved our amended and restated 2004 Equity
Incentive Plan to:
|
·
|
change
the equity compensation for our non-employee directors to provide (a) on
first appointment as a director, an initial grant of an option to purchase
6,000 shares of common stock and $60,000 in RSUs (based on the market
price of our stock on the grant date), each subject to four-year vesting,
(b) an annual grant of an option to purchase 3,000 shares of common stock
subject to vesting over 12 months and $30,000 in RSUs (based on the market
price of our stock on the grant date) subject to two-year vesting; and (c)
for non-employee directors who as of the 2009 annual meeting have served
as our director for at least five years, a one-time grant of $100,000 in
RSUs (based on the market price of our stock on the grant date) subject to
four-year vesting, and
|
|
·
|
revise
the definition of “performance goals” in the 2004 Equity Incentive Plan
related to the treatment of awards under Section 162(m) of the Internal
Revenue Code.
|
The
purpose of the change in equity compensation for our non-employee directors is
to enable us to continue to attract and retain qualified persons to serve as
directors. Our Board also believes that the equity compensation for
our non-employee directors should include RSUs together with a reduced number of
options to be more in line with the equity awards provided to our officers and
key employees. In this regard, since fiscal 2006, we have used RSUs,
as opposed to stock options, as our preferred method of providing equity
incentives to our employees, and, since fiscal 2007, we have not granted stock
options to any of our executive officers or key employees. However,
under our 2004 Equity Incentive Plan, our non-employee directors have continued
to receive stock options under the automatic grant provisions of such
plan. Any change to such automatic grant provisions requires
stockholder approval.
The
purpose of the amendment to the definition of “performance goals” under our 2004
Equity Incentive Plan is to give the Compensation Committee of our Board more
flexibility in structuring equity compensation arrangements that will qualify as
“performance based compensation” for purposes of Section 162(m) of the Internal
Revenue Code and to help us achieve our goal of attracting, retaining and
motivating our personnel. In particular, as amended and restated, our
2004 Equity Incentive Plan will allow us to set goals based on a variety of GAAP
and non-GAAP financial metrics, operating milestones or other object performance
criteria as described in more detail in the summary below. We believe
that, as revised, the 2004 Equity Incentive Plan will continue to be an
essential element of our competitive compensation package.
Please
see the summary of our 2004 Equity Incentive Plan below.
Vote
Required and Recommendation
The
affirmative vote of the holders of a majority of the shares of common stock
present in person or represented by proxy and entitled to vote at the annual
meeting is required to approve the amendment and restatement of our 2004 Equity
Incentive Plan.
Our
executive officers have an interest in this proposal as they may receive awards
of RSUs under the 2004 Equity Incentive Plan. The non-employee
members of our Board of Directors have an interest in this proposal as they may
receive awards of options and RSUs under the 2004 Equity Incentive
Plan.
Our
Board of Directors recommends a vote FOR Proposal Two to amend and restate our
2004 Equity Incentive Plan. Proxies solicited by the Board of
Directors will be so voted unless stockholders specify otherwise in their
proxies.
9
Summary
of the Amended 2004 Equity Incentive Plan
The
essential features of the 2004 Equity Incentive Plan are summarized
below. This summary does not purport to be complete and is subject
to, and qualified in its entirety by, the provisions of the amended and restated
2004 Equity Incentive Plan, which is attached as Appendix
A. Capitalized terms used herein and not defined shall have the
meanings set forth in the 2004 Equity Incentive Plan.
General. The
purposes of the 2004 Equity Incentive Plan are to attract and retain the best
available personnel, provide additional incentive to our employees, consultants
and non-employee directors and promote the success of our business.
Administration. The
2004 Equity Incentive Plan may be administered by our Board of Directors or a
committee, which our Board of Directors may appoint from among its members (the
“Administrator”). Subject to the provisions of the 2004 Equity
Incentive Plan, the Administrator has the authority to: (i) interpret
the plan and apply its provisions; (ii) prescribe, amend or rescind rules and
regulations relating to the 2004 Equity Incentive Plan; (iii) select the persons
to whom awards are to be granted (apart from the non-employee director automatic
grant provisions); (iv) subject to individual fiscal year limits applicable to
each type of award, determine the number of shares or equivalent units to be
made subject to each award; (v) determine whether and to what extent awards are
to be granted; (vi) determine the terms and conditions applicable to awards
generally and of each individual award (including the provisions of the award
agreement to be entered into between Microchip and the participant); (vii) amend
any outstanding award subject to applicable legal restrictions (except repricing
an option or SAR); (viii) authorize any person to execute, on our behalf, any
instrument required to effect the grant of an award; (ix) approve forms of
agreement for use under the 2004 Equity Incentive Plan; (x) allow participants
to satisfy withholding tax obligations by electing to have Microchip withhold
from the shares or cash to be issued upon exercise, vesting of an award (or
distribution of a deferred stock unit) that number of shares or cash having a
fair market value equal to the minimum amount required to be withheld; and (xi)
subject to certain limitations, take any other actions deemed necessary or
advisable for the administration of the 2004 Equity Incentive
Plan. All decisions, interpretations and other actions of the
Administrator shall be final and binding on all holders of options or rights and
on all persons deriving their rights therefrom.
Discount Award
Limitations. No more than 30% of the shares initially
available for issuance under the 2004 Equity Incentive Plan and 30% of the
shares subsequently added to the 2004 Equity Incentive Plan by virtue of options
expiring or being cancelled under the 1993 Stock Option Plan and the 1997
Nonstatutory Stock Option Plan may be granted pursuant to restricted share or
share unit awards with a purchase price that is less than 100% of fair market
value on the date of grant; provided, however, that such 30% limitation does not
apply to RSUs issued on or after August 18, 2006. No stock options or
stock appreciation rights may be granted with an exercise price that is less
than 100% of fair market value on the date of grant.
No Repricing. The
2004 Equity Incentive Plan prohibits option or stock appreciation right
repricing, including by way of an exchange for another award.
Eligibility. The
2004 Equity Incentive Plan provides that awards may be granted to our employees,
consultants and non-employee directors.
Code Section 162(m) Performance
Goals. We have designed the 2004 Equity Incentive Plan so that
it permits us to also issue other awards that qualify as performance-based under
Section 162(m) of the Code. Thus, the Administrator may make
performance goals applicable to a participant with respect to an
award. Prior to the amendment and restatement of our 2004 Equity
Incentive Plan, at the Administrator’s discretion, one or more of the following
performance goals may apply: revenue, cash position, earnings per
share, net income, operating cash flow, operating expense, operating income,
return on assets, return on equity, return on sales, total stockholder return,
and gross margin. The Administrator shall appropriately adjust any
evaluation of performance under a performance goal to exclude (i) any
extraordinary non-recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management’s discussion and analysis of financial
conditions and results of operations appearing in our quarterly or annual
reporting with the Securities and Exchange Commission for the applicable year,
or (ii) the effect of any changes in accounting principles affecting our
business unit’s reported results. Moreover, the Administrator, in its
sole discretion, may adjust any performance goal (in both setting and
determining the performance) to exclude other items, such as compensation
expenses under FAS 123R. If Proposal Two is approved at the annual
meeting, under our 2004 Equity Incentive Plan, as amended and restated, at the
Administrator’s discretion, the performance measures for any performance period
may be one or more of the following objective performance
criteria: cash flow, cash position, revenue (on an absolute basis or
adjusted for currency effects), revenue growth, contribution margin, gross
margin or gross margin as a percentage of revenue, operating margin or operating
margin as a percentage of revenue, operating expenses or operating expenses as a
percentage of revenue, earnings (which may
10
include
earnings before interest and taxes, earnings before taxes and net earnings),
earnings per share, net income, stock price, return on equity, total stockholder
return, growth in stockholder value relative to a specified publicly reported
index, return on capital, return on assets or net assets, return on investment,
operating profit or net operating profit, market share (which include ranking
for a specific product line or market share percentage for a given product
line), contract awards or backlog, overhead or other expense reduction, credit
rating, objective customer indicators, new product invention or innovation,
attainment of research and development milestones, improvements in productivity,
attainment of objective operating goals and objective employee
metrics. At the Administrator’s discretion, the objective performance
criteria may be applied to Microchip as a whole or (except with respect to
stockholder return metrics) to a region, business unit, affiliate or business
segment or specific product or products, and measured either on an absolute
basis or relative to a pre-established target, to a previous period’s results or
to a designated comparison group. At the Administrator’s sole
discretion, with respect to financial metrics, which may be determined in
accordance with GAAP or accounting principals established by the International
Accounting Standards Board, or IASB Principles, such objective performance
criteria may be adjusted when established to exclude any items otherwise
includable under GAAP or under IASB Principles or any other objectively
determinable items including, without limitation, any extraordinary
non-recurring items, the effect of any merger, acquisition, or other business
combination or divestiture, or the effect of any changes in accounting
principles affecting
Microchip’s
or a business unit’s, region’s, affiliate’s or business segment’s reported
results. The Administrator may use other performance goals for awards
that are not intended to qualify as performance-based under Section 162(m) of
the Code.
Terms and Conditions of
Options. Each option granted under the 2004 Equity Incentive
Plan is evidenced by a written stock option agreement between the optionee and
Microchip and is subject to the following terms and conditions:
(a) Exercise
Price. The Administrator determines the exercise price of
options at the time the options are granted. However, the exercise
price of a stock option may not be less than 100% of the fair market value of
the common stock on the date the option is granted. As our common
stock is listed on the Nasdaq National Market, the fair market value is the
closing sale price for the common stock (or the closing bid if no sales were
reported) on the date the option is granted.
(b) Form of
Consideration. The means of payment for shares issued upon
exercise of an option is specified in each option agreement and generally may be
made by cash, check, other shares of our common stock owned by the optionee,
delivery of an exercise notice together with irrevocable instructions to a
broker to deliver to us the exercise price from sale proceeds, or by a
combination thereof or other consideration permitted by applicable
laws.
(c) Exercise of the
Option. Each stock option agreement will specify the term of
the option and the date when the option is to become
exercisable. However, in no event shall an option granted under the
2004 Equity Incentive Plan be exercised more than ten (10) years after the date
of grant.
(d) Termination of
Employment. If an optionee’s employment terminates for any
reason (other than misconduct, death or permanent disability), all vested
options held by such optionee under the 2004 Equity Incentive Plan expire upon
the earlier of (i) such period of time as is set forth in his or her option
agreement, or three (3) months if no period is stated, or (ii) the expiration
date of the option. The optionee may exercise all or part of his or
her option at any time before such expiration to the extent that such option was
exercisable at the time of termination of employment. Unvested
options shall revert to the 2004 Equity Incentive Plan upon
termination.
(e) Permanent
Disability. If an optionee is unable to continue employment
with us as a result of permanent and total disability (as defined in the Code),
all options held by such optionee under the 2004 Equity Incentive Plan shall
expire upon the earlier of (i) six (6) months after the date of termination of
the optionee’s employment or (ii) the expiration date of the
option. The optionee may exercise all or part of his or her option at
any time before such expiration to the extent that such option was exercisable
at the time of termination of employment.
(f) Death. If an
optionee dies while employed by us, 100% of the optionee’s awards shall
immediately vest, and shall expire upon the earlier of (i) 12 months after the
optionee’s death or (ii) the expiration date of the option. The
executors or other legal representatives or the optionee may exercise all or
part of the optionee’s option at any time before such expiration with respect to
all shares subject to such option.
(g) Other
Provisions. The stock option agreement may contain terms,
provisions and conditions that are consistent with the 2004 Equity Incentive
Plan as determined by the Administrator.
11
162(m) Share Limit. No participant may be
granted stock options and stock appreciation rights to purchase more than
1,500,000 shares of common stock in any fiscal year, except that up to 4,000,000
shares may be granted in the participant’s first fiscal year of
service.
Exercise Price and Other Terms of
Stock Appreciation Rights. The Administrator, subject to the
provisions of the 2004 Equity Incentive Plan (including the 162(m) share limit
referred to above), shall have complete discretion to determine the terms and
conditions of SARs granted under the 2004 Equity Incentive Plan.
Payment of Stock Appreciation Right
Amount. Upon exercise of an SAR, the holder of the SAR shall
be entitled to receive payment in an amount equal to the product of (i) the
difference between the fair market value of a share on the date of exercise and
the exercise price and (ii) the number of shares for which the SAR is
exercised.
Payment upon Exercise of Stock
Appreciation Right. At the discretion of the Administrator,
payment to the holder of an SAR may be in cash, shares of our common stock or a
combination thereof. To the extent that an SAR is settled in cash,
the shares available for issuance under the 2004 Equity Incentive Plan shall not
be diminished as a result of the settlement.
Stock Appreciation Right
Agreement. Each SAR grant shall be evidenced by an agreement
that shall specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the committee, in its sole
discretion, shall determine.
Expiration of Stock Appreciation
Rights. SARs granted under the 2004 Equity Incentive Plan
expire as determined by the Administrator, but in no event later than ten (10)
years from date of grant. No SAR may be exercised by any person after
its expiration.
Termination of
Employment. If a SAR holder terminates employment, other than
for death or disability, the participant may exercise vested SARs within such
period as specified by the SAR agreement, or three (3) months if no period is
specified, but in no event later than the term of the SAR. In the
event of termination for disability, the participant may exercise vested SARs
for a period specified in the SAR agreement, or six (6) months following
termination if no period is specified. In the event of termination
for death, all SARs become vested, and the participant may exercise the SARs for
a period specified in the SAR agreement, or twelve (12) months if no period is
specified.
Grant of Restricted
Stock. Subject to the terms and conditions of the 2004 Equity
Incentive Plan, restricted stock may be granted to our employees and consultants
at any time and from time to time at the discretion of the
Administrator. The Administrator shall have complete discretion to
determine (i) the number of shares subject to a restricted stock award granted
to any participant and (ii) the conditions for grant or for vesting that must be
satisfied, which typically will be based principally or solely on continued
provision of services but may include a performance-based
component. However, no participant shall be granted a restricted
stock award covering more than 300,000 shares in any of our fiscal years, except
that up to 750,000 shares may be granted on the participant’s first fiscal year
of service. Until the shares are issued, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
underlying shares. Restricted stock may also be granted in the form
of RSUs, which are generally not issued until the vesting date.
Restricted Stock Award
Agreement. Each restricted stock grant shall be evidenced by
an agreement that shall specify the purchase price (if any) and such other terms
and conditions as the Administrator shall determine; provided, however, that if
the restricted stock grant has a purchase price, the purchase price must be paid
no more than ten (10) years following the date of grant.
Grant of Performance
Shares. Subject to the terms and conditions of the 2004 Equity
Incentive Plan, performance shares may be granted to our employees and
consultants at any time and from time to time as shall be determined at the
discretion of the Administrator. The Administrator shall have
complete discretion to determine (i) the number of shares of our common stock
subject to a performance share award granted to any service provider and (ii)
the conditions that must be satisfied for grant or for vesting, which typically
will be based principally or solely on achievement of performance milestones but
may include a service-based component. However, no participant shall
be granted a restricted stock award covering more than 300,000 shares in any of
our fiscal years, except that up to 750,000 shares may be granted on the
participant’s first fiscal year of service.
Performance Share Award
Agreement. Each performance share grant shall be evidenced by
an agreement that shall specify such other terms and conditions as the
Administrator, in its sole discretion, shall determine.
12
Grant of Performance
Units. Performance units are similar to performance shares,
except that they shall be settled in cash equivalent to the fair market value of
the underlying shares of our common stock, determined as of the vesting
date. The shares available for issuance under the 2004 Equity
Incentive Plan shall not be diminished as a result of the settlement of a
performance unit.
Performance Unit Award
Agreement. Each performance unit grant shall be evidenced by
an agreement that shall specify such terms and conditions as shall be determined
at the discretion of the Administrator. However, no participant shall
be granted a performance unit award covering more than $1,500,000 in any of
Microchip’s fiscal years, except that a newly hired participant may receive a
performance unit award covering up to $4,000,000.
Deferred Stock
Units. Deferred stock units shall consist of a restricted
stock, performance share or performance unit award that the Administrator, in
its sole discretion, permits to be paid out in installments or on a deferred
basis, in accordance with rules and procedures established by the
Administrator. Deferred stock units are subject to the individual
annual limits that apply to each type of award.
Awards to Non-Employee
Directors. Prior to the amendment and restatement of our 2004
Equity Incentive Plan by our Board on June 1, 2009, our 2004 Equity Incentive
Plan provided for initial and annual awards to non-employee directors within
prescribed parameters. Specifically, each non-employee director is
entitled to receive the following automatic option grants of Common
Stock: (i) an initial option grant of 12,000 shares on the date first
appointed or elected to the Board of Directors (except for non-employee
directors who previously served as directors); and (ii) an annual option grant
of 6,000 shares on the first business day of the month in which our annual
stockholders’ meeting is scheduled. Only non-employee directors who
have served as such for at least three months as of the grant date are eligible
to receive the annual grant. If Proposal Two is approved by our
stockholders at the annual meeting, our 2004 Equity Incentive Plan, as amended
and restated, would result in each non-employee director being entitled to
receive the following automatic equity award grants: (i) an initial
option grant of 6,000 shares, and $60,000 of RSUs (based on the market price of
our stock on the grant date) on the date first appointed or elected to the Board
of Directors (except for non-employee directors who previously served as
directors); (ii) an annual option grant of 3,000 shares and $30,000 of RSUs
(based on the market price of our stock on the grant date) on the date of our
annual meeting of stockholders’, provided that such non-employee director has
served as such for at least three months as of the grant date; and (iii) for
each non-employee director who has served as a non-employee director for at
least five years as of the date of our 2009 annual stockholders’ meeting and
provided that such director is elected by the stockholders to continue to serve
as a director at that meeting, a one-time grant of $100,000 of RSUs (based on
the market price of our stock on the grant date).
Non-Transferability of
Awards. Unless determined otherwise by the Administrator, an
award granted under the 2004 Equity Incentive Plan may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the recipient, only by the recipient. If the
Administrator makes an award granted under the 2004 Equity Incentive Plan
transferable, such award shall contain such additional terms and conditions as
the Administrator deems appropriate.
Acceleration upon
Death. In the event that a participant dies while a service
provider, 100% of his or her awards shall immediately vest.
Leave of
Absence. In the event that a participant goes on a leave of
absence, award vesting will cease until he or she returns to work, except as
required by law or as determined by the Administrator.
Misconduct. In the
event a participant’s service is terminated for misconduct, including but not
limited to dishonesty, willful misconduct, fraud, embezzlement or unauthorized
use of confidential information, then all awards held by the participant shall
terminate immediately.
Adjustment Upon Changes in
Capitalization. In the event that our capital stock is changed
by reason of any stock split, reverse stock split, stock dividend, combination
or reclassification of our common stock or any other increase or decrease in the
number of issued shares of common stock effected without receipt of
consideration by us, appropriate proportional adjustments shall be made in the
number and class of shares of stock subject to the 2004 Equity Incentive Plan,
the individual fiscal year limits applicable to restricted stock, performance
share awards, SARs and options, the number and class of shares of stock subject
to any award outstanding under the 2004 Equity Incentive Plan, and the exercise
price of any such outstanding option or SAR or other award, provided that such
automatic adjustments will not be made to the number of shares to be
granted
13
to our
non-employee Directors under the 2004 Equity Incentive Plan. Any such
adjustment shall be made by the Compensation Committee of our Board of
Directors, whose determination shall be conclusive.
