DEF 14A of Formfactor Inc
Filed Apr 2, 2025 · FY20240001140361-25-011850
NOTICE OF 2025 ANNUAL MEETING OF STOCKHOLDERS
| | Page | | Outstanding Equity Awards at Fiscal Year Ended December 28, 2024 | 43 | | Option Exercises and Stock Vested at Fiscal Year Ended December 28, 2024 | 44 | | Change of Control, Severance, Separation and Indemnification Agreements | 44 | | PEO Pay Ratio | 48 | | Pay Versus Performance | 49 | | Proposal No. 3 Approval of an Amendment to the 2012 Equity Incentive Plan to Increase the Number of Shares Reserved for Issuance Under the 2012 Equity Incentive Plan by 2,200,000 Shares | 53 | | Summary of Proposed Changes | 53 | | About Our Request for Additional Shares | 53 | | Plan Description | 55 | | New Plan Benefits | 58 | | Historical Plan Benefits | 59 | | Equity Compensation Plans | 60 | | AUDIT MATTERS | 61 | | Proposal No. 4 Ratification of Selection of Independent Registered Public Accounting Firm for Fiscal Year 2025 | 61 | | Principal Auditor Fees and Services | 61 | | Pre-Approval of Audit and Non-Audit Services of Auditor | 62 | | Report of the Audit Committee | 63 | | ADDITIONAL INFORMATION | 64 | | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 64 | | Beneficial Ownership of Our Securities | 64 | | Certain Relationships and Related Person Transactions | 66 | | Proposals for the 2026 Annual Meeting of Stockholders | 67 | | Delinquent Section 16(a) Reports | 68 | | Other Business | 69 | | ANNEX A | A-1 | | ANNEX B | B-1 |
PROPOSAL NO. 1 — ELECTION OF DIRECTORS
PROPOSAL NO. 1 — ELECTION OF DIRECTORS The first proposal is to elect eight directors to our Board of Directors (the “Board”), including seven independent directors and our Chief Executive Officer (“CEO”). The nominees for this year’s Annual Meeting are Kevin Brewer, Rebeca Obregon Jimenez, Sheri Rhodes, Michael D. Slessor, Thomas St. Dennis, Kelley Steven-Waiss, Jorge Titinger, and Brian White, all of whom are current directors of FormFactor. The nominees have been duly nominated by our Board and have agreed to stand for election. The eight nominees, if elected, will hold office for a one-year term expiring at the 2026 Annual Meeting and until their successor has been duly elected and qualified or until their earlier death, resignation or removal. The proxy holders intend to vote all proxies received for the election of Mr. Brewer, Ms. Obregon Jimenez, Ms. Rhodes, Dr. Slessor, Mr. St. Dennis, Ms. Steven-Waiss, Mr. Titinger, and Mr. White unless otherwise instructed. Proxies may not be voted for more than eight directors. In the event any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies may be voted for a nominee designated by our Board to fill the vacancy. Alternatively, the Board may reduce the size of the Board. As of the date of this Proxy Statement, our Board is not aware that any nominee is unable or will decline to serve as a director of the Company.
Required Vote
Required Vote Each of the nominees will be elected if holders of shares of our common stock entitled to vote who are present online or represented by proxy at the Annual Meeting cast more votes “for” such nominee’s election than the votes “against” such nominee’s election. If you own shares through a bank, broker, or other holder of record you must instruct your bank, broker or other holder of record how to vote in accordance with their specific instructions in order for your vote to be counted on this Proposal.
Required Vote
| Our Board of Directors recommends a vote FOR the election to our Board of Directors of each of the nominees. |
Board of Directors
Board of Directors Our Board currently consists of eight members, and each director stands for election on an annual basis following the expiration of their current term. All returning directors will be up for election at this year’s Annual Meeting. Each director holds office until their successor is duly elected and qualified or until their earlier death, resignation or removal.
Board of Directors
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Board of Directors
Information as of the record date of this Proxy Statement, regarding our director nominees including their names and positions with the Company, is set forth below.
Board of Directors
| Name of Director | Age | Position with FormFactor | Director Since | Governance and Nominating Committee | Compensation Committee | Audit Committee | | Mr. Kevin Brewer | 67 | Director | March 2024 | Member | | Member | | Ms. Rebeca Obregon Jimenez | 56 | Director | September 2019 | | Member | | | Ms. Sheri Rhodes | 56 | Director | December 2019 | | | Member | | Dr. Michael D. Slessor | 55 | Director and Chief Executive Officer | October 2013 | | | | | Ms. Kelley Steven-Waiss | 55 | Director | August 2015 | Member | Chair | | | Mr. Thomas St. Dennis | 71 | Director and Chairperson | September 2010 | | | | | Mr. Jorge Titinger | 64 | Director | June 2021 | Chair | Member | | | Mr. Brian White | 60 | Director | September 2022 | Member | | Chair |
Board of Directors
Based upon the information and discussion of qualifications and experience described in this Proxy Statement, the Board as a whole, and the Governance and Nominating Committee, have determined that each of the nominees are qualified to serve as directors of the Company.
Kevin Brewer
Kevin Brewer Kevin Brewer has served as a director since March 2024. Mr. Brewer served as the Chief Financial Officer and Executive Vice President of Global Operations for Axcelis Technologies, Inc. (“Axcelis”), a world-leading provider of equipment and services to the semiconductor manufacturing industry, from July 2013 until October of 2023, and had previously served in several other senior level positions at Axcelis since 1999, including Executive Vice President, Global Operations and Senior Vice President, Manufacturing Operations. Prior to joining Axcelis, Mr. Brewer held a variety of senior management positions at Raytheon Company. Mr. Brewer holds an M.B.A from Southern New Hampshire University and a B.S. in Mechanical Engineering Technology from the University of Massachusetts, Dartmouth. Mr. Brewer brings to the Board over 40 years of experience in the semiconductor and high-tech industries along with a deep functional expertise in finance. Mr. Brewer is an accomplished executive with broad corporate finance, operations and engineering experience in the design and build of complex products for semiconductor capital equipment, aerospace, and defense industries. The Board has determined that Mr. Brewer meets the financial sophistication requirements of the Nasdaq’s listing standards. Mr. Brewer’s top three skills identified in our Board skills assessment are Financial and Risk Management, Manufacturing Operations and Related Industry.
Rebeca Obregon Jimenez
Rebeca Obregon Jimenez Rebeca Obregon Jimenez has served as a director since September 2019. Ms. Obregon Jimenez currently serves as Senior Vice President, Strategic Business Engagements and Supplier Management at Avnet, a global leader of the design, supply and delivery of electronic components. From January 2020 to December 2022 Ms. Obregon Jimenez served as Corporate Vice President of the Advanced System in Package Business Unit for Amkor Technology, Inc., one of the world’s largest providers of outsourced semiconductor packaging and test services. Prior to that, from August 2014 to January 2020, Ms. Obregon Jimenez served as Corporate Vice President of Sales, and as a Senior Vice President in sales, strategic program management, and in operations finance at Amkor Technology, Inc. From May 1999 to August 2014, Ms. Obregon Jimenez held executive and
Rebeca Obregon Jimenez
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Rebeca Obregon Jimenez
senior management positions at Integrated Device Technology, Inc., and Integrated Circuit Systems, Inc., in test operations, test engineering and product engineering. From June 1990 to May 1999, Ms. Obregon Jimenez served in the Semiconductor Products Sector of Motorola, Inc., where she held roles of increasing responsibility in a variety of engineering positions. Ms. Obregon Jimenez holds an M.S. in electrical engineering from the National Technological University and a B.S. in electrical engineering from Arizona State University. Ms. Obregon Jimenez brings to our Board strong executive and operational experience from within the semiconductor industry, particularly within the semiconductor manufacturing and semiconductor test sectors. Ms. Obregon Jimenez also brings an extensive understanding of our customer base and the drivers of customer demand for our products and the market in which we operate, including deep knowledge of the global supplier base for the semiconductor industry, from her experience as Corporate Vice President of the Advanced System in Package Business Unit for Amkor Technology, Inc., and other positions. Ms. Obregon Jimenez’s top three skills identified in our Board skills assessment are Related Industry, Sales and Marketing, and Engineering and Product Development.
