DEF 14A of Silicon Laboratories Inc.
Filed Mar 6, 2024 · FY20230001193125-24-060713
Director Nominees
Director Nominees
Director Nominees
| | Age | Director Since | Independent | Committee Membership | | Matt Johnson | 48 | 2022 | | | | Sumit Sadana | 55 | 2015 | ✓ | • Nominating & Corporate Governance (Chair) | | Gregg Lowe | 61 | 2017 | ✓ | • Compensation (Chair) • Nominating & Corporate Governance (Member) |
Director Nominees
| Proxy Statement | 1 | | Matters To Be Considered at Annual Meeting | 1 | | Proposal One: Election of Directors | 3 | | Other Directors | 5 | | Board Leadership/Independence | 8 | | Committees and Meetings | 8 | | Director Nomination | 9 | | Attendance at Annual Meetings | 12 | | Stockholder Communications with the Board of Directors | 12 | | Code of Ethics | 13 | | Risk Management | 13 | | Director Compensation and Indemnification Arrangements | 13 | | Recommendation of the Board of Directors | 14 | | Proposal Two: Ratification of Appointment of Independent Registered Public Accounting Firm | 15 | | Recommendation of the Board of Directors | 16 | | Proposal Three: Advisory Vote on Executive Compensation | 17 | | Recommendation of the Board of Directors | 17 | | Other Matters | 18 | | Ownership of Securities | 19 | | Certain Relationships and Related Transactions, and Director Independence | 20 | | Certain Relationships and Related Transactions | 20 | | Policies and Procedures with Respect to Related Party Transactions | 20 | | Director Independence | 20 | | Audit Committee Report | 21 | | Executive Officers | 22 |
Director Nominees
| Compensation Discussion and Analysis | 23 | | 2023 Business Results | 23 | | 2023 Business Highlights | 24 | | Significant Executive Compensation Actions | 24 | | Significant Corporate Governance Standards | 25 | | Compensation Philosophy | 26 | | Prior Say On Pay Vote and Shareholder Engagement | 26 | | Compensation-Setting Process | 27 | | Compensation Elements | 28 | | Compensation Arrangements Upon Termination of Employment or a Change in Control | 32 | | Welfare, Retirement, and Other Benefits | 32 | | Income Tax and Accounting Considerations | 33 | | Compensation Committee Report on Executive Compensation | 33 | | Summary Compensation | 34 | | Grants of Plan-Based Awards | 36 | | Outstanding Equity Awards at Fiscal Year-End | 37 | | Option Exercises and Stock Vested Table | 38 | | Potential Payments Upon Termination or Change in Control | 39 | | CEO Pay Ratio | 41 | | Pay Versus Performance Disclosure | 42 | | Compensation Committee Interlocks and Insider Participation | 47 | | Equity Compensation Plan Information | 48 | | No Incorporation by Reference of Certain Portions of this Proxy Statement | 49 | | Delinquent Section 16(a) Reports | 49 | | Annual Report | 49 | | Form 10-K | 49 | | Appendix I: Reconciliation of GAAP to Non-GAAP Executive Compensation Financial Measures | 50 |
Proposal One: Election of Directors
Proposal One: Election of Directors
General
General The Board of Directors is divided into three classes, designated Class I, Class II and Class III, with staggered three-year terms. The term of office of the Class II Directors, Matt Johnson, Sumit Sadana and Gregg Lowe, will expire at this Annual Meeting. Messrs. Johnson, Sadana and Lowe have been nominated to continue as Class II Directors. The directors elected as Class II Directors at the Annual Meeting will each serve for a term of three years expiring at the 2027 annual meeting of stockholders, or until such director’s successor has been duly elected and qualified or until such director’s earlier death, resignation or removal. The nominees for election have agreed to serve if elected, and management has no reason to believe that the nominees will be unavailable to serve. In the event any of the nominees are unable or decline to serve as directors at the time of the Annual Meeting, the Proxies will be voted for any nominees who may be designated by our present Board of Directors to fill the vacancies. Unless otherwise instructed, the Proxy holders will vote the Proxies received by them FOR the nominees named below.
