DEF 14A of Wolfspeed, Inc.
Filed Oct 17, 2024 · FY20240000895419-24-000078
Bradley D. Kohn
| | Equity Compensation Plans | 50 | | | Pay Versus Performance Disclosure | 51 | | DIRECTOR COMPENSATION | | 55 | | | Summary of Cash and Certain Other Compensation | 55 | | | Summary of Director Compensation Program | 56 | | | Compensation Committee Interlocks and Insider Participation | 56 | | PROPOSAL NO. 2—RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS | | 57 | | | Report of the Audit Committee | 57 | | | Independent Auditor Fee Information | 58 | | PROPOSAL NO. 3—ADVISORY (NONBINDING) VOTE TO APPROVE EXECUTIVE COMPENSATION | | 59 | | OTHER MATTERS | | 61 | | | Other Business | 61 | | | 2025 Annual Meeting of Shareholders | 61 | | | Procedures for Director Nominations | 61 | | | Shareholder and Interested Party Communications with Directors | 62 | | | Costs of Soliciting Proxies | 62 | | | Availability of Report on Form 10-K | 62 | | | Shareholders Sharing the Same Last Name and Address | 62 | | | Principal Executive Offices and Annual Meeting Location | 63 |
2024 PROXY SUMMARY
2024 PROXY SUMMARY This summary highlights information contained in this proxy statement. The summary does not contain all of the information that you should consider; please read the entire proxy statement carefully before voting.
2024 PROXY SUMMARY
| Annual Meeting of Shareholders | • | Place: Virtually at www.virtualshareholdermeeting.com/WOLF2024 and in person at our corporate offices in the Executive Conference Center, 4408 Silicon Drive, Durham, North Carolina 27703 | | | • | Date and time: Thursday, December 5, 2024, at 12:00 p.m. | | | • | Record Date: October 7, 2024 | | | • | Approximate Date of Availability of Proxy Materials: October 22, 2024 | | | • | Voting: Shareholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director nominee and to one vote for each of the other proposals to be voted on. | | Voting matters and Board recommendations | • | Election of ten directors (FOR THE NOMINEES) | | | • | Ratification of the appointment of PricewaterhouseCoopers LLP as our independent auditors for the fiscal year ending June 29, 2025 (FOR) | | | • | Advisory (nonbinding) vote to approve executive compensation (FOR) | | Board nominees | • | Glenda M. Dorchak. Director of ANSYS, Inc. and GlobalFoundries. Director since 2020. | | | • | John C. Hodge. Founding Partner of Rubicon Technology Partners. Director since 2018. | | | • | Darren R. Jackson. Former Board Member and Chief Executive Officer of Advance Auto Parts, Inc. Director since 2016. | | | • | Duy-Loan T. Le. President of DLE Management Consulting LLC. Director since 2018. | | | • | Gregg A. Lowe. President and Chief Executive Officer of the Company. Director since 2017. | | | • | Marvin A. Riley. Chief Executive Officer of Municipal Emergency Services, Inc. Director since 2021. | | | • | Thomas J. Seifert. Chief Financial Officer of Cloudflare, Inc. | | | • | Stacy J. Smith. Executive Chairman of Kioxia Corporation. Director since January 2023. | | | • | Thomas H. Werner. Executive Chairman and Principal Executive Officer of SunPower Corporation. Director since 2006. | | | • | Woody H. Young. Former Board Member and President of Solidigm. |
2024 PROXY SUMMARY
| Executive officers at end of fiscal year | • | Gregg A. Lowe, President and Chief Executive Officer | | | • | Neill P. Reynolds, Executive Vice President and Chief Financial Officer |
2024 PROXY SUMMARY
| Independent auditors | Although not required, we ask shareholders to ratify the selection of PricewaterhouseCoopers LLP as our independent auditors for our fiscal year ending June 29, 2025. Our Board of Directors recommends a FOR vote. | | Advisory (nonbinding) vote to approve executive compensation | Annually, our shareholders consider and vote on the compensation of our named executive officers on an advisory (nonbinding) basis. Our Board of Directors recommends a FOR vote. |
PROPOSAL NO. 1—ELECTION OF DIRECTORS
PROPOSAL NO. 1—ELECTION OF DIRECTORS
Nominees for Election as Directors
Nominees for Election as Directors Eight of the persons nominated for election to the Board of Directors at the Annual Meeting are currently serving as directors of the Company. Clyde R. Hosein and John B. Replogle, who have served on the Board since 2005 and 2014, respectively, are not standing for re-election and will retire from the Board following the expiration of their terms at the 2024 Annual Meeting of Shareholders. Upon the recommendation of the Governance and Nominations Committee, the Board of Directors has nominated Thomas Seifert and Woody Young, who have not previously been associated with the Company, for election as directors. The Company is not aware of any nominee who will be unable or will decline to serve as a director. If a nominee becomes unable or declines to serve, the proxies solicited by the Board of Directors may be voted for a substitute nominee, if any, designated by the Board. The term of office of each person elected as a director will continue until the later of the next annual meeting of shareholders or until such time as his or her successor has been duly elected and qualified. The following tables list the nominees for election and information about each nominee. The Governance and Nominations Committee has recommended each nominee to the Board of Directors. Each nominee meets the criteria set forth in the Corporate Governance Guidelines, including that no Company director shall serve on more than four public company boards of directors, inclusive of service on the Company’s Board. In addition, each nominee meets the minimum share ownership guidelines set forth in the Corporate Governance Guidelines, under which the Chief Executive Officer is expected to hold shares with a value not less than six times his base salary, and each non-employee member of the Board is expected to hold shares with a value not less than five times the sum of the director’s annual cash retainers for service on the Board and on Board committees, within five years after election or appointment to the Board. A copy of the Corporate Governance Guidelines is available on the Company’s website at https://investor.wolfspeed.com under “Governance”. Under the charter of the Governance and Nominations Committee, the Governance and Nominations Committee is responsible for identifying from a wide field of candidates, including women and minority candidates, and recommending that the Board select qualified candidates for membership on the Board. In identifying candidates, the Governance and Nominations Committee takes into account such factors as it considers appropriate, which may include (1) ensuring that the Board, as a whole, is diverse as to race, gender, culture, thought and geography, such that the Board reflects a range of viewpoints, backgrounds, skills, experience and expertise, and consists of individuals with relevant technical skills, industry knowledge and experience, financial expertise and local or community ties; (2) minimum individual qualifications, including strength of character, mature judgment, relevant career experience, independence of thought and an ability to work collegially; (3) questions of independence, possible conflicts of interest and whether a candidate has special interests or a specific agenda that would impair his or her ability to effectively represent the interests of all shareholders; (4) the extent to which the candidate would fill a present need on the Board; and (5) whether the candidate can make sufficient time available to perform the duties of a director.
Nominees for Election as Directors
| Name | Age | Principal Occupation and Background | Director Since | | Glenda M. Dorchak | 70 | Ms. Dorchak has been a member of the Board of Directors since January 2020. Ms. Dorchak’s career began with 22 years at IBM Corporation where she held management and executive positions in IBM Canada and IBM Corporation, including General Manager and Director of IBM Direct, and Director, General Business, of IBM Personal Systems Group North America. From 1998 to 2000, she was President and later Chief Executive Officer of Value America (VA) before joining Intel Corporation in 2001 as Vice President and Chief Operating Officer of the Intel Communications Group and later Vice President and Group General Manager of the Broadband Products Group and followed by the Consumer Electronics Group. From 2006 to 2008, Ms. Dorchak served as chair and Chief Executive Officer of Intrinsyc Software before joining VirtualLogix in 2009 as Vice Chair and Chief Executive Officer until its acquisition by Redbend Software in September 2010. Subsequently, she held the position of Executive Vice President and General Manager of global business for Spansion from 2012 to 2013. Ms. Dorchak also serves as an independent director on the public boards of ANSYS (Nasdaq: ANSS) since June 2018 and GlobalFoundries Inc. (Nasdaq: GFS) since May 2019. Prior board experience includes Mellanox Technologies Ltd. from 2009 to 2020 when it was acquired by Nvidia, Quantenna Communications, Inc. from 2018 to 2019 when it was acquired by ON Semiconductor, and Viavi Solutions (Nasdaq: VIAV) from 2019 to November 2021. Ms. Dorchak’s qualifications to serve as a director include over 35 years in operating and leadership positions in the technology industry including as Chief Executive Officer of two public companies and one private company and as Vice President and Group General Manager at Intel Corporation. She brings deep industry knowledge, strategy and business development acumen and extensive leadership and business management experience. Ms. Dorchak also has over 20 years of experience as an independent director on boards of public technology companies. | 2020 | | John C. Hodge | 57 | Mr. Hodge has been a member of the Board of Directors since October 2018. He is a founding partner of private-equity firm Rubicon Technology Partners, which he joined in 2012. Prior to that, Mr. Hodge was a Senior Advisor and Senior Managing Director with Blackstone Group, a private equity firm, from 2006 to 2011. From 1998 to February 2006, Mr. Hodge was Senior Advisor, Managing Director and Global Head of Corporate Finance of the Technology Group of Credit Suisse First Boston. He also previously held positions at Morgan Stanley and Robertson Stephens. Mr. Hodge has spent more than 25 years as an investor in and advisor to the global semiconductor and technology industry. Mr. Hodge’s qualifications to serve as a director include his years of experience in private equity, corporate finance, and merger and acquisition transactions and his extensive experience as a director of semiconductor companies, including Silicon Image, Inc. from 2007 to 2014 and Freescale Semiconductor, Ltd. from 2008 to 2011. He brings to the Board of Directors his financial expertise and his work as a private equity investor analyzing and focusing on creating long-term value through operational improvements utilizing a repeatable process driven approach. | 2018 |
Nominees for Election as Directors
| Name | Age | Principal Occupation and Background | Director Since | | Darren R. Jackson | 59 | Mr. Jackson has been a member of the Board of Directors since May 2016, and served as Chair of the Board of the Company from October 2018 to October 2023. From July 2004 to January 2016, he served on the Board of Directors of Advance Auto Parts, Inc., and served as its Chief Executive Officer from January 2008 to January 2016. Mr. Jackson also served as President of Advance Auto Parts from January 2008 to January 2009 and from January 2012 to April 2013. Prior to this, Mr. Jackson served in various executive positions with Best Buy Co., Inc., a specialty retailer of consumer electronics, office products, appliances and software, ultimately serving from July 2007 to December 2007 as Executive Vice President of Customer Operating Groups. Mr. Jackson joined Best Buy in 2000 and was appointed as its Executive Vice President-Finance and Chief Financial Officer in February of 2001. Prior to 2000, he served as Vice President and Chief Financial Officer of Nordstrom, Inc., Full-line Stores, a fashion specialty retailer, and held various senior positions, including Chief Financial Officer of Carson Pirie Scott & Company, a regional department store company. Mr. Jackson also served as a director of Fastenal Company (Nasdaq: FAST), which sells industrial and construction supplies, from July 2012 until April 2020. Mr. Jackson’s qualifications to serve as a director include his years as a Chief Executive Officer, President and Chief Financial Officer of publicly traded companies in the retail and distribution industries, including his operational, logistical and executive management, financial and accounting acumen and experience. | 2016 | | Duy-Loan T. Le | 62 | Ms. Le has been a member of the Board of Directors since October 2018. She retired from Texas Instruments Inc. in February 2015, most recently holding the title of Senior Fellow since 2002. During her 33-year career at Texas Instruments, Ms. Le held various leadership positions, including Advanced Technology Ramp Manager for the Embedded Processing Division and worldwide project manager for the Memory Division. Since 2016, she has been president and sole partner of DLE Management Consulting LLC, a management consulting firm. Ms. Le has 33 years of experience in semiconductors, specifically in chip design, silicon manufacturing technology development, and advanced technology manufacturing from concept to high volume production, and 33 years of global business experience, including managing global R&D centers, joint ventures, foundries, and OSAT (Outsourced Semiconductor Assembly and Test) partnerships in Asia and Europe. Ms. Le is currently a member of the board of directors of Cirrus Logic, Inc. (Nasdaq: CRUS) and Atomera Incorporated (Nasdaq: ATOM), and also served as a director of Ballard Power Systems (Nasdaq: BLDP) from 2017 to February 2023 and National Instruments Corp. (Nasdaq: NATI) from 2002 to October 2023. Ms. Le’s qualifications to serve as a director include her extensive experience in various aspects of semiconductor design and manufacture, including operations, research and development, product launch, customer interfacing, foundry partnership, and supply chain management while at Texas Instruments. She also has 20 years of experience serving on public company boards of directors. | 2018 |