Sheri Rhodes
Sheri Rhodes Sheri Rhodes has served as a director since December 2019. Ms. Rhodes currently serves as Chief Customer Officer at Workday, Inc., a leading provider of enterprise cloud applications for finance, human resources, and planning, a role she has held since February 2022. From April 2019 to February 2022, Ms. Rhodes held the role of Chief Information Officer. Prior to joining Workday, Ms. Rhodes served as Chief Technology Officer at Western Union Company, a worldwide financial services and communications company, from May 2017 to April 2019. Ms. Rhodes served as the Chief Information Officer at Electronics for Imaging, Inc., a digital imaging technology company, from December 2015 to May 2017. Preceding her role at Electronics for Imaging, Inc., Ms. Rhodes held various leadership roles at Symantec, Visa, Washington Mutual, and KPMG. Ms. Rhodes earned an M.B.A. and a B.S. in Business Administration from San Diego State University. Ms. Rhodes brings to our Board extensive executive-level management expertise in technology companies, as well as a deep understanding of complex global organizations and information technology management. Ms. Rhodes also brings to our Board a broad base of financial reporting and corporate governance expertise. The Board has determined that Ms. Rhodes meets the financial sophistication requirements of the Nasdaq’s listing standards. Ms. Rhodes’s top three skills identified in our Board skills assessment are Information Technology and Cybersecurity, Engineering and Product Development, and Mergers and Acquisitions.
Michael D. Slessor
Michael D. Slessor Michael D. Slessor has served as a director since October 2013. Dr. Slessor has served as our President since October 2013 and became our Chief Executive Officer in December 2014. Dr. Slessor served as Senior Vice President and General Manager, MicroProbe Product Group from October 2012 to October 2013. Before joining FormFactor, Dr. Slessor was President and Chief Executive Officer of MicroProbe Incorporated from July 2008 through the October 2012 closing of FormFactor’s acquisition of MicroProbe. Prior to joining MicroProbe, he held various management, product-marketing, and applications-engineering positions in the semiconductor industry, primarily with KLA-Tencor. Dr. Slessor received his Ph.D. in Aeronautics and Physics from the California Institute of Technology and holds a B.A.Sc. in Engineering Physics from the University of British Columbia. Dr. Slessor provides extensive knowledge and experience in the semiconductor equipment industry, particularly within the semiconductor equipment manufacturing and semiconductor test sectors. Dr. Slessor also provides the Board with vision and insight from his years of service as our Chief Executive Officer, and from his service as the former President and Chief Executive Officer of MicroProbe. Dr. Slessor’s top three skills identified in our Board skills assessment are Engineering and Product Development, Sales and Marketing, and Mergers and Acquisitions.
Michael D. Slessor
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Kelley Steven-Waiss
Kelley Steven-Waiss Kelley Steven-Waiss has served as a director since August 2015. Ms. Steven-Waiss currently serves as the Chief Transformation Officer of ServiceNow, a software company that develops a cloud computing platform to help companies manage digital workflows for enterprise operations. From June 2022 to March 2023, Ms. Steven-Waiss served as the Head of Workforce Innovation Products at ServiceNow after Hitch Works, Inc., the company founded and led by Ms. Steven-Waiss, acquired by ServiceNow. Prior to the acquisition, from July 2020 to June 2022, Ms. Steven-Waiss served as the Founder and CEO, as well as Executive Chairman of Hitch Works Inc., a SaaS-based enterprise talent mobility platform. Prior to that, Ms. Steven-Waiss served as the Executive Vice President, Chief Innovation Officer from February 2020 to July 2020, and EVP, Chief Human Resources Officer from April 2016 to February 2020, at HERE Technologies Global B.V., a software location intelligence company. She previously served as the Executive Vice President and Chief Human Resources Officer of Extreme Networks, Inc., a software and services-led networking solutions company, from March 2014 to March 2016. Ms. Steven-Waiss also served as the Vice President of Worldwide Human Resources for Integrated Device Technology, Inc., a provider of semiconductor products, from 2009 through 2012, and, prior to that, as the Vice President of Worldwide Human Resources for PMC-Sierra, Inc., a fabless semiconductor company. Ms. Steven-Waiss also serves as the Chair of the Advisory Board for the Silicon Valley Education Foundation. Ms. Steven-Waiss earned her MSOD in human resources and organization development from the University of San Francisco and a B.A. in journalism from the University of Arizona. Ms. Steven-Waiss brings to the Board years of executive-level management expertise in technology companies, as well as a deep understanding of complex global organizations and human capital management. Ms. Steven-Waiss has substantial leadership experience from her roles as the Chief Transformation Officer of ServiceNow, Founder and Chief Executive Officer, and Executive Chairman, of Hitch Works, Inc., Chief Human Resources Officer of HERE Technologies Global B.V., and her previous executive roles, including as a chief human resources officer and other executive human resources positions at public technology companies. Ms. Steven-Waiss’s top three skills identified in our Board skills assessment are Human Capital Management, Sales and Marketing, and Mergers and Acquisitions.
Thomas St. Dennis
Thomas St. Dennis Thomas St. Dennis has served as a director since September 2010 and has served as the Chairperson of the Board since February 2016, prior to which he served as our Executive Chairperson of the Board from October 2013 to February 2016. Mr. St. Dennis served as our Chief Executive Officer from September 2010 through December 2014. Mr. St. Dennis has served as a director of Axcelis Technologies, Inc., a semiconductor company, since May 2015. Mr. St. Dennis has served as a director of Veeco Instruments Inc., since May 2016, including as a member of its Compensation Committee since May 2016 and its Audit Committee since May 2023. Mr. St. Dennis also served on the Board of Directors of Mattson Technology, Inc., a semiconductor manufacturing company, from September 2013 to May 2016. Mr. St. Dennis previously held various positions at Applied Materials, Inc., from 1992 to 1999 and again from 2005 to 2009, most recently as its Senior Vice President and General Manager of the Silicon Systems Group. He also served at Novellus Systems, Inc. as Executive Vice President of Sales and Marketing from 2003 to 2005. From 1999 to 2003, Mr. St. Dennis was President and Chief Executive Officer of Wind River Systems, Inc. Mr. St. Dennis holds an M.S. in Physics and a B.S. in Physics from the University of California, Los Angeles. Mr. St. Dennis provides extensive semiconductor industry and leadership experience as the past Chief Executive Officer of the Company, as well as from having served as Senior Vice President and General Manager of the Silicon Systems Group at Applied Materials, and as the President and Chief Executive Officer of Wind River Systems, Inc. He maintains a valuable network of customer and industry relationships, and vital perspectives on corporate governance from his service on several public company boards. Mr. St. Dennis’s top three skills identified in our Board skills assessment are Sales and Marketing, Board Practices of Public Companies, and Engineering and Product Development.