Change of Control. In
the event of a change of control, the successor corporation (or its parent or
subsidiary) will assume or substitute for each outstanding award. If
the successor corporation refuses to assume the awards or to substitute
equivalent awards, such awards shall become 100% vested. In such
event, the Administrator shall notify the participant that each award subject to
exercise is fully exercisable for 30 days from the date of such notice and that
the award terminates upon expiration of such period.
Amendment, Suspensions and
Termination of the 2004 Equity Incentive Plan. Our Board of
Directors may amend, suspend or terminate the 2004 Equity Incentive Plan at any
time; provided, however,
that stockholder approval is required for any amendment to the extent
necessary to comply with Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, or “Rule 16b-3,” or Section 422 of the Code, or any similar rule or
statute. The 2004 Equity Incentive Plan will naturally expire in
September 2014, unless earlier terminated.
Federal
Tax Information
Options. Options
granted under the 2004 Equity Incentive Plan are nonstatutory options that do
not qualify as incentive stock options under Section 422 of the
Code.
An
optionee will not recognize any taxable income at the time the optionee is
granted a nonstatutory option. However, upon its exercise, the
optionee will recognize taxable income generally measured as the excess of the
then fair market value of the shares purchased over the purchase
price. Any taxable income recognized in connection with an option
exercise by an optionee who is also our employee will be subject to tax
withholding by us. Upon resale of such shares by the optionee, any
difference between the sale price and the optionee’s purchase price, to the
extent not recognized as taxable income as described above, will be treated as
short-term or long-term capital gain or loss, depending on the holding
period.
Stock Appreciation
Rights. No taxable income is reportable when an SAR is granted
to a participant. Upon exercise, the participant will recognize
ordinary income in an amount equal to the fair market value of any shares of our
common stock received and/or the amount of cash received. Any
additional gain or loss recognized upon any later disposition of the shares of
our common stock would be a capital gain or loss.
Restricted Stock, Performance Units
and Performance Shares. A participant will not have taxable
income upon grant (unless, with respect to restricted stock that is not in the
form of RSUs, he or she elects to be taxed at that time). Instead, he
or she will recognize ordinary income at the time of vesting/delivery equal to
the fair market value (on the vesting date) of the vested shares or cash
received minus any amount paid for the shares of our vested common
stock.
Code Section
409A. Section 409A of the Code, which was added by the
American Jobs Creation Act of 2004, provides certain new requirements on
non-qualified deferred compensation arrangements. These include new requirements
with respect to an individual’s election to defer compensation and the
individual’s selection of the timing and form of distribution of the deferred
compensation. Code Section 409A also generally provides that
distributions must be made on or following the occurrence of certain events
(e.g., the individual’s separation from service, a predetermined date, or the
individual’s death). Code Section 409A imposes restrictions on an
individual’s ability to change his or her distribution timing or form after the
compensation has been deferred. For certain individuals who are
officers, Code Section 409A requires that such individual’s distribution
commence no earlier than six months after such officer’s separation from
service.
Awards
granted under the 2004 Equity Incentive Plan with a deferral feature will be
subject to the requirements of Code Section 409A. If an Award is
subject to and fails to satisfy the requirements of Code Section 409A, the
recipient of that Award will recognize ordinary income on the amounts deferred
under the Award, to the extent vested, which may be prior to when the
compensation is actually or constructively received. Also, if an
Award that is subject to Code Section 409A fails to comply with Code Section
409A’s provisions, Code Section 409A imposes an additional twenty percent (20%)
federal income tax on compensation recognized as ordinary income, as well as
possible interest charges and penalties. Certain states have enacted
laws similar to Section 409A which impose additional taxes, interest and
penalties on non-qualified deferred compensation arrangements. The
Company will also have reporting requirements with respect to such amounts, and
will have certain withholding requirements.
Tax Effect for
Microchip. We generally will be entitled to a tax deduction in
connection with an award under the 2004 Equity Incentive Plan in an amount equal
to the ordinary income realized by a participant at the time the participant
recognizes
14
such
income (for example, the exercise of a nonqualified stock
option). Special rules limit the deductibility of compensation paid
to our CEO, CFO and to each of our three most highly compensated executive
officers. Under Section 162(m) of the Code, the annual compensation
paid to any of these specified executives will be deductible only to the extent
that it does not exceed $1,000,000. However, we can preserve the
deductibility of certain compensation in excess of $1,000,000 if the conditions
of Section 162(m) are met with respect to awards. The 2004 Equity
Incentive Plan has been designed to permit the committee to grant awards that
qualify as performance-based for purposes of satisfying the conditions of
Section 162(m), thereby permitting us to continue to receive a federal income
tax deduction in connection with such awards.
The
foregoing is only a summary of the effect of federal income taxation upon us and
upon participants, does not purport to be complete, and does not discuss the tax
consequences of any participant’s death or the income tax laws of any
municipality, state or foreign country in which a participant may
reside.
New
Plan Benefits
The
amount, timing, and value of discretionary awards under the 2004 Equity
Incentive Plan, including grants to our CEO, our current and former CFOs and our
three other most highly compensated executive officers, is not determinable. The
future award of options or RSUs to non-employee directors is subject to the
election of such individuals as directors and the fair market value of the
common stock on the date the awards are made. The following table sets forth
information with respect to the grant of options during the fiscal year ended
March 31, 2009 to: (a) non-employee directors; (b) our CEO, our
current and former CFOs and our three other most highly compensated executive
officers named in this proxy statement; (c) all current executive officers as a
group; and (d) all other employees as a group:
EQUITY
GRANTS IN FISCAL 2009
|
Name
of Individual or Identity of Group and Position
|
Number
of Shares Subject to RSUs Granted
|
Weighted
Average Fair Value (1)
|
Number
of
Shares
Subject to Options Granted
|
Weighted
Average Grant Price (2)
|
||||||||||||
|
Steve
Sanghi
President
and CEO
|
191,438 | (3) | $ | 19.11 | --- | $ | --- | |||||||||
|
Mitchell
R. Little
VP,
Worldwide Sales and Applications
|
44,566 | (3) | 19.00 | --- | --- | |||||||||||
|
Gordon
W. Parnell (4)
VP,
Business Development and Investor Relations,
former
CFO
|
1,289 | (3) | 18.41 | --- | --- | |||||||||||
|
David
S. Lambert
VP,
Fab Operations
|
32,039 | (3) | 19.07 | --- | --- | |||||||||||
|
Ganesh
Moorthy
Executive
VP
|
80,666 | (3) | 19.51 | --- | --- | |||||||||||
|
J.
Eric Bjornholt (4)
VP,
CFO
|
24,298 | 17.62 | --- | --- | ||||||||||||
|
All
executive officers as a group (8 people)
|
449,218 | 19.06 | --- | --- | ||||||||||||
|
All
current directors who are not executive officers as a group (4
people)
|
--- | --- | 24,000 | 33.90 | ||||||||||||
|
All
other employees as a group
|
1,427,520 | 23.07 | --- | --- | ||||||||||||
_________________________
|
(1)
|
Represents
the weighted average fair value per share as of the grant
date.
|
|
(2)
|
Represents
the weighted average per share grant
price.
|
|
(3)
|
The
vesting of a portion of these grants was subject to achievement of
performance goals which were not fully met, therefore a portion of these
grants were cancelled as they did not meet their vesting
requirements.
|
|
(4)
|
Gordon
W. Parnell stepped down from his position as our VP and CFO effective
December 31, 2008 and assumed a new role of VP, Business Development and
Investor Relations. J. Eric Bjornholt was elected as our VP and
CFO effective as of January 1,
2009.
|
15
PROPOSAL
THREE
RATIFICATION
OF APPOINTMENT OF
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit
Committee of our Board of Directors has appointed Ernst & Young LLP,
independent registered public accounting firm, to audit our consolidated
financial statements for the fiscal year ending March 31,
2010. Ernst & Young LLP has audited our financial statements
since the fiscal year ended March 31, 2002 and has served as our independent
registered public accounting firm since June 2001. The partner in
charge of our audit is rotated every five years. Other partners and
non-partner personnel are rotated on a periodic basis.
We
anticipate that a representative of Ernst & Young LLP will be present at the
annual meeting, will have the opportunity to make a statement if he or she
desires and will be available to respond to appropriate
questions. Stockholder ratification of the appointment of Ernst &
Young LLP is not required by our Bylaws or applicable law. However,
our Board of Directors chose to submit such appointment to our stockholders for
ratification. In the event of a negative vote on such ratification,
the Audit Committee will reconsider its selection.
Upon
the recommendation of our Audit Committee, the Board of Directors recommends
that stockholders vote FOR ratification of such appointment.
Fees
Paid to Independent Registered Public Accounting Firm
Audit
Fees
This
category includes fees associated with our annual audit, the reviews of our
quarterly reports on Form 10-Q, and statutory audits required
internationally. This category also includes advice on audit and
accounting matters that arose during, or as a result of, the audit or the review
of our interim financial statements, statutory audits and the assistance with
review of our SEC registration statements. This category also
included fees associated with the audit of our internal control over financial
reporting required by Section 404 of the Sarbanes-Oxley Act of
2002. The aggregate fees billed or to be billed by Ernst & Young
LLP in each of the last two fiscal years for such services were $967,000 for
fiscal 2009 and $1,188,000 for fiscal 2008.
Audit-Related
Fees
This
category includes fees associated with employee benefit plan audits, internal
control reviews, accounting consultations and attestation services that are not
required by statute or regulation. The aggregate fees billed or to be
billed by Ernst & Young LLP in each of the last two fiscal years for such
services were $0 for fiscal 2009 and $85,000 for fiscal 2008.
Tax
Fees
This
category includes fees associated with tax return preparation, tax advice and
tax planning. The aggregate fees billed or to be billed by Ernst
& Young LLP in each of the last two fiscal years for such services were
$258,000 for fiscal 2009 and $262,000 for fiscal 2008.
All
Other Fees
This
category includes fees for support and advisory services not related to audit
services or tax services. There were no such fees in fiscal 2009 or
fiscal 2008.
Our Audit
Committee pre-approves all audit and permissible non-audit services provided by
our independent registered public accounting firm. These services may
include audit services, audit-related services, tax services and other
services. The Audit Committee has adopted a policy for the
pre-approval of services provided by our independent registered public
accounting firm. Under the policy, pre-approval is generally provided
for up to one year, and any pre-approval is detailed as to the particular
service or category of services and is subject to a specific budget or
limit. The Audit Committee may also pre-approve particular services
on a case-by-case basis. The Chairman of the Audit Committee has the
delegated
16
authority
from the Audit Committee to pre-approve a specified level of services, and such
pre-approvals are then communicated to the full Audit Committee at its next
scheduled meeting. During fiscal 2009, all audit and non-audit
services rendered by Ernst & Young LLP were approved in accordance with our
pre-approval policy.
Our Audit
Committee has determined that the non-audit services rendered by Ernst &
Young LLP during fiscal 2009 and fiscal 2008 were compatible with maintaining
the independence of Ernst & Young LLP.
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS
AND EXECUTIVE OFFICERS
The
following table sets forth information concerning the beneficial ownership of
our common stock as of May 22, 2009 for: (a) each director, (b) our
CEO, our current and former CFOs and the three other most highly compensated
executive officers named in the Summary Compensation Table, (c) all directors
and executive officers as a group, and (d) each person who is known to us to own
beneficially more than 5% of our common stock. Except as otherwise
indicated in the footnotes to this table, and subject to applicable community
property laws and joint tenancies, the persons named in this table have sole
voting and investment power with respect to all shares of common stock held by
such person:
|
Name
and Address of Beneficial Owner
|
Number
of Shares Beneficially Owned (1)
|
Percent
of
Common
Stock (1)
|
||||||
|
Capital
World Investors
(2)
|
18,946,000 | 10.4 | % | |||||
|
Waddell
& Reed Financial, Inc.(3)
|
18,906,967 | 10.3 | % | |||||
|
Capital
Research Global Investors (4)
|
11,923,890 | 6.5 | % | |||||
|
Steve
Sanghi
(5)
|
5,836,588 | 3.2 | % | |||||
|
Matthew
W. Chapman (6)
|
65,647 | * | ||||||
|
L.B.
Day (7)
|
60,000 | * | ||||||
|
Albert
J. Hugo-Martinez (8)
|
93,250 | * | ||||||
|
Wade
F. Meyercord (9)
|
56,000 | * | ||||||
|
J.
Eric Bjornholt (10)
|
20,267 | * | ||||||
|
David
S. Lambert (11)
|
421,791 | * | ||||||
|
Mitchell
R. Little (12)
|
52,163 | * | ||||||
|
Ganesh
Moorthy (13)
|
332,440 | * | ||||||
|
Gordon
W. Parnell (14)
|
115,186 | * | ||||||
|
All
directors and executive officers as a group (11 people) (15)
|
7,424,143 | 4.0 | % | |||||
_________________________
|
|
* Less
than 1% of the outstanding shares of common
stock.
|
|
(1)
|
For
each individual and group included in the table, the number of shares
beneficially owned includes shares of common stock issuable to the
identified individual pursuant to stock options that are exercisable
within 60 days of May 22, 2009. There are no stock purchase rights or RSUs
that will vest within 60 days of May 22, 2009. In
calculating the percentage of ownership of each individual or group, share
amounts that are attributable to options that are exercisable or stock
purchase rights or RSUs that will vest within 60 days of May 22, 2009 are
deemed to be outstanding for the purpose of calculating the percentage of
shares of common stock owned by such individual or group but are not
deemed to be outstanding for the purpose of computing the percentage of
shares of common stock owned by any other individual or
group.
|
|
(2)
|
Address
is 333 South Hope Street, Los Angeles, CA 90071. All
information is based solely on the Schedule 13G filed by Capital World
Investors dated February 12, 2009, with the exception of the percentage of
common stock held which is based on shares outstanding at May 22,
2009. Such Schedule 13G indicates that (i) Capital World
Investors has sole power to dispose of and direct the disposition of the
common stock; and (ii) Capital World Investors is deemed to be the
beneficial owner of 18,946,000 shares as a result of acting as investment
adviser to various investment companies registered under Section 8 of the
Investment Company Act of 1940; and (iii) The Income Fund of America,
Inc., an investment company registered under the Investment Company Act of
1940, which is advised by Capital World Investors, is the beneficial owner
of 14,128,000 of such shares.
|
17
|
(3)
|
Address
is 6300 Lamar Avenue, Overland Park, KS 66202. All
information is based solely on the Schedule 13G filed by Waddell &
Reed Financial, Inc. dated May 7, 2009, with the exception of the
percentage of common stock held which is based on shares outstanding at
May 22, 2009. Such Schedule 13G indicates that (i) Waddell
& Reed Financial, Inc. is the parent holding company of a group of
investment management companies that hold investment power and, in some
cases, voting power over the securities reported in the referenced
Schedule 13G; (ii) Waddell & Reed Investment Management Company has
sole power to vote or direct the vote and to dispose of and direct the
disposition of 13,323,470 shares of the common stock; (iii) Ivy Investment
Management Company has sole power to vote or direct the vote and to
dispose of and direct the disposition of 5,223,436 shares of the common
stock; and (iv) Austin, Calvert & Flavin, Inc. has sole power to vote
or direct the vote and to dispose of and direct the disposition of 360,061
shares of the common stock.
|
|
(4)
|
Address
is 333 South Hope Street, Los Angeles, CA 90071. All
information is based solely on the Schedule 13G filed by Capital Research
Global Investors dated February 17, 2009, with the exception of the
percentage of common stock held which is based on shares outstanding at
May 22, 2009. Such Schedule 13G indicates that (i) Capital
Research Global Investors has sole power to dispose of and direct the
disposition of the common stock; and (ii) Capital Research Global
Investors is deemed to be the beneficial owner of 11,923,890 shares as a
result of acting as investment adviser to various investment companies
registered under Section 8 of the Investment Company Act of
1940.
|
|
(5)
|
Includes
1,508,507 shares issuable upon exercise of options and 4,289,884 shares
held of record by Steve Sanghi and Maria T. Sanghi as
trustees.
|
|
(6)
|
Includes
58,250 shares issuable upon exercise of options, 262 shares held in
Testamentary Trust of Regan Chapman and 135 shares held by Mr. Chapman’s
minor children.
|
|
(7)
|
Includes
55,000 shares issuable upon exercise of
options.
|
|
(8)
|
Includes
63,250 shares issuable upon exercise of options and 30,000 shares held of
record by Albert J. Hugo-Martinez and S. Gay Hugo-Martinez as
trustees.
|
|
(9)
|
Includes
50,000 shares issuable upon exercise of options and 6,000 shares held of
record by Wade F. Meyercord and Phyllis Meyercord as
trustees.
|
|
(10)
|
Includes
14,481 shares issuable upon exercise of
options.
|
|
(11)
|
Includes
257,050 shares issuable upon exercise of options, 2,789 shares held by Mr.
Lambert’s children, and 159,103 shares held by David S. Lambert and Carol
Lambert as trustees.
|
|
(12)
|
Includes
44,980 shares issuable upon exercise of
options.
|
|
(13)
|
Includes
303,160 shares issuable upon exercise of options and 26,577 shares held of
record by Ganesh Moorthy and Hema Moorthy as
trustees.
|
|
(14)
|
Includes
106,308 shares issuable upon exercise of options and 8,878 shares held of
record by Gordon W. Parnell and Jeanette Parnell as
trustees.
|
|
(15)
|
Includes
an aggregate of 2,746,205 shares issuable upon exercise of
options.
|
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
of the Compensation Program
The
Compensation Committee of the Board of Directors, presently comprised of Mr.
Day, Mr. Hugo-Martinez and Mr. Meyercord, reviews the performance of our
executive officers and makes compensation decisions regarding our executive
officers. Our policies for setting compensation for each of our named
executive officers (CEO, our current and former CFOs, and our three most highly
paid executive officers) are the same as those for the rest of our executive
officers. Our compensation program is a comprehensive package
designed to motivate the executive officers to achieve our corporate objectives
and is intended to be competitive and allow us to attract and retain highly
qualified executive officers. In general, the types of compensation
and benefits provided to our executive officers are similar to those provided to
most other Microchip employees, and include salary, cash bonuses, RSUs, and
other benefits described below.
Our
Executive Compensation Policy and Objectives
Our
compensation policy for executive officers, including our named executive
officers, and key employees is based on a “pay-for-performance”
philosophy. This “pay-for-performance” philosophy emphasizes variable
compensation, primarily by placing a large portion of pay at risk. We
believe that this philosophy meets the following objectives:
18
|
·
|
rewards
performance that may contribute to increased stockholder
value,
|
|
·
|
attracts,
retains, motivates and rewards individuals with competitive compensation
opportunities,
|
|
·
|
aligns
an executive officer’s total compensation with our business
objectives,
|
|
·
|
fosters
a team environment among our management that focuses their energy on
achieving our financial and business objectives consistent with
Microchip’s “guiding values,”
|
|
·
|
balances
short-term and long-term strategic goals,
and
|
|
·
|
builds
and encourages ownership of our common
stock.
|
Decisions
regarding cash and equity compensation also include subjective determinations
and consideration of various factors with the weight given to a particular
factor varying from time to time and in various individual cases, such as an
executive officer’s experience in the industry and the perceived value of the
executive officer’s position to Microchip as a whole.