Nominees for Election as Directors
| Name | Age | Principal Occupation and Background | Director Since | | Gregg A. Lowe | 62 | Mr. Lowe has served as the Company’s President, Chief Executive Officer and as a member of the Board of Directors since September 2017. From June 2012 to December 2015, he served as president and CEO of Freescale Semiconductor, Ltd., a $5 billion company with 17,000 employees and products serving automotive, industrial, consumer and communications markets. Prior to that, he had a long career spanning 28 years at Texas Instruments, most recently serving as senior vice president and leader of the analog business. In addition to his experience with semiconductor companies, Mr. Lowe also holds board positions with Silicon Labs in Austin, Texas (Nasdaq: SLAB), North Carolina Agricultural and Technical State University (NC A&T), where he serves as a trustee, the Semiconductor Industry Association, and The Rock and Roll Hall of Fame in Cleveland, Ohio, where he serves as chairman of the board. Mr. Lowe brings to the Board extensive leadership and deep industry experience from his long career serving publicly-traded companies in the semiconductor industry. Further, Mr. Lowe’s leadership position as the Chief Executive Officer of the Company equips him with a unique perspective to inform Board deliberations on the vision for the company moving forward in addition to crucial insights on the general management and operations of the Company. | 2017 | | Marvin A. Riley | 50 | Mr. Riley has been a member of the Board of Directors since January 2021. He serves as Chief Executive Officer of Municipal Emergency Services, Inc., an equipment supplier and service provider to first responders, which he joined in July 2024. Prior to that, Mr. Riley served as President and Chief Executive Officer of EnPro Industries, Inc. (NYSE: NPO), an industrial technology company, from July 2019 to July 2021, after previously serving as executive vice president and chief operating officer since July 2017. He has also served in various leadership positions including president of the company’s Fairbanks Morse division; vice president of the company’s corporate manufacturing function; and vice president of global operations for its GGB division. Prior to joining EnPro, Mr. Riley was an executive with General Motors Corporation, working within the General Motors Vehicle Manufacturing Group where he held multiple positions of increasing responsibility from 1997 to 2007. Mr. Riley’s extensive experience at GM includes leadership positions in general assembly, body operations, dimensional control, plant maintenance and supporting multiple vehicle launches. He also credits his deep understanding of lean manufacturing to his time at GM. Mr. Riley’s qualifications to serve as a director include his long history of executive positions in the automotive and technology industries, including roles in operations and manufacturing, in addition to his experience as a chief executive officer of a publicly traded technology company. | 2021 |
Nominees for Election as Directors
| Name | Age | Principal Occupation and Background | Director Since | | Thomas J. Seifert | 61 | Mr. Seifert has served as Chief Financial Officer of Cloudflare, Inc., an internet security company, since June 2017. Prior to Cloudflare, he served as Executive Vice President and Chief Financial Officer of Symantec Corporation, a provider of cybersecurity software and services, from March 2014 to November 2016 and served in an advisory capacity to Symantec from December 2016 to March 2017. From December 2012 to March 2014, Mr. Seifert served as Executive Vice President and Chief Financial Officer of Brightstar Corp., a wireless distribution and services company. From October 2009 to September 2012, he served as Senior Vice President and Chief Financial Officer at Advanced Micro Devices Inc., a semiconductor company, where he additionally served as Interim Chief Executive Officer from January 2011 to August 2011. Mr. Seifert currently serves as a member of the board of directors of First Derivatives plc, an ultra-high-performance analytics software company. He previously served on the board of directors of CompuGroup Medical SE, an eHealth provider, and IPG Photonics Corporation (Nasdaq: IPGP), a manufacturer of fiber lasers. Mr. Seifert’s qualifications to serve as director include his years of experience as Chief Financial Officer at publicly traded and private companies, extensive leadership and management experience in the technology and semiconductor industries, significant financial expertise gained as a member of the board of directors of several publicly traded companies and knowledge and insight in cybersecurity and data science. | N/A |
Nominees for Election as Directors
| Name | Age | Principal Occupation and Background | Director Since | | Stacy J. Smith | 61 | Mr. Smith has been a member of the Board of Directors since January 2023. He has served as Executive Chairman of Kioxia Corporation (formerly Toshiba Memory Corporation), a producer of flash memory and solid state drives, since October 2018 and as non-executive chair and member of the board of directors of Autodesk, Inc. since June 2018 and November 2011, respectively. Mr. Smith has also served as an independent director on the board of Intel Corporation (Nasdaq: INTC) since March 2024. He previously served as Group President of Sales, Manufacturing and Operations at Intel Corporation from February 2017 to January 2018; as the Executive Vice President, Manufacturing, Operations and Sales from October 2016 to February 2017; as Executive Vice President, Chief Financial Officer from November 2012 to October 2016; as Senior Vice President, Chief Financial Officer from January 2010 to November 2012; as Vice President, Chief Financial Officer from 2007 to 2010; as Vice President, Assistant Chief Financial Officer from 2006 to 2007; as Vice President, Finance and Enterprise Services and Chief Information Officer from 2004 to 2006; and in other roles of increasing responsibility after he joined Intel in 1988. Mr. Smith also serves on The California Chapter of The Nature Conservancy Board of Trustees and the University of Texas McCombs School of Business Advisory Board. Mr. Smith previously served on the boards of directors of Metromile, Inc., from July 2018 to February 2021, Virgin America from February 2014 until it was acquired by Alaska Air Group in December 2016, and Gevo, Inc. from June 2010 to June 2014. Mr. Smith’s qualifications to serve as a director include an extensive breadth of expertise in the technology industry, with significant senior executive leadership experience including almost 10 years as Intel’s Chief Financial Officer. He brings deep strategic thinking and strong analytical skills as evidenced from his roles across finance as Chief Financial Officer, and as Group President of Sales, Manufacturing and Operations as well as technical expertise from his role as Chief Information Officer. He has served on multiple public boards for more than two decades and has helped take two companies public. He is currently Executive Chairman of a Japanese semiconductor company and Chairman of the board of a U.S. software company. | 2023 |
Nominees for Election as Directors
| Name | Age | Principal Occupation and Background | Director Since | | Thomas H. Werner | 64 | Mr. Werner has been a member of the Board of Directors since March 2006, and has served as Chair of the Board of the Company since October 2023. He has served as the Executive Chairman of SunPower Corporation (Nasdaq: SPWR), a publicly traded marketer of high-efficiency solar cells and solar panels, since February 2024, and served as Principal Executive Officer of SunPower from February 2024 until August 2024. On August 5, 2024, SunPower filed a voluntary petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware. Mr. Werner previously served as Sunpower’s Chairman of the Board of Directors from June 2010 to November 2021 and as its Chief Executive Officer from June 2003 to April 2021. Prior to SunPower, he served as Chief Executive Officer of Silicon Light Machines Corporation, an optical solutions subsidiary of Cypress Semiconductor Corporation, from July 2001 to June 2003. Earlier, Mr. Werner was Vice President and General Manager of the Business Connectivity Group of 3Com Corporation, a network solutions company. Mr. Werner’s qualifications to serve as a director include significant executive leadership and operational management experience gained at businesses in the technology sector, and the semiconductor industry in particular, including his experience as a chief executive officer of a publicly traded “green technology” company for eighteen years. | 2006 | | George H. “Woody” Young III | 65 | Mr. Young most recently served as the President and a member of the Board of Directors of Solidigm, a flash memory semiconductor company, from October 2022 until August 2023. Prior to Solidigm, Mr. Young served as Partner and Chairman of Mergers and Acquisitions at Perella Weinberg Partners LP, a financial services firm, from January 2016 to August 2021. Prior to joining Perella Weinberg, Mr. Young was Co-Head of the Global Telecommunications, Media, and Technology Group and a Managing Director at Lazard Ltd. from 2009 until 2015. He previously served as Global Head of Technology, Media and Telecommunications at Merrill Lynch & Co., and prior to that spent 14 years at Lehman Brothers, where he served as a Managing Director and Head of the Global Communications Group. At Lehman Brothers, he also served as the Chairman of the Senior Client Council and as a member of both the Investment Banking Executive Committee and the Firm’s Strategy Committee. Mr. Young was selected as a White House Fellow and served as special assistant to the Deputy Secretary of the Treasury from 1991 to 1992. Mr. Young currently serves as a director of Frontier Communications Parent, Inc. (Nasdaq: FYBR), a fiber internet provider. He is a member of the Council on Foreign Relations and served as a member of its Term Membership Committee for more than a decade. Mr. Young’s qualifications to serve as director include his over 30 years as an investment banker, including his leadership roles at several global investment banks, during which time he has been involved in numerous significant M&A transactions in the telecommunications and media industries, in addition to his experience in strategic and operational management. | N/A |
Nominees for Election as Directors
Summary of Skills of Nominees Director Nominee Highlights
Executive Summary
Our aggregate weighted performance resulted in an approximately 16% achievement level for fiscal 2024 and, after applying the safety performance modifier, final payout was 15% of target. (iii)Long-term incentive compensation awards: Reinforcing alignment of pay with performance, the grant value of our fiscal 2024 annual equity awards was delivered as a mix of 60% performance-based stock unit (“PSU”) awards and 40% time-based restricted stock unit (“RSU”) awards. PSU awards are based on relative total shareholder return (“TSR”) performance and require performance at the 55th percentile of the comparator group to earn a 100% target payout. The Committee determined not to increase the target value of the long-term incentive awards for our NEOs for fiscal 2024. Pay-for-Performance Analysis. Our executive compensation program is comprised of three primary elements: base salary, annual performance-based cash incentive compensation opportunities (cash bonus), and long-term incentive compensation in the form of PSUs and RSUs. A significant percentage of the target total direct compensation opportunities for our CEO and CFO is structured as “performance-based” compensation, comprised of an annual short-term cash bonus opportunity and PSU awards. In fiscal 2024, as detailed later in this Compensation Discussion and Analysis, the pay-for-performance structure of our executive compensation program operated as designed and intended. The annual cash bonus and long-term incentive compensation, in particular PSUs, paid at levels well below target based on our financial performance during fiscal 2024 (cash bonus), and performance at the end of fiscal 2024 and into early fiscal 2025 (PSUs). The following charts illustrate the extent to which target total direct compensation opportunities for our CEO and CFO are “at risk,” as payout levels are based entirely on our performance. For each chart, the amounts shown represent fiscal 2024 base salary, fiscal 2024 annual target short-term cash bonus opportunities, and the grant date fair value of long-term incentive compensation awards granted in fiscal 2024, which were granted 60% in the form of PSU awards and 40% in the form of RSU awards.