Thomas St. Dennis
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Jorge Titinger
Jorge Titinger Jorge Titinger has served as a director since June 2021. Mr. Titinger is currently the Chief Executive Officer of Titinger Consulting, a firm he founded in November 2016, focused on providing strategy, corporate transformation, and culture advice to its clients. Mr. Titinger has served as a director of Ichor Systems, Inc., since June 2022. He also has served as a director of CalAmp Corp., since June 2015, and as a director of Axcelis Technologies, Inc., since August 2019. Mr. Titinger served as a director of Xcerra Corporation from October 2012 until it was acquired by Cohu in 2018, where he served as a director until May 2021. He also served as a director of Hercules Capital, Inc., from October 2017 to June 2020. Mr. Titinger was President, Chief Executive Officer and director of Silicon Graphics, Inc., from February 2012 to November 2016. Mr. Titinger also served as President, Chief Executive Officer, and director of Verigy Ltd. in 2011 and held other senior executive roles from 2008 to 2011. Prior to Verigy, he held senior executive positions with FormFactor, Inc., KLA-Tencor Corporation and Applied Materials. Mr. Titinger holds an M.S. in Engineering Management and Business, and an M.S. and B.S. in Electrical Engineering from Stanford University. Mr. Titinger brings to the Board over 30 years of experience in the high-tech industry and has held various executive positions in the semiconductor equipment and computer industries. Mr. Titinger is also a published author of the book, “Differences That Make A Difference,” which focuses on the impact of inclusion and diversity on the success of companies. Mr. Titinger brings an innovative perspective to FormFactor with his extensive board level experience in public companies, significant industry knowledge, and ability to develop strategic initiatives. Mr. Titinger’s top three skills identified in our Board skills assessment are Manufacturing Operations, Sales and Marketing, and Related Industry.
Brian White
Brian White Brian White has served as a director since September 2022. Mr. White served as the Chief Financial Officer for Ambarella, Inc., a system-on-chip (SoC) provider of low-power AI vision processors, from March 2022 to February 2024. Mr. White served as the Chief Financial Officer for Maxim Integrated, a supplier of high-performance analog/mixed signal semiconductor solutions, from August 2019 to August 2021. From September 2013 to March 2019, Mr. White served as the Chief Financial Officer for Integrated Device Technology, Inc. Mr. White also served as the Vice President of Finance & Treasurer at Integrated Device Technology, from 2007 to 2013. Prior to that, Mr. White held a variety of financial and operational management positions at companies such as Nvidia, Hitachi GST, IBM, and Deloitte. Mr. White holds an M.B.A. from the University of Notre Dame and a B.A. in Business Administration from Seattle University. Mr. White is also a licensed Certified Public Accountant and a Certified Financial Planner. Mr. White brings deep functional expertise in finance to the Board, along with over 30 years of experience in the semiconductor and high-tech industries. Mr. White is a licensed Certified Public Accountant and has an extensive background in our industry and a broad base of financial reporting expertise from his experiences at Ambarella, Maxim Integrated, and Integrated Device Technology. The Board has determined that Mr. White is an audit committee financial expert as defined under the regulations of the SEC and meets the financial sophistication requirements of the Nasdaq’s listing standards. Mr. White’s top three skills identified in our Board skills assessment are Financial and Risk Management, Human Capital Management, and Mergers and Acquisitions. All Board members and nominees are expected to fully participate in Board activities, including preparation for, attendance at and active participation in meetings of our Board, and to have a high degree of personal integrity and interpersonal skills. Each is also expected to represent the best interests of all of our stockholders. We have determined that Messrs. Brewer, St. Dennis, Titinger, and White, and Mses. Steven-Waiss, Obregon Jimenez and Rhodes are currently independent directors under applicable Nasdaq Stock Market and SEC rules. Our CEO, Dr. Slessor, is a member of our Board and is not independent. There are no family relationships among any of the director nominees, directors or any of our executive officers. In addition, no nominee has an arrangement or understanding with another person under which he or she was or is to be selected as a director or nominee.
Brian White
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Director Compensation
Director Compensation The form and amount of compensation paid to our non-executive directors for serving on our Board and its committees is designed to be competitive with industry practices and the obligations imposed by such service. To align the long-term interests of our directors with those of our stockholders, a substantial portion of director compensation is provided in equity-based compensation. The value of total annualized compensation of our non-executive directors is targeted to be at approximately the median of our peer group of companies, which is described below under the “Compensation Discussion and Analysis” section in this Proxy Statement. Other than the compensation disclosed below, no director received compensation or other payment for their candidacy or service on our Board.
Director Compensation
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Director Compensation
Cash Compensation. Our cash compensation policy for our non-executive directors during fiscal year 2024 is set forth in the following table.
Director Compensation
| Compensation Element | Fiscal Year 2024 Cash Compensation | | Director Annual Retainer | $52,500 | | Chairperson Annual Retainer | $50,000 for Board Chairperson | | | $22,000 for Audit Committee Chairperson | | | $15,000 for Compensation Committee Chairperson | | | $10,000 for all other committee chairpersons | | Committee Member Annual Retainer | $11,000 for Audit Committee member | | | $7,500 for Compensation Committee member | | | $5,000 for all other committee members |
Director Compensation
Equity Compensation. For fiscal year 2024, following the 2024 annual stockholders meeting, continuing directors received a RSU award of approximately $190,000 worth of shares of common stock (based on our average closing stock price for the 20 trading days preceding the date of the award) that vests monthly over a one-year period, the vested portion of which will settle in shares only at the earlier of the one-year anniversary of the grant or upon the departure of the director from the Board. The policy regarding initial equity grants to non-employee directors provides that such grants are to be calculated on a pro-rated basis relative to the anniversary of the most recent annual RSU grant made to continuing directors (the “Anniversary Date”). Accordingly, any newly appointed director will receive a pro-rated RSU award based on $190,000 (calculated in the same manner as the continuing directors’ awards) worth of shares of common stock that vests monthly from the date of grant until the date that is the Anniversary Date, the vested portion of which will settle in shares only at the earlier of the Anniversary Date or upon the departure of the director from the Board. 2024 Director Compensation. The following table presents the compensation earned or paid to our non-executive directors for fiscal year 2024. Compensation paid to Dr. Slessor, our CEO, for fiscal year 2024 is described under the “Compensation Discussion and Analysis” and “Executive Compensation and Related Information” sections below in this Proxy Statement.