In
response to the adverse global economic conditions which impacted our business
in fiscal 2009, we took a number of actions to significantly reduce our
operating expenses, including significant reductions in compensation for our
executive officers and other employees. These actions
included:
|
·
|
a
reduction in salary equal to one week without pay in the third quarter of
fiscal 2009 which ended December 31,
2008,
|
|
·
|
a
10% salary reduction for all executive officers effective December 29,
2008,
|
|
·
|
a
week off without pay in the fourth quarter of fiscal 2009 which ended
March 31, 2009,
|
|
·
|
no
payments under our Executive Management Incentive Compensation Plan, or
EMICP, or under our Discretionary Management Incentive Compensation Plan,
or DMICP, for the third and fourth quarters of fiscal
2009,
|
|
·
|
no
payments to officers or employees under our Employee Cash Bonus Program,
or ECBP, for the second, third and fourth quarters of fiscal 2009,
and
|
|
·
|
no
matching contributions under our 401(k) for the third and fourth quarters
of fiscal 2009.
|
We
believe that the overall compensation levels for our executive officers,
including our named executive officers, in fiscal 2009 were consistent with our
“pay-for-performance” philosophy and are commensurate with our fiscal 2009
performance.
Executive
Compensation Process
On an
annual basis, the Compensation Committee evaluates and establishes the
compensation of the executive officers, including the named executive
officers. The Compensation Committee seeks input from Mr. Sanghi when
discussing the performance of, and compensation levels for, the executive
officers other than himself. Mr. Sanghi does not participate in
deliberations relating to his own compensation.
The
Compensation Committee designs our executive compensation program to be
competitive with those of other companies in the semiconductor or related
industries that are similar to us in number of employees, revenue and
capitalization. The Compensation Committee determines appropriate
levels of compensation for each executive officer based on their level of
responsibility within the organization, performance, and overall
contribution. After such determination, the Compensation Committee
makes allocations between long-term and short-term as well as cash and non-cash
elements of compensation. Microchip’s financial and business
objectives, the salaries of executive officers in similar positions with
comparable companies and individual performance are considered in making these
determinations. If compensation information is reviewed for other
companies, it is obtained from published materials such as proxy statements, and
information gathered from such companies directly. We do not engage
consultants to conduct such review process for us.
The
executive officer compensation process begins with consideration of Microchip’s
overall annual budget for employee compensation. The Compensation
Committee considers the budgeted salary data and individual executive officer
salary increases are determined with the goal of keeping the average executive
officer salary increase within the budgeted range for all other
employees. In setting annual salaries for executive officers, the
Compensation Committee also considers relevant industry data but does not target
any overall industry percentage level or peer group average.
19
Microchip’s
annual budget is created as part of Microchip’s annual operating plan process
under which business and financial objectives are initially developed by our
executive officers, in conjunction with their respective operating units, and
then discussed with and approved by our CEO. These objectives are
then reviewed by our Board of Directors and the Board sets the overall financial
and business objectives for Microchip on which incentive compensation is
based.
The Compensation
Committee sets the compensation of our Chairman, CEO and President, Mr.
Sanghi, in the same manner as each of our other executive
officers. In particular, the Compensation Committee considers Mr.
Sanghi’s level of responsibility, performance, and overall contribution to the
results of the organization. The Compensation Committee also
considers the compensation of CEOs of other companies in the semiconductor
or related industries that are similar to us in number of employees, revenue and
capitalization. Mr. Sanghi participates in the same cash incentive,
equity incentive and benefit programs as our other executive officers. For
example, his compensation is subject to the same performance metrics
as our other executive officers under our EMICP and DMICP programs.
The Compensation Committee recognizes that Mr. Sanghi’s total compensation
package is significantly higher than that of our other executive
officers and the Committee believes this is appropriate in consideration of
Mr. Sanghi’s superior leadership of Microchip over a long period of
time. In particular, the Committee believes that Mr. Sanghi’s
leadership has been key to the substantial revenue growth, strong
market position and substantial increase in the market value
of Microchip since taking Microchip public in 1993, and to leading
Microchip’s strong performance relative to others in the industry in the current
adverse conditions facing the semiconductor industry and the global
economy.
For
fiscal 2009, the Compensation Committee reviewed and approved the total
compensation package of all of our executive officers, including the elements of
compensation discussed below, and determined the amounts to be reasonable and
competitive. In addition, in light of the global economic downturn,
the Compensation Committee took actions to reduce executive compensation as part
of Microchip’s overall efforts to significantly reduce its operating
expenses.
Elements
of Compensation
Our
executive compensation program is currently comprised of four major
elements:
|
·
|
annual
base salary,
|
|
·
|
incentive
cash bonuses,
|
|
·
|
equity
compensation, and
|
|
·
|
compensation
and employee benefits generally available to all of our
employees.
|
The
retirement benefits and other benefits offered to our executive officers are
largely the same as those we provide to a broad base of
employees. While our executive officers’ level of participation in
our management incentive compensation plans and equity incentive plans is
typically higher than for our non-executive employees, based on the officers’
level of responsibility and industry experience, the plans in which our
executive officers are eligible to participate are very similar to those for our
other employees. In accordance with Microchip’s compensation
philosophy, we do not offer perquisites to our executive
officers. The Compensation Committee reviews each element of
compensation separately and total compensation as a whole, other than those
benefits which are available to all employees. The Compensation
Committee determines the appropriate mix of elements to meet our compensation
objectives and ensures that we remain competitive with the compensation
practices in our industry.
Although
our executive officers are entitled to certain severance and change of control
benefits (as described below), the Compensation Committee does not consider such
benefits to be elements of compensation for purposes of annual compensation
reviews because such benefits may never be paid.
Base Salaries. We
review the base salaries of our executive officers each year. When
setting base salaries, we review the business and financial objectives for
Microchip as a whole, as well as the objectives for each of the individual
officers relative to their respective areas of responsibility. We may
also consider the salaries of executive officers in similar positions with
comparable companies in the semiconductor industry. This review
encompasses the objectives for both the immediately preceding fiscal year and
the upcoming fiscal year.
After
consideration of the factors described above and in light of the adverse global
economic conditions that impacted our business in fiscal 2009, the base salaries
for our CEO and other named executive officers were not increased from the
fiscal 2008 levels. In addition, during the third quarter of fiscal
2009, our CEO and other named executive officers (and many other employees) had
their salaries reduced by one week’s pay. Also, effective December
29, 2008, our CEO and other named executive
officers (and many other employees), underwent a 10% reduction in base
salary. In the fourth quarter of
20
fiscal
2009 our CEO and other named executive officers received a week off without
pay. The only salary increase among our named executive officers
during fiscal 2009 was in connection with the promotion of our VP of Finance, J.
Eric Bjornholt, to the position of CFO effective January 1, 2009.
Incentive Cash
Bonuses. The Compensation Committee sets performance goals
which, if met, result in quarterly payments to our executive officers under the
EMICP. Executive officers may also receive quarterly payments under
the DMICP. The Committee establishes performance goals which it
believes are challenging, require a high level of performance
and motivate participants to drive shareholder value, but which goals
are expected to be achievable in the context of business conditions anticipated
at the time the goals are set. When setting the performance goals, the
Committee places more emphasis on the overall expected financial performance of
Microchip rather than on the achievement of any one individual goal.
The Committee believes that this focus on the overall
payout incentivizes outstanding performance across the corporation and
drives the overall financial success of the
corporation. The Committee uses the DMICP to help achieve the overall
objectives of the performance bonus program.
In fiscal
2009, the quarterly payments under the EMICP for our named executive officers
were targeted at an aggregate of approximately $295,000 for all such officers as
a group. The aggregate budgeted bonus pool under the various
management incentive compensation plans is calculated by multiplying the
eligible executive officer’s bonus target percentage by his or her base
salary. Actual payments under the various management incentive plans
are predicated on Microchip’s quarterly operating results and, with respect to
the DMICP, a subjective element. Bonuses under the DMICP are subject
to a maximum award of $2,500,000 per individual on an annual basis; however, all
awards to date have been substantially less than such maximum
amount.
In fiscal
2009, the following business and financial areas were selected as the basis for
calculating bonuses under our management incentive compensation
plans:
|
Target
Quarterly Measurement
|
Target
% of Bonus
|
|
|
Total
sequential revenue growth
|
4.00%
|
10.00%
|
|
16-bit
sequential revenue growth
|
30.00%
|
5.00%
|
|
Analog
sequential revenue growth
|
6.00%
|
5.00%
|
|
Gross
margin percentage (non-GAAP)
|
59.00%
|
15.00%
|
|
Operating
expenses as a percentage of sales (non-GAAP)
|
25.5%
|
15.00%
|
|
Operating
income as a percentage of sales (non-GAAP)
|
33.00%
|
15.00%
|
|
Earnings
per share (quarterly)
|
(1)
|
15.00%
|
|
DMICP
|
Discretionary
|
20.00%
|
|
|
(1)
|
The
EMICP quarterly non–GAAP earnings per share (EPS) targets for fiscal 2009
were $0.42, $0.43, and $0.37 for the first through third quarters,
respectively. There was no EPS target set for the fourth
quarter of fiscal 2009 due to the uncertain economic conditions existing
at the time. The EPS targets (as well as the other targets
under the EMICP) are set each quarter by the Compensation Committee and
may be based on either GAAP or non-GAAP financial results at the
discretion of the Compensation Committee. The Compensation
Committee typically uses non-GAAP information when setting the targets
because it believes such targets are more useful in understanding our
operating results due to the exclusion of non-cash and other special
charges.
|
Consistent
with our “pay-for-performance” philosophy, our CEO and other executive officers
received bonuses under the EMICP and DMICP for the first two quarters of fiscal
2009 as we achieved or exceeded 100% of the Target Quarterly Measurements stated
above. However, to conserve cash, the Compensation Committee
determined that only a portion of the awards should be paid. In
particular, the EMICP bonuses for the first quarter of fiscal 2009 were paid at
80% and the bonuses for the second quarter of fiscal 2009 were paid at
60%. For the third and fourth quarters of fiscal 2009, no bonuses
were paid under the EMICP as the performance criteria for such periods were not
met and no amounts were paid under the DMICP for such periods due to adverse
global economic conditions. For fiscal 2009, the total cash bonus
payments under the EMICP and the DMICP for our named executive officers, other
than our CEO, ranged from $9,240 to $47,450. In fiscal 2009, Mr.
Sanghi
21
earned an
aggregate EMICP bonus of $374,413, and no DMICP bonus. The
differences in the levels of compensation under these programs for the various
executive officers are based upon their relative contribution, performance, and
responsibility level within the organization.
Equity
Compensation. Equity compensation, such as RSUs, constitutes a
significant portion of our incentive compensation program because we believe
that executive officers and key employees should hold a long-term equity stake
in Microchip to align their collective interests with the interests of our
stockholders. In fiscal 2009, equity grants in the form of RSUs were
a significant portion of our executive officers’ total compensation
package.
We
typically make equity compensation grants to executive officers and key
employees in connection with their initial employment, and we also typically
make quarterly evergreen grants of equity to incentivize employees on a
continuing basis as their initial equity awards vest. In setting the
amount of the equity compensation grants, the estimated value of the grants is
considered, as well as the intrinsic value of the outstanding equity
compensation held by the executive officer, both the unvested retention value
and the vested amount. In setting these amounts and any performance
goals, the Committee uses its judgment after considering the effect of the
overall RSU amounts and the percentage of RSUs granted to executive officers in
connection with the overall financial results and performance of the
corporation.
The
evergreen grants of RSUs for fiscal 2009 were awarded with vesting subject to
meeting specified performance goals over identified periods. In
fiscal 2009, these performance goals were related to achieving certain levels of
operating profit over a specified time frame. Specifically, with
respect to the awards made in April 2008, the performance goal was related to
achieving non-GAAP operating profit for the six months ended September 30, 2008
from $160 million to $190 million with an achievement of $190 million of
non-GAAP operating profit necessary for full vesting of the
award. Based on the actual operating profit for such period, these
awards vested at 100%. With respect to the awards made in July 2008,
the performance goal was related to achieving non-GAAP operating profit for the
six months ended December 31, 2008 from $157 million to $187 million with an
achievement of $187 million of non-GAAP operating profit necessary for full
vesting of the award. Based on the actual operating profit for such
period, the performance goal was not achieved, these awards did not vest and
were subsequently cancelled. With respect to the awards made in
October 2008, the performance goal was related to achieving non-GAAP operating
profit for the six months ended March 31, 2008 from $112 million to $142 million
with an achievement of $142 million of non-GAAP operating profit necessary for
full vesting of the award. Based on the actual operating profit for
such period, the performance goal was not achieved, these awards did not vest
and were subsequently cancelled. With respect to the awards made in
February 2009, the performance goal was related to achieving non-GAAP operating
profit of $21 million or more for the three months ended June 30, 2009 in order
for the awards to vest in full. As of the date of this proxy
statement, it was not known what portion of these awards, if any, will
vest.
In
addition to the evergreen RSU grants, in October 2008, we made additional RSU
grants under the 2004 Equity Incentive Plan in order to recognize achievement of
the Target Quarterly Measurements under the EMICP for the first and second
quarters of fiscal 2009. These grants were made with vesting subject
to a performance goal related to achieving non-GAAP operating profit for the six
months ended March 31, 2009 from $112 million to $142 million with an
achievement of $142 million of non-GAAP operating profit necessary for full
vesting of the award. These awards were made in RSUs in order
to incentivize employees on a continuing basis and to conserve
cash. Based on the actual operating profit for such period, the
performance goal was not achieved, these awards did not vest and were
subsequently cancelled.
Grants of
RSUs may also be made in connection with promotions, other changes in
responsibilities or in recognition of other individual or Microchip developments
or achievements. Grants of RSUs in fiscal 2009 typically were
scheduled to vest approximately four years from the grant date. The
RSUs were awarded without a purchase price and therefore have immediate value to
recipients upon vesting. On March 31, 2009, approximately 58% of our
employees worldwide held RSUs or options to purchase our common
stock. Since the middle of fiscal 2006, RSUs have been the principal
equity compensation vehicle for Microchip executive officers and key
employees.
In
granting equity compensation awards to executive officers, we consider numerous
factors, including:
|
·
|
the
individual’s position and
responsibilities,
|
|
·
|
the
individual’s future potential to influence our mid- and long-term
growth,
|
|
·
|
the
vesting schedule of the awards, and
|
|
·
|
the
number and value of awards previously
granted.
|
22
We do not
separately target the equity element of our executive officer compensation
programs at a specific percentage of overall compensation. However,
overall total compensation is structured to be competitive so that we can
attract and retain executive officers. In setting equity award
levels, we also take into consideration the impact of the equity-based awards on
the dilution of our stockholders’ interests in our common stock.
Historically,
the Compensation Committee had granted RSUs to executive officers and current
employees once per year near the start of the fiscal year. In fiscal
2008, the Compensation Committee moved from annual grants to a quarterly grant
program in order to more evenly record its stock-based compensation
expense. Grants of RSUs to new employees are made once per month by
the Employee Committee at a meeting of such committee. Microchip does
not have any program, plan or practice to time grants of RSUs in coordination
with the release of material non-public information. Microchip does
not time, nor do we plan to time, the release of material non-public information
for the purposes of affecting the value of executive
compensation. Our 2004 Equity Incentive Plan provides that the value
of RSUs be the market closing price of our stock on the grant date.
See
the table under “Grants of
Plan-Based Awards for Fiscal Year Ended March 31, 2009” at page 29 for
information regarding RSUs granted during fiscal 2009 to our named executive
officers.
Stock Ownership
Guidelines For Key Employees And Directors. To help ensure
alignment of the interests of our management and Board of Directors with those
of our stockholders, we have put in place a stock holding policy that applies to
each member of our management and Board of Directors. This policy was
proposed by our Nominating and Governance Committee and ratified by our Board of
Directors at its October 24, 2003 meeting. Under this policy,
effective April 1, 2004, each of our directors, executive officers, vice
presidents and internal director-level employees must maintain a specified
minimum level of ownership of our stock during their tenure in their respective
office or position. During fiscal 2009, all persons subject to this
policy were in compliance with its terms.
Microchip
does not permit executive officers to speculate in Microchip stock, which
includes a prohibition on short selling, buying and selling options (including
writing covered calls) or hedging or any type of arrangement that has a similar
economic effect.
Other Compensation and Employee
Benefits Generally Available to All Employees. We maintain
compensation and employee benefits that are generally available to all Microchip
employees, including:
|
·
|
our
employee stock purchase plan,
|
|
·
|
medical,
dental, vision, employee assistance program, flexible spending, and short-
and long-term disability insurance, accidental death and dismemberment
insurance,
|
|
·
|
life
insurance benefits,
|
|
·
|
a
401(k) retirement savings plan,
|
|
·
|
an
employee cash bonus plan, and
|
|
·
|
vacation
and paid time off.
|
Since
these programs are generally available to all employees, these forms of
compensation are not independently evaluated by the Compensation Committee in
connection with the annual determination of executive officer
compensation.
Employee Stock Purchase
Plan. Our 2001 Employee Stock Purchase Plan is a Section 423
qualified employee stock purchase plan that allows all U.S. employees the
opportunity to purchase our common stock through payroll deduction at 85% of the
fair market value at the lower of the price as of the opening of the two-year
offering period or at the end of any six-month purchase period. A
significant portion of our international employees have the ability to
participate in the 1994 International Employee Stock Purchase Plan that allows
them the opportunity to purchase our common stock through payroll deduction at
85% of the fair market value at the lower of the price as of the opening or the
end of any six-month offering period.
Medical, Dental, Vision, Employee
Assistance Program, Flexible Spending, Alternative Health Care, Long-Term Care,
Legal Assistance, and Disability Coverage. We make medical,
dental, vision, employee assistance program, flexible spending, alternative
health care, long term care, legal assistance, and
disability coverage available to all of our U.S. employees through our active
benefit plans. Under these generally available plans, our named
executives officers are eligible to receive between $1,000 and $7,500 per month
in long-term disability coverage depending on which plan they
elect. Short-term disability coverage is provided which allows for
100% of base salary to be paid for six months in the event of
disability. Accidental death and dismemberment insurance with a
benefit of one times the executive’s annual salary is provided by
23
Microchip. Since
all of our U.S. employees participate in this plan on a non-discriminatory
basis, the value of these benefits to our named executive officers is not
required to be included in the Summary Compensation Table on page 27
pursuant to SEC rules and regulations.
Life Insurance. In
fiscal 2009, we provided life insurance coverage to our named executive officers
in the amount up to one and a half times the executive’s annual salary (up to a
maximum of $500,000). The named executive officers may purchase
supplemental life insurance at their own expense.
401(k). We
maintain a 401(k) plan for the benefit of all of our U.S. employees in order to
allow our employees to save for retirement. We contribute to our
401(k) plan each year based on our profitability during the year, subject to
maximum contributions and other rules prescribed by Federal law governing such
plans. Our named executive officers are permitted to participate in
the plans to the same extent as our other U.S. employees. In light of
the adverse global economic conditions which impacted our business in fiscal
2009 and our resulting actions to significantly reduce our operating expenses,
no discretionary matching contributions were made for the third or fourth
quarters of fiscal 2009, and we eliminated any required matching contribution
effective January 1, 2009.
Employee Cash Bonus
Plan. All of our employees worldwide participate in our
Employee Cash Bonus Plan. The cash bonus plan can award each eligible
employee with a target of two and one-half days of pay, calculated on base
salary, every quarter, if certain operating profitability objectives are
achieved. The pay-out is adjusted based on actual quarterly operating
results. During fiscal 2009, bonus awards were paid out at 75% for
the first quarter of fiscal 2009. There were no bonus awards for the
second, third and fourth quarters of 2009 due to the adverse economic
conditions, the impact of such conditions on our performance and our efforts to
substantially reduce our operating expenses. Under such program, for
fiscal 2009, our named executive officers received payments ranging from $998 to
$3,857.