Executive Summary
| ☑ What We Do | ☒ What We Don’t Do | | •Design our executive compensation program to align pay and performance | •No special one-time awards to NEOs during fiscal 2023 or fiscal 2024, nor are any planned for fiscal 2025 | | •Design compensation programs that do not encourage excessive or unnecessary risk-taking | •No hedging or pledging of our common stock by our executive officers and the non-employee members of our Board of Directors | | •Grant performance-based long-term incentive compensation awards subject to multi-year performance requirements | •No excise tax gross ups in connection with change in control payments | | •Provide limited perquisites and other personal benefits | •No guaranteed short-term cash bonuses | | •Maintain share ownership guidelines applicable to our CEO and other Executive Officers, equal to 6x and 2x their base salary, respectively, and to non-employee directors equal to 5x their annual cash retainer | •No repricing or exchange of underwater stock options without shareholder approval | | •Maintain post-employment compensation policy that provides for “double-trigger” change in control equity award vesting | •No discounted or reloaded stock options | | •Maintain a SEC and NYSE compliant compensation recovery (or “clawback”) policy that provides for the recovery of certain executive compensation in the event of accounting restatements resulting from material noncompliance with financial reporting requirements under securities laws | •No share-dividend equivalents paid pursuant to our long-term incentive compensation program before vesting of the underlying shares occurs | | •Engage an independent compensation consultant for the Committee that does no other work for us | •No special retirement plans exclusively for executive officers |
Compensation-Setting Process
At the beginning of each year, our CEO reviews the performance of our senior management or Senior Leadership Team (“SLT”) members, including our CFO, based on their overall performance and performance against business objectives established for them for the prior year, and then shares observations from these performance reviews and makes recommendations to the Committee for each element of compensation as described above. The annual business objectives for each SLT member are developed through mutual discussion and agreement between our CEO and the SLT member, and are based on the Company-wide business objectives for the year. The Committee reviews and discusses our CEO’s recommendations and considers them as one factor in determining and approving the annual compensation of our SLT members, including our NEOs. Our CEO attends meetings of our Board of Directors and the Committee at which executive compensation matters are addressed, except for discussions involving his own compensation. Role of Compensation Consultant. During fiscal 2024, the Committee continued to retain Compensia to act as the Committee’s independent compensation consultant. The Committee assessed the independence of Compensia and determined its independence and that no conflicts of interest arose in connection with their provision of services to the Committee. The compensation consultant reports directly to the Committee and works with management only at the Committee’s direction. For fiscal 2024, Compensia assisted the Committee with the following: •Reviewing our Compensation Peer Group (as described below) and making recommendations for any changes to the Peer Group to the Committee; •Reviewing the current executive compensation levels relative to the market and our performance and formulating recommendations with respect to each compensation element and target total direct compensation; •Reviewing the current compensation arrangements for the non-employee members of our Board of Directors and assisting with the formulation of recommendations; •Reviewing aggregate equity usage relative to market; •Supporting our preparation of materials to be filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K and definitive proxy statement, with respect to compensation matters; and •Advising the Committee of executive compensation-related trends and developments over the course of the year. Use of Competitive Market Data. During fiscal 2024, the Committee used competitive market analyses prepared by Compensia as a reference point to evaluate the competitiveness of our executive compensation program and the compensation packages for our SLT members, including our NEOs. Compensia developed a market composite (referred to herein as “market data”) using data from two sources: (1) public company filings from a select peer group (the “Compensation Peer Group”); and (2) the Radford Global Technology survey. The data presented in the survey is aggregated and individual company information is not determinable. Jobs of similar scope and responsibility as those at the companies in the Compensation Peer Group and included in the Radford survey were identified and a market composite was created for each of the executive officer roles. The Committee used this market data to analyze base salary, annual short-term cash bonuses, target total cash compensation, equity compensation, and target total direct compensation.
Peer Group
Peer Group The Committee, assisted by Compensia, underwent a rigorous annual evaluation of our Compensation Peer Group in the spring of 2023 to assist with compensation decisions for fiscal 2024. The companies in the Compensation Peer Group were selected based on the following criteria: •companies operating in the semiconductor industry; •companies that operate fabrication plants (or “fabs”); •“clean” technology companies (those who offer products and services to reduce the use of natural resources); •companies with comparable annual revenue and market capitalization; •companies against which we compete for executive talent; •companies that allow for sufficient room to grow without over- or under-extending; and •sensitivity to the criteria the major proxy advisor services (e.g., ISS and Glass Lewis) will apply when determining their “Say on Pay” proposal voting recommendations. In April 2023, following its annual review, the Committee approved the following changes to the Compensation Peer Group effective for fiscal 2024 compensation decision-making. For fiscal 2024, the Committee removed four peer group companies (Marvell Technology Group Ltd, ON Semiconductor Corporation, SMART Global Holdings, Inc. and Skyworks Solutions, Inc.) from the Compensation Peer Group due to size relative to Wolfspeed and added four companies (Allegro MicroSystems, Enphase Energy, Lattice Semiconductor and Universal Display). The companies comprising the Compensation Peer Group used as a reference to assist the Committee in its deliberations with respect to fiscal 2024 pay decisions were:
Peer Group
| Advanced Energy Industries, Inc. | Monolithic Power Systems, Inc. | | Allegro Microsystem, Inc. | Power Integrations, Inc. | | Cirrus Logic, Inc. | Qorvo, Inc. | | Coherent Corp. (f/k/a II-VI Incorporated) | Semtech Corporation | | Diodes Incorporated | Silicon Laboratories Inc. | | Enphase Energy | Synaptics Incorporated | | Entegris, Inc. | Teradyne, Inc. | | Lattice Semiconductor | Universal Display | | MACOM Technology Solutions Holdings, Inc. | |
Peer Group
Compensia used the foregoing Compensation Peer Group to develop the market data analysis that was provided to the Committee to assist it in its fiscal 2024 executive compensation decision-making. The Committee, assisted by Compensia, also undertook a rigorous annual evaluation of our compensation peer group in the spring of 2024 to assist with compensation decisions for fiscal 2025. The companies in the fiscal 2025 Compensation Peer Group were selected based on the same criteria as described above taking into account changes in both our business and the businesses of the companies in the peer group. For fiscal 2025, the Committee removed four peer group companies (Enphase Energy, Entegris, Monolithic Power Systems and Teradyne) from the Compensation Peer Group due to size relative to Wolfspeed and added four companies (Cohu, MaxLinear, Novanta and Photronics). While the Committee relies on the Compensation Peer Group analysis to provide data about and understand the competitive market and relevant trends, it does not consider the peer group analysis as a substitute for its collective business judgment.