Director Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3)(4) | All Other Compensation | Total ($) | | Kevin Brewer | 36,508 | 244,117(5) | — | 280,625 | | Lothar Maier(6) | 46,442 | — | — | 46,442 | | Rebeca Obregon Jimenez | 60,000 | 213,258 | — | 273,258 | | Sheri Rhodes | 63,500 | 213,258 | — | 276,758 | | Thomas St. Dennis | 100,625 | 213,258 | — | 313,883 | | Kelley Steven-Waiss | 72,500 | 213,258 | — | 285,758 | | Jorge Titinger | 63,599 | 213,258 | — | 276,857 | | Brian White | 79,500 | 213,258 | — | 292,758 |
Director Compensation
| (1) The stock awards are RSUs that we awarded to our non-executive directors under our 2012 Equity Incentive Plan. The RSUs vest monthly over a one-year period and the vested portion settles in shares only at the earlier of the one-year anniversary of the date of grant or upon the departure of the director from the Board. |
Director Compensation
| (2) The amounts shown reflect the aggregate grant date fair value of all awards granted in fiscal year 2024 for financial statement reporting purposes in accordance with Financial Accounting Standards Board Topic No. ASC 718, Compensation - Stock Compensation. Assumptions used in the calculation of these amounts are described in Note 13, Stock-Based Compensation, to our Company’s consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024. |
Director Compensation
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Director Compensation
| (3) The Company calculates the number of RSUs subject to an award by dividing the targeted award value by the average closing price of a share of Company common stock on the Nasdaq Stock Market during the 20 trading days preceding the date of such award (the “20-day Average Price”). For the awards of 3,828 RSUs to non-executive directors on May 17, 2024, the 20-day Average Price was $49.63 and the stock price on the date of grant was $55.71. |
Director Compensation
| (4) A summary of options and RSUs outstanding as of December 28, 2024 for each of our non-employee directors is as follows: |
Director Compensation
| Name | Stock Options Outstanding (#) | Restricted Stock Units Outstanding (#) | | Kevin Brewer | — | 3,828 | | Rebeca Obregon Jimenez | — | 3,828 | | Sheri Rhodes | — | 3,828 | | Thomas St. Dennis | — | 3,828 | | Kelley Steven-Waiss | — | 3,828 | | Jorge Titinger | — | 3,828 | | Brian White | — | 3,828 |
Director Compensation
| (5) Includes the grant date fair value for a pro-rated award of 749 RSUs granted on March 19, 2024 in connection with Mr. Brewer’s appointment as a director. For this award, the 20-day Average Price was $42.99 and the stock price on the date of the grant was $41.20. |
Director Compensation
| (6) Mr. Maier served on the Board through May 17, 2024. |
Director Compensation
Other. We reimburse our directors for travel, director continuing education programs and other business expenses incurred in connection with their services as a member of our Board and its committees and extend coverage to them under the Company’s travel accident and directors’ and officers’ indemnity insurance policies. Non-executive directors may elect to receive a restricted stock award or RSU award under our 2012 Equity Incentive Plan in lieu of payment of a portion or all of the non-executive director’s annual retainer based on the fair market value of our common stock on the date the annual retainer would otherwise be paid. None of our directors have made such an election in relation to their annual retainer for 2024.
Consideration of Director Nominees
Consideration of Director Nominees Nominations to our Board are determined by our Board on the recommendation of the Governance and Nominating Committee. The Governance and Nominating Committee generally identifies nominees based upon its own search, as well as recommendations by our directors and members of management. In addition, the Governance and Nominating Committee also considers recommendations properly submitted by our stockholders. The Governance and Nominating Committee may retain recruiting professionals to assist in the identification and evaluation of candidates for director nominees, and the Company has, in the past, paid a third party to assist us in a director search process. In selecting director nominees, our Governance and Nominating Committee considers many factors, including an understanding of the semiconductor, electronics or other technology industries and experience in business operations, finance, marketing, strategic planning, and other relevant disciplines. Other important factors in the evaluation of candidates include outstanding career achievements, essential and complementary skills, soundness of judgment, independent thinking, and diversity of viewpoints and experience. Recognizing that
Consideration of Director Nominees
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Consideration of Director Nominees
diversity has multiple dimensions, our Governance and Nominating Committee takes into consideration all aspects of diversity, such as gender, ethnicity, and experiences, and assesses its effectiveness in this regard as part of its annual Board evaluation process. In selecting director nominees, our Governance and Nominating Committee also considers candidates based on the need to satisfy the applicable SEC regulations and the Nasdaq Stock Market rules. Board members are encouraged to cultivate and utilize a broad professional network to aid in this process. Stockholders can recommend qualified candidates for our Board by writing to the Corporate Secretary at FormFactor, Inc., 7005 Southfront Road, Livermore, California 94551. Such candidates will be considered in accordance with our bylaws and are evaluated in the same manner as any other candidates. After evaluating Kevin Brewer, Rebeca Obregon Jimenez, Sheri Rhodes, Kelley Steven-Waiss, Michael D. Slessor, Thomas St. Dennis, Jorge Titinger, and Brian White pursuant to the above criteria, our Board approved the nomination of these eight current directors for election to our Board.
Compensation Governance Practices
| What We Do | | | Independence. The Compensation Committee is comprised solely of independent directors. Additionally, the Compensation Committee’s independent compensation consultant is retained directly by the Compensation Committee. Incentive Award Opportunities Capped. We limit our non-equity incentive plan awards to 200% of the target, and we limit our performance-based equity incentive awards to 200% of the target. Performance-Based Compensation. The majority of executive officer compensation is aligned with pre-determined, objective measures of Company performance with both cash incentives and performance-based equity being earned based upon levels of achievement of goals. | Double-Trigger Change in Control Provisions. The change in control severance agreements provided to senior executives have “double-trigger” provisions and the amount of severance provided is conservatively set compared to companies of a similar size and sector. Annual Executive Compensation Strategy Review. The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes and other factors. Annual Stockholder Advisory Vote on Named Executive Officer Compensation. We conduct the stockholder advisory vote on the compensation of our named executive officers every year. |
Compensation Governance Practices
| Mix of Metrics. We rely on different metrics between our cash incentive plan and our long-term incentive plan to create focus and line of sight on near term operating decisions to support long-term growth for the Company. We may change the mix from time to time to support continued alignment between our executive officers and stockholder interests Dilution Management. We continue to closely manage our equity budget, expense and burn rate limiting our gross share usage to under 2% in fiscal 2024. | Stock Ownership Guidelines. We have adopted stock ownership guidelines for our executive officers. Clawback Policy. The Board has adopted a clawback policy applicable to incentive compensation. |
Compensation Governance Practices
| What We Don’t Do | | | No Special Perquisites. We did not provide any special benefits or perquisites to our named executive officers in fiscal year 2024. No Hedging or Pledging. Our insider trading policy, available on our website, strictly prohibits our directors and officers from purchasing options on our securities, pledging our stock in a margin account or otherwise entering into transactions designed to hedge or offset any decrease in the market value of our stock (such as exchange funds, equity swaps, zero-cost collars and forward sale contracts). No Guarantees of Employment. We have no employment contracts with any executives that guarantee a term of employment, contain extraordinary severance provisions or guarantee salary increases or bonus amounts. No Excessive Risks. Compensation programs are reviewed and structured to avoid inappropriate risk taking by our executives and all employees by having the appropriate pay philosophy, peer group and market positioning to support reasonable business objectives. Our risk analysis concluded that our executive compensation program has no elements that are likely to cause a material adverse outcome for the Company. | No Executive Defined Benefit or Retirement Plans. We do not offer supplemental pension arrangements or defined benefit retirement plans or arrangements to our executive officers that are different from or in addition to what is offered to our other employees. No Dividends or Dividend Equivalents Payable on Unvested Equity Awards. We do not pay dividends or dividend equivalents on unvested or unearned equity compensation awards. Prohibition of Repricings. Our 2012 Equity Incentive Plan prohibits repricings of any grants under the plan without the approval of stockholders. No Golden Parachute. We do not provide for “golden parachute” excise tax gross ups and our change in control policies are aligned with industry trends and do not exceed two times target total compensation. |
Compensation Governance Practices
Elements of Executive Compensation. Our executive compensation program focuses on total direct compensation, which consists of three components: base salary, short-term cash incentives and long-term equity incentives. We provide base salaries that are generally at market-competitive levels, taking into consideration the specific responsibilities of the role, the named executive officer’s experience and performance, and the Company’s overall cost structures. We also offer competitive annual cash incentives and longer-term equity compensation opportunities to attract and retain superior executives and managers in an extremely competitive environment for qualified talent. When designing our compensation plans, we generally try to align target total compensation with the 50th percentile or median of our peer group and we formulate policies to ensure our cost structures are aligned with other similar businesses. This ensures our compensation program is competitive but also that we are mindful of the overall cost of our compensation packages to our stockholders. Although we take into account peer benchmarks, we also consider a number of factors such as performance, criticality of the role, retention and internal pay comparisons when determining the level and form of pay. The Compensation Committee takes a holistic view on setting pay to ensure that the overall compensation program is meeting the Company’s objectives and the Compensation Committee and our CEO have the necessary flexibility to structure individual compensation packages that are within market standards. The following table summarizes the major elements of our executive compensation program for our executive officers. We also provide our executive officers with a variety of benefits that are generally available to all employees.