Nominees for Class II Directors with a Term Expiring in 2024 (ages as of Annual Meeting date)
Nominees for Class II Directors with a Term Expiring in 2024 (ages as of Annual Meeting date)
Nominees for Class II Directors with a Term Expiring in 2024 (ages as of Annual Meeting date)
| Matt Johnson, 48 | Mr. Johnson has served as a Director and our Chief Executive Officer since January 2022 and has served as our President since April 2021. Mr. Johnson served as our Senior Vice President and General Manager of our Internet of Things business unit from July 2018 until he was promoted to President in April 2021. Before joining Silicon Labs, Mr. Johnson held leadership positions at NXP, Freescale, and Fairchild Semiconductor. Mr. Johnson is dedicated to a strong company culture, innovative product development, and operational excellence. Mr. Johnson holds a B.S. in Electrical Engineering Technology from the University of Maine and has completed executive programs at Harvard Business School and Stanford University. Mr. Johnson currently serves on the boards of the Dell Children’s Foundation and the Semiconductor Industry Association. Mr. Johnson has extensive technology and operations experience in various leadership positions throughout the semiconductor industry, most recently as our chief executive officer, and brings to the Board a thorough understanding of our people, products and markets worldwide. | | Sumit Sadana, 55 | Mr. Sadana has served as a Director of Silicon Labs since 2015, and as Lead Director since January 2022. Mr. Sadana has been the Executive Vice President and Chief Business Officer of Micron Technology, Inc. (NASDAQ: MU) since 2017. In 2022, Mr. Sadana served as Micron’s Interim Chief Financial Officer. Mr. Sadana has over 30 years of technology industry experience, including leadership positions at San Disk, Freescale Semiconductor and IBM. Mr. Sadana has a Bachelor of Technology degree in Electrical Engineering from the Indian Institute of Technology (IIT), Kharagpur (India) and an M.S. in Electrical Engineering from Stanford University. Mr. Sadana brings to our board significant experience from diverse leadership roles across technology, engineering, operations, strategy, business development and P&L management as an executive in global technology and semiconductor companies. Mr. Sadana provides valuate insights in the areas of finance and accounting, M&A, culture and diversity, and global business supply chain. |
Nominees for Class II Directors with a Term Expiring in 2024 (ages as of Annual Meeting date)
| Gregg Lowe, 61 | Mr. Lowe has served as a Director of Silicon Labs since 2017. Mr. Lowe is currently the President and Chief Executive Officer of Wolfspeed, Inc. (NYSE: WOLF), an innovator of lighting-class LEDs, lighting products and Wolfspeed™ power and radio frequency (RF) semiconductors. Mr. Lowe previously served as President and CEO of Freescale Semiconductor from June 2012 until its merger with NXP (NASDAQ: NXPI) in 2015. Prior, Mr. Lowe served as senior vice president and manager of the Analog business for Texas Instruments (NASDAQ: TXN) where he helped to direct the acquisition of National Semiconductor. During his 27 years at Texas Instruments, he held various leadership positions across field sales, automotive sales, marketing, and integrated circuits where he oversaw a global team with design centers and customers on every continent. Mr. Lowe currently serves on the boards of Wolfspeed, the Semiconductor Industry Association, the Rock & Roll Hall of Fame in Cleveland, Ohio and St. Edward’s High School in Lakewood, Ohio. Mr. Lowe has a Bachelor of Science degree in electrical engineering from Rose-Hulman Institute of Technology in Terre Haute, Indiana and is a graduate from the Stanford Executive Program at Stanford University. Mr. Lowe has been recognized for his accomplishments in the community and within the semiconductor industry as the recipient of the Rose-Hulman Institute of Technology Career Achievement Award. Mr. Lowe brings to our board extensive experience as a chief executive office for publicly traded semiconductor companies. Mr. Lowe provides valuable insights from his experiences managing global operations including expertise in technology, marketing, sales, supply chain, and M&A. |
Other Directors
Other Directors Set forth below is information concerning our other Directors whose terms of office continue after this Annual Meeting.