Compensation Elements
| Element/Percentage of Target TDC | Why We Pay This Element | Key Characteristics | How We Determine Amount | | Base Salary | •Provides market competitive levels of fixed pay to attract and retain our NEOs | •Cash •Fixed •Annual | •Market rate, internal pay equity, experience, and critical skills | | | | | | | Cash Bonus | •Provides competitive incentives to achieve difficult annual financial, operational and strategic business goals •Pay-for-performance •Shareholder alignment •Strategic alignment with long-term business strategy | •Cash •At-risk •Performance-based •Annual | •90% financial –30% revenue –30% non-GAAP gross margin –30% Adjusted EBITDA •10% ESG initiatives •Subject to potential downward safety modifier | | | | | | | PSU Awards | •Provides strategic alignment incentivizing achievement of multi-year business plan based on TSR relative to Nasdaq Composite Index filtered by the Semiconductor, Semiconductor Equipment, and Electronics Equipment, Instruments and Component Sectors •Pay-for-performance •Shareholder alignment | •Equity •At-risk •Performance-based | •Market rate, internal pay equity, experience, and critical skills | | | | | | | RSU Awards | •Achieves retention objectives •Shareholder alignment | •Equity •At-risk | •Market rate, internal pay equity, experience, and critical skills | | | | | |
Compensation Elements
| Executive Officer | Fiscal 2024 Target Annual Bonus Opportunity (as a percentage of base salary) | | Gregg A. Lowe | 140% | | Neill P. Reynolds | 100% |
Compensation Elements
Goal Setting Process and Rationale: The Committee spends considerable time evaluating the appropriate corporate operational, financial, and business performance goals to be included in the annual short-term cash bonus plan each fiscal year. After such evaluation for fiscal 2024, the Committee determined to increase the corporate financial goal weighting to 90% (from 70%) with the remaining 10% based on ESG initiatives. ESG initiatives include emissions reduction, water recycling and diversity, equity and inclusion (DEI) initiatives. For fiscal 2024, in addition to financial and ESG initiatives, the Committee determined to include a potential downward modifier of up to a 10% reduction based on the Company’s TRIR for fiscal 2024. TRIR is a key safety metric used to measure the number of work-related injuries and illnesses that occur each year, typically expressed per 100 full-time employees. This measure helps Wolfspeed assess our safety performance and identify areas for improvement. The design of our fiscal 2024 Annual Performance-Based Cash Bonus Program was as follows: When determining the level of award payable as short-term cash bonuses, performance against each objective is weighted in determining the amount of the annual award payment. If attainment of an individual performance objective did not meet the threshold performance level for that objective, no payment would be earned for that objective. If attainment of an individual performance objective was met or exceeded at the threshold performance level for that objective, but fell below the target performance level, a payment would be earned of at least 25% for that objective but less than 100% of the target award opportunity for such individual objective. If attainment of an individual performance objective met or exceeded the target performance level but fell below the maximum performance level, a payment would be earned of at least 100% but less than 200% of the target award opportunity for such individual objective. The maximum payment for any individual performance objective, and subsequently the total annual award payout is 200% of the target annual short-term cash bonus award opportunity. The potential downward modifier is applied once achievement of the individual performance objectives has been determined and aggregated. Therefore, the total annual short-tern cash bonus award payment percentage is the sum of the percentage of achievement of each performance objective, reduced by the safety modifier (if applicable) and rounded to the nearest whole percentage. Performance Results: The performance objectives established by the Committee for fiscal 2024 and our corresponding actual performance with respect to each objective are set forth in the following table:
Compensation Elements
(1)Non-GAAP gross margin is defined as GAAP gross margin excluding stock-based compensation expense. (2)Adjusted EBITDA is defined as net loss before interest expense, income tax expense, and depreciation and amortization expense and excluding stock-based compensation expense, project, transformation and transaction costs, executive severance costs, loss (gain) on legal proceedings, gain on equity investment and loss on Wafer Supply Agreement. Please see the Company’s earnings release for the fourth quarter and fiscal year ended June 30, 2024 included as Exhibit 99.1 to the Form 8-K furnished to the Securities and Exchange Commission on August 21, 2024, for more information on these adjustments (which exhibit is not incorporated by reference in, and is not part of, this proxy statement). The total calculated bonus payout percentage for fiscal 2024 was 16.2% before application of the safety modifier and rounding. This was primarily due to two of the three financial performance metrics (non-GAAP gross margin and adjusted EBITDA) not meeting the threshold and the final financial performance measure (revenue) meeting the threshold but not target performance. After applying a 5% reduction of such calculated bonus payout percentage for the safety modifier and rounding to the nearest whole number, the final total bonus payout percentage was 15%. The following table sets forth, for each NEO, the Committee’s approved annual performance-based cash incentive compensation award payment under our fiscal 2024 Annual Short-Term Cash Bonus Program:
Compensation Elements
| Executive Officer | Fiscal 2024 Target Annual Bonus Opportunity | Total Amount Awarded | Total Award as a Percent of Target | Total Award as a Percent of Base Salary | | Gregg A. Lowe | $1,225,000 | $183,750 | 15% | 21% | | Neill P. Reynolds | $600,000 | $90,000 | 15% | 15% |
Compensation Elements
Long-Term Incentive Compensation Program. Equity awards are granted to our NEOs under the shareholder approved LTIP in effect at the time of grant to motivate them to achieve our financial, operational, and strategic business objectives, align their performance with shareholder interests, providing an opportunity for these executive officers to increase their ownership in the Company, and also providing for their retention. The Committee emphasizes the importance of shareholder value growth by endeavoring to create compensation packages for our NEOs, with the majority of their target total direct compensation opportunity for any fiscal year to be earned through PSU awards and/or RSU awards granted under the then in-effect LTIP. The Committee grants all annual equity awards under the then-effective LTIP on August 1 to align the grant date with our internal focal performance review cycle, and also to grant these awards close to the beginning of the current fiscal year. The Committee-approved target equity award values for Mr. Lowe and Mr. Reynolds for fiscal 2024 were $7,000,000 and $2,800,000, respectively, which amounts were equal to the target equity award values approved by the Committee for fiscal 2023. To determine the actual number of RSUs and PSUs awarded, the Committee-approved target value is divided by a 30 trading-day average of our closing price up to and including the grant date, which average was $60.53. The total grant date values based on the closing price of $63.25 on August 1, 2023 is 4.5% higher than the award value used by the Committee to calculate the number of units awarded. The amounts reported below are not the grant date fair values calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, or ASC Topic 718. The Committee approved RSU and PSU equity awards for each of our NEOs as follows:
Compensation Elements
| Executive Officer | FY24 Total Grant Date Value | RSUs | | | PSUs | | | | | | Number Awarded | Grant Date Value | Percentage of Total Grant Value | Number Awarded | Grant Date Value | Percentage of Total Grant Value | | Gregg A. Lowe | $7,313,914 | 46,254 | $2,925,566 | 40% | 69,381 | $4,388,348 | 60% | | Neill P. Reynolds | $2,925,502 | 18,501 | $1,170,188 | 40% | 27,752 | $1,755,314 | 60% |
Compensation Elements
Restricted Stock Unit (RSU) Awards. RSU awards, which are subject to time-based vesting, align the interests of our NEOs with the interests of our shareholders as the value of the RSU awards fluctuates with changes in the market value of our common stock. The primary value of RSU awards, however, is that they create a strong incentive for executive retention, because our NEOs will realize the value of these awards only upon vesting. The fiscal 2024 RSU awards vest ratably in equal annual increments over four years from the grant date, contingent on continued employment as of each vesting date. Vesting ends upon termination of employment, and all unvested RSUs are forfeited; however, vesting accelerates upon death or termination of employment due to disability. Under the terms of the SLT Severance Plan (or for our CEO, his Change in Control Agreement), however, vesting of RSU awards may also be accelerated in certain circumstances as discussed below. Performance Stock Unit (PSU) Awards. PSU awards further align the interests of our NEOs with the interests of our shareholders because not only does the value of the PSU awards fluctuate with changes in the market value of our common stock, but the performance objectives must first be met for the PSU awards to be earned and vest. PSU awards also serve our retention objectives similar to RSU awards, because our NEOs will realize the value of these awards only if the PSUs are earned and vest. The fiscal 2024 PSU awards, if earned, vest three years after the date of grant. The actual number of shares of our common stock received under the PSU awards at the end of the three-year performance period will be equal to the number of units awarded multiplied by the “Payout Factor” described below. The performance threshold for the PSU awards will be based on our relative TSR compared to a peer group of companies listed on the Nasdaq Composite Index filtered by the Semiconductor, Semiconductor Equipment, and Electronics Equipment, Instruments and Component Sectors and, for fiscal 2024, NYSE-traded companies with Semiconductor or Semiconductor Equipment as the primary classification (the “TSR Peer Group”) over the period beginning on August 1, 2023 and ending immediately prior to the vesting date of July 31, 2026 (the “Measurement Period”). The starting value for the calculation of the Payout Factor was the 90 calendar-day average price for our common stock through July 31, 2023 and the ending value for the calculation will be the average share price for our common stock for the 90 calendar days prior to the end of the Measurement Period. Our TSR will then be compared to the performance of the TSR Peer Group over the three-year period. The number of shares of our common stock that will be issued as payment for the number of units earned will be calculated in accordance with the following schedule:
Compensation Elements
| Relative Total Shareholder Return Ranking over Measurement Period | Payout Factor | | 75th Percentile or Higher | 200% | | 55th Percentile | 100% | | 25th Percentile | 50% | | Below 25th Percentile | 0% |
Results of Prior PSU Grants
Results of Prior PSU Grants With respect to our August 2020 (fiscal 2021) PSU grants to our NEOs, our three-year TSR of -6.95% for the three-year performance period ended August 1, 2023 placed us at the 26th percentile of the TSR Peer Group. Based on the payout schedule in place for that fiscal 2021 PSU award (shown below), our NEOs earned 52% of their respective target awards.
Results of Prior PSU Grants
| Relative Total Shareholder Return Ranking over Measurement Period | Payout Factor | | 75th Percentile or Higher | 150% | | 50th Percentile to 74th Percentile | 100% | | 25th Percentile to 49th Percentile | 50% | | Below 25th Percentile | 0% |
Results of Prior PSU Grants
With respect to our CEO’s one-time performance and retention PSU award granted in September 2020 that vested in September 2023 (during fiscal 2024), actual performance achievements resulted in a payout of 92.5% of the target. The number of shares of the Company’s common stock earned on settlement of the award was based on the Company’s actual achievement of certain performance criteria as compared against pre-established targets during the period beginning on the grant date and ending immediately prior to the third anniversary of the grant date (such period, the “Performance Period”). The Compensation Committee determined that, during the Performance Period, design-ins were $17.6 billion, which was 150% of target, MOSFET weighted-average yield was achieved at 120% of target*, and DEI initiatives were achieved at target. The Compensation Committee determined that the performance metric for completion of the Mohawk Valley Fab building and fit out (measured by wafer starts per week during the Performance Period) did not meet threshold of 1,500 wafer starts per week. *We believe that disclosing the target and actual MOSFET weighted-average yield performance would cause competitive harm to us by revealing highly confidential and proprietary information about our manufacturing process and operations without adding meaningfully to the understanding of our executive compensation arrangements. However, like the target levels for all the performance objectives, the Committee set the threshold, target, and maximum performance levels at definitive, rigorous, and objective levels so as to require improvement during the Performance Period and significant leadership effort and achievement by our CEO. More specifically, the Committee believed the target-level goal may be characterized as “strong performance,” meaning that based on historical performance, attainment of this performance level was uncertain when established (but the Committee believed that the target performance could be achieved), while the threshold performance level was believed to be more likely to be achieved, and the maximum performance level represented a more aggressive level of performance.