Compensation Framework
| • | Align our named executive officers’ interests with the long-term interests of our stockholders with a focus on Company performance that drives value creation for our stockholders. |
Compensation Framework
Target Pay Position/Mix of Pay. Our executive compensation program is comprised of a combination of base salary, variable pay-for-performance cash incentive payments, and long-term equity grants. Each of these components is discussed in greater detail below under “Compensation Components”. Our emphasis on variable, or at-risk, compensation provides that our named executive officers, subject to retention needs, will generally only receive target or above-target compensation to the extent that our performance goals have been achieved or exceeded, respectively. As in prior years, our compensation philosophy in 2024 was focused on pay-for-performance. We aimed to closely align the compensation paid to our named executive officers with the achievement of both near-term and long-term financial goals. To accomplish this objective, we structured our compensation mix such that 90% and 80% of the total target direct compensation awarded to our CEO and our CFO, respectively, was in the form of variable cash incentives and equity awards. This structure supports our pay for performance culture and places the emphasis on long-term performance and retention incentives for alignment with investors. The graphic below shows the allocation of the core elements of target compensation for fiscal year 2024. At-Risk Pay in the graphic below includes awards granted to our CEO and CFO pursuant to our short-term incentive plan, assuming such awards were earned at target, and our long-term equity incentive awards (time-based RSUs and performance-based RSUs) utilizing the targeted economic value for executives as approved by the Compensation Committee.
Compensation Framework
Compensation Benchmarking. The Compensation Committee, assisted by its independent compensation consultant, Aon’s Human Capital Solutions practice, a division of Aon plc (Aon), conducts an annual review of the compensation practices of a defined peer group that forms the basis for this research. Additionally, Aon provides data reflecting the compensation practices of companies outside of FormFactor’s peer group for consideration. This information is reviewed by the Compensation Committee in connection with its evaluation of the level of pay, mix of pay, and competitiveness of the Company’s executive compensation. The Compensation Committee completed its annual review of our peer group for 2024 and made minimal changes to executive compensation, which were deemed to be closely aligned with peers and best practices recommended by Institutional Shareholder Services (ISS) and Glass Lewis. The Compensation Committee considers the policies of outside investors and several governance advisory groups as well as comparability to FormFactor when establishing the compensation peer group. As a result of this review in 2024, Entegris was removed as a peer due to it exceeding both the revenue and market cap ranges described in the table below, and was replaced with Alpha and Omega Semiconductor. For fiscal year 2024, our peer group for compensation practices consisted of 19 companies for the purpose of evaluating the competitiveness of our named executive officer compensation.
2024 Peer Group
2024 Peer Group
2024 Peer Group
| Peer Group Selection Criteria | | | | Global Industry Classification Standard Code | Trailing 12-Months Revenue Range | Market Capitalization Range | | Semiconductor — 45301020 and Semiconductor equipment — 45301010 | $200 million - $2 billion (0.25x to 2.5x) | $750 million - $7.5 billion (0.3x to 3x) |
2024 Peer Group
| Selected Peer Group | | | | Advanced Energy Industries | MACOM Technology Solutions | Silicon Laboratories | | Alpha and Omega Semiconductor | MKS Instruments | Ultra Clean Holdings | | Axcelis Technologies | National Instruments | Veeco Instruments | | Cohu | Onto Innovation | Viavi Solutions | | Ichor | Photronics | XPeri | | Lattice Semiconductor | Power Integrations | | | MaxLinear | Semtech | |
2024 Peer Group
For the 2024 peer group, revenue was at the 16th percentile against the peer group with a market capitalization at the 51st percentile at the time that the group was approved. The Compensation Committee viewed this group as a balanced group reflective of the compensation policies for companies at a similar business stage that are also competing for executive talent in a similar labor market.
Compensation Components
| | 2023 | | | 2024 | | | | | | Named Executive Officers | Base Pay | Target Bonus Amount | Total Target Cash | Base Pay | Total Target Bonus Amount | Total Target Cash | Total Target Cash % Change 2024 vs 2023 | Percentile of Market | | Michael D. Slessor | $550,000 | 120% | $1,210,000 | $650,000 | 100% | $1,300,000 | 7.4% | 50th% | | Shai Shahar | $350,000 | 85% | $647,500 | $460,000 | 75% | $805,000 | 24.0% | 50th% |
Compensation Components
| Named Executive Officers | 2023 Target Bonus as a % of Base-Salary | 2024 Target Bonus as a % of Base-Salary | | Michael D. Slessor | 120% | 100% | | Shai Shahar | 85% | 75% |
Compensation Components
| Period | Adjusted Operating Income Result (in thousands)(1) | Adjusted Operating Income Target (in thousands)(1) | % Payout Achieved(2) | | Q1 | 15,001 | 26,941 | 26.1% | | Q2 | 42,802 | 26,941 | 198.1% | | Q3 | 38,826 | 26,941 | 173.5% | | Q4 | 29,381 | 26,941 | 115.1% |
Compensation Components
| (1) Consistent with prior years, adjusted operating income results and target amounts exclude bonus expense, amortization of intangibles, inventory and fixed asset fair value adjustments due to acquisitions, stock-based compensation, restructuring charges, gain on sale of business net of related costs, acquisition related expenses, and the effect of certain events that are not intended to impact the Employee Incentive Plan performance measure. A reconciliation of adjusted operating income results to GAAP financial measures is set forth in Annex A. |
Compensation Components
| (2) As a result of these quarterly achievement levels, each named executive officer earned 128.2% of his annual target cash incentive award for fiscal year 2024. Achievement is calculated on a constant slope, where there is 0% achievement at $10.8 million or below and 100% achievement at $26.9 million in quarterly adjusted operating income before bonus expense. The maximum achievement under the plan is 200% of target adjusted operating income. |
Compensation Components
| Named Executive Officers | 2024 Annual Total Target Bonus* | 2024 Annual Total Payout % Achieved | 2024 Annual Total Actual Bonus | | Michael D. Slessor | $655,769 | 128.2% | $840,239 | | Shai Shahar | $317,596 | 128.2% | $410,691 |
Compensation Components
| * The target bonus amount is based on annual base pay. Actual bonus payout calculates the bonus amount using actual earnings for the year, creating a slight discrepancy between target and actual earnings. |
Compensation Components
Equity Compensation. Our 2012 Equity Incentive Plan authorizes the award of different types of equity awards, including stock options, RSUs and performance-based RSUs. Equity awards are granted to our named executive officers under our 2012 Equity Incentive Plan. The Compensation Committee believes that equity compensation is a very important component of our pay-for-performance compensation philosophy and is an effective way to reward performance and contributions to our Company, and align compensation for named executive officers over a multi-year period directly with the interests of the Company’s stockholders by motivating and rewarding creation and preservation of stockholder value. Also, due to its long-term nature, equity compensation is also useful for retention purposes. Fiscal 2024 Equity Awards. In fiscal year 2024, the Compensation Committee chose to continue issuing annual equity awards in the form of a combination of performance-based RSUs, representing 50% of the grant value, and time-vested RSUs, representing 50% of the grant value, to our named executive officers. RSUs were awarded because their value is directly impacted by all stock price changes and therefore tied directly to stockholder value. Awards of performance-based RSUs were given to our named executive officers in fiscal year 2024 and are tied to a multi-year TSR goal. These performance-based RSU awards are based on the Company’s TSR on a relative basis against the S&P Semiconductors Select Industry Index. The time-based RSU awards will vest quarterly in equal installments over a period of three years from the date of grant. The performance-based RSU awards will vest following the end of a three-year performance period, depending on how many of the units are earned (between 0% and 200% of the target amount), as certified by the Compensation Committee, based on the Company’s TSR for the period from July 1, 2024 through June 30, 2027 relative to the TSR of the companies identified as being part of the S&P Semiconductors Select Industry Index as of July 1, 2024. The table below reflects selected details relating to the TSR awards granted to Dr. Slessor and Mr. Shahar in fiscal year 2024(1).