Continuing Class III Directors with a Term Expiring in 2025 (ages as of Annual Meeting date)
Continuing Class III Directors with a Term Expiring in 2025 (ages as of Annual Meeting date)
Continuing Class III Directors with a Term Expiring in 2025 (ages as of Annual Meeting date)
| William G. Bock, 73 | Mr. Bock originally joined Silicon Labs’ Board of Directors in 2000 and served as Chairman of the audit committee until he joined the management team and was appointed CFO in 2006. Mr. Bock was re-appointed to the board of directors in mid-2011, returning as interim CFO in early 2013 and was then appointed President in mid-2013 before retiring from the management team in early 2016. Mr. Bock previously participated in the venture capital industry, principally as a partner with CenterPoint Ventures. Before his venture career, Mr. Bock held senior executive positions with three venture-backed companies, Dazel Corporation, Tivoli Systems and Convex Computer Corporation. Mr. Bock began his career with Texas Instruments. Mr. Bock currently serves as Chairman of the Board of SolarWinds Corporation (NYSE: SWI) and Chairman of the Board of N-able Inc. (NYSE: NABL). Mr. Bock also currently serves on the Board of SailPoint Technologies, a private technology company. Mr. Bock holds a B.S. in Computer Science from Iowa State University and an M.S. in Industrial Administration from Carnegie Mellon University. Mr. Bock brings more than 40 years of broad operational, financial and board of director experience to our board, specifically in the high-tech industry areas of systems, software and semiconductors. Mr. Bock has extensive experience as a board member and executive leader for public companies as well as M&A, including his time in venture capital. As a former Silicon Labs President and Chief Financial Officer, Mr. Bock brings to the board a thorough understanding of our operations and markets. | | Christy Wyatt, 52 | Ms. Wyatt has served as a Director of Silicon Labs since 2019. Ms. Wyatt has served as the President, Chief Executive Officer and a director of Absolute Software Corporation, an endpoint security and data risk management company that was publicly traded on both the Nasdaq and Toronto Stock Exhange until its acquisition by Crosspoint Capital Partners in July 2023. Ms. Wyatt currently is a director of Ericsson (NASDAQ:ERIC), a position she has held since 2023. Ms. Wyatt previously served as a director of Quotient Technology, Inc. (NYSE: QUOT), a digital promotions, media and analytics company, from July 2018 to April 2022. Ms. Wyatt previously served as Chairman, Chief Executive Officer and President of Good Technology Corporation from 2013, leading to its acquisition by Blackberry in 2015, and also served as President and Chief Executive Officer and Director of Dtex Systems, a threat detection company, from 2016 to 2018. Ms. Wyatt has held leadership positions in the technology industry within Citigroup, Motorola, Apple, Palm and Sun Microsystems and also served as a board member for Centrify. Ms. Wyatt was named “CEO of the Year” by the Globe and Mail in 2020, one of the “Top 50 Women in Saas” by the Software Report in 2019, a “Top 50 Women Entrepreneur in America” by Inc. Magazine, “CEO of the Year” by Information Security Global Excellence Awards and a “Most Influential Women in Wireless” by Fierce Wireless. Ms. Wyatt’s CEO, director and officer experience provides our board expertise in global and international operating experience as well as cyber and security risk. Ms. Wyatt also has extensive technology expertise in hardware and software global technology product companies and contributes valuable insights in these areas. |
Continuing Class III Directors with a Term Expiring in 2025 (ages as of Annual Meeting date)
| Sherri Luther, 58 | Ms. Luther joined the Silicon Labs Board of Directors in January 2022. Ms. Luther currently serves as the Chief Financial Officer of Lattice Semiconductor (NASDAQ: LSCC), a global leader of low power programmable FPGAs, a position she has held since January 2019. Prior to this role, Ms. Luther was a senior financial executive at Coherent Inc. (NASDAQ: COHR), most recently serving as Corporate Vice President of Finance where she oversaw large scale acquisitions and provided thought leadership and strategic direction across 40 global sites. Ms. Luther previously held various senior finance and accounting positions at companies including Quantum Corporation, Ultra Network Technologies and Arthur Andersen. Ms. Luther holds a Bachelor of Business Administration, with a dual major in Accounting and Finance, from Wright State University. Ms. Luther