Other Compensation Elements and Practices
Other Compensation Elements and Practices Health and Welfare Benefits. Generally, our NEOs are eligible to and participate in only those benefit and retirement programs available to other U.S. employees, including our Section 401(k) retirement savings plan, health and welfare plans, group term life insurance plan, and our employee stock purchase program. Our NEOs receive matching contributions under the Section 401(k) plan consistent with other participating employees. We match 100% of the first 1% of an employee’s contribution, and 50% of the next 5% of an employee’s eligible contribution. Consistent with our compensation philosophy, the Committee seeks to limit the perquisites and other personal benefits provided to our NEOs. Our SLT members, including our NEOs, are eligible to participate in a voluntary executive physical program. This benefit is intended to encourage our SLT members to receive regular comprehensive physical examinations, as their future health and well-being are important to our success. Each participant is encouraged to voluntarily elect a comprehensive physical examination once per calendar year at a facility designated by us. No NEO received perquisites or other personal benefits exceeding $10,000 in fiscal 2024. Post-Termination Compensation Arrangements. The Committee has approved the severance payments and benefits described below following termination of employment, both in the context of a change in control of the Company and in other circumstances, to encourage our SLT members, including our NEOs, to act in our best interests without regard to potential concerns for loss of income in the event of a disagreement with management or our Board of Directors that leads to their termination of employment. In connection with his appointment as our CEO in September 2017, we entered into a Change in Control Agreement with Mr. Lowe setting forth his severance payments and benefits in the event of the termination of his employment by us without cause or by him for good reason, including in connection with a change in control of the Company. See “Potential Payments upon Termination or Change in Control” for the details about this agreement. The SLT Severance Plan, which was originally adopted in April 2018 and was most recently amended and restated as of June 21, 2024, is designed to provide severance payments and benefits to our executive officers who report directly to our CEO and who serve on the SLT, including Mr. Reynolds, in the event of their termination of employment without cause or their resignation for good reason. Under the Change in Control Agreement and the SLT Severance Plan, severance payments and benefits in connection with a change in control of the Company are subject to a “double-trigger” feature, which means that payments are not triggered on a change in control unless, in connection with the change in control, the employment of the executive officer either (1) is terminated without cause (but not as a result of his death or long-term disability); or (2) terminated by the executive officer for good reason within 24 months of such change in control. See “Potential Payments upon Termination or Change in Control” below for additional information on our severance arrangements with our NEOs. Share Ownership Guidelines. Our Board of Directors has adopted Corporate Governance Guidelines that include share ownership guidelines for the non-employee members of our Board of Directors and our executive officers, including our NEOs. Under these guidelines, within five years after election or appointment: •our CEO is expected to hold shares of our common stock with a value not less than six times his annual base salary; •each other executive officer, including our CFO, is expected to hold shares of our common stock with a value not less than two times the executive officer’s annual base salary; and •each non-employee member of our Board of Directors is expected to hold shares of our common stock with a value not less than five times the sum of the director’s annual cash retainers for service on our Board of Directors and on Board Committees. Shares held and owned, including outstanding RSU awards, count toward the share ownership requirement. Any outstanding stock option (vested or unvested) and outstanding PSU award does not count toward the share ownership requirement. Presently all non-employee directors and executive officers are compliant with their respective stock ownership guideline. Anti-Hedging and Pledging Policies. We have adopted a Securities Trading Policy that prohibits all employees, including our NEOs, and the non-employee members of our Board of Directors from entering into any pledging or margin account transactions involving our equity securities. In addition, the Securities Trading Policy provides that hedging transactions in our equity securities are prohibited for all employees (including our executive officers) and the non-employee members of our Board of Directors. Compensation Recovery Policy. On November 29, 2023, the Committee adopted a new compensation recovery policy as required by Rule 10D-1 under the Securities Exchange Act of 1934, as amended, and the corresponding listing standards of the NYSE, which provides for the mandatory recovery from current and former executive officers of incentive-based compensation that was erroneously awarded during the three years preceding the date that the Company is required to prepare an accounting restatement due to material non-compliance of the Company with any financial reporting requirement under the securities laws, including to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period. The amount required to be recovered is the excess of the amount of incentive-based compensation received over the amount that otherwise would have been received had it been determined based on the restated financial measure. Deductibility of Executive Compensation. Section 162(m) of the Code limits the deduction certain employers may take for otherwise deductible compensation payable to certain current or former executive officers of the employer to the extent the compensation paid to such an officer for the taxable year exceeds $1 million. The Committee believes that tax deductibility is only one of several relevant considerations when structuring our executive compensation program and strives to balance the effectiveness and overall goals of our executive compensation program with the materiality of reduced tax deductions. Accordingly, the Committee may approve compensation that is not deductible for federal income tax purposes in order to achieve the desired flexibility in the design and delivery of compensation. Accounting for Stock-Based Compensation. FASB ASC Topic 718, Compensation—Stock Compensation, requires us to recognize an expense for the fair value of equity-based compensation awards granted under our equity incentive award plans. The Committee considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, the Committee may revise certain plans and programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) (1) | Non-Equity Incentive Plan Compensation ($) (2) | All Other Compensation ($) (3) | Total ($) | | (a) | (b) | (c) | (d) | (e) | (g) | (i) | (j) | | Gregg A. Lowe | 2024 | $875,000 | — | $10,329,212 | $183,750 | $11,762 | $11,399,724 | | CEO and President | 2023 | $875,000 | — | $11,285,988 | $306,250 | $10,601 | $12,477,839 | | | 2022 | $875,000 | — | $7,295,016 | $1,102,500 | $9,500 | $9,282,016 | | Neill P. Reynolds | 2024 | $600,000 | — | $4,131,604 | $90,000 | $11,396 | $4,833,000 | | Executive Vice President and CFO | 2023 | $600,000 | — | $4,514,384 | $150,000 | $10,675 | $5,275,059 | | | 2022 | $550,000 | — | $1,683,417 | $455,400 | $13,616 | $2,702,433 |
Summary Compensation Table
________________ (1)Represents the aggregate grant date fair value of service-based RSUs and PSUs granted during the fiscal years shown calculated in accordance with ASC Topic 718. The aggregate grant date fair value is the amount we expect to expense in our financial statements over the award’s vesting schedule. See Note 13 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended June 30, 2024 for assumptions used in the calculations. There can be no assurance that the ASC Topic 718 grant date fair value amounts will ever be realized. For the PSUs that vest based on relative TSR, the probable outcome of achievement and grant date fair value was determined using a Monte Carlo simulation model. (2)Amounts listed in in column (g) represent amounts paid under our Annual Short-Term Cash Bonus Program. For additional information regarding the 2024 Annual Short-Term Cash Bonus Program, see “Compensation Discussion and Analysis” above. (3)Amounts listed in column (i) include matching contributions to the 401(k) retirement plan. No named executive officer received perquisites and personal benefits valued, in the aggregate, at $10,000 or more. Therefore, in accordance with Securities and Exchange Commission disclosure rules, this column does not reflect the value of the perquisites and personal benefits received for fiscal 2022 through 2024 unless previously disclosed.
Grants of Plan-Based Awards in Fiscal 2024
Grants of Plan-Based Awards in Fiscal 2024
Grants of Plan-Based Awards in Fiscal 2024
| | Grant Date | Approval Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Possible Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (3) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | | Name | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Gregg A. | | | $306,250 | $1,225,000 | $2,450,000 | | | | — | — | — | — | | Lowe | 8/1/2023 | 7/31/2023 | — | — | — | 34,691(2) | 69,381(2) | 138,762(2) | — | — | — | $7,403,647 | | | 8/1/2023 | 7/31/2023 | — | — | — | — | — | — | 46,254 | — | — | $2,925,566 | | Neill P. | | | $150,000 | $600,000 | $1,200,000 | | | | — | — | — | — | | Reynolds | 8/1/2023 | 7/31/2023 | — | — | — | 13,876(2) | 27,752(2) | 55,504(2) | — | — | — | $2,961,416 | | | 8/1/2023 | 7/31/2023 | — | — | — | — | — | — | 18,501 | — | — | $1,170,188 |
Grants of Plan-Based Awards in Fiscal 2024
________________ (1) Non-equity incentive plan awards represent the threshold, target and maximum amounts of cash incentive compensation payable under our 2024 Annual Short-Term Cash Bonus Program. The actual amounts earned are disclosed in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table.” Threshold payment amounts assume only the attainment of the minimum performance level for each individual goal and are paid at 25% of the target incentive. Target payment amounts are paid at 100% of the target incentive and assume goal attainment of 100% of the target goals. Maximum payment amounts reflect the payout cap of 200% of the target incentive, which assumes goal attainment of the maximum goals. The threshold, target and maximum amounts assume no downward modification based on performance on certain predetermined safety measures. For fiscal 2024, the annual operational, financial and business goal targets approved by the Compensation Committee were stated in terms of revenue, non-GAAP gross margin, adjusted EBITDA, and accomplishment of ESG initiatives, subject to the safety modifier. For additional information regarding the 2024 Annual Short-Term Cash Bonus Program, see “Compensation Discussion and Analysis” above. (2) The target represents the number of PSUs granted on the grant date. Actual shares earned and issued will be determined at the end of the measurement period (three years after grant date). The number of shares that will be issued is calculated by measuring the Company’s relative TSR on the third anniversary of the grant date as compared to the TSR Peer Group. If the Company’s TSR performance is at the 75th percentile or higher, the maximum number of shares will be issued (200% of target). If the Company’s TSR performance is at the 55th percentile, the target number of shares will be issued. If the Company’s TSR performance is at the 25th percentile, the threshold number of shares will be issued (50% of target). Linear interpolation shall be used to determine the payout level and shares issued for performance that falls between the 25th percentile and the 75th percentile, provided that there will be no shares issued for performance below the 25th percentile, and any performance above the 75th percentile results in the maximum number of shares issued. For additional information regarding the fiscal 2024 PSU awards, see “Compensation Discussion and Analysis” above. (3) The RSUs granted to Messrs. Lowe and Reynolds vest in four annual installments commencing on the first anniversary of the date of grant, provided the recipient continues service as an employee or as a member of the Board of Directors.