Compensation Components
| Objective | Below Threshold | Threshold | Target | Maximum | | Percentile Rank | Below the 25th percentile | 25th percentile | 50th percentile | 75th percentile or higher | | Payout Percentage | 0% - No payout | 50% | 100% | 200% |
Compensation Components
| (1) Award payouts are calculated using linear interpolation between performance levels. |
Compensation Components
The individual award amounts for the fiscal year 2024 annual equity awards to our named executive officers are set forth in the table below. No special or one-time equity awards were granted in 2024.
Compensation Components
| Named Executive Officer | 2024 Time-Based Restricted Stock Unit Awards (#) | 2024 Performance-Based Restricted Stock Unit Awards (#)(1) | | Michael D. Slessor | 43,728 | 43,728 | | Shai Shahar | 13,392 | 13,392 |
Compensation Components
| (1) Performance-based RSU awards reflect the “target” number of units that can be earned based on relative TSR performance. Actual units earned may vary from 0% to 200% of the “target” number based upon relative TSR as described above. |
Compensation Components
As discussed above, during 2024, the Compensation Committee rebalanced pay mix across base salaries, target cash incentives and target value of long-term equity incentives to align total direct compensation levels to market benchmarks for both cash and equity. As a result, the Compensation Committee granted Dr. Slessor long-term equity awards with a target grant value of $4.9 million (compared to $5 million in 2023), a reduction of $100,000. The Compensation Committee granted Mr. Shahar long-term equity awards with a total target grant value of $1.5 million, slightly higher than his total target 2023 grant value. See the table entitled “Grants of Plan-Based Awards in Fiscal Year 2024” under “Executive Compensation and Related Information” in this Proxy Statement for additional information regarding these equity awards to our named executive officers in fiscal year 2024. Note the actual number of shares granted is determined by dividing the target grant value by the 20-day average stock price prior to the grant date. The 20-day average price used to determine the number of shares granted was $56.04 and the actual price at grant was $41.25, resulting in a 26% reduction in value between the target grant value and the fair market value at the time of grant. Achievement of TSR Awards for Performance Periods Ending in 2024. Our performance-based RSUs granted in fiscal year 2021 had a three-year performance period that ended June 30, 2024. The grant performance was determined based on the TSR percentile rank among the S&P Semiconductor Index of Total Shareholder Return (TSR) at the end of the performance period. Performance is determined on a straight line ratio along the following points: 200% of target (maximum) at 75% or greater percentile rank, 100% of target at 50% TSR percentile rank, 50% of target at 25% TSR percentile rank, and 0% payout below 25% TSR percentile rank. Our TSR for the three-year measurement period was 65% and ranked 11th out of 38, or in the 73rd percentile of the S&P Semiconductors Select Industry Index, resulting in a payout at 146%. During this 3-year performance period, our stock price increased 65% from $34.54 to $56.92 per share.
Compensation Components
| Named Executive Officer/Grant Year | Target Performance-Based Restricted Stock Unit Awards Scheduled to Vest in 2024 (#) | Number of Performance-Based Restricted Stock Units Achieved (#) | % of Target Achievement | | Michael D. Slessor | 60,915 | 88,902 | 146% | | Shai Shahar | 21,997 | 32,103 | 146% |
Equity Award Timing Policies and Practices
Equity Award Timing Policies and Practices We do not grant equity awards in anticipation of the release of material nonpublic information, and we do not time the release of material nonpublic information based on equity award grant dates or for the purpose of affecting the value of executive compensation. In addition, we do not take material nonpublic information into account when determining the timing and terms of such awards. Although we do not have a formal policy with respect to the timing of our equity award grants, the Compensation Committee has historically granted such awards on a predetermined annual schedule for our named executive officers and other employees. All annual grants are historically approved at a regularly scheduled meeting of the Compensation Committee pursuant to our guidelines for equity awards and issued
Equity Award Timing Policies and Practices
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Equity Award Timing Policies and Practices
during an open trading window pursuant to our insider trading policy. The Compensation Committee also considers and grants equity awards for special situations from time to time, such as promotions. In fiscal year 2024, we did not grant new awards of stock options, stock appreciation rights, or similar option-like instruments to our named executive officers.
Change of Control and Severance Benefits
Change of Control and Severance Benefits Our severance obligations with our named executive officers and certain of our other officers are described in this Proxy Statement under “Executive Compensation and Related Information - Change of Control, Severance, Separation and Indemnification Agreements.” The Compensation Committee believes that these benefits protect the interests of our stockholders by attracting and retaining key executives and provide a framework for avoiding the distraction and loss of key management personnel that may occur in connection with rumored or actual fundamental corporate changes. The uncertainty about the future status of employment among management that can arise in the face of a potential change of control could result in the untimely departure or distraction of key officers. Change of control severance benefits provide support to officers to remain with our Company despite uncertainties while a change of control is under consideration or pending, and the Compensation Committee believes that the potential benefits under these agreements are reasonable and generally comparable to competitive terms offered by our peer companies to their senior executives. Change of control benefits are “double-trigger,” which means that they are provided to the executive only in the event that the executive is terminated, or the executive involuntarily experiences material changes in terms of employment, following a change of control. We do not provide for gross ups for excise taxes under Internal Revenue Code section 280G. Current performance-based equity awards will be deemed earned at the greater of target or actual results immediately prior to a change of control if the awards will be otherwise forfeited as determined by the Compensation Committee prior to the change of control.