Vacation and Paid Time-Off
Benefits. We provide vacation and other paid holidays to all
of our employees, including our named executive officers. We believe
our vacation and holidays are comparable to others in the industry.
Non-Qualified Deferred Compensation
Plan. We maintain a non-qualified deferred compensation plan
for certain employees, including our named executive officers, who receive
compensation in excess of the 401(k) contribution limits imposed under the
Internal Revenue Code and desire to defer more compensation than they would
otherwise be permitted under a tax-qualified retirement plan, such as our 401(k)
plan. Microchip does not make contributions to this non-qualified
deferred compensation plan. This plan allows our executive officers
to make pre-tax contributions to this plan which would be fully taxed to the
executive officers after the executive officer’s termination of employment with
Microchip.
We do not
have pension plans or other retirement plans for our named executive officers or
our other U.S. employees.
Employment Contracts, Termination of
Employment and Change of Control Arrangements We do not have
employment contracts with our CEO, CFO or any of our executive officers, nor
agreements to pay severance on involuntary termination (other than as stated in
the change of control agreements below) or upon retirement. Our CEO,
CFO, and our executive officers have entered into change of control agreements
with us.
These
agreements were designed to help ensure the continued services of our key
executive officers in the event that a change of control of the company is
effected, and to assist our key executive officers in transitioning from the
company if as a result of a change of control, they lose their
positions. We believe that the benefits provided by these agreements
help to ensure that our management team will be incentivized to remain employed
with Microchip during a change of control. Capitalized terms used
herein and not defined shall have the meanings set forth in the change of
control agreements. Additionally, our 2004 Equity Incentive Plan has
a change of control provision which provides that any successor company shall
assume each outstanding award or provide an equivalent substitute award;
however, if the successor fails to do so, vesting of awards shall
accelerate. The Compensation Committee considered prevalent market
practices in determining the severance amounts and the basis for selecting the
events triggering payment in the agreements.
With
respect to our CEO, CFO and VP of Worldwide Sales, if the executive officer’s
employment terminates for reasons other than Cause within the Change of Control
Period, the executive officer will be entitled to receive severance benefits
consisting of the following primary components:
|
·
|
a
one-time payment of his base salary in effect immediately prior to the
Change of Control or termination date, whichever is greater, for the
following periods: (1) in the case of the CEO, two years; (2) in
the case of the CFO and the VP of Worldwide Sales, one year;
and
|
24
|
·
|
a
one-time payment of his bonuses for which he was or would have been
eligible in the year in which the Change of Control occurred or for the
year in which termination occurred, whichever is greater, for the
following periods: (1) in the case of the CEO, two years;
(2) in the case of the CFO and the VP of Worldwide Sales, one year;
and
|
|
·
|
a
continuation of medical and dental benefits (subject to any required
employee contributions) for the following periods: (1) in the case of the
CEO, two years; (2) in the case of the CFO and VP of Worldwide Sales, one
year; provided in each case that such benefits would cease sooner if and
when the executive officer becomes covered by the plans of another
employer; and
|
With
respect to our CEO, the CFO and the VP of Worldwide Sales, immediately prior to
a Change of Control (regardless of whether the executive officer’s employment
terminates), all equity compensation held by the executive officer shall become
fully vested.
With
respect to our executive officers other than the CEO, the CFO and the VP of
Worldwide Sales, if the executive officer terminates his employment for Good
Reason, or the executive’s employment is terminated for reasons other than Cause
within the Change of Control Period, the executive officer will be entitled to
receive severance benefits consisting of the following primary
components:
|
·
|
a
one-time payment of his base salary in effect immediately prior to the
Change of Control or termination date, whichever is greater, for one year,
and
|
|
·
|
a
one-time payment of his bonuses for which he was or would have been
eligible in the year in which the Change of Control occurred or for the
year in which termination occurred, whichever is greater, for one year,
and
|
|
·
|
a
continuation of medical and dental benefits (subject to any required
employee contributions) for one year (provided in each case that such
benefits would cease sooner if and when the executive officer becomes
covered by the plans of another employer),
and
|
|
·
|
a
payment to cover any excise tax that may be due under Section 4999 of the
Code, if the payments provided for in the change of control agreement
constitute “parachute payments” under Section 280G of the Code and the
value of such payments is more that three times the executive officer’s
“base amount” as defined by Section 280G(b)(3) of the
Code.
|
With
respect to our executive officers other than the CEO, the CFO and the VP of
Worldwide Sales, immediately upon termination during the Change of Control
Period other than for Cause, all equity compensation held by the executive
officer shall become fully vested.
The
following table sets forth the aggregate dollar value of payments, to the extent
calculable, in the event of a termination of a named executive officer on March
31, 2009, the last business day of our last completed fiscal year.
|
Name
(1)
|
Salary
|
Bonus
|
Equity
Compensation
Due to
Accelerated
Vesting
|
Tax
Gross-up
on
Change of
Control
(2)
|
Continuation
of
Certain
Benefits
(3)
|
||||||||||||
|
Steve
Sanghi (4)
|
$ | 962,769 | $ | 1,962,568 | $ | 6,284,128 | $ | --- |
2
years
|
||||||||
|
Ganesh
Moorthy (5)
|
221,738 | 130,484 | 2,175,620 | 1,057,929 |
1
year
|
||||||||||||
|
Mitchell
R. Little (5)
|
228,708 | 114,002 | 1,437,593 | --- |
1
year
|
||||||||||||
|
David
S. Lambert (5)
|
199,387 | 97,393 | 1,085,648 | --- |
1
year
|
||||||||||||
|
J.
Eric Bjornholt
(5)
|
157,500 | 53,308 | 604,720 | 301,231 |
1
year
|
||||||||||||
|
(1)
|
Mr.
Parnell was a party to a change of control agreement which terminated
effective December 31, 2008 in connection with his stepping down from his
position as VP and CFO in order to assume the role of VP, Business
Development and Investor Relations.
|
|
(2)
|
This
payment covers any excise tax that may be payable under Section 4999 of
the Code if the payments provided for under the change of control
agreement constitute “parachute payments” under section 280G of the Code
and the value of the payments is more than three times the executive
officer’s “base amount” as defined by Section 280G(b)(3) of the
Code.
|
25
|
(3)
|
Benefits
continued under the change of control agreements are limited to
company-paid medical, dental, vision and life insurance coverage at the
same level of coverage the executive was provided immediately prior to
termination of employment with Microchip. Amounts are not
determinable at this time and are dependent on each executive officer’s
individual circumstances.
|
|
(4)
|
The
change of control payment includes an amount equal to twice the annual
salary of the executive plus a bonus equal to two times the targeted
annual amount payable to such executive under our management incentive
compensation plans and employee cash bonus
plan.
|
|
(5)
|
The
change of control payment includes an amount equal to one times the annual
salary of the executive plus a bonus equal to the targeted annual amounts
payable to such executive under our management incentive compensation
plans and employee cash bonus plan.
|
Performance-Based
Compensation and Financial Restatement
To date,
Microchip has not experienced a financial restatement and has not considered or
implemented a policy regarding retroactive adjustments to any cash or
equity-based incentive compensation paid to its executive officers and other
employees where such payments were predicated upon the achievement of certain
financial results that would subsequently be the subject of a
restatement.
Tax
Deductibility
Section
162(m) of the Code disallows a corporate income tax deduction for executive
compensation paid to our named executive officers in excess of $1,000,000 per
year, unless that income meets permitted exceptions. In order to
enhance our ability to obtain tax deductions for executive compensation, our
stockholders approved the EMICP at our 2006 annual meeting. This
allows us to seek to have such compensation under our EMICP qualify as
performance-based compensation under Section 162(m). Additionally,
our 2004 Equity Incentive Plan allows for the granting of performance-based
awards such as RSUs. To the extent that we grant awards with such
performance-based limitations, we would expect them to qualify as
performance-based awards for purposes of 162(m).
To
maintain flexibility in compensating Microchip’s executive officers in a manner
designed to promote varying corporate goals, it is not the policy of the
Compensation Committee that executive compensation must be tax
deductible. We intend to review the deductibility of executive
officer compensation from time to time to determine whether any additional
actions are advisable to obtain deductibility.
Conclusion
We
believe that our executive team provided outstanding service to Microchip in
fiscal 2009. We will work to assure that the executive compensation
programs continue to meet Microchip’s strategic goals as well as the overall
objectives of the compensation program.
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION (2)
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis section of this proxy statement required by
Item 402(b)
of Regulation S-K with management and, based on such review and discussions, the
Compensation Committee recommended to our Board of Directors that the
Compensation Discussion and Analysis be included in this proxy
statement.
By the
Compensation Committee of the Board of Directors:
L.B. Day
(Chair) Albert
J.
Hugo-Martinez Wade
F. Meyercord
(2) The
Compensation Committee Report on executive compensation is not “soliciting”
material and is not deemed “filed” with the Securities and exchange Commission,
and is not incorporated by reference into any filings of Microchip under the
Securities Act of 1933 or the Securities Exchange Act of 1934 whether made
before or after the date hereof and irrespective of any general incorporation
language contained in such filings.
26
SUMMARY
COMPENSATION TABLE
The
following table lists the annual compensation for our CEO, our current and
former CFOs and our three other most highly compensated executive officers
(referred to as the “named executive officers”) in the fiscal year ended March
31, 2009:
|
Name
and
Principal
Position
|
Year
|
Salary
(1)
|
Bonus
(2)
|
Stock
Awards
(3)
|
Option
Awards
(4)
|
Non-Equity
Incentive Plan Compensation (5)
|
Change
in Pension Value and Non-Qualified Deferred Compensation Earnings (6)
|
All
Other Compensation (7)
|
Total
|
||||||||||||||||||
|
Steve
Sanghi,
|
2009
|
$ | 502,985 | $ | 3,857 | $ | 1,682,278 | $ | 739,416 | $ | 374,413 | $ | --- | $ | 2,496 | $ | 3,305,445 | ||||||||||
|
President
|
2008
|
532,675 | 7,714 | 1,183,405 | 1,293,246 | 751,495 | --- | 4,231 | 3,772,766 | ||||||||||||||||||
|
and
CEO
|
2007
|
515,010 | 28,467 | 904,135 | 1,787,773 | 1,167,276 | --- | 5,005 | 4,407,666 | ||||||||||||||||||
|
Ganesh
Moorthy,
|
2009
|
231,687 | 1,777 | 542,172 | 203,977 | 47,450 | --- | 2,623 | 1,029,686 | ||||||||||||||||||
|
Executive
Vice
|
2008
|
243,455 | 3,554 | 330,637 | 338,018 | 95,193 | --- | 3,827 | 1,014,684 | ||||||||||||||||||
|
President
|
2007
|
215,632 | 11,741 | 243,322 | 422,967 | 134,866 | --- | 4,152 | 1,032,680 | ||||||||||||||||||
|
Mitchell
R. Little, VP
|
2009
|
238,971 | 1,833 | 385,440 | 142,784 | 40,919 | --- | 3,123 | 813,070 | ||||||||||||||||||
|
Worldwide
|
2008
|
252,625 | 3,666 | 271,018 | 222,517 | 82,119 | --- | 3,123 | 835,068 | ||||||||||||||||||
|
Sales
and Applications
|
2007
|
241,808 | 13,420 | 207,179 | 256,258 | 125,844 | --- | 3,896 | 848,405 | ||||||||||||||||||
|
David
S. Lambert,
|
2009
|
208,334 | 1,598 | 299,490 | 142,784 | 34,896 | --- | 2,749 | 689,851 | ||||||||||||||||||
|
VP,
Fab
|
2008
|
220,321 | 3,196 | 213,738 | 222,517 | 70,035 | --- | 2,822 | 732,629 | ||||||||||||||||||
|
Operations
|
2007
|
211,414 | 11,733 | 165,743 | 256,258 | 107,635 | --- | 3,487 | 756,270 | ||||||||||||||||||
|
Gordon
W. Parnell, VP, Business
|
2009
|
207,816 | 1,678 | 160,881 | 132,585 | 36,662 | --- | 3,020 | 542,642 | ||||||||||||||||||
|
Development
and Investor Relations
|
2008
|
231,384 | 3,356 | 132,585 | 204,359 | 73,552 | --- | 3,088 | 726,775 | ||||||||||||||||||
|
and
Former CFO (8)
|
2007
|
222,030 | 12,322 | 36,662 | 238,150 | 113,039 | --- | 3,791 | 743,236 | ||||||||||||||||||
|
J.
Eric Bjornholt,
Current
VP and CFO (8)
|
2009
|
137,765 | 998 | 102,154 | 15,879 | 9,240 | --- | 1,383 | 267,419 | ||||||||||||||||||
|
|
(1)
|
Represents
the base salary earned by each executive officer in the specified fiscal
year.
|
|
|
(2)
|
Represents
bonuses earned by each executive officer in the specified fiscal year
under our ECBP.
|
|
|
(3)
|
Represents
the compensation cost recognized in our financial statements in the
specified fiscal year under SFAS No. 123R related to RSUs for each
executive officer and thus may include amounts from awards granted prior
to the specified fiscal year. For information on the valuation
assumptions made with respect to the grants of RSUs in fiscal 2009, please
refer to the assumptions for fiscal years ended March 31, 2009, 2008, and
2007 stated in Note 15, “Equity Incentive Plans” to Microchip’s audited
financial statements for the fiscal year ended March 31,
2009.
|
|
|
(4)
|
Represents
the compensation cost recognized in our financial statements in the
specified fiscal year under SFAS No. 123R related to non-qualified stock
options and RSUs for each executive officer and thus may include amounts
from awards
|
27
granted
prior to the specified fiscal year. For information on the valuation
assumptions made with respect to the foregoing option and RSU grants, please
refer to the assumptions for fiscal years ended March 31, 2006, 2005 and 2004
stated in Note 15, “Equity Incentive Plans” to Microchip’s audited financial
statements for the fiscal year ended March 31, 2006, included in Microchip’s
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
May 31, 2006.
|
(5)
|
Represents
the aggregate amount of bonuses earned by each executive officer in the
specified fiscal year under our MICP, EMICP and DMICP. Each
executive officer received the following payments under each of such plans
in the specified fiscal year:
|
|
Named
Executive Officer
|
Year
|
MICP
|
EMICP
|
DMICP
|
||||||||||
|
2009
|
$ | --- | $ | 374,413 | $ | --- | ||||||||
|
Steve
Sanghi
|
2008
|
--- | 697,312 | 54,183 | ||||||||||
|
2007
|
640,705 | 419,804 | 106,767 | |||||||||||
|
2009
|
--- | 47,450 | --- | |||||||||||
|
Ganesh
Moorthy
|
2008
|
--- | 88,330 | 6,863 | ||||||||||
|
2007
|
72,063 | 50,069 | 12,734 | |||||||||||
|
2009
|
--- | 40,919 | --- | |||||||||||
|
Mitchell
R. Little
|
2008
|
--- | 76,198 | 5,921 | ||||||||||
|
2007
|
69,074 | 45,259 | 11,511 | |||||||||||
|
2009
|
--- | 34,896 | --- | |||||||||||
|
David
S. Lambert
|
2008
|
--- | 64,985 | 5,050 | ||||||||||
|
2007
|
59,080 | 38,710 | 9,845 | |||||||||||
|
2009
|
--- | 36,662 | --- | |||||||||||
|
Gordon
W. Parnell (8)
|
2008
|
--- | 68,249 | 5,303 | ||||||||||
|
2007
|
62,046 | 40,654 | 10,339 | |||||||||||
|
J.
Eric Bjornholt (8)
|
2009
|
9,240 | --- | --- | ||||||||||
|
|
(6)
|
The
contributions under our non-qualified deferred compensation plan are
invested at the discretion of the executive officer and there are no
above-market or preferential earnings on such amounts made or provided by
Microchip.
|
|
|
(7)
|
Consists
of company-matching contributions to our 401(k) retirement savings plan
and the full dollar value of premiums paid by Microchip for life insurance
for the benefit of a named executive officer in the amounts shown
below:
|
|
Named
Executive Officer
|
Year
|
401(k)
|
Life
Insurance
|
|||||||
|
2009
|
$ | 1,599 | $ | 897 | ||||||
|
Steve
Sanghi
|
2008
|
3,696 | 535 | |||||||
|
2007
|
4,525 | 480 | ||||||||
|
2009
|
2,012 | 611 | ||||||||
|
Ganesh
Moorthy
|
2008
|
3,306 | 521 | |||||||
|
2007
|
3,738 | 414 | ||||||||
|
2009
|
1,515 | 1,608 | ||||||||
|
Mitchell
R. Little
|
2008
|
2,590 | 533 | |||||||
|
2007
|
3,431 | 465 | ||||||||
|
2009
|
1,361 | 1,388 | ||||||||
|
David
S. Lambert
|
2008
|
2,350 | 472 | |||||||
|
2007
|
3,081 | 406 | ||||||||
|
2009
|
1,526 | 1,494 | ||||||||
|
Gordon
W. Parnell (8)
|
2008
|
2,593 | 495 | |||||||
|
2007
|
3,365 | 426 | ||||||||
|
J.
Eric Bjornholt (8)
|
2009
|
1,208 | 175 | |||||||
|
|
(8)
|
Gordon
W. Parnell stepped down from his position as our VP and CFO effective
December 31, 2008 and assumed a new role of VP, Business Development and
Investor Relations. J. Eric Bjornholt was elected as our VP and
CFO effective as of January 1,
2009.
|
28
Grants
of Plan-Based Awards During Fiscal 2009
The
following table sets forth information with respect to our EMICP, our DMICP, and
our ECBP, as well as RSUs made to our named executive officers under the 2004
Equity Incentive Plan, including the grant date fair value of the
RSUs. Amounts listed in the “Estimated Future Payouts Under
Non-Equity Incentive Plan Awards” column are annual targets based on the
salaries of the named executive officers at the end of fiscal
2009. Actual payments for our bonus plans in fiscal 2009 are
reflected in the Summary Compensation Table above. Equity awards in
the table below were granted in fiscal 2009.