Outstanding Equity Awards
Outstanding Equity Awards The following table provides information about outstanding equity awards held by the named executive officers as of June 30, 2024.
Outstanding Equity Awards at 2024 Fiscal Year-End
Outstanding Equity Awards at 2024 Fiscal Year-End
Outstanding Equity Awards at 2024 Fiscal Year-End
| | Stock Awards (1) | | | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | 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 ($) (2) | | Gregg A. Lowe | 104,796(3) | $2,385,157 | 81,370(4) | $1,851,947 | | Neill P. Reynolds | 37,195(5) | $846,558 | 29,606(6) | $673,821 |
Outstanding Equity Awards at 2024 Fiscal Year-End
________________ (1) The RSUs and PSUs listed were granted under the Prior LTIP. (2) Market value of shares that have not vested is based on $22.76 per share (the closing price of our common stock as reported by the NYSE on June 28, 2024, the last business day of the Company’s fiscal 2024). (3) Includes RSUs that vest as to 41,886 shares on August 1, 2024, as to 30,019 shares on August 1, 2025, as to 21,328 shares on August 1, 2026, and as to 11,563 shares on August 1, 2027. (4) Includes (a) PSUs that vest as to 17,382 shares on August 1, 2024, as to 29,297 shares on August 1, 2025, and as to 34,691 shares on August 1, 2026 if the applicable performance targets for each period are satisfied (assuming threshold achievement and a Payout Factor of 50%). (5) Includes RSUs that vest as to 13,503 shares on August 1, 2024, as to 10,536 shares on August 1, 2025, as to 8,531 shares on August 1, 2026, and as to 4,625 shares on August 1, 2027. (6) Includes PSUs that vest as to 4,011 shares on August 1, 2024, as to 11,719 shares on August 1, 2025, and as to 13,876 shares on August 1, 2026 if the applicable performance targets for each period are satisfied (assuming threshold achievement and a Payout Factor of 50%).
Stock Option Exercises and Vesting of Restricted Stock
Stock Option Exercises and Vesting of Restricted Stock The following table provides information about option exercises and vesting of RSUs held by the named executive officers during fiscal 2024.
Option Exercises and Stock Vested in Fiscal 2024
Option Exercises and Stock Vested in Fiscal 2024
Option Exercises and Stock Vested in Fiscal 2024
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise(#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Gregg A. Lowe | — | — | 121,511 | $6,741,059(1) | | Neill P. Reynolds | — | — | 40,314 | $1,791,348(2) |
Option Exercises and Stock Vested in Fiscal 2024
________________ (1) The value realized on vesting is based on $63.25 per share (the closing price of our common stock as reported by the NYSE on August 1, 2023) as to 42,298 RSU shares and 24,680 PSU shares and $45.93 per share (the closing price of our common stock as reported by the NYSE on September 1, 2023) as to 54,533 PSU shares. (2) The value realized on vesting is based on $63.25 per share (the closing price of our common stock as reported by the NYSE on August 1, 2023) as to 11,400 RSU shares and 6,170 PSU shares and $29.90 per share (the closing price of our common stock as reported by the NYSE on April 1, 2024) as to 22,744 RSU shares.
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control We have various arrangements that provide the named executive officers with specified benefits if their employment is terminated under certain circumstances, as described below. In addition, these named executive officers participate in various benefit plans that may provide them with acceleration of equity awards or payments under certain circumstances, as described below. Payments to the Named Executive Officers Made Upon Termination Without Cause or Resignation for Good Reason in Connection with a Change in Control The Change in Control Agreement with Mr. Lowe and the SLT Severance Plan for any other named executive officers in each case provide for certain payments to be made upon termination without cause or resignation for good reason in connection with a change in control. Mr. Lowe (under the Change in Control Agreement) and Mr. Reynolds (under the SLT Severance Plan), if his employment is terminated by us without cause but not as a result of his death or long-term disability, or by the executive for good reason, and the termination was in connection with a change in control, will be entitled to receive the following benefits:
Potential Payments upon Termination or Change in Control
| Change in Control Agreement (Mr. Lowe): | | SLT Severance Plan: | | | • | continued payment of Mr. Lowe’s base salary for 24 months; | • | continued payment of the executive’s regular salary for 18 months; | | • | a lump sum payment equal to two times his target annual incentive award for the fiscal year in which the termination occurs; | • | a lump sum payment equal to 1.5 times the executive’s target annual incentive award for the year in which the termination occurs; | | • | a lump sum payment equal to 24 multiplied by the COBRA premium in effect for the type of medical, dental, and vision coverage then in effect for Mr. Lowe; | • | a lump sum payment equal to 18 multiplied by the COBRA premium in effect for the type of medical, dental, and vision coverage then in effect for the executive; | | • | full accelerated vesting with respect to his then outstanding, unvested RSUs and other equity awards that vest solely based on the passage of time, and full accelerated vesting with respect to his then outstanding, unvested PSUs, with all performance objectives deemed to have been satisfied at the greater of (i) the target level (target being a Payout Factor of 100%); and (ii) the actual performance level (with the date of the Change in Control being treated as the ending date for the measurement period and the effective stock price of the Change in Control being used for the calculation of relative total shareholder return); and | • | accelerated vesting of RSUs and options that are subject to time-based vesting requirements only, so that they become vested by the date employment terminates, and deemed vesting of any unvested PSUs at the greater of (i) the target level and (ii) the actual performance level (with the date of the Change in Control being treated as the ending date for the measurement period and the effective stock price of the Change in Control being used for the calculation of relative total shareholder return); and | | • | reimbursement by the Company for any loss incurred in the sale of Mr. Lowe’s primary North Carolina residence. | • | outplacement benefits for 12 months. |
Potential Payments upon Termination or Change in Control
In the event amounts payable under the Change in Control Agreement or SLT Severance Plan, as applicable, or otherwise are contingent on a change in control for purposes of Section 280G of the Internal Revenue Code of 1986, as amended, or the Code, and it is determined that any payment or benefit made or provided to the executive would be subject to the excise tax imposed by Section 4999 of the Code, the payments to such executive under the Change in Control Agreement or SLT Severance Plan, as applicable, will either be (i) paid in full or (ii) reduced to an amount that would not trigger the Section 280G-related excise tax, whichever results in the executive receiving the greatest after tax payment. The Change in Control Agreement also provides that, if Mr. Lowe becomes generally disabled and his employment is terminated before he becomes eligible for benefits under our long-term disability program or if he elects to resign for good reason because the Company does not restore him to his prior position and level of authority after he ceases to be generally disabled, in each case in connection with a change in control, he will be entitled to severance benefits under the Change in Control Agreement. Payments to the Named Executive Officers Made Upon Termination Without Cause or Resignation for Good Reason Not in Connection with a Change in Control The Change in Control Agreement with Mr. Lowe and the SLT Severance Plan for any other named executive officers (for fiscal 2024, Mr. Reynolds) in each case provide for certain payments to be made upon termination without cause or resignation for good reason not in connection with a change in control. Mr. Lowe (under the Change in Control Agreement) and Mr. Reynolds (under the SLT Severance Plan), if his employment is terminated by us without cause but not as a result of his death or long-term disability, or by the executive for good reason, and the termination was not in connection with a change in control, will be entitled to receive the following benefits:
Potential Payments upon Termination or Change in Control
| Change in Control Agreement (Mr. Lowe): | | SLT Severance Plan: | | | • | continued payment of Mr. Lowe’s base salary for 18 months; | • | continued payment of the executive’s base salary for 12 months; | | • | a lump sum payment equal to 1.5 times his target annual incentive award for the fiscal year in which the termination occur; | • | a lump sum payment equal to the executive’s target annual incentive award for the fiscal year in which the termination occurred; | | • | a lump sum payment equal to 18 multiplied by the COBRA premium in effect for the type of medical, dental, and vision coverage then in effect for Mr. Lowe; and | • | reimbursement for the additional costs of continuing the executive’s group medical, dental and vision coverage under COBRA for 12 months or until he is eligible for new healthcare coverage, whichever is shorter; | | • | conditioned upon Mr. Lowe’s fulfillment of his obligation for consulting, to the extent required by the Company, continued vesting of RSUs and options granted to Mr. Lowe under the LTIPs that are subject to time-based vesting requirements only during the 18 months following the date of employment termination as if Mr. Lowe’s employment had not terminated, and continued vesting during the 18 months following the date of termination of PSUs in accordance with the terms of such awards as if Mr. Lowe’s employment had not terminated, although PSUs that may vest will be paid out based upon actual Company performance in accordance with the terms of the LTIPs and the applicable award agreement, including prorating for the portion of time Mr. Lowe provided services to the Company over the course of the applicable performance period and such additional 18-month period, as applicable. | • | conditioned upon the executive’s fulfillment of his obligation for consulting, to the extent required by the Company, continued vesting of RSUs and options during the 12 months following the date of employment termination as if the executive’s employment had not terminated, and continued vesting of PSUs during the 12 months following the date of termination in accordance with the terms of such awards as if the executive’s employment had not terminated, although PSUs that may vest will be paid out based upon actual Company performance in accordance with the terms of the LTIPs and the applicable award agreement, including prorating for the portion of time the executive provided services to the Company over the course of the applicable performance period and such additional 12-month period, as applicable; and | | | | • | outplacement benefits for 12 months. |
Potential Payments upon Termination or Change in Control