is a CPA (Certified Public Accountant), is NACD (National Association of Corporate Directors) Directorship Certified and graduated from the Executive MBA Program at Stanford University Graduate School of Business. Ms. Luther has been recognized for her high ethical and professional standards and received the “CFO of the Year” Award from the Business Journal in Portland, Oregon. Ms. Luther brings to our board 35 years of experience in strategic and financial operations, with an expertise in financial reporting, forecasting, SOX compliance, M&A, operations and supply chain management. As the CFO of a multinational public semiconductor company and qualified financial expert under SEC regulations, Ms. Luther contributes valuable insights in the areas of finance and accounting, capital allocation, investor relations as well as in risk management, cybersecurity, and sustainability. |
Continuing Class I Directors with a Term Expiring in 2026 (ages as of Annual Meeting date)
Continuing Class I Directors with a Term Expiring in 2026 (ages as of Annual Meeting date)
Continuing Class I Directors with a Term Expiring in 2026 (ages as of Annual Meeting date)
| Navdeep S. Sooch, 61 | Mr. Sooch co-founded Silicon Labs in August 1996 and has served as Chairman of the Board since our inception. Mr. Sooch served as Chief Executive Officer from August 1996 to December 2003 and as interim Chief Executive Officer from April 2005 to September 2005. Mr. Sooch also served as the CEO of Ketra, Inc., a private company in the field of solid-state lighting, from October 2011 to April 2018. Prior to founding Silicon Labs, Mr. Sooch held various positions at Crystal Semiconductor/Cirrus Logic, a designer and manufacturer of integrated circuits, including Vice President of Engineering and was a Design Engineer with AT&T Bell Labs. Mr. Sooch holds a B.S. in Electrical Engineering from the University of Michigan, Dearborn and an M.S. in Electrical Engineering from Stanford University. Mr. Sooch brings to our board extensive experience as an executive, engineer, and semiconductor designer with valuable insights into our industry and Silicon Labs operations, as our founder and former CEO. Beyond his expertise in technology and as a public company executive leader, Mr. Sooch further contributes valuable insights in the areas of talent and culture. |
Continuing Class I Directors with a Term Expiring in 2026 (ages as of Annual Meeting date)
| Nina Richardson, 65 | Ms. Richardson has served as a Director of Silicon Labs since 2016. Ms. Richardson was previously the Chief Operating Officer at GoPro where she led Engineering, Operations, Sales, Sales Operations, Support and Human Resources. Ms. Richardson also held a variety of executive positions at global EMS provider, Flex, including Vice President and GM where she managed several manufacturing plants in the U.S. and Mexico. Ms. Richardson is currently a Managing Director of Three Rivers Energy, an energy services company she co-founded in 2004. Ms. Richardson is also a board member of Resideo Technologies, Inc. (NYSE: REZI), a global provider and distributor of comfort and security solutions and Cohu, Inc. (NASDAQ: COHU), a global provider of back-end semiconductor equipment and services. Ms. Richardson is also a board member of Revelle, a privately held company in biomedical solutions and Tonal, a privately held smart-fitness equipment and services company. Ms. Richardson was previously a director of SGI, until its sale to HPE, CallidusCloud, until its sale to SAP, Zayo Group and Eargo (NASDAQ:EAR). Ms. Richardson holds a B.S. in Industrial Engineering from Purdue University and an Executive MBA from Pepperdine University. Ms. Richardson has broad executive experience in manufacturing, engineering, and supply chain that complements our Company’s operations. Ms. Richardson brings valuable insights from her experiences as a director at several other publicly traded companies and particularly her governance and ESG experience, having completed NACD’s Cybersecurity Certification and the Diligent Climate Leadership Certification. Ms. Richardson has scaled operations, talent and organizations in multiple geographies bringing an important perspective to this stage of our growth. | | Robert Conrad, 64 | Mr. Conrad has served as a Director of Silicon Labs since July 2022. Mr. Conrad was previously the Senior Vice President of the Automotive Microcontrollers and Processors business at NXP Semiconductors (NASDAQ: NXPI). Prior to this role, he held several senior executive roles at Freescale Semiconductor, Fairchild Semiconductor and Analog Devices leading various product groups