GRANTS
OF PLAN-BASED AWARDS
For
Fiscal Year Ended March 31, 2009
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
||||||||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Threshold
($) (1)
|
Target
($)
|
Maximum
($) (1)
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
(2)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price
of
Option Awards
($/Sh)
|
Grant
Date Fair Value of Stock
and
Option Awards
($)
(3)
|
||||||||||||||||||||||||
|
Steve
Sanghi
|
04/01/2008
|
--- | --- | --- | 20,029 | --- | --- | 559,811 | ||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 214 | --- | --- | 5,981 | |||||||||||||||||||||||||
|
07/01/2008
|
--- | --- | --- | 21,757 | (4) | --- | --- | 565,247 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 6,536 | (4) | --- | --- | 150,916 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 26,703 | (4) | --- | --- | 508,158 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 22,125 | (4) | --- | --- | 449,137 | ||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 38,624 | --- | --- | 560,048 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 26,700 | --- | --- | 399,966 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 22,200 | --- | --- | 343,434 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 6,550 | --- | --- | 115,280 | |||||||||||||||||||||||||
| --- | --- | 770,215 | (5) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 192,554 | (6) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 18,515 | (7) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
|
Ganesh
Moorthy
|
04/01/2008
|
--- | --- | --- | 7,439 | --- | --- | 207,920 | ||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 3,000 | --- | --- | 83,850 | |||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 2,000 | --- | --- | 55,900 | |||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 303 | --- | --- | 8,469 | |||||||||||||||||||||||||
|
07/01/2008
|
--- | --- | --- | 8,081 | (4) | --- | --- | 209,944 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 827 | (4) | --- | --- | 19,095 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 9,918 | (4) | --- | --- | 188,740 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 11,902 | (4) | --- | --- | 241,611 | ||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 14,346 | --- | --- | 208,017 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 10,000 | --- | --- | 149,800 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 12,000 | --- | --- | 185,640 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 850 | --- | --- | 14,960 | |||||||||||||||||||||||||
| --- | --- | 97,565 | (5) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 24,391 | (6) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 8,528 | (7) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
|
Mitchell
R. Little
|
04/01/2008
|
--- | --- | --- | 4,578 | --- | --- | 127,955 | ||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 117 | --- | --- | 3,270 | |||||||||||||||||||||||||
|
07/01/2008
|
--- | --- | --- | 4,973 | (4) | --- | --- | 129,199 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 714 | (4) | --- | --- | 16,486 | ||||||||||||||||||||||||
29
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
||||||||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Threshold
($) (1)
|
Target
($)
|
Maximum
($) (1)
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
(2)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price
of
Option Awards
($/Sh)
|
Grant
Date Fair Value of Stock
and
Option Awards
($)
(3)
|
||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 6,103 | (4) | --- | --- | 116,140 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 6,103 | (4) | --- | --- | 123,891 | ||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 8,828 | --- | --- | 128,006 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 6,200 | --- | --- | 92,876 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 6,200 | --- | --- | 95,914 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 750 | --- | --- | 13,200 | |||||||||||||||||||||||||
| --- | --- | 84,165 | (5) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 21,041 | (6) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 8,796 | (7) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
|
David
S. Lambert
|
04/01/2008
|
--- | --- | --- | 3,434 | --- | --- | 95,980 | ||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 102 | --- | --- | 2,851 | |||||||||||||||||||||||||
|
07/01/2008
|
--- | --- | --- | 3,730 | (4) | --- | --- | 96,905 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 609 | (4) | --- | --- | 14,062 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 4,578 | (4) | --- | --- | 87,119 | ||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 3,815 | (4) | --- | --- | 77,445 | ||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 6,621 | --- | --- | 96,005 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 4,600 | --- | --- | 68,908 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 3,900 | --- | --- | 60,333 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 650 | --- | --- | 11,440 | |||||||||||||||||||||||||
| --- | --- | 71,779 | (5) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 17,945 | (6) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 7,669 | (7) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
|
Gordon
W. Parnell
|
10/31/2008
|
--- | --- | --- | 639 | (4) | --- | --- | 14,755 | |||||||||||||||||||||||
|
03/02/2009
|
--- | --- | --- | 650 | --- | --- | 8,970 | |||||||||||||||||||||||||
| --- | --- | 37,800 | (5) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 9,450 | (5) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 6,058 | (6) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
|
J.
Eric Bjornholt
|
04/01/2008
|
--- | --- | --- | 311 | --- | --- | 8,692 | ||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 190 | --- | --- | 5,310 | |||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 679 | --- | --- | 18,978 | |||||||||||||||||||||||||
|
04/01/2008
|
--- | --- | --- | 152 | --- | --- | 4,248 | |||||||||||||||||||||||||
|
07/01/2008
|
--- | --- | --- | 349 | --- | --- | 9,067 | |||||||||||||||||||||||||
|
07/01/2008
|
--- | --- | --- | 213 | --- | --- | 5,534 | |||||||||||||||||||||||||
|
07/01/2008
|
--- | --- | --- | 760 | --- | --- | 19,745 | |||||||||||||||||||||||||
|
08/14/2008
|
--- | --- | --- | 38 | --- | --- | 1,241 | |||||||||||||||||||||||||
|
09/05/2008
|
--- | --- | --- | 615 | --- | --- | 16,869 | |||||||||||||||||||||||||
|
10/02/2008
|
--- | --- | --- | 388 | --- | --- | 8,210 | |||||||||||||||||||||||||
|
10/02/2008
|
--- | --- | --- | 237 | --- | --- | 5,015 | |||||||||||||||||||||||||
|
10/02/2008
|
--- | --- | --- | 846 | --- | --- | 17,901 | |||||||||||||||||||||||||
|
10/31/2008
|
--- | --- | --- | 106 | --- | --- | 2,448 | |||||||||||||||||||||||||
|
12/16/2008
|
--- | --- | --- | 3,000 | --- | --- | 48,150 | |||||||||||||||||||||||||
30
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
||||||||||||||||||||||||||||||||
|
Name
|
Grant
Date
|
Threshold
($) (1)
|
Target
($)
|
Maximum
($) (1)
|
All
Other Stock Awards: Number of Shares of Stock or Units
(#)
(2)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
or Base Price
of
Option Awards
($/Sh)
|
Grant
Date Fair Value of Stock
and
Option Awards
($)
(3)
|
||||||||||||||||||||||||
|
12/16/2008
|
--- | --- | --- | 3,500 | --- | --- | 56,175 | |||||||||||||||||||||||||
|
12/16/2008
|
--- | --- | --- | 4,000 | --- | --- | 64,200 | |||||||||||||||||||||||||
|
12/16/2008
|
--- | --- | --- | 4,500 | --- | --- | 72,225 | |||||||||||||||||||||||||
|
02/27/2009
|
--- | --- | --- | 4,414 | --- | --- | 64,003 | |||||||||||||||||||||||||
| --- | --- | 37,800 | (5) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 9,450 | (6) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
| --- | --- | 6,058 | (7) | --- | --- | --- | --- | --- | ||||||||||||||||||||||||
|
(1)
|
Individual
awards under our EMICP are made quarterly and are not stated in terms of a
threshold or maximum amount for an award period. The EMICP does
provide that the maximum amount payable to any participant is
$2.5 million for any fiscal
year.
|
|
(2)
|
Represents
RSUs granted under Microchip’s 2004 Equity Incentive
Plan.
|
|
(3)
|
This
column shows the full grant date fair value of RSU awards under SFAS No.
123R granted to the named executives under SFAS No. 123R in fiscal
2009. Generally, the full grant date fair value is the amount
that Microchip would expense in its financial statements over the award’s
vesting schedule.
|
|
(4)
|
The
vesting of this grant was subject to achievement of performance goals
which were not met, therefore these grants were cancelled and will not
vest.
|
|
(5)
|
This
annual target represents the percentage of the executive officer’s base
salary reflected in dollar terms targeted under Microchip’s
EMICP.
|
|
(6)
|
This
annual target represents the percentage of the executive officer’s base
salary reflected in dollar terms targeted under Microchip’s
DMICP.
|
|
(7)
|
Microchip’s
EMICP annual target is based on 2.5 days of base salary per quarter, or on
an annual basis, two weeks of the executive officer’s annual base
salary.
|
Summary
Compensation Table and Grants of Plan-Based Awards Table Discussion
Based on
the data stated in the Summary Compensation Table, the level of salary, bonus
and non-equity incentive plan compensation in proportion to total compensation
ranged from approximately 27% to 55% for the named executive officers in fiscal
2009. See the “Compensation Discussion and Analysis” section of this
proxy statement for further discussion of overall compensation and how
compensation is determined.
We do not
have employment contracts with our named executive officers, nor agreements to
pay severance on involuntary termination (other than as stated in the change of
control agreements discussed above under the heading “Employment Contracts,
Termination of Employment and Change of Control Arrangements”) or
retirement.
For a
discussion of the material terms of the awards listed in the Grants of
Plan-Based Awards Table, see our discussion of the equity awards and incentive
cash bonuses in the “Compensation Discussion and Analysis” section of this proxy
statement under the headings “Incentive Cash Bonus,” “Equity Compensation,” and
“Cash Bonus Plan.”
Microchip
has not repriced any stock options or made any material modifications to any
equity-based awards during the last fiscal year.
31
OUTSTANDING
EQUITY AWARDS AT FISCAL 2009 YEAR END
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock that Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested (27)
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
that Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested ($)
|
|||||||||||||||||||||||||||
|
Steve
Sanghi
|
247,500 | (1) | --- | --- | 23.39 |
04/14/2010
|
--- | --- | --- | --- | ||||||||||||||||||||||||||
| 4,756 | (1) | --- | --- | 15.86 |
06/01/2011
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 26,457 | (1) | --- | --- | 24.27 |
01/22/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 303,750 | (1) | --- | --- | 24.04 |
10/25/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 58,541 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 2,602 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 135,000 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 70,249 | (1) | --- | --- | 26.14 |
10/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 23,400 | (1) | --- | --- | 27.39 |
10/24/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 145,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 10,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 145,000 | (1) | --- | --- | 26.25 |
07/21/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 49,939 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 202,500 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 47,562 | (1) | --- | --- | 21.00 |
08/01/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | 145,000 | (2) | --- | 25.29 |
04/01/2015
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 29,000 | (3) | 614,510 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 65,000 | (4) | 1,377,350 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 17,500 | (5) | 370,825 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 32,778 | (6) | 694,556 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 37,966 | (7) | 804,500 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 20,029 | (8) | 424,415 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 214 | (9) | 4,535 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 21,757 | (10) | 461,031 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 38,624 | (11) | 818,443 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 26,700 | (12) | 565,773 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 22,200 | (13) | 470,418 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,550 | (14) | 138,795 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,536 | (10) | 138,498 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 26,703 | (10) | 565,837 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 22,125 | (10) | 468,829 | --- | --- | |||||||||||||||||||||||||||
|
Ganesh
Moorthy
|
72,000 | (1) | --- | --- | 23.70 |
12/03/2011
|
--- | --- | --- | --- | ||||||||||||||||||||||||||
| 26,000 | (1) | --- | --- | 24.04 |
10/25/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 35,000 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 7,060 | (1) | --- | --- | 26.14 |
10/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 40,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 5,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 25,000 | (1) | --- | --- | 26.25 |
07/21/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 3,600 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 39,000 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
32
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock that Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested (27)
($)
|
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 ($)
|
|||||||||||||||||||||||||||
| 24,000 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 16,500 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | 40,000 | (2) | --- | 25.29 |
04/01/2015
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 8,000 | (3) | 169,520 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 17,000 | (4) | 360,230 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 5,500 | (5) | 116,545 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 10,302 | (6) | 218,299 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 11,932 | (7) | 252,839 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 7,439 | (8) | 157,632 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,000 | (7) | 63,570 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 2,000 | (15) | 42,380 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 303 | (16) | 6,421 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 8,081 | (10) | 171,236 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 14,346 | (11) | 303,992 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 10,000 | (12) | 211,900 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 12,000 | (13) | 254,280 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 850 | (14) | 18,012 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 827 | (10) | 17,524 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 9,918 | (10) | 210,162 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 11,902 | (10) | 252,203 | --- | --- | |||||||||||||||||||||||||||
|
Mitchell
R. Little
|
1 | (1) | --- | --- | 29.11 |
08/01/2010
|
--- | --- | --- | --- | ||||||||||||||||||||||||||
| 10,000 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 27,978 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | 28,000 | (2) | --- | 25.29 |
04/01/2015
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 7,000 | (3) | 148,330 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 14,000 | (4) | 296,660 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,000 | (5) | 84,760 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 7,492 | (6) | 158,755 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 8,678 | (7) | 183,887 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,578 | (8) | 97,008 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 117 | (17) | 2,479 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,973 | (10) | 105,378 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 8,828 | (11) | 187,065 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,200 | (12) | 131,378 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,200 | (13) | 131,378 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 750 | (14) | 15,893 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 714 | (10) | 15,130 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,103 | (10) | 129,323 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,103 | (10) | 129,323 | --- | --- | |||||||||||||||||||||||||||
|
David
S. Lambert
|
48,600 | (1) | --- | --- | 23.39 |
04/14/2010
|
--- | --- | --- | --- | ||||||||||||||||||||||||||
| 7,740 | (1) | --- | --- | 15.92 |
04/02/2011
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 32,400 | (1) | --- | --- | 15.92 |
04/02/2011
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
33
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock that Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested (27)
($)
|
Equity
Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights
that Have Not Vested (#)
|
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not Vested ($)
|
|||||||||||||||||||||||||||
| 1,935 | (1) | --- | --- | 15.86 |
06/01/2011
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 2,871 | (1) | --- | --- | 24.27 |
01/22/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 26,000 | (1) | --- | --- | 24.04 |
10/25/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 6,307 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 1,051 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 26,000 | (1) | --- | --- | 18.48 |
04/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 7,568 | (1) | --- | --- | 26.14 |
10/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 28,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 2,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 10,000 | (1) | --- | --- | 26.25 |
07/21/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 5,418 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 39,000 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 5,160 | (1) | --- | --- | 21.00 |
08/01/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | 28,000 | (2) | --- | 25.29 |
04/01/2015
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 5,600 | (3) | 118,664 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 11,200 | (4) | 237,328 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,000 | (5) | 63,570 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 5,619 | (6) | 119,067 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,508 | (7) | 137,905 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,434 | (8) | 72,766 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 102 | (9) | 2,161 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,730 | (10) | 79,039 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 6,621 | (11) | 140,299 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,600 | (12) | 97,474 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,900 | (13) | 82,641 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 650 | (14) | 13,744 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 609 | (10) | 12,905 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,578 | (10) | 97,008 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,815 | (10) | 80,840 | --- | --- | |||||||||||||||||||||||||||
|
Gordon
W. Parnell
|
8,550 | (1) | --- | --- | 24.86 |
06/01/2010
|
--- | --- | --- | --- | ||||||||||||||||||||||||||
| 3,022 | (1) | --- | --- | 24.27 |
01/22/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 7,948 | (1) | --- | --- | 26.14 |
10/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 26,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 10,000 | (1) | --- | --- | 26.25 |
07/21/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 5,704 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 38,582 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | 26,000 | (2) | --- | 25.29 |
04/01/2015
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 5,200 | (3) | $ | 110,188 | --- | --- | ||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 10,400 | (4) | $ | 220,376 | --- | --- | ||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 650 | (14) | $ | 13,774 | --- | --- | ||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 639 | (10) | $ | 13,540 | --- | --- | ||||||||||||||||||||||||||
34
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||||||||||||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options
(#)
Exercisable
|
Number
of Securities Underlying Unexercised Options
(#)Unexercisable
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options (#)
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
Number
of Shares or Units of Stock that Have Not Vested (#)
|
Market
Value of Shares or Units of Stock That Have Not Vested (27)
($)
|
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 ($)
|
|||||||||||||||||||||||||||
|
J.
Eric Bjornholt
|
2,375 | (1) | --- | --- | 23.39 |
04/14/2010
|
--- | --- | --- | --- | ||||||||||||||||||||||||||
| 457 | (1) | --- | --- | 24.27 |
01/22/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 356 | (1) | --- | --- | 24.04 |
10/25/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 1,172 | (1) | --- | --- | 26.14 |
10/09/2013
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 326 | (1) | --- | --- | 28.31 |
02/02/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 3,000 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 1,500 | (1) | --- | --- | 27.05 |
04/01/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 1,000 | (1) | --- | --- | 26.25 |
07/21/2014
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 864 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 1,782 | (1) | --- | --- | 27.15 |
04/03/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| 823 | (1) | --- | --- | 21.00 |
08/01/2012
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | 3,300 | (2) | --- | 25.29 |
04/01/2015
|
--- | --- | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 660 | (3) | 13,985 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 125 | (3) | 2,6278 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 1,354 | (4) | 28,691 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 425 | (5) | 9,006 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 300 | (18) | 6,357 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 425 | (19) | 9,006 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 430 | (6) | 9,112 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 521 | (7) | 11,040 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 311 | (20) | 6,590 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 190 | (5) | 4,026 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 679 | (8) | 14,388 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 152 | (9) | 3,221 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 349 | (21) | 13,752 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 213 | (19) | 4,513 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 760 | (22) | 16,104 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 38 | (23) | 805 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 615 | (24) | 13,032 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 388 | (25) | 8,222 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 237 | (6) | 5,022 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 846 | (12) | 17,927 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 106 | (26) | 2,246 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,000 | (14) | 63,570 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 3,500 | (15) | 74,165 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,000 | (7) | 84,760 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,500 | (11) | 95,355 | --- | --- | |||||||||||||||||||||||||||
| --- | --- | --- | --- | --- | 4,414 | (11) | 93,533 | --- | --- | |||||||||||||||||||||||||||
|
1
|
The
option is fully vested.
|
|
2
|
The
option vests in 12 equal monthly installments, commencing on March 31,
2009.
|
|
3
|
The
award vests quarterly over a two-year period, commencing on May 1,
2008.
|
|
4
|
The
award vests quarterly over a one-year period, commencing on May 1,
2010.
|
|
5
|
The
award vests in full on May 1, 2011.
|
|
6
|
The
award vests in full on November 1,
2011.
|
|
7
|
The
award vests in full on February 1,
2012.
|
|
8
|
The
award vests in full on May 1, 2012.
|
|
9
|
The
award vests in two equal installments on November 1, 2009 and February 1,
2010.
|
|
10
|
The
vesting of this grant was subject to achievement of performance goals
which were not met, therefore these grants were cancelled and will not
vest.
|
|
11
|
The
award vests in full on February 1,
2013.
|
35
|
12
|
The
award vests in full on November 1,
2012.
|
|
13
|
The
award vests quarterly over a two-year period commencing on February 1,
2010.
|
|
14
|
The
award vests in full on February 1,
2010.
|
|
15
|
The
award vests in full on February 1,
2011.
|
|
16
|
The
award vests in one installment of 151 shares on November 1, 2009 and one
installment of 152 shares on February 1,
2010.
|
|
17
|
The
award vests in one installment of 58 shares on November 1, 2009 and one
installment of 59 shares on
February 1, 2010.
|
|
18
|
The
award vests in full on May 1, 2009.
|
|
19
|
The
award vests in full on August 1,
2011.
|
|
20
|
The
award vests in full on May 1, 2010.
|
|
21
|
The
award vests in full on August 1,
2010.
|
|
22
|
The
award vests in full on August 1,
2012.
|
|
23
|
The
award vests in full on August 14,
2009.
|
|
24
|
The
award vests quarterly over a two-year period, commencing on August 1,
2009.
|
|
25
|
The
award vests in full on November 1,
2010.
|
|
26
|
The
award vests in full on November 2,
2009.
|
|
27
|
Represents
number of RSUs multiplied by $21.19, the closing price of our common stock
on March 31, 2009.