Summary Compensation
| Named Executive Officer and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(4)(5) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Michael D. Slessor, President and CEO | 2024 | 592,308 | — | 3,960,445 | 739,118 | 11,734 | 5,303,605 | | | 2023 | 550,000 | — | 5,980,078 | 187,872 | 9,899 | 6,727,849 | | | 2022 | 555,769 | — | 4,258,926 | 287,589 | 9,648 | 5,111,932 | | Shai Shahar, Senior Vice President and CFO | 2024 | 396,539 | — | 1,212,913 | 348,990 | 6,120 | 1,964,562 | | | 2023 | 350,000 | — | 2,286,957 | 84,685 | 5,975 | 2,727,617 | | | 2022 | 357,409 | — | 1,490,639 | 131,632 | 7,674 | 1,987,354 |
Grants of Plan-Based Awards in Fiscal Year 2024
Grants of Plan-Based Awards in Fiscal Year 2024 The following table presents information regarding RSUs granted during fiscal year 2024 to our named executive officers. These equity awards were granted under our 2012 Equity Incentive Plan. The vesting schedule for the awards is set forth below in the table “Outstanding Equity Awards at Fiscal Year Ended December 28, 2024.” There can be no assurance that the “Grant Date Fair Value of Stock Awards” will ever be realized. The following table also presents information in the “Non-Equity Incentive Plan Awards” columns regarding potential awards under our Employee Incentive Plan for fiscal year 2024. All awards presented in the table below are further described under “Compensation Discussion and Analysis-Compensation Components” in this Proxy Statement.
Grants of Plan-Based Awards in Fiscal Year 2024
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock Awards ($)(4) | | Name | Grant Date | Threshold ($) | Target ($) | Max ($) | Threshold (#) | Target (#) | Max (#) | | | | Michael D. Slessor | — | — | 655,769 | 1,311,538 | — | — | — | — | — | | | 8/5/2024 | — | — | — | — | — | — | 43,728 | 1,803,780 | | | 8/5/2024 | — | — | — | 21,864 | 43,728 | 87,456 | — | 2,156,665 | | Shai Shahar | — | — | 317,596 | 635,192 | — | — | — | — | — | | | 8/5/2024 | — | — | — | — | — | — | 13,392 | 552,420 | | | 8/5/2024 | — | — | — | 6,696 | 13,392 | 26,784 | — | 660,493 |
Grants of Plan-Based Awards in Fiscal Year 2024
| (1) Represents the target awards under the Employee Incentive Plan. |
Grants of Plan-Based Awards in Fiscal Year 2024
| (2) Represents the performance-based RSU awards (which are market-based awards). The performance-based RSU awards were issued on August 5, 2024 and vest on August 1, 2027 based on the Company’s relative TSR performance from July 1, 2024 through June 30, 2027. |
Grants of Plan-Based Awards in Fiscal Year 2024
| (3) Represents the time-based RSU awards granted. The time-based RSU awards were issued on August 5, 2024 and vest quarterly over a three-year period in equal installments. |
Grants of Plan-Based Awards in Fiscal Year 2024
| (4) Represents the aggregate grant date fair value of time-based and performance-based RSU awards. The grant date fair value of the performance-based RSU awards represents the target achievement of 100% and is derived using a Monte Carlo simulation model. The grant date fair value of our time-based RSU awards is based on the closing fair market value of our common stock on the Nasdaq Stock Market on the grant date. |
Grants of Plan-Based Awards in Fiscal Year 2024
Assumptions used in the calculation of these amounts are described in Note 13, Stock-Based Compensation, to our Company’s consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 28, 2024. The use of any stock-based compensation valuation model should not be interpreted as a prediction of the actual value that may be realized from the award.
Grants of Plan-Based Awards in Fiscal Year 2024
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Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024 The following table presents information regarding outstanding stock awards held by our named executive officers at December 28, 2024. None of our named executive officers held outstanding stock option awards at December 28, 2024.
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | Michael D. Slessor | 14,426(2) | 662,442 | 64,919(5) | 2,981,080 | | | 41,356(3) | 1,899,068 | 141,792(6) | 6,511,089 | | | 40,084(4) | 1,840,657 | 21,864(7) | 1,003,995 | | Shai Shahar | 5,049(2) | 231,850 | 22,722(5) | 1,043,394 | | | 20,685(3) | 949,855 | 42,552(6) | 1,953,988 | | | 12,276(4) | 563,714 | 6,696(7) | 307,480 |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| (1) Market value was determined by multiplying the closing fair market value for a share of the Company’s common stock as of December 27, 2024, which was the last business day of fiscal year 2024, of $45.92, by the number of unvested and unearned units. |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| (2) 33.33% of the stock units vest each August 1 commencing after August 1, 2022. |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| (3) 8.33% of the stock units vest quarterly over three years commencing after August 7, 2023. |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| (4) 8.33% of the stock units vest quarterly over three years commencing after August 5, 2024. |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| (5) Represents 100% of the market-based RSUs granted August 1, 2022 that will vest based on the Company’s TSR relative to the TSR of the companies identified as being part of the S&P Semiconductor Select Industry Index for the period from July 1, 2022 to June 30, 2025. As of December 28, 2024, the award achievement level was calculated at 95% of target. The payout range for the market-based RSU award is 50% to 200%. Any earned units will vest on the Compensation Committee’s certification date in 2025. |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| (6) Represents 200% of the market-based RSUs granted August 7, 2023 that will vest based on the Company’s TSR relative to the TSR of the companies identified as being part of the S&P Semiconductor Select Industry Index for the period from July 1, 2023 to June 30, 2026. As of December 28, 2024, the award achievement level was calculated at 195% of target. The payout range for the market-based RSU award is 50% to 200%. Any earned units will vest on the Compensation Committee’s certification date in 2026. |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
| (7) Represents 50% of the market-based RSUs granted August 5, 2024 that will vest based on the Company’s TSR relative to the TSR of the companies identified as being part of the S&P Semiconductor Select Industry Index for the period from July 1, 2024 to June 30, 2027. As of December 28, 2024, the award achievement level was calculated at 0% of target. The payout range for the market-based RSU award is 50% to 200%. Any earned units will vest on the Compensation Committee’s certification date in 2027. |
Outstanding Equity Awards at Fiscal Year Ended December 28, 2024
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Option Exercises and Stock Vested During Fiscal Year Ended December 28, 2024
Option Exercises and Stock Vested During Fiscal Year Ended December 28, 2024 The following table presents information concerning the exercise of options during fiscal year 2024 by our named executive officers, and the vesting of stock units held by them during fiscal year 2024 (with the reported value based on the market price on the applicable date).