and corporate strategy. Mr. Conrad started his career with Texas Instruments in product engineering and hardware design, process development, and operations. Mr. Conrad is also the owner of privately held North Water Marine since 2021. Mr. Conrad currently serves on the boards of Montalvo Corporation, The New Hampshire Boat Museum and The Wolfeboro Public Library Foundation. Mr. Conrad holds a BSEE in Electrical and Computer Engineering from the University of Cincinnati. Mr. Conrad brings to our board more than 40 years of extensive experience in leadership, technology development, and strategy across a variety of technology, product, and market segments as a member of the executive staff for multiple public top tier semiconductor companies. Mr. Conrad provides extensive insights into the semiconductor industry as well as global business, M&A, and supply chain. |
Director Compensation and Indemnification Arrangements
Director Compensation and Indemnification Arrangements Our 2009 Stock Incentive Plan, as approved by our stockholders, limits to $750,000 in each calendar year, the maximum grant date fair value of awards payable in our common stock and cash compensation for all services as an independent director that may be provided to each of our independent directors. Under the 2009 Stock Incentive Plan, on the date of the 2023 annual meeting of stockholders, the Board of Directors granted each non-employee director a Restricted Stock Unit (“RSU”) award covering a number of shares of the Company’s common stock equal to $200,000 (or $255,000 for the Chairperson of the Board) divided by the average closing price of the Company’s common stock during the 30 trading days ending on the second trading day preceding the grant date; provided that any former employee of the Company must have served as a non-employee director for at least six months in order to receive such award. Accordingly, as Chairman of the Board, Mr. Sooch received a grant of 1,494 RSUs and Messrs. Bock, Conrad, Lowe, Sadana and Mses. Luther, Richardson and Wyatt each received a grant of 1,172 RSUs on the date of the 2023 annual meeting of stockholders. The RSU awards require no purchase price payment and will vest on approximately the first anniversary of the date of grant. During 2023, our non-employee director compensation program consisted of the following cash compensation: (i) $55,000 per person per year, (ii) an additional $25,000 per year for the Chairman of the Audit Committee, (iii) an additional $9,000 per year for each Audit Committee member (excluding the Chairman), (iv) an additional $25,000 per year for the Chairman of the Compensation Committee, (v) an additional $9,000 per year for each Compensation Committee member (excluding the Chairman), (vi) an additional $10,000 per year for the Chairman of the Nominating and Corporate Governance Committee, (vii) an additional $5,000 per year for each Nominating and Corporate Governance Committee member (excluding the Chairman), (viii) an additional $20,000 per year for the Lead Director (ix) an additional $10,000 per year for the Chairman of the Corporate Development and Finance Committee, (x) an additional $5,000 per year for each Finance Committee member (excluding the Chairman) and (xi) an additional $20,000 per year for the Chairman of the Board. Payments under the cash compensation plan are generally paid in equal quarterly installments on the last day of each fiscal quarter. Notwithstanding this compensation program, for the period commencing August 1, 2023 and ending December 30, 2023, we reduced the cash retainer of each non-employee director of the Company from an annualized rate of $55,000 to an annualized rate of $33,000, in line with reductions we made to executive base pay as a response to market conditions and business performance. The other director compensation amounts were unchanged. Cash compensation was pro-rated if the individual served less than the full year in a position. Our certificate of incorporation limits the personal liability of our directors for breaches by them of their fiduciary duties. Our bylaws require us to indemnify our directors to the fullest extent permitted by Delaware law. We have also entered into indemnification agreements with all of our directors and have purchased Director and Officers liability insurance. In addition to the above compensation, we also reimburse non-employee directors for all reasonable out-of-pocket expenses incurred for attending board and committee meetings. The following table provides summary information on compensation earned by each non-employee member of our Board of Directors in fiscal 2023.