|
OPTION
EXERCISES AND STOCK VESTED
For
Fiscal Year Ended March 31, 2009
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
Number
of Shares Acquired on Vesting (#)
|
Value
Realized on Vesting ($)
|
||||||||||||
|
Steve
Sanghi, President
and CEO
|
71,343 | 1,130,287 | 7,250 | 138,765 | ||||||||||||
| 103,750 | 2,086,724 | 7,250 | 275,500 | |||||||||||||
| 81,000 | 1,232,253 | 7,250 | 228,883 | |||||||||||||
| 84,000 | 1,534,092 | 7,250 | 178,713 | |||||||||||||
|
Ganesh
Moorthy, Executive Vice President
|
--- | --- | 2,000 | 38,280 | ||||||||||||
| --- | --- | 2,000 | 76,000 | |||||||||||||
| --- | --- | 2,000 | 63,140 | |||||||||||||
| --- | --- | 2,000 | 49,300 | |||||||||||||
|
Mitchell
R. Little, VP,
Worldwide Sales and Applications
|
22 | 79 | 1,750 | 33,495 | ||||||||||||
| 16,000 | 294,240 | 1,750 | 66,500 | |||||||||||||
| 9,375 | 125,259 | 1,750 | 55,247 | |||||||||||||
36
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
Number
of Shares Acquired on Vesting (#)
|
Value
Realized on Vesting ($)
|
||||||||||||
| 2,084 | 21,882 | 1,750 | 43,137 | |||||||||||||
| 6,500 | 82,615 | --- | --- | |||||||||||||
| 1,457 | 14,133 | --- | --- | |||||||||||||
|
David
S. Lambert, VP,
Fab Operations
|
20,283 | 181,132 | 1,400 | 26,796 | ||||||||||||
| 60,750 | 542,512 | 1,400 | 53,200 | |||||||||||||
| 3,837 | 91,414 | 1,400 | 44,198 | |||||||||||||
| --- | --- | 1,400 | 34,510 | |||||||||||||
|
Gordon
W. Parnell, VP Business Development and Investor
Relations,
and
former CFO
|
400 | 5,376 | 1,875 | 71,250 | ||||||||||||
| 100 | 1,343 | 1,300 | 49,400 | |||||||||||||
| 400 | 5,368 | 1,300 | 41,041 | |||||||||||||
| 100 | 1,341 | 1,300 | 32,045 | |||||||||||||
| 400 | 5,360 | 1,300 | 24,882 | |||||||||||||
| 300 | 4,017 | --- | --- | |||||||||||||
| 1,100 | 14,718 | --- | --- | |||||||||||||
| 1,300 | 17,381 | --- | --- | |||||||||||||
| 1,700 | 22,712 | --- | --- | |||||||||||||
| 1,500 | 20,025 | --- | --- | |||||||||||||
| 100 | 1,334 | --- | --- | |||||||||||||
| 400 | 5,332 | --- | --- | |||||||||||||
| 1,100 | 14,652 | --- | --- | |||||||||||||
| 1,100 | 14,641 | --- | --- | |||||||||||||
| 101 | 1,343 | --- | --- | |||||||||||||
| 2,000 | 26,580 | --- | --- | |||||||||||||
| 3,472 | 46,108 | --- | --- | |||||||||||||
| 327 | 4,339 | --- | --- | |||||||||||||
| 400 | 5,304 | --- | --- | |||||||||||||
| 2,825 | 37,431 | --- | --- | |||||||||||||
| 1,007 | 13,333 | --- | --- | |||||||||||||
37
|
Option
Awards
|
Stock
Awards
|
|||||||||||||||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
Number
of Shares Acquired on Vesting (#)
|
Value
Realized on Vesting ($)
|
||||||||||||
| 2,168 | 28,683 | --- | --- | |||||||||||||
| 200 | 2,642 | --- | --- | |||||||||||||
| 500 | 6,600 | --- | --- | |||||||||||||
| 1,600 | 21,104 | --- | --- | |||||||||||||
| 700 | 9,226 | --- | --- | |||||||||||||
| 500 | 6,585 | --- | --- | |||||||||||||
| 200 | 2,632 | --- | --- | |||||||||||||
| 93 | 1,815 | --- | --- | |||||||||||||
| 300 | 5,826 | --- | --- | |||||||||||||
| 2,000 | 38,240 | --- | --- | |||||||||||||
| 1,000 | 19,070 | --- | --- | |||||||||||||
| 2,000 | 38,340 | --- | --- | |||||||||||||
| 11,000 | 209,220 | --- | --- | |||||||||||||
| 940 | 17,926 | --- | --- | |||||||||||||
| 1,060 | 17,543 | --- | --- | |||||||||||||
| 4,373 | 72,592 | --- | --- | |||||||||||||
|
J.
Eric Bjornholt, VP
and CFO
|
304 | 5,949 | 31 | 593 | ||||||||||||
| 700 | 13,699 | 165 | 3,158 | |||||||||||||
| 1,000 | 19,094 | 31 | 1,178 | |||||||||||||
| --- | --- | 165 | 6,270 | |||||||||||||
| --- | --- | 31 | 979 | |||||||||||||
| --- | --- | 165 | 5,209 | |||||||||||||
| --- | --- | 31 | 764 | |||||||||||||
| --- | --- | 165 | 4,067 | |||||||||||||
Non-Qualified
Deferred Compensation for Fiscal Year 2009
All of
our U.S. employees in director-level and above positions, including our
executive officers, are eligible to defer a portion of their salary and
cash bonuses into our Non-Qualified Deferred Compensation Plan, or the
Deferred Compensation Plan. Pursuant to the Deferred Compensation Plan, eligible
employees can defer up to 50% of their base salary and/or cash
bonuses. In general, deferral elections are made prior
to January of each year for amounts to be earned in the upcoming
year. Participants may invest amounts in various funds available
under the Deferred Compensation Plan (in general, any of those funds traded on a
nationally recognized exchange). Plan earnings are calculated by reference
to actual earnings of mutual funds or other securities chosen by individual
participants.
Except
for a change in control or certain unforeseeable emergencies (as defined under
the Deferred Compensation Plan), benefits under the plan will not be distributed
until a “distribution event” has occurred. The distribution event occurs
upon termination of employment.
We incur
incidental expenses for administration of the Deferred Compensation Plan, and
the receipt of any tax benefit we might obtain based on payment of a
participant’s compensation is delayed until funds (including earnings or losses
on the amounts invested pursuant to the plan) are eventually distributed.
We do not pay any additional compensation or guarantee minimum returns to
any participant in the Deferred Compensation Plan.
The
following table shows the non-qualified deferred compensation activity for each
named executive officer for the fiscal year ended March 31, 2009.
38
NON-QUALIFIED
DEFERRED COMPENSATION
|
Name
|
Executive
Contributions in Last FY (1)
|
Registrant
Contributions in Last FY
|
Aggregate
Earnings in Last FY (1)
|
Aggregate
Withdrawals/ Distributions
|
Aggregate
Balance
at
Last
FYE (1)
|
|||||||||||||||
|
Steve
Sanghi
|
$ | 0.00 | $ | 0.00 | $ | (872,654.94 | ) | $ | 1,601,746.50 | $ | 0.00 | |||||||||
|
Ganesh
Moorthy
|
$ | 79,226.61 | $ | 0.00 | $ | (162,907.30 | ) | $ | 328,811.13 | $ | 11,893.48 | |||||||||
|
Mitchell
R. Little
|
$ | 10,587.52 | $ | 0.00 | $ | (79,679.28 | ) | $ | 128,945.17 | $ | 0.00 | |||||||||
|
David
S. Lambert
|
$ | 16,615.56 | $ | 0.00 | $ | (120,662.77 | ) | $ | 0.00 | $ | 197,956.55 | |||||||||
|
Gordon
W. Parnell
|
$ | 36,476.23 | $ | 0.00 | $ | (223,282.47 | ) | $ | 0.00 | $ | 387,551.99 | |||||||||
|
J.
Eric Bjornholt
|
$ | 6,558.62 | $ | 0.00 | $ | (11,227.96 | ) | $ | 0.00 | $ | 21,479.13 | |||||||||
|
(1)
|
The
executive contribution amounts shown in the table were previously reported
in the “Summary Compensation Table” as salary and/or bonus for fiscal 2009
or prior fiscal years. The earnings amounts shown in the table were
not previously reported for fiscal 2009 or prior years under
applicable SEC rules as such earnings were not under a defined benefit or
actuarial pension plan and there were no above-market or preferential
earnings on such amounts made or provided by
Microchip.
|
Equity
Compensation Plan Information
The table
below provides information about our common stock that, as of March 31, 2009,
may be issued upon the exercise of options and rights under the following
existing equity compensation plans (which are all of our equity compensation
plans):
|
·
|
Microchip
1993 Stock Option Plan,
|
|
·
|
Microchip
1994 International Employee Stock Purchase
Plan,
|
|
·
|
Microchip
1997 Nonstatutory Stock Option
Plan,
|
|
·
|
Microchip
2001 Employee Stock Purchase Plan,
|
|
·
|
Microchip
2004 Equity Incentive Plan,
|
|
·
|
PowerSmart,
Inc. 1998 Stock Incentive Plan,
|
|
·
|
TelCom
Semiconductor, Inc. 1994 Stock Option Plan,
and
|
|
·
|
TelCom
Semiconductor, Inc. 2000 Nonstatutory Stock Option
Plan.
|
|
Plan
Category
|
(a)
Number of securities to be issued upon exercise of
outstanding
options and vesting of RSUs
|
(b)
Weighted-average exercise price of
outstanding
options
|
(c)
Number of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(a))
|
|||||||||
|
Equity
Compensation Plans Approved by Stockholders (1)
|
8,438,391 | (2) | $ | 25.10 | (3) | 14,684,465 | ||||||
|
Equity
Compensation Plans Not Approved by Stockholders (4)
|
5,247,469 | $ | 23.42 | --- | ||||||||
|
Total
|
13,685,860 | $ | 24.24 | 14,684,465 | ||||||||
|
|
(1)
|
Beginning
January 1, 2005, the shares authorized for issuance under our 2001
Employee Stock Purchase Plan are subject to an annual automatic increase
of the lesser of (i) 1,500,000 shares, (ii) one-half of one percent (0.5%)
of the then outstanding shares of our common stock, or (iii) such lesser
amount as is approved by our Board of Directors. Beginning
January 1, 2007, the shares authorized for issuance under our 1994
International Employee Stock Purchase Plan, or the IESPP, are subject to
an annual automatic increase of one-tenth of one percent (0.10%) of the
then outstanding shares of our common
stock.
|
|
|
(2)
|
Includes
3,603,210 shares issuable upon the vesting of RSUs granted under the 2004
Equity Incentive Plan. The remaining balance consists of
outstanding stock option grants under various
plans.
|
39
|
|
(3)
|
The
weighted average exercise price does not take into account the shares
issuable upon vesting of outstanding RSUs, which have no exercise
price.
|
|
|
(4)
|
Includes
outstanding options to purchase an aggregate of 111,211 shares of our
common stock assumed through our acquisitions of TelCom Semiconductor,
Inc. in January 2001, and PowerSmart, Inc. in June 2002. At
March 31, 2009, these assumed options had a weighted average exercise
price of $20.60 per share. No additional options may be granted
under these plans.
|
Equity
Compensation Plans Not Approved by Stockholders
Microchip
Technology Incorporated 1997 Nonstatutory Stock Option Plan
In
November 1997, our Board of Directors approved the Microchip 1997 Nonstatutory
Stock Option Plan, or our 1997 Plan. Under our 1997 Plan,
nonqualified stock options were granted to employees who were not officers or
directors of Microchip and to our consultants. The 1997 Plan was not
submitted to our stockholders for approval because doing so was not required
under applicable rules and regulations in effect at the time the plan was
initially adopted or when it was amended. As of March 31, 2009,
options to acquire 5,220,219 shares were outstanding under the 1997 Plan and no
shares were available for future grant because this plan was replaced with our
2004 Equity Incentive Plan for future grants.
The
expiration date, maximum number of shares purchasable, and other provisions of
options granted under the 1997 Plan, including vesting provisions, were
established at the time of grant by either the Compensation Committee or the
Employee Committee appointed by the Board of Directors, provided that the
exercise price of an option could not be less than the fair market value of our
common stock on the date of grant and no option could have a term of more than
10 years. If Microchip is acquired by merger, consolidation or asset
sale, each outstanding option that is not assumed by the successor corporation
or otherwise replaced with a comparable option will automatically accelerate and
vest in full. In connection with a change of control of Microchip by
tender offer or proxy contest for board membership, our Board of Directors can
accelerate the vesting of outstanding options. Our Board of Directors
or Compensation Committee may amend or terminate the 1997 Plan without
stockholder approval, but no amendment or termination of the 1997 Plan may
adversely affect any award previously granted under the 1997 Plan without the
written consent of the stock option holder.
CODE
OF ETHICS
On May 3,
2004, our Board of Directors adopted a code of ethics for our directors,
officers (including our chief executive officer and chief financial officer),
and employees. A copy of the code of ethics is available on our
website at the Corporate/Investors section under Mission Statement/Corporate
Governance on www.microchip.com.
We intend
to post on our website any amendment to, or waiver from, a provision of our
codes of ethics within four business days following the date of such amendment
or waiver or such other time period required by SEC rules.
OTHER
MATTERS
Other
Matters to be Presented at the Annual Meeting
At the
date this proxy statement went to press, we did not anticipate that any other
matters would be raised at the annual meeting.
Requirements,
Including Deadlines, for Receipt of Stockholder Proposals for the 2010 Annual
Meeting of Stockholders; Discretionary Authority to Vote on Stockholder
Proposals
Under SEC
rules, if a stockholder wants us to include a proposal in our proxy statement
and form of proxy for the 2010 annual meeting, our Secretary must receive the
proposal at our principal executive offices by March 12, 2010. Stockholders
interested in submitting such a proposal are advised to contact knowledgeable
counsel with regard to the detailed requirements of applicable securities
laws. The submission of a stockholder proposal does not guarantee
that it will be included in our proxy statement.
40
Under our
Bylaws, stockholders must follow certain procedures to nominate a person for
election as a director or to introduce an item of business at our annual
meeting. Under these procedures, stockholders must submit the
proposed nominee or item of business by delivering a notice addressed to our
Secretary at our principal executive offices. We must receive notice
as follows:
|
·
|
Normally
we must receive notice of a stockholder’s intention to introduce a
nomination or proposed item of business for an annual meeting not less
than 90 days before the first anniversary of the date on which we first
mailed our proxy statement to stockholders in connection with the previous
year’s annual meeting of stockholders. Accordingly, a
stockholder who intends to submit a nomination or proposal for our 2010
annual meeting must do so no later than April 11,
2010.
|
|
·
|
However,
if we hold our 2010 annual meeting on a date that is not within 30 days
before or after the anniversary date of our 2009 annual meeting, we must
receive the notice no later than the close of business on the later of the
90th
day prior to our 2010 annual meeting or the 10th
day following the day on which public announcement of the date of such
annual meeting is first made.
|
|
·
|
A
stockholder’s submission must include certain specified information
concerning the proposal or nominee, as the case may be, and information as
to the stockholder’s ownership of our common stock. Proposals
or nominations not meeting these requirements will not be considered at
our 2010 annual meeting.
|
|
·
|
If
a stockholder does not comply with the requirements of this advance notice
provision, the proxies may exercise discretionary voting authority under
proxies it solicits to vote in accordance with its best judgment on any
such proposal or nomination submitted by a
stockholder.
|
To make
any submission or to obtain additional information as to the proper form and
content of submissions, stockholders should contact our Secretary in writing at
2355 West Chandler Boulevard, Chandler, Arizona 85224-6199.
Householding
of Annual Meeting Materials
Some
brokers and other nominee record holders may be participating in the practice of
“householding” proxy statements and annual reports. This means that
only one copy of our proxy statement and annual report may have been sent to
multiple stockholders in a stockholder’s household. Additionally, you
may have notified us that multiple stockholders share an address and thus you
requested to receive only one copy of our proxy statement and annual
report. While our proxy statement and 2009 Annual Report are
available online (see “Electronic Access to Proxy Statement
and Annual Report” on page 2), we will promptly deliver a separate copy
of either document to any stockholder who contacts our investor relations
department at 480-792-7761 or by mail addressed to Investor Relations, Microchip
Technology Incorporated, 2355 West Chandler Boulevard, Chandler, Arizona
85224-6199, requesting such copies. If a stockholder is receiving
multiple copies of our proxy statement and annual report at the stockholder’s
household and would like to receive a single copy of the proxy statement and
annual report for a stockholder’s household in the future, stockholders should
contact their broker, or other nominee record holder to request mailing of a
single copy of the proxy statement and annual report. Stockholders
receiving multiple copies of these documents directly from us, and who would
like to receive single copies in the future, should contact our investor
relations department to make such a request.
Date
of Proxy Statement
The date
of this proxy statement is July 10, 2009.
41
APPENDIX
A
MICROCHIP
TECHNOLOGY INCORPORATED
2004
EQUITY INCENTIVE PLAN
As
amended and restated by the Board on June 1, 2009
Subject
to Stockholder Approval at our 2009 Annual Meeting
1. Purposes of the
Plan. The purposes of this 2004 Equity Incentive Plan
are:
|
§
|
to
attract and retain the best available
personnel,
|
|
§
|
to
provide additional incentive to Service Providers,
and
|
|
§
|
to
promote the success of the Company’s
business.
|
Awards
granted under the Plan may be Nonstatutory Stock Options, Restricted Stock,
Stock Appreciation Rights, Performance Shares, Performance Units or Deferred
Stock Units, as determined by the Administrator at the time of
grant.
2. Definitions. As
used herein, the following definitions shall apply:
(a) “Administrator” means
the Board or any of its Committees as shall be administering the Plan, in
accordance with Section 4 of the Plan.
(b) “Applicable Laws”
means the legal requirements relating to the administration of equity
compensation plans under state and federal corporate and securities laws and the
Code.
(c) “Award” means,
individually or collectively, a grant under the Plan of Options, Restricted
Stock, Stock Appreciation Rights, Performance Shares, Performance Units or
Deferred Stock Units.
(d) “Award Agreement”
means the written agreement setting forth the terms and provisions applicable to
each Award granted under the Plan. The Award Agreement is subject to
the terms and conditions of the Plan.
(e) “Awarded Stock” means
the Common Stock subject to an Award.
(f) “Board” means the
Board of Directors of the Company.
(g) “Change of Control”
means the occurrence of any of the following events, in one or a series of
related transactions:
(1) any
“person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act,
other than the Company, a subsidiary of the Company or a Company employee
benefit plan, including any trustee of such plan acting as trustee, is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing
(2) fifty
percent (50%) or more of the combined voting power of the Company’s then
outstanding securities entitled to vote generally in the election of directors;
or
(3) a merger
or consolidation of the Company or any direct or indirect subsidiary of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation; or
A-1
(4) the sale
or disposition by the Company of all or substantially all of the Company’s
assets; or
(5) a change
in the composition of the Board, as a result of which fewer than a majority of
the directors are Incumbent Directors. “Incumbent Directors” shall
mean directors who either (A) are Directors as of the date this Plan is approved
by the Board, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the Incumbent Directors and
whose election or nomination was not in connection with any transaction
described in (1) or (2) above or in connection with an actual or threatened
proxy contest relating to the election of directors of the Company.
(h) “Code” means the
Internal Revenue Code of 1986, as amended.
(i) “Committee” means a
committee appointed by the Board in accordance with Section 4 of the
Plan.
(j) “Common Stock” means
the common stock of the Company.
(k) “Company” means
Microchip Technology Incorporated.
(l) “Consultant” means any
person, including an advisor, engaged by the Company or a Parent or Subsidiary
to render services and who is compensated for such services. The term
Consultant shall not include Directors who are compensated by the Company only
for their service as Directors.
(m) “Deferred Stock Unit”
means a deferred stock unit Award granted to a Participant pursuant to Section
13.
(n) “Director” means a
member of the Board.
(o) “Disability” means
total and permanent disability as defined in Section 22(e)(3) of the
Code.
(p) “Employee” means any
person, including Officers and Directors, employed by the Company or any Parent
or Subsidiary of the Company. A Service Provider shall not cease to
be an Employee in the case of (i) any leave of absence approved by the Company
or (ii) transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor. Neither service as a
Director nor payment of a director’s fee by the Company shall be sufficient to
constitute “employment” by the Company.
(q) “Exchange Act” means
the Securities Exchange Act of 1934, as amended.
(r) “Fair Market Value”
means, as of any date, the value of Common Stock determined as
follows:
(1) If the
Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq National Market of the National
Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq”) System,
the Fair Market Value of a Share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such system or exchange (or the exchange with the greatest volume of trading
in Common Stock) on the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
(2) If the
Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National
Market thereof) or is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common
Stock shall be the mean between the high bid and low asked prices for the Common
Stock on the last market trading day prior to the day of determination, as
reported in The Wall Street
Journal or such other source as the Administrator deems reliable;
or
(3) In the
absence of an established market for the Common Stock, the Fair Market Value
shall be determined in good faith by the Administrator.