Option Exercises and Stock Vested During Fiscal Year Ended December 28, 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 ($) | | Michael D. Slessor | — | — | 144,141 | 7,796,029 | | Shai Shahar | — | — | 54,977 | 2,947,407 |
Change of Control, Severance, Separation and Indemnification Agreements
| • | accelerated vesting of his outstanding equity awards as if he had continued in employment for twelve (12) additional months following his separation; provided that with respect to any performance-based equity award for which the performance period has not ended as of the date of termination but for which the initial vesting date would occur within twelve (12) months following his separation, such performance award will remain outstanding and, upon determination of the amount earned for such performance period, the earned amount of the performance award will be subject to the same twelve (12) month acceleration; and he will have twelve (12) months following his separation to exercise any vested stock options not to exceed the expiration date of such options. |
PEO Pay Ratio
PEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of our median-compensated employee’s annual total compensation to the annual total compensation of our Principal Executive Officer (“PEO”). The purpose of this disclosure is to provide a measure of the equitability of pay within our Company. We believe our compensation philosophy and process yield an equitable result for all of our employees. During fiscal year 2024, FormFactor’s PEO was our President and CEO, Dr. Michael D. Slessor. The combined annual total compensation for Dr. Slessor and for our median-compensated employee and the resulting estimated pay ratio are reflected in the table below.
PEO Pay Ratio
| PEO Pay Ratio | | | PEO Annual Total Compensation* | $5,303,605 | | Median-Compensated Employee Annual Total Compensation | $86,969 | | PEO to Median Employee Pay Ratio | 61:1 |
PEO Pay Ratio
| * The annual total compensation reflected here is the amount reflected in the “Summary Compensation Table”. |
PEO Pay Ratio
In accordance with Item 402(u) of Regulation S-K, we identified the median-compensated employee using our employee population (excluding the PEO) as of December 28, 2024. On this date, we employed 2,238 people worldwide. In a manner consistent with SEC rules, we identified the median-compensated employee by use of a consistently applied compensation measure. Specifically, we identified the median-compensated employee by (i) calculating annual base pay plus target bonus or sales incentive (each compensation element was annualized for employees not employed for the full year), and (ii) ranking this compensation measure for our employees from lowest to highest. Once the median-compensated employee was identified, we calculated the median-compensated employee’s total annual compensation in accordance with the requirements of the Summary Compensation Table. Components of compensation paid in foreign currencies were converted to U.S. dollars based on exchange rates in effect as of the end of our 2024 fiscal year. The pay ratio reported above is a reasonable estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. Because the SEC 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 employee populations and compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
PEO Pay Ratio
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Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our PEO and Non-PEO named executive officers (“NEOs”) 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
| | | | | | Value of Initial Fixed $100 Investment based on:(4) | | | | | Year | Summary Compensation Table Total for PEO(1) ($) | Compensation Actually Paid to PEO(1),(2),(3) ($) | Average Summary Compensation Table Total for Non- PEO NEOs(1) ($) | Average Compensation Actually Paid to Non- PEO NEOs(1),(2),(3) ($) | TSR ($) | Peer Group TSR ($) | Net Income ($ Millions) | TSR Percentile Rank(5) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2024 | 5,303,605 | 8,147,045 | 1,964,562 | 2,944,343 | 176.3 | 242.1 | 69.6 | 55.0 | | 2023 | 6,727,849 | 13,476,551 | 2,727,617 | 5,101,521 | 160.6 | 217.8 | 82.4 | 85.0 | | 2022 | 5,111,932 | (2,441,277) | 1,987,354 | (897,158) | 85.6 | 160.9 | 50.7 | 30.8 | | 2021 | 5,231,873 | 2,791,024 | 2,082,660 | 1,146,973 | 171.4 | 232.3 | 83.9 | 5.4 | | 2020 | 4,588,247 | 13,461,558 | 2,064,727 | 5,424,209 | 164.0 | 162.3 | 78.5 | 72.2 |
Pay Versus Performance
| (1) Michael D. Slessor, our President and CEO, was our PEO for each year presented. The only Non-PEO NEO for each year presented was Shai Shahar, our CFO. |
Pay Versus Performance
| (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 PEO or non-PEO NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below. |
Pay Versus Performance
| (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for Dr. Slessor and Mr. Shahar as set forth in the table below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards column are the totals from the Stock Awards column set forth in the Summary Compensation Table. |
Pay Versus Performance
| (4) The Peer Group TSR set forth in this table utilizes the S&P Semiconductors Select Industry Index, which we also utilize in the stock price performance graph required by Item 201(e) of Regulation S-K included in our Annual Report for the fiscal year ended December 28, 2024. The comparison assumes $100 was invested for the period starting December 27, 2019 through the end of the applicable year reflected in the table, in the Company and in the S&P Semiconductors Select Industry Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. |
Pay Versus Performance
| (5) We determined TSR Percentile Rank relative to the constituents of the S&P Semiconductors Select Industry Index to be the most important financial performance measure used to link company performance to Compensation Actually Paid to our PEO and non-PEO NEO in 2024. This column presents the TSR Percentile Rank (or the relative ranking of the Company’s TSR as compared to the TSRs of the companies included in the S&P Semiconductors Select Industry Index) for each covered year. |
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO ($) | Exclusion of Stock Awards and Option Awards ($) | Inclusion of Equity Values(1) ($) | Compensation Actually Paid to PEO ($) | | 2024 | 5,303,605 | 3,960,445 | 6,803,885 | 8,147,045 | | 2023 | 6,727,849 | 5,980,078 | 12,728,781 | 13,476,551 | | 2022 | 5,111,932 | 4,258,926 | (3,294,284) | (2,441,277) | | 2021 | 5,231,873 | 4,189,734 | 1,748,885 | 2,791,024 | | 2020 | 4,588,247 | 3,311,000 | 12,184,311 | 13,461,558 |
Pay Versus Performance
| Year | Summary Compensation Table Total for Non-PEO NEOs ($) | Exclusion of Stock Awards and Option Awards ($) | Inclusion of Equity Values(1) ($) | Compensation Actually Paid to Non-PEO NEOs ($) | | 2024 | 1,964,562 | 1,212,913 | 2,192,694 | 2,944,343 | | 2023 | 2,727,617 | 2,286,957 | 4,660,861 | 5,101,521 | | 2022 | 1,987,354 | 1,490,639 | (1,393,873) | (897,158) | | 2021 | 2,082,660 | 1,512,966 | 577,280 | 1,146,973 | | 2020 | 2,064,727 | 1,430,352 | 4,789,834 | 5,424,209 |
Pay Versus Performance
| (1) 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
| 2025 Proxy Statement | | 49 |
Relationship Between Compensation Actually Paid, Company TSR and Peer Group TSR
Relationship Between Compensation Actually Paid, Company TSR and Peer Group TSR The following chart sets forth the relationship between Compensation Actually Paid to our PEO and non-PEO NEOs and the cumulative TSR over the four most recently completed fiscal years of the Company and the S&P Semiconductors Select Industry.
Relationship Between Compensation Actually Paid and Net Income
Relationship Between Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO and non-PEO NEOs and the Company’s net income during the four most recently completed fiscal years.
Relationship Between Compensation Actually Paid and Net Income
| 2025 Proxy Statement | | 51 |
Relationship Between Compensation Actually Paid and TSR Percentile Rank
Relationship Between Compensation Actually Paid and TSR Percentile Rank The following chart sets forth the relationship between Compensation Actually Paid to our PEO and non-PEO NEOs and the Company’s TSR Percentile Rank during the four most recently completed fiscal years.
About Our Request for Additional Shares
| • | Our outstanding equity awards (not including under our Employee Stock Purchase Plan) plus the shares available for future issuance under our Equity Incentive Plan, as listed above, assuming grants with a mix of types comparable to historical rates for 2024 and 2023 represented approximately 7.0% of our outstanding shares of common stock (commonly referred to as the “overhang”) as of March 17, 2025; and |