Further Conditions to Severance Benefits As a condition to the receipt of the benefits described above under the Change in Control Agreement, Mr. Lowe must (i) sign and not revoke a release of claims, (ii) refrain from disparaging the Company, its directors, or its officers for 24 months after termination, and (iii) continue to comply with the terms of the standard form of employee agreement regarding confidential information, intellectual property and noncompetition between Mr. Lowe and the Company (the “Confidential Information Agreement”), as amended by the Change in Control Agreement. Pursuant to the Change in Control Agreement, the period during which such noncompetition provisions of the Confidential Information Agreement apply will be (x) 24 months following Mr. Lowe’s termination (or such longer period used to calculate continued salary payments) in the event that he is entitled to severance payments in connection with a change in control as described above or (y) 18 months in the event that Mr. Lowe is entitled to severance payments not in connection with a change in control. As a condition of eligibility to participate in the SLT Severance Plan, each executive must (i) sign and not revoke a release of claims, (ii) sign a participation agreement under which, among other things, such executive agrees to waive any rights he or she might still have under certain other Company sponsored severance programs; and (iii) continue to comply with the terms of the executive’s Confidential Information Agreement, which, in the event that the executive is entitled to severance payments in connection with a change in control as described above, will be amended by the release to provide that the post-separation restrictive period applicable to the noncompetition and nonsolicitation provisions contained therein will extend until the end of the 18-month period following the executive’s termination date (or such longer period used to calculate continued salary payments). Definitions The terms “cause,” “good reason,” “change in control” and “in connection with a change in control” are defined in the Change in Control Agreement and SLT Severance Plan as follows: “Cause” means:
Potential Payments upon Termination or Change in Control
| Change in Control Agreement (Mr. Lowe): | | SLT Severance Plan: | | | • | Mr. Lowe’s willful and continued failure to substantially perform the reasonable and lawful duties and responsibilities of his position that is not corrected after one written warning detailing the concerns and offering Mr. Lowe a reasonable period of time to cure; | • | an executive’s willful and continued failure to substantially perform the reasonable and lawful duties and responsibilities of the executive’s position that is not corrected after one written warning detailing the concerns and offering him a reasonable period of time to cure; | | • | any material and willful violation of any federal or state law by Mr. Lowe in connection with his responsibilities as an employee of the Company; | • | any material and willful failure of an executive to comply with Company policies (including but not limited to the Company’s Code of Conduct), applicable government laws, rules and regulations and/or reasonable directives of the CEO or Board of Directors; | | • | any act of personal dishonesty taken by Mr. Lowe in connection with his responsibilities as an employee of the Company with the intention or reasonable expectation that such may result in his personal enrichment; | • | any dishonest or illegal action (including, without limitation, embezzlement) or any other action whether or not dishonest or illegal by an executive which is materially detrimental to the interest and well-being of the Company, including, without limitation, harm to its reputation; | | • | Mr. Lowe’s conviction of, or plea of nolo contendere to, or grant of prayer of judgment continued with respect to, a felony that the Board of Directors reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business; or | • | an executive’s conviction of, or plea of nolo contendere to, or grant of prayer of judgment continued with respect to, a felony that the Board of Directors reasonably believes has had or will have a material detrimental effect on the Company’s reputation or business; | | • | Mr. Lowe materially breaching his Confidential Information Agreement, which breach is not cured. | • | an executive’s material breach of his Confidential Information Agreement. | | | | • | an executive’s failure to fully disclose any material conflict of interest that he may have with the Company in a transaction between the Company and any third party which is materially detrimental to the interest and well-being of the Company; or | | | | • | an executive’s commission of any act or omission that has caused or could cause material reputational damage to the Company. |
Potential Payments upon Termination or Change in Control
“Good reason” generally means the occurrence of any of the following without the executive’s consent, and not due to cause, within the timeframes specified in the definition of “in connection with a change in control” below, if applicable, subject to certain notice and cure provisions:
Potential Payments upon Termination or Change in Control
| Change in Control Agreement (Mr. Lowe): | | SLT Severance Plan: | | | • | a material reduction in Mr. Lowe’s authority, duties or responsibilities, including removal from, or a failure to elect Mr. Lowe to, the Board of Directors; | • | a material reduction in the executive’s authority, duties or responsibilities, provided however, that this will not apply to the sale, transfer or other disposition of all or substantially all of the stock or assets of a business unit for which the applicable executive was not the primary executive responsible; | | • | a material reduction in Mr. Lowe’s base salary or target annual and long-term incentive compensation, other than a one-time reduction in either case that also is applied to substantially all other executive officers of the Company, provided that Mr. Lowe’s reduction is substantially proportionate to the reduction applied to substantially all other executive officers; | • | a material reduction in the executive’s annual base salary, target annual compensation (bonus), or long-term incentive compensation (including, but not limited to equity compensation); | | • | the Company requiring Mr. Lowe to report to anyone other than the Board of Directors; or | • | the Company requiring the executive to report to anyone other than the CEO of the Company; or | | • | the Company requiring Mr. Lowe to relocate his principal place of business or the Company relocating its headquarters, in either case to a facility or location outside of a 35 mile radius (or such longer distance that is the minimum permissible distance under the circumstances for purposes of the involuntary separation from service standards under the Treasury Regulations or other guidance under Section 409A of the Code) from Mr. Lowe’s current principal place of employment. | • | the Company requiring the executive to relocate his principal place of business or the Company relocating its headquarters, in either case to a facility or location outside of a 35 mile radius from his current principal place of employment. |
Potential Payments upon Termination or Change in Control
“Change in control” generally means any of the following events: •any person or group of persons becomes the beneficial owner of 50% or more of our outstanding common stock or the combined voting power of our securities entitled to vote generally in the election of directors; •a sale or other disposition of all or substantially all of our assets; •shareholder approval of a definitive agreement or plan to liquidate our company; •a merger or consolidation of our company with and into another entity, unless immediately following such transaction (1) more than 50% of the members of the governing body of the surviving entity were incumbent directors at the time of execution of the initial agreement providing for such transaction; (2) no person or group of persons is the beneficial owner, directly or indirectly, of 50% or more of the equity interests of the surviving entity or the combined voting power of the equity interests of the surviving entity entitled to vote generally in the election of members of its governing body; and (3) more than 50% of the equity interests of the surviving entity and the combined voting power of the equity interests of the surviving entity entitled to vote generally in the election of members of its governing body is beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners of the shares of common stock immediately prior to such transaction in substantially the same proportions as their ownership immediately prior to such transaction; •a change in the majority of the incumbent directors of the Board of Directors during a consecutive 24-month period during the executive’s employment term, excluding such changes resulting from directors who are elected by, or on the recommendation of or with the approval of, at least two-thirds of the directors qualifying as incumbent directors; or •in the case of the SLT Severance Plan, the sale, transfer or other disposition of all or substantially all of the stock or assets of a business unit of the Company or a similar transaction as the Board of Directors, in its sole discretion, may determine to be a “change in control”; provided, however, that “change in control” will not include (1) a transaction the sole purpose of which is to change the state of our incorporation; or (2) the initial public offering of the stock of a business unit of our company, and any subsequent sell down of the stock of the business unit by our company. “In connection with a change in control” means either: •within the period of time between the commencement of a tender offer or our entry into a written agreement with another party that contemplates a transaction, the consummation of either of which would result in a change in control and the occurrence of either the resulting change in control or the termination or expiration of the tender offer or the written agreement without the occurrence of a change in control; or •within 24 months following a change in control. LTIPs The LTIPs provide for potential acceleration of equity awards in the event of a proposed sale of all or substantially all of our assets or stock, the merger of our company with or into another corporation such that our shareholders immediately prior to the merger exchange their shares of stock for cash and/or shares of another entity or any other corporate transaction to which the Compensation Committee deems appropriate. Upon such an event, if the successor corporation does not agree to assume the outstanding equity awards or to substitute equivalent awards, the Compensation Committee has discretion to provide for the participants in the LTIPs to have the right to exercise, for a period of 15 days, their stock options or other awards as to all shares, including shares as to which the options or other awards would not otherwise be exercisable (or with respect to restricted stock or stock units, provide that all restrictions will lapse). The stock options or other awards will terminate upon the expiration of the 15-day period to the extent not exercised. The award agreements under the LTIPs provide for accelerated vesting of RSUs and PSUs in the event of a participant’s death or upon the effective date of the determination of the executive officer’s long-term disability. For PSUs, vesting is accelerated in full on the date of death or on the effective date of the determination of the disability and paid out at the greater of (a) the target level and (b) the actual performance level (with the date of death or on the effective date of the determination of disability being treated as the ending date for the measurement period). However, in the case of Mr. Lowe’s PSU awards for fiscal 2022 and 2023 and Mr. Reynolds’ PSU awards for fiscal 2022, the PSUs will not pay out until the end of the applicable three-year period and the payout at that time will be determined based on actual performance. Amounts of Potential Payments upon Termination or Change in Control The following table provides information concerning the estimated payments and benefits that would be provided to each of the named executive officers in the event of a termination of employment or change in control, or both. Payments and benefits are estimated using the following assumptions: (1) the triggering event took place on June 28, 2024, the last business day of fiscal 2024, or the Trigger Date; (2) the price per share of our common stock on the Trigger Date was $22.76, which represents the closing price of our common stock as reported by the NYSE on the last trading day preceding such date; and (3) all amounts are based on compensation and benefit agreements, plans and arrangements in effect on the Trigger Date notwithstanding subsequent changes in such agreements, plans and arrangements for fiscal 2025. There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or if the actual results differ from the assumptions described herein.