(s) “Fiscal Year” means a
fiscal year of the Company.
(t) “Fiscal Quarter” means
a fiscal quarter of the Company.
A-2
(u) “Non-Employee
Director” means a member of the Board who is not an
Employee.
(v) “Nonstatutory Stock
Option” means an Option not intended to qualify as an incentive stock
option under Section 422 of the Code and regulations promulgated
thereunder.
(w) “Notice of Grant”
means a written or electronic notice evidencing certain terms and conditions of
an individual Award. The Notice of Grant is part of the Option
Agreement.
(x) “Officer” means a
person who is an officer of the Company within the meaning of Section 16 of the
Exchange Act and the rules and regulations promulgated thereunder.
(y) “Option” means a stock
option granted pursuant to the Plan.
(z) “Option Agreement”
means a written or electronic agreement between the Company and a Participant
evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of
the Plan.
(aa) “Parent” means a
“parent corporation,” whether now or hereafter existing, as defined in Section
424(e) of the Code.
(bb) “Participant” means
the holder of an outstanding Award granted under the Plan.
(cc) “Performance Goals”
means the goal(s) (or combined goal(s)) determined by the Administrator (in its
discretion) to be applicable to a Participant with respect to an
Award. As determined by the Administrator, the performance measures
for any performance period will be any one or more of the following objective
performance criteria, applied to either the Company as a whole or, except with
respect to stockholder return metrics, to a region, business unit, affiliate or
business segment or specific product or products, and measured either on an
absolute basis or relative to a pre-established target, to a previous period's
results or to a designated comparison group, and, with respect to financial
metrics, which may be determined in accordance with United States Generally
Accepted Accounting Principles ("GAAP"), in accordance with accounting
principles established by the International Accounting Standards Board ("IASB
Principles") or which may be adjusted when established to exclude any items
otherwise includable under GAAP or under IASB Principles or any other
objectively determinable items including, without limitation, (a) any
extraordinary non-recurring items, (b) the effect of any merger,
acquisition, or other business combination or divestiture, or (c) the effect of
any changes in accounting principles affecting the Company's or a business
units', region's, affiliate's or business segment's reported results:
(i) cash flow (including operating cash flow or free cash flow),
(ii) cash position, (iii) revenue (on an absolute basis or adjusted
for currency effects), (iv) revenue growth, (v) contribution margin,
(vi) gross margin or gross margin as a percentage of revenue,
(vii) operating margin or operating margin as a percentage of revenue
(viii) operating expenses or operating expenses as a percentage of revenue,
(ix) earnings (which may include earnings before interest and taxes,
earnings before taxes and net earnings), (x) earnings per share,
(xi) net income, (xii) stock price, (xiii) return on equity,
(xiv) total stockholder return, (xv) growth in stockholder value
relative to a specified publicly reported index (such as the S&P 500 Index),
(xvi) return on capital, (xvii) return on assets or net assets,
(xviii) return on investment, (xix) operating profit or net operating
profit, (xx) market share (which may include ranking for a specific product
line or market share percentage for a given product line), (xxi) contract
awards or backlog, (xxii) overhead or other expense reduction,
(xxiii) credit rating, (xxiv) objective customer indicators,
(xxv) new product invention or innovation, (xxvi) attainment of
research and development milestones, (xxvii) improvements in productivity,
(xxviii) attainment of objective operating goals, and (xxix) objective
employee metrics. The Performance Goals may differ from Participant
to Participant and from Award to Award.
(dd) “Performance Share”
means a performance share Award granted to a Participant pursuant to Section
11.
(ee) “Performance Unit”
means a performance unit Award granted to a Participant pursuant to
Section 12.
(ff) “Plan” means this 2004
Equity Incentive Plan.
(gg) “Restricted Stock”
means Shares granted pursuant to Section 10 of the Plan.
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(hh) “Rule 16b-3” means
Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when
discretion is being exercised with respect to the Plan.
(ii) “Section 16(b)” means
Section 16(b) of the Exchange Act, as amended.
(jj) “Service Provider”
means an Employee, Consultant or Non-Employee Director.
(kk) “Share” means a share
of the Common Stock, as adjusted in accordance with Section 19 of the
Plan.
(ll) “Stock Appreciation
Right” or “SAR” means an Award
granted pursuant to Section 9 of the Plan.
(mm) “Subsidiary” means a
“subsidiary corporation,” whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3. Stock Subject to the
Plan. Subject to the provisions of Section 19 of the Plan, the
maximum aggregate number of Shares which may be issued under the Plan is
20,400,000 Shares
comprised of (i) any Shares remaining available for issuance pursuant to the
Company’s 1993 Stock Option Plan as of the date upon which this Plan is
effective, up to a maximum of 7,500,000 Shares, (ii) any Shares
remaining available for issuance pursuant to the Company’s 1997 Nonstatutory
Stock Option Plan as of the date upon which this Plan is effective, up to a
maximum of 7,900,000 Shares, and (iii) any Shares subject to any outstanding
options under the Company’s 1993 or 1997 Nonstatutory Stock Option Plans that
subsequently expire unexercised, up to a maximum of an additional 5,000,000
Shares. In no
event shall more than 30% of the Shares remaining issuable under the Plan as of
the effective date and 30% of the Shares subsequently added to the Plan by
virtue of outstanding 1993 Stock Option Plan and 1997 Nonstatutory Stock Option
Plan options expiring unexercised be issued pursuant to Restricted Stock,
Performance Share, Performance Unit or Deferred Stock Unit Awards with a
purchase price lower than 100% of the Fair Market Value of the underlying Shares
or units on the date of grant; provided, however, that such 30% limitation shall
not apply to RSUs issued on or after the date of the Company’s 2006 annual
stockholders’ meeting.
The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an
Award expires or becomes unexercisable without having been exercised in full, or
with respect to Restricted Stock, Performance Shares, Performance Units or
Deferred Stock Units, is forfeited to or repurchased by the Company, the
unpurchased Shares (or for Awards other than Options and SARs, the forfeited or
repurchased Shares) which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has terminated). With
respect to SARs, only Shares actually issued pursuant to an SAR shall cease to
be available under the Plan; all remaining Shares under SARs shall remain
available for future grant or sale under the Plan (unless the Plan has
terminated). However, Shares that have actually been issued under the
Plan under any Award shall not be returned to the Plan and shall not become
available for future distribution under the Plan; provided, however, that if
Shares of Restricted Stock, Performance Shares, Performance Units or Deferred
Stock Units are repurchased by the Company at their original purchase price or
are forfeited to the Company, such Shares shall become available for future
grant under the Plan. Shares used to pay the exercise price or
purchase price, if applicable, of an Award shall become available for future
grant or sale under the Plan. To the extent an Award under the Plan
is paid out in cash rather than stock, such cash payment shall not result in
reducing the number of Shares available for issuance under the
Plan.
4. Administration of the
Plan.
(a) Procedure.
(1) Multiple Administrative
Bodies. The Plan may be administered by different Committees
with respect to different groups of Service Providers.
(2) Section
162(m). To the extent that the Administrator determines it to
be desirable to qualify Options granted hereunder as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the Plan shall
be administered by a Committee of two or more “outside directors” within the
meaning of Section 162(m) of the Code.
(3) Rule
16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
shall be structured to satisfy the requirements for exemption under Rule
16b-3.
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(4) Other
Administration. Other than as provided above, the Plan shall
be administered by (A) the Board or (B) a Committee, which committee shall be
constituted to satisfy Applicable Laws.
(b) Powers of the
Administrator. Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(1) to
determine the Fair Market Value of the Common Stock, in accordance with
Section 2(u) of the Plan;
(2) to select
the Service Providers to whom Awards may be granted hereunder (other than the
automatic grants to Non-Employee Directors provided for in Section 17 of the
Plan);
(3) to
determine whether and to what extent Awards or any combination thereof, are
granted under the Plan;
(4) to
determine the number of shares of Common Stock or equivalent units to be covered
by each Award granted under the Plan;
(5) to
approve forms of agreement for use under the Plan;
(6) to
determine the terms and conditions, not inconsistent with the terms of the Plan,
of any award granted under the Plan. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options or SARs may be exercised or other Awards vest (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Award or the
shares of Common Stock relating thereto, based in each case on such factors as
the Administrator, in its sole discretion, shall determine;
(7) to
construe and interpret the terms of the Plan and Awards;
(8) to
prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the
purpose of qualifying for preferred tax treatment under foreign tax
laws;
(9) to modify
or amend each Award (subject to Section 21(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of
Options and SARs longer than is otherwise provided for in the Plan;
(10) to
authorize any person to execute on behalf of the Company any instrument required
to effect the grant of an Award previously granted by the
Administrator;
(11) to allow
Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares or cash to be issued upon exercise or vesting
of an Award (or distribution of a Deferred Stock Unit) that number of Shares or
cash having a Fair Market Value equal to the minimum amount required to be
withheld (but no more). The Fair Market Value of any Shares to be
withheld shall be determined on the date that the amount of tax to be withheld
is to be determined. All elections by a Participant to have Shares or
cash withheld for this purpose shall be made in such form and under such
conditions as the Administrator may deem necessary or advisable;
(12) to
determine the terms and restrictions applicable to Awards; and
(13) to make
all other determinations deemed necessary or advisable for administering the
Plan.
(c) Effect of Administrator’s
Decision. The Administrator’s decisions, determinations and
interpretations shall be final and binding on all Participants and any other
holders of Awards.
5. Eligibility. Restricted
Stock, Performance Shares, Performance Units, Stock Appreciation Rights,
Deferred Stock Units and Nonstatutory Stock Options may be granted to Service
Providers. Non-Employee Directors shall only receive Awards pursuant
to Section 17 of the Plan.
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6. Limitations.
(a) Nonstatutory Stock
Option. Each Option shall be designated in the Notice of Grant
as a Nonstatutory Stock Option.
(b) No Employment
Rights. Neither the Plan nor any Award shall confer upon a
Participant any right with respect to continuing the Participant’s employment
with the Company or its Subsidiaries, nor shall they interfere in any way with
the Participant’s right or the Company’s or Subsidiary’s right, as the case may
be, to terminate such employment at any time, with or without cause or
notice.
(c) 162(m)
Limitations. The following limitations shall apply to grants
of Options and Stock Appreciation Rights to Participants:
(1) No
Participant shall be granted, in any Fiscal Year, Options and Stock Appreciation
Rights to purchase more than 1,500,000 Shares; provided,
however, that such limit shall be 4,000,000 Shares in the Participant’s first
Fiscal Year of Company service.
(2) The
foregoing limitations shall be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section
19(a).
7. Term of
Plan. The Plan is effective as of October 1, 2004 (the
“Effective Date”). It shall continue in effect until September 30,
2014, unless sooner terminated under Section 21 of the Plan.
8. Stock
Options.
(a) Term. The
term of each Option shall be stated in the Notice of Grant; provided, however,
that the term shall be ten (10) years from the date of grant or such shorter
term as may be provided in the Notice of Grant.
(b) Option Exercise
Price. The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator and shall be no less than 100% of the Fair Market Value per share
on the date of grant.
(c) No
Repricing. The exercise price for an Option may not be
reduced. This shall include, without limitation, a repricing of the
Option as well as an Option exchange program whereby the Participant agrees to
cancel an existing Option in exchange for an Option, SAR or other
Award.
(d) Waiting Period and Exercise
Dates. At the time an Option is granted, the Administrator
shall fix the period within which the Option may be exercised and shall
determine any conditions which must be satisfied before the Option may be
exercised. In so doing, the Administrator may specify that an Option
may not be exercised until the completion of a service period.
(e) Form of
Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Subject to Applicable Laws, such consideration may
consist entirely of:
(1) cash;
(2) check;
(3) other
Shares which (A) in the case of Shares acquired upon exercise of an option have
been owned by the Participant for more than six months on the date of surrender,
and (B) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the Shares as to which said Option shall be
exercised;
(4) delivery
of a properly executed exercise notice together with such other documentation as
the Administrator and the broker, if applicable, shall require to effect an
exercise of the Option and delivery to the Company of the sale proceeds required
to pay the exercise price;
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(5) any
combination of the foregoing methods of payment; or
(6) such
other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.
(f) Exercise of
Option.
Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement.
An Option
may not be exercised for a fraction of a Share.
An Option
shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised. Full payment may consist of
any consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan. Shares issued upon
exercise of an Option shall be issued in the name of the Participant or, if
requested by the Participant, in the name of the Participant and his or her
spouse. Until the stock certificate evidencing such Shares is issued
(as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or receive dividends
or any other rights as a stockholder shall exist with respect to the optioned
stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the Option
is exercised. No adjustment will be made for a dividend or other
right for which the record date is prior to the date the stock certificate is
issued, except as provided in Section 19 of the Plan.
Exercising
an Option in any manner shall decrease the number of Shares thereafter available
for sale under the Option, by the number of Shares as to which the Option is
exercised.
(g) Termination of Relationship
as a Service Provider. If a Participant ceases to be a Service
Provider, other than upon the Participant’s misconduct, death or Disability, the
Participant may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent that the Option is vested on the
date of termination (but in no event later than the expiration of the term of
such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Participant’s termination. If, on
the date of termination, the Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan. If, after termination, the Participant does not exercise
his or her Option within the time specified by the Administrator, the Option
shall terminate, and the Shares covered by such Option shall revert to the
Plan.
(h) Disability. If
a Participant ceases to be a Service Provider as a result of the Participant’s
Disability, the Participant may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent the Option is vested
on the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the
absence of a specified time in the Option Agreement, the Option shall remain
exercisable for six (6) months following the Participant’s
termination. If, on the date of termination, the Participant is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan. If, after
termination, the Participant does not exercise his or her Option within the time
specified herein, the Option shall terminate, and the Shares covered by such
Option shall revert to the Plan.
(i) Death of
Participant. If a Participant dies while a Service Provider,
the Option may be exercised following the Participant’s death within such period
of time as is specified in the Option Agreement (but in no event may the option
be exercised later than the expiration of the term of such Option as set forth
in the Option Agreement), by the personal representative of the Participant’s
estate, provided such representative has been designated prior to Participant’s
death in a form acceptable to the Administrator. If no such
representative has been designated by the Participant, then such Option may be
exercised by the person(s) to whom the Option is transferred pursuant to the
Participant’s will or in accordance with the laws of descent and
distribution. In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
Participant’s death. If the Option is not so exercised within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
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9. Stock Appreciation
Rights.
(a) Grant of
SARs. Subject to the terms and conditions of the Plan, SARs
may be granted to Participants at any time and from time to time as shall be
determined by the Administrator, in its sole discretion. The
Administrator shall have complete discretion to determine the number of SARs
granted to any Participant.
(b) Exercise Price and Other
Terms. Subject to Section 4(c) of the Plan, the Administrator,
subject to the provisions of the Plan, shall have complete discretion to
determine the terms and conditions of SARs granted under the Plan; provided,
however, that no SAR may have a term of more than ten (10) years from the date
of grant. The per share exercise price for the Shares or cash to be
issued pursuant to exercise of an SAR shall be determined by the Administrator
and shall be no less than 100% of the Fair Market Value per share on the date of
grant. The exercise price may not be reduced. This shall
include, without limitation, a repricing of the SAR as well as an SAR exchange
program whereby the Participant agrees to cancel an existing SAR in exchange for
an Option, SAR or other Award
(c) Payment of SAR
Amount. Upon exercise of an SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:
(1) the
difference between the Fair Market Value of a Share on the date of exercise over
the exercise price; times
(2) the
number of Shares with respect to which the SAR is exercised.
(d) Payment Upon Exercise of
SAR. At the discretion of the Administrator, payment for an
SAR may be in cash, Shares or a combination thereof.
(e) SAR
Agreement. Each SAR grant shall be evidenced by an Award
Agreement that shall specify the exercise price, the term of the SAR, the
conditions of exercise, and such other terms and conditions as the
Administrator, in its sole discretion, shall determine.
(f) Expiration of
SARs. An SAR granted under the Plan shall expire upon the date
determined by the Administrator, in its sole discretion, and set forth in the
Award Agreement.
(g) Termination of Relationship
as a Service Provider. If a Participant ceases to be a Service
Provider, other than upon the Participant’s death or Disability termination, the
Participant may exercise his or her SAR within such period of time as is
specified in the SAR Agreement to the extent that the SAR is vested on the date
of termination (but in no event later than the expiration of the term of such
SAR as set forth in the SAR Agreement). In the absence of a specified
time in the SAR Agreement, the SAR shall remain exercisable for three (3) months
following the Participant’s termination. If, on the date of
termination, the Participant is not vested as to his or her entire SAR, the
Shares covered by the unvested portion of the SAR shall revert to the
Plan. If, after termination, the Participant does not exercise his or
her SAR within the time specified by the Administrator, the SAR shall terminate,
and the Shares covered by such SAR shall revert to the Plan.
(h) Disability. If
a Participant ceases to be a Service Provider as a result of the Participant’s
Disability, the Participant may exercise his or her SAR within such period of
time as is specified in the SAR Agreement to the extent the SAR is vested on the
date of termination (but in no event later than the expiration of the term of
such SAR as set forth in the SAR Agreement). In the absence of a
specified time in the SAR Agreement, the SAR shall remain exercisable for six
(6) months following the Participant’s termination. If, on the date
of termination, the Participant is not vested as to his or her entire SAR, the
Shares covered by the unvested portion of the SAR shall revert to the
Plan. If, after termination, the Participant does not exercise his or
her SAR within the time specified herein, the SAR shall terminate, and the
Shares covered by such SAR shall revert to the Plan.
(i) Death of
Participant. If a Participant dies while a Service Provider,
the SAR may be exercised following the Participant’s death within such period of
time as is specified in the SAR Agreement (but in no event may the SAR be
exercised later than the expiration of the term of such SAR as set forth in the
SAR Agreement), by the personal representative of the Participant’s estate,
provided such representative has been designated prior to Participant’s death in
a form acceptable to the Administrator. If no such representative has
been designated by the Participant, then such SAR may be exercised by the
person(s) to whom the SAR is transferred pursuant to the Participant’s will or
in accordance with the laws of descent and distribution. In the
absence of a specified time in the SAR Agreement, the SAR shall remain
exercisable for
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twelve
(12) months following Participant’s death. If the SAR is not so
exercised within the time specified herein, the SAR shall terminate, and the
Shares covered by such SAR shall revert to the Plan.
10. Restricted
Stock.
(a) Grant of Restricted
Stock. Subject to the terms and conditions of the Plan,
Restricted Stock may be granted to Participants at any time as shall be
determined by the Administrator, in its sole discretion. The
Administrator shall have complete discretion to determine (i) the number of
Shares subject to a Restricted Stock award granted to any Participant (provided
that during any Fiscal Year, no Participant shall be granted more than 300,000
Shares of Restricted Stock); provided, however, that such limit shall be 750,000
Shares in the Participant’s first Fiscal Year of Company service, and (ii) the
conditions that must be satisfied, which typically will be based principally or
solely on continued provision of services but may include a performance-based
component, upon which is conditioned the grant or vesting of Restricted
Stock.
(b) Restricted Stock
Units. Restricted Stock may be granted in the form of
Restricted Stock or units to acquire Shares. Each such unit shall be
the equivalent of one Share for purposes of determining the number of Shares
subject to an Award. With respect to the units to acquire Shares,
until the Shares are issued, no right to vote or receive dividends or any other
rights as a stockholder shall exist.
(c) Other
Terms. The Administrator, subject to the provisions of the
Plan, shall have complete discretion to determine the terms and conditions of
Restricted Stock granted under the Plan. Restricted Stock grants
shall be subject to the terms, conditions, and restrictions determined by the
Administrator at the time the stock is awarded. The
Administrator
may require the recipient to sign a Restricted Stock Award agreement as a
condition of the award. Any certificates representing the Shares of
stock awarded shall bear such legends as shall be determined by the
Administrator.
(d) Restricted Stock Award
Agreement. Each Restricted Stock grant shall be evidenced by
an agreement that shall specify the purchase price (if any) and such other terms
and conditions as the Administrator, in its sole discretion, shall determine;
provided, however, that if the Restricted Stock grant has a purchase price, such
purchase price must be paid no more than ten (10) years following the date of
grant.
(e) Section 162(m) Performance
Restrictions. For purposes of qualifying grants of Restricted
Stock as “performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set
by the Administrator on or before the latest date permissible to enable the
Restricted Stock to qualify as “performance-based compensation” under Section
162(m) of the Code. In granting Restricted Stock which is intended to
qualify under Section 162(m) of the Code, the Administrator shall follow any
procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Restricted Stock under Section 162(m) of the Code
(e.g., in determining the Performance Goals).
11. Performance
Shares.
(a) Grant of Performance
Shares. Subject to the terms and conditions of the Plan,
Performance Shares may be granted to Participants at any time as shall be
determined by the Administrator, in its sole discretion. The
Administrator shall have complete discretion to determine (i) the number of
Shares subject to a Performance Share award granted to any Participant (provided
that during any Fiscal Year, no Participant shall be granted more than 300,000
units of Performance Shares); provided, however, that such limit shall be
750,000 Shares in the Participant’s first Fiscal Year of Company service, and
(ii) the conditions that must be satisfied, which typically will be based
principally or solely on achievement of performance milestones but may include a
service-based component, upon which is conditioned the grant or vesting of
Performance Shares. Performance Shares shall be granted in the form
of units to acquire Shares. Each such unit shall be the equivalent of
one Share for purposes of determining the number of Shares subject to an
Award. Until the Shares are issued, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
units to acquire Shares.
(b) Other
Terms. The Administrator, subject to the provisions of the
Plan, shall have complete discretion to determine the terms and conditions of
Performance Shares granted under the Plan. Performance Share grants
shall be subject to the terms, conditions, and restrictions determined by the
Administrator at the time the stock is awarded, which may include such
performance-based milestones as are determined appropriate by the
Administrator. The Administrator
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may
require the recipient to sign a Performance Shares agreement as a condition of
the award. Any certificates representing the Shares of stock awarded
shall bear such legends as shall be determined by the
Administrator.
(c) Performance Share Award
Agreement. Each Performance Share grant shall be evidenced by
an agreement that shall specify such other terms and conditions as the
Administrator, in its sole discretion, shall determine.
(d) Section 162(m) Performance
Restrictions. For purposes of qualifying grants of Performance
Shares as “performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set
by the Administrator on or before the latest date permissible to enable the
Performance Shares to qualify as “performance-based compensation” under Section
162(m) of the Code. In granting Performance Shares which are intended
to qualify under Section 162(m) of the Code, the Administrator shall follow any
procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Performance Shares under Section 162(m) of the Code
(e.g., in determining the Performance Goals).
12. Performance
Units.
(a) Grant of Performance
Units. Performance Units are similar to Performance Shares,
except that they shall be settled in a cash equivalent to the Fair Market Value
of the underlying Shares, determined as of the vesting date. Subject
to the terms and conditions of the Plan, Performance Units may be granted to
Participants at any time and from time to time as shall be determined by the
Administrator, in its sole discretion. The Administrator shall have
complete discretion to determine the conditions that must be satisfied, which
typically will be based principally or solely on achievement of performance
milestones but may include a service-based component, upon which is conditioned
the grant or vesting of Performance Units. Performance Units shall be
granted in the form of units to acquire Shares. Each such unit shall
be the cash equivalent of one Share of Common Stock. No right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to Performance Units or the cash payable thereunder.
(b) Number of Performance
Units. The Administrator will have complete discretion in
determining the number of Performance Units granted to any Participant, provided
that during any Fiscal Year, no Participant shall receive Performance Units
having an initial value greater than $1,500,000, provided, however, that such
limit shall be $4,000,000 in the Participant’s first Fiscal Year of Company
service.
(c) Other
Terms. The Administrator, subject to the provisions of the
Plan, shall have complete discretion to determine the terms and conditions of
Performance Units granted under the Plan. Performance Unit grants
shall be subject to the terms, conditions, and restrictions determined by the
Administrator at the time the stock is awarded, which may include such
performance-based milestones as are determined appropriate by the
Administrator. The Administrator may require the recipient to sign a
Performance Unit agreement as a condition of the award. Any
certificates representing the Shares awarded shall bear such legends as shall be
determined by the Administrator.
(d) Performance Unit Award
Agreement. Each Performance Unit grant shall be evidenced by
an agreement that shall specify such terms and conditions as the Administrator,
in its sole discretion, shall determine.
(e) Section 162(m) Performance
Restrictions. For purposes of qualifying grants of Performance
Units as “performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the
achievement of Performance Goals. The Performance Goals shall be set
by the Administrator on or before the latest date permissible to enable the
Performance Units to qualify as “performance-based compensation” under Section
162(m) of the Code. In granting Performance Units which are intended
to qualify under Section 162(m) of the Code, the Administrator shall follow any
procedures determined by it from time to time to be necessary or appropriate to
ensure qualification of the Performance Units under Section 162(m) of the Code
(e.g., in determining the Performance Goals).
A-10
13. Deferred Stock
Units.
(a) Description. Deferred
Stock Units shall consist of a Restricted Stock, Performance Share or
Performance Unit Award that the Administrator, in its sole discretion permits to
be paid out in installments or on a deferred basis, in accordance with rules and
procedures established by the Administrator. Deferred Stock Units
shall remain subject to the claims of the Company’s general creditors until
distributed to the Participant.
(b) 162(m)
Limits. Deferred Stock Units shall be subject to the annual
162(m) limits applicable to the underlying Restricted Stock, Performance Share
or Performance Unit Award.
14. Death of
Participant. In the event that a Participant dies while a
Service Provider, then 100% of his or her Awards shall immediately
vest.
15. Leaves of
Absence. Unless the Administrator provides otherwise or as
otherwise required by Applicable Laws, vesting of Awards granted hereunder shall
cease commencing on the first day of any unpaid leave of absence and shall only
recommence upon return to active service.
16. Misconduct. Should
(i) the Participant’s service be terminated for misconduct (including, but not
limited to, any act of dishonesty, willful misconduct, fraud or embezzlement),
or (ii) the Participant makes any unauthorized use or disclosure of confidential
information or trade secrets of the Company or any Parent or Subsidiary, then in
any such event all outstanding Awards held by the Participant under the Plan
shall terminate immediately and cease to be outstanding, including as to both
vested and unvested Awards.
17. Non-Employee Director
Options.
(a) Initial
Grants. Each Non-Employee Director who first becomes a
Non-Employee Director on or after the date upon which the Plan is approved by
the Company’s stockholders (excluding any Non-Employee Director who previously
served on the Board), shall be automatically granted (i) an Option grant
covering 6,000 shares of Common Stock (the “Initial Option Grant”), and (ii)
that number of Restricted Stock Units equal to $60,000 divided by the Fair
Market Value, rounded down to the nearest whole Share (the “Initial RSU Grant”),
as of the date that the individual first is appointed or elected as a
Non-Employee Director. The Initial Option Grant shall vest as to
1/48th of the
Shares subject to the Initial Option each month following the grant date, so as
to be 100% vested on the four-year anniversary of the grant date. The
Initial RSU Grant will vest in equal 25% annual installments on each of the four
anniversaries of the first business day of the second month of the Company’s
fiscal quarter in which the grant is made. All vesting of the Initial
Option Grant and the Initial RSU Grant is contingent upon the Non-Employee
Director maintaining continued status as a Non-Employee Director through the
applicable vesting date.
(b) Annual
Grants. On the date of the Company’s annual stockholders’
meeting, each Non-Employee Director who has served as a Non-Employee Director
for at least three months on that date shall be automatically granted (i) an
Option grant covering 3,000 shares of Common Stock (the “Annual Option Grant”),
and (ii) that number of Restricted Stock Units equal to $30,000 divided by the
Fair Market Value, rounded down to the nearest whole Share (the “Annual RSU
Grant”), provided that such Non-Employee Director has been elected by the
stockholders to serve as a member of the Board at that annual meeting. The
Annual Option Grant shall vest as to 1/12th of the
Shares subject to the Annual Option each month following the grant date, so as
to be 100% vested on the anniversary of the grant date. The Annual
RSU Grant will vest in equal 50% annual installments on each of the two
anniversaries of the first business day of the second month of the Company’s
fiscal quarter in which the grant is made. All vesting of the Annual
Option Grant and the Annual RSU Grant is contingent upon the Non-Employee
Director maintaining continued status as a Non-Employee Director through the
applicable vesting date.
(c) One-Time
Grant. On the date of the Company’s 2009 stockholders’
meeting, each Non-Employee Director who has served as a Non-Employee Director
for at least five years on that date shall be automatically granted a one-time
grant of that number of Restricted Stock Units equal to $100,000 divided by the
Fair Market Value, rounded down to the nearest whole Share, provided that such
Non-Employee Director has been elected by the stockholders to serve as a member
of the Board at that annual meeting. The Restricted Stock Units
subject to this grant will vest in equal 25% annual installments on each of the
four anniversaries of the first business day of the second month of the
Company’s fiscal quarter in which the grant is made. Vesting of the
one-time grant is contingent upon the Non-Employee Director maintaining
continued status as a Non-Employee Director through the applicable vesting
date.
A-11
18. Non-Transferability of
Awards. Unless determined otherwise by the Administrator, an
Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the recipient, only by the
recipient. If the Administrator makes an Award transferable, such
Award shall contain such additional terms and conditions as the Administrator
deems appropriate.
19.
Adjustments Upon
Changes in Capitalization, Dissolution or Liquidation or Change of
Control.
(a) Changes in
Capitalization. Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Award, the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no Awards have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Award, as well as the price per share of Common Stock covered by each such
outstanding Award and the 162(m) fiscal year share issuance limits under
Sections 6(c), 10(a) and 11(a) shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that any such change in
capitalization shall not affect the number of shares awarded under the automatic
grants to Non-Employee Directors described in Sections 17(a) and (b), and
provided that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Award.
(b) Dissolution or
Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for a
Participant to have the right to exercise his or her Option or SAR until ten
(10) days prior to such transaction as to all of the Awarded Stock covered
thereby, including Shares as to which the Award would not otherwise be
exercisable. In addition, the Administrator may provide that any
Company repurchase option or forfeiture rights applicable to any Award shall
lapse 100%, and that any Award vesting shall accelerate 100%, provided the
proposed dissolution or liquidation takes place at the time and in the manner
contemplated. To the extent it has not been previously exercised
(with respect to Options and SARs) or vested (with respect to other Awards), an
Award will terminate immediately prior to the consummation of such proposed
action.
(c) Change of
Control.
(1) Stock Options and
SARs. In the event of a Change of Control, each outstanding
Option and SAR shall be assumed or an equivalent option or SAR substituted by
the successor corporation or a Parent or Subsidiary of the successor
corporation. In the event that the successor corporation refuses to
assume or substitute for the Option or SAR, the Participant shall fully vest in
and have the right to exercise the Option or SAR as to all of the Awarded Stock,
including Shares as to which it would not otherwise be vested or
exercisable. If an Option or SAR becomes fully vested and exercisable
in lieu of assumption or substitution in the event of a Change of Control, the
Administrator shall notify the Participant in writing or electronically that the
Option or SAR shall be fully vested and exercisable for a period of thirty (30)
days from the date of such notice, and the Option or SAR shall terminate upon
the expiration of such period. For the purposes of this paragraph,
the Option or SAR shall be considered assumed if, following the Change of
Control, the option or stock appreciation right confers the right to purchase or
receive, for each Share of Awarded Stock subject to the Option or SAR
immediately prior to the Change of Control, the consideration (whether stock,
cash, or other securities or property) received in the Change of Control by
holders of Common Stock for each Share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the Change of Control
is not solely common stock of the successor corporation or its Parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option or SAR, for
each Share of Awarded Stock subject to the Option or SAR, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the Change of
Control.
(2) Restricted Stock,
Performance Shares, Performance Units and Deferred Stock
Units. In the event of a Change of Control, each outstanding
Restricted Stock, Performance Share, Performance Unit and Deferred Stock Unit
award shall be assumed or an equivalent Restricted Stock, Performance Share,
Performance Unit and Deferred Stock Unit
A-12
award
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation
refuses to assume or substitute for the Restricted Stock, Performance Share,
Performance Unit or Deferred Stock Unit award, the Participant shall fully vest
in the Restricted Stock, Performance Share, Performance Unit or Deferred Stock
Unit including as to Shares (or with respect to Performance Units, the cash
equivalent thereof) which would not otherwise be vested. For the
purposes of this paragraph, a Restricted Stock, Performance Share, Performance
Unit and Deferred Stock Unit award shall be considered assumed if, following the
Change of Control, the award confers the right to purchase or receive, for each
Share (or with respect to Performance Units, the cash equivalent thereof)
subject to the Award immediately prior to the Change of Control, the
consideration (whether stock, cash, or other securities or property) received in
the Change of Control by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the Change of Control is not solely common stock of the successor corporation
or its Parent, the Administrator may, with the consent of the successor
corporation, provide for the consideration to be received, for each Share and
each unit/right to acquire a Share subject to the Award, to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the Change of
Control.
20. Date of
Grant. The date of grant of an Award shall be, for all
purposes, the date on which the Administrator makes the determination granting
such Award, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each
Participant within a reasonable time after the date of such grant.
21. Amendment and Termination of
the Plan.
(a) Amendment and
Termination. The Board may at any time amend, alter, suspend
or terminate the Plan.
(b) Stockholder
Approval. The Company shall obtain stockholder approval of any
Plan amendment to the extent necessary and desirable to comply with Section 422
of the Code (or any successor rule or statute or other applicable law, rule or
regulation, including the requirements of any exchange or quotation system on
which the Common Stock is listed or quoted). Such stockholder
approval, if required, shall be obtained in such a manner and to such a degree
as is required by the applicable law, rule or regulation.
(c) Effect of Amendment or
Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Participant, unless
mutually agreed otherwise between the Participant and the Administrator, which
agreement must be in writing and signed by the Participant and the
Company.
22. Conditions Upon Issuance of
Shares.
(a) Legal
Compliance. Shares shall not be issued pursuant to the
exercise of an Award unless the exercise of the Award or the issuance and
delivery of such Shares (or with respect to Performance Units, the cash
equivalent thereof) shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment
Representations. As a condition to the exercise or receipt of
an Award, the Company may require the person exercising or receiving such Award
to represent and warrant at the time of any such exercise or receipt that the
Shares are being purchased only for investment and without any present intention
to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required.
23. Liability of
Company.
(a) Inability to Obtain
Authority. The inability of the Company to obtain authority
from any regulatory body having jurisdiction, which authority is deemed by the
Company’s counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have
been obtained.
(b) Grants Exceeding Allotted
Shares. If the Awarded Stock covered by an Award exceeds, as
of the date of grant, the number of Shares which may be issued under the Plan
without additional stockholder approval, such Award
A-13
shall be
void with respect to such excess Awarded Stock, unless stockholder approval of
an amendment sufficiently increasing the number of Shares subject to the Plan is
timely obtained in accordance with Section 21(b) of the Plan.
24. Reservation of
Shares. The Company, during the term of this Plan, will at all
times reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
A-14
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Microchip
Technology Incorporated
2355
West Chandler Boulevard
Chandler,
Arizona 85224-6199
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This
Proxy is solicited on behalf of the Board of Directors
2009
ANNUAL MEETING OF
STOCKHOLDERS
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I
(whether one or more of us) appoint Steve Sanghi and J. Eric Bjornholt, and each
of them, each with full power of substitution, to be my Proxies. The
Proxies may vote on my behalf, in accordance with my instructions, all of my
shares entitled to vote at the 2009 Annual Meeting of Stockholders of Microchip
Technology Incorporated and any adjournment(s) of that meeting. The
meeting is scheduled for August 14, 2009, at 9:00 a.m., Mountain Standard Time,
at the company’s Chandler, Arizona facility at 2355 West Chandler Boulevard,
Chandler, Arizona. The Proxies may vote on my behalf as if I were
personally present at the meeting.
This
Proxy will be voted as directed or, if no contrary direction is indicated, will
be voted for the Election of Directors; for approval of the amendment and
restatement of our 2004 Equity Incentive Plan to (i) modify the automatic grant
provisions with respect to equity compensation for non-employee directors to
provide for annual awards of options and restricted stock units (“RSUs”), rather
than just options, and to provide for a one-time award of RSUs to serve as a
retention mechanism and (ii) revise the definition of “performance goals” for
purposes of Section 162(m) of the Internal Revenue Code; for the ratification of
Ernst & Young LLP as Microchip’s independent registered public accounting
firm for the fiscal year ending March 31, 2010; and as my Proxies deem advisable
on such other matters as may properly come before the meeting or any
adjournment(s) thereof. The proposals described in the accompanying
proxy statement have been proposed by the Board of Directors.
IF
VOTING BY MAIL, PLEASE COMPLETE, DATE AND SIGN ON REVERSE SIDE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Dear
Stockholder,
Microchip
requests that you notify us if you are receiving multiple copies of our proxy
statement and annual report. If you do so, we can reduce the number
of these materials we must print and mail. To choose this option,
please check the appropriate box on your proxy card and return it by
mail.
YOUR
VOTE IS IMPORTANT!
Thank you in advance for participating
in our 2009 Annual Meeting.
The
Board of Directors Recommends a Vote FOR Items 1, 2 and 3.
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1.
Election of directors:
|
01
Steve Sanghi
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04
Matthew W. Chapman
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o Vote
FOR
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o Vote
WITHHELD
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02
Albert J. Hugo-Martinez
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05
Wade F. Meyercord
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all nominees
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from all
nominees
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|
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03
L.B. Day
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(except as
marked)
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(Instructions:
To withhold authority to vote for any indicated nominee,
write
the number(s) of the nominee(s) in the box provided to the
right.)
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2.
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Proposal
to approve the amendment and restatement of our 2004 Equity Incentive Plan
to (i) modify the automatic grant provisions with respect to equity
compensation for non-employee directors to provide for annual awards of
options and restricted stock units (“RSUs”), rather than just options, and
to provide for a one-time award of RSUs to serve as a retention mechanism
and (ii) revise the definition of “performance goals” for purposes of
Section 162(m) of the Internal Revenue Code.
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o |
For
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o |
Against
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o |
Abstain
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3.
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Proposal
to ratify the appointment of Ernst & Young LLP as the independent
registered public accounting firm of Microchip for the fiscal year ending
March 31, 2010.
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o |
For
|
o |
Against
|
o |
Abstain
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o Multiple
stockholder publications. Please check here to stop mailing of
stockholder publications for this account, since multiple copies come to
this address
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Date
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Address
Change? Mark
Box o Indicate
changes below:
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Signature(s)
in Box
(Please
sign exactly as your name(s) appears on the proxy card. If held
in joint tenancy, all persons must sign. Trustees,
administrators, etc., must include title and
authority. Corporations must provide full name of corporation
and title of authorized officer signing the proxy.)
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