Potential Payments and Benefits to Named Executive Officers upon
Potential Payments and Benefits to Named Executive Officers upon
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure Securities and Exchange Commission rules require the Company to disclose the ratio of the total annual compensation of our CEO to the total annual compensation of our median employee. As of June 30, 2024, we employed approximately 5,136 individuals located primarily in the United States, with less significant representation in China (including Hong Kong), Taiwan, South Korea, Japan, Malaysia, India, and various countries in Europe. We determined our median employee for fiscal 2024 based on the Company’s global employee population as of June 30, 2024. The median employee compensation was identified using a consistently applied compensation measure of target annual compensation for fiscal 2024, consisting of base salary, estimated profit sharing or incentive compensation with a performance period of one year or less, as applicable, and shift differential, calculated using internal human resources records. As allowed under Securities and Exchange Commission rules, base pay was annualized for full-time or part-time permanent employees hired during fiscal 2024 to reflect a full year of service. We selected the median employee to determine the required ratio by: •Calculating the compensation based on the consistently applied measure of target annual compensation as described above of all of our employees except the CEO; •Determining the median employee from our employee population based on this consistently applied compensation measure; and •Identifying the ten employees whose target annual compensation was situated above and below this median and calculating total annual compensation for this subset of employees using the same methodology we use for our named executive officers as set forth in the fiscal 2024 Summary Compensation Table in accordance with Item 402 of Regulation S-K (the “Item 402 Rules”), excluding any employee who had anomalous compensation characteristics, to ensure that our selected median employee reflects our population as a whole and supports the reasonableness of our consistently applied compensation measure. We calculated the total annual compensation of our CEO and of the median employee for fiscal 2024 using the Item 402 Rules. The total annual compensation for our CEO for fiscal 2024 was $11,399,724, the total annual compensation for the median employee was $79,085, and the resulting ratio of these amounts is 144 to 1. This pay ratio is a reasonable estimate calculated in a manner consistent with the Securities and Exchange Commission Item 402 Rules based on our payroll and employment records and the methodology described above. Because the Securities and Exchange Commission Item 402 Rules for identifying the median-compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their compensation practices, the amount of compensation of the median-compensated employee and the pay ratio reported by other companies may not be comparable to our estimates reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
Pay Versus Performance Disclosure
Pay Versus Performance Disclosure In accordance with rules adopted by the Securities and Exchange Commission pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEO and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for PEO ($) (1) | Compensation Actually Paid to PEO ($) (1) (2) (3) | Average Summary Compensation Table Total for Non-PEO NEO ($) (1) | Average Compensation Actually Paid to Non-PEO NEO ($) (1) (2) (3) | Value of Initial Fixed $100 Investment based on: (4) | | Net Income ($ Millions) | | Revenue ($ Millions) (5) | | | | | | | TSR ($) | Peer Group TSR ($) | | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | | (i) | | 2024 | $11,399,724 | $(1,116,224) | $4,833,000 | $(288,099) | $39.42 | $299.72 | | (325.9) | $807.2 | | 2023 | $12,477,839 | $7,947,159 | $5,275,059 | $1,625,479 | $85.64 | $190.01 | | (329.9) | $922.0 | | 2022 | $9,282,016 | $(2,027,399) | $2,702,433 | $(818,332) | $123.66 | $145.19 | | (200.9) | $746.2 | | 2021 | $13,287,668 | $19,320,787 | $2,707,751 | $9,822,525 | $170.75 | $170.93 | | (523.9) | $525.6 |
Pay Versus Performance Disclosure
__________________________ (1) Gregg A. Lowe was our PEO for each year presented. Neill P. Reynolds was our Non-PEO NEO for each year presented. (2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEO as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the amounts from the Stock Awards column set forth in the Summary Compensation Table.
Pay Versus Performance Disclosure
| Year | Summary Compensation Table Total for PEO ($) | Exclusion of Stock Awards for PEO ($) | Inclusion of Equity Values for PEO ($) | Compensation Actually Paid to PEO ($) | | 2024 | $11,399,724 | $(10,329,212) | $(2,186,736) | $(1,116,224) |
Pay Versus Performance Disclosure
| Year | Average Summary Compensation Table Total for Non-PEO NEO ($) | Average Exclusion of Stock Awards for Non-PEO NEO ($) | Average Inclusion of Equity Values for Non-PEO NEO ($) | Average Compensation Actually Paid to Non-PEO NEO ($) | | 2024 | $4,833,000 | $(4,131,604) | $(989,495) | $(288,099) |
Pay Versus Performance Disclosure
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Pay Versus Performance Disclosure
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO ($) | Vesting Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for PEO ($) | Total - Inclusion of Equity Values for PEO ($) | | 2024 | $2,720,808 | $(5,879,712) | — | $972,168 | — | — | $(2,186,736) |
Pay Versus Performance Disclosure
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEO ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEO ($) | Average Vesting Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEO ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEO ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year forNon-PEO NEO ($) | Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Non-PEO NEO ($) | Total - Average Inclusion of Equity Values for Non-PEO NEO ($) | | 2024 | $1,088,300 | $(1,990,233) | — | $(87,562) | — | — | $(989,495) |
Pay Versus Performance Disclosure
(4) The Peer Group TSR set forth in this table utilizes the Philadelphia Semiconductor Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the fiscal year ended June 30, 2024. The comparison assumes $100 was invested for the period starting June 28, 2020, through the end of the listed year in the Company and in the Philadelphia Semiconductor Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. (5) We determined Revenue to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEO in fiscal 2024. This performance measure may not have been the most important financial performance measure for prior years and we may determine a different financial performance measure to be the most important financial performance measure in future years. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Total Shareholder Return (“TSR”) The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEO, the cumulative TSR over the four most recently completed fiscal years for the Company, and the Philadelphia Semiconductor Index TSR over the same period. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEO, and our Net Income during the four most recently completed fiscal years. Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Revenue The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEO, and our Revenue during the four most recently completed fiscal years. Tabular List of Most Important Financial Performance Measures The following table presents the financial performance measures that the Company considers to have been the most important in linking Compensation Actually Paid to our PEO and non-PEO NEO for fiscal 2024 to Company performance. The measures in this table are not ranked.
Pay Versus Performance Disclosure
| Revenue | | Non-GAAP Gross Margin | | Adjusted EBITDA | | Relative TSR |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
Director Compensation for Fiscal 2024
Director Compensation for Fiscal 2024
Director Compensation for Fiscal 2024
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Total ($) | | Glenda M. Dorchak (2) | $95,000 | $167,896 | $262,896 | | John C. Hodge (3) | $87,500 | $167,896 | $255,396 | | Clyde R. Hosein (4) | $102,500 | $167,896 | $270,396 | | Darren R. Jackson (5) | $117,500 | $167,896 | $285,396 | | Duy-Loan T. Le (6) | $85,000 | $167,896 | $252,896 | | John B. Replogle (7) | $92,500 | $167,896 | $260,396 | | Marvin A. Riley (8) | $82,500 | $167,896 | $250,396 | | Stacy J. Smith (9) | $85,000 | $167,896 | $252,896 | | Thomas H. Werner (10) | $122,500 | $167,896 | $290,396 |
Director Compensation for Fiscal 2024
__________________________ (1) Amounts listed in the Stock Awards column represent the aggregate grant date fair value of awards granted during fiscal 2024 calculated in accordance with ASC Topic 718. These amounts relate to the annual grant of 5,383 RSUs on October 23, 2023. All awards were made under the Prior LTIP. For a discussion of the assumptions used to value these awards, see Note 13 to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024. (2) As of June 30, 2024, Ms. Dorchak held 5,383 RSUs which will vest on October 23, 2024. (3) As of June 30, 2024, Mr. Hodge held 5,383 RSUs which will vest on October 23, 2024. Of the fees earned in fiscal 2024, Mr. Hodge elected to receive $43,750 in shares in lieu of cash fees. (4) As of June 30, 2024, Mr. Hosein held 5,383 RSUs which will vest on October 23, 2024. (5) As of June 30, 2024, Mr. Jackson held 5,383 RSUs which will vest on October 23, 2024. (6) As of June 30, 2024, Ms. Le held 5,383 RSUs which will vest on October 23, 2024. (7) As of June 30, 2024, Mr. Replogle held 5,383 RSUs which will vest on October 23, 2024. (8) As of June 30, 2024, Mr. Riley held 5,383 RSUs which will vest on October 23, 2024. (9) As of June 30, 2024, Mr. Smith held 5,383 RSUs which will vest on October 23, 2024. Of the fees earned in fiscal 2024, Mr. Smith elected to receive $40,000 in shares in lieu of cash fees. (10) As of June 30, 2024, Mr. Werner held 5,383 RSUs which will vest on October 23, 2024.
Summary of Director Compensation Program
Summary of Director Compensation Program Non-employee directors are compensated for Board of Directors service through a combination of a cash retainer and grants of RSUs. We also reimburse directors for expenses incurred in serving as a director. Directors who are also employed by us are not separately compensated for their service on the Board of Directors. Each non-employee director then serving on the Board who has been nominated for re-election at the next annual meeting of shareholders is granted RSUs on the date of such re-election at the annual meeting of shareholders, with such RSUs vesting in full on the first anniversary of the date of grant. For fiscal 2024, the number of RSUs granted was determined by dividing $200,000 by the 30 trading-day average closing stock price of the Company’s common stock ending one trading day prior to the date of grant. Non-employee directors appointed to fill a vacancy between annual meetings of shareholders are granted RSUs as provided above. Vesting of all equity awards is subject to continued service; provided, however, that the Compensation Committee may allow RSUs to continue to vest until the next annual meeting of shareholders for a director who steps down from the Board before his or her time expires under certain circumstances. In fiscal 2024, non-employee directors were paid the following quarterly cash retainers: $17,500 for service as a member of the Board; $20,000 for service as Chair of the Board; $7,500 for service as Audit Committee Chair; $5,000 for service as Compensation Committee Chair; $2,500 for service as Governance and Nominations Committee Chair; $3,750 for service as a member of the Audit Committee; $2,500 for service as a member of the Compensation Committee; and $1,250 for service as a member of the Governance and Nominations Committee. Committee chairs receive the retainer for service as chair in addition to the retainer for committee membership. Unless another compensation arrangement is put in place at the time of special committee formation, non-employee directors may also receive meeting fees of $1,000 for service as a committee member or $2,000 for service as committee chair of any additional committee of the Board of Directors that may be formed in the future. For fiscal 2025, upon recommendation of the Compensation Committee, which was approved by the Board in August 2024, the quarterly cash retainer for service as member of the Board was reduced to $16,250, for service as Chair of the Board was reduced to $18,750, and for service as Governance and Nominations Committee Chair was increased to $3,750. Non-employee directors may elect to participate in the Deferral Program. Under this plan, a participant will receive shares of our common stock in lieu of all or a portion of the quarterly retainer and any meeting fees earned. The number of shares will be determined quarterly by dividing the applicable fees by the fair market value of a share, with fair market value for this purpose defined as the closing price on the NYSE on the first business day following announcement of financial results for the previous fiscal quarter. A participant in the plan may also choose to defer receipt of the shares until after his or her separation from service as a director. A participant who elects to defer receipt of shares may choose either a lump sum distribution, to be made in any of the first five years after the year of separation from service as a director, or a series of up to five installment distributions ending not later than the fifth year after separation from service. In the event of the death of a participant, either while serving as a director or after separation of service, any deferred distributions will be made within ninety days after the date of death.