Director Compensation Table for Fiscal 2023
Director Compensation Table for Fiscal 2023
Director Compensation Table for Fiscal 2023
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | William G. Bock | 73,577 | 195,197 | 268,774 | | Bob Conrad | 57,088 | 195,197 | 252,285 | | Gregg Lowe | 75,833 | 195,197 | 271,030 | | Sherri Luther | 58,308 | 195,197 | 253,505 | | Nina Richardson | 60,138 | 195,197 | 255,335 | | Sumit Sadana | 74,308 | 195,197 | 269,505 | | Navdeep S. Sooch | 74,308 | 248,826 | 323,134 | | William P. Wood(2) | 19,821 | — | 19,821 | | Christy Wyatt | 57,577 | 195,197 | 252,774 |
Director Compensation Table for Fiscal 2023
| (1) Amounts shown do not reflect compensation actually received by the director but represent the grant date fair value as determined pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718, Stock Compensation (“ASC Topic 718”). The assumptions underlying the calculation are discussed under Note 15, Stock-Based Compensation, of the Company’s Form 10-K for the fiscal year ended December 30, 2023. |
Director Compensation Table for Fiscal 2023
| (2) Mr. Wood served as a member of the Board of Directors until his term expired at the 2023 Annual Meeting. |
Director Compensation Table for Fiscal 2023
| RECOMMENDATION OF THE BOARD OF DIRECTORS OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF THE NOMINEES FOR CLASS II DIRECTORS AS LISTED ABOVE. |
Significant Executive Compensation Actions
| • | Approved annual cash incentive bonus targets with 45% tied to revenue, 45% tied to operating income and 10% tied to diversity, equity and inclusion metrics as part of our overall ESG initiatives. |
Significant Executive Compensation Actions
| • | Approved long-term incentive compensation, consisting of a combination of Restricted Stock Units (“RSUs”) and Performance Stock Units (“PSUs”) to align our executives’ incentives with our stockholders, retain key employees, and reward performance. |
Significant Executive Compensation Actions
| • | No performance bonus was paid based upon business performance in 2023. |
Significant Corporate Governance Standards
| What We Do | What We Do Not Do | | We have stock ownership guidelines. Our CEO must hold Silicon Labs equity with a value equal to six times his base salary, and our CFO must hold equity with a value equal to three times his base salary following a phase-in period. Other executive officers must hold equity with a value of two times their base salary following a phase-in period. Unvested options and unvested PSUs do not count for purposes of the stock ownership guidelines. All executive officers and directors are in compliance with our stock ownership guidelines. | We do not provide excise tax gross-ups in the event of a change in control. | | We have stock ownership guidelines for our Directors requiring them to hold Silicon Labs equity with a value equal to three times their annual cash retainer following a phase-in period. | We do not allow hedging and pledging of Company securities. | | All employee change in control agreements do contain double trigger (rather than single trigger) change in control provisions. | We do not provide significant perquisites or other personal benefits to our executive officers. Other than an annual physical examination provided by the Company, our executive officers participate in broad-based company-sponsored health and welfare benefits programs on the same basis as our other full-time employees. | | We separate the roles of Chairman of the Board and Chief Executive Officer. Our Board also includes the position of Lead Independent Director. | We do not offer retirement plans or nonqualified deferred compensation plans to our executive officers, other than the 401(k) retirement plan offered to all salaried full-time employees. | | We conduct an annual assessment to ensure that the compensation consultant engaged by the Compensation Committee is independent. | | | We conduct an annual review of our compensation programs for executive officers and other employees to assess the level of risk associated with those programs and the effectiveness of our policies and practices for monitoring and managing these risks. | | | We have a recoupment (or claw-back) policy that complies with the listing standards of the Nasdaq to provide for recovery of incentive compensation from any executive officer in the event of a restatement of our financial results. | |
Compensation Philosophy
Compensation Philosophy Our executive compensation program supports our long-term strategic and operational goals. It is intended to attract, motivate, and retain talented individuals to serve as our executive officers. The Compensation Committee designs the various components of our executive compensation program to be market competitive and support growth and profitability objectives while remaining aligned with our culture. We hold our executives to high performance standards and our compensation arrangements for our CEO and other Named Executive Officers are designed to deliver competitive base pay and attractive incentive opportunities if performance is outstanding while delivering significantly lower actual compensation when performance is below our rigorous standards. To this end, a significant portion of target compensation for our executives is designed to be at risk. Salaries are compared not only to our peer group listed below, but also to data from the Radford Technology survey. Our target for base salaries, considering data from each source, is market median. Our annual cash incentive plan, discussed below, is based solely on achieving corporate targets. This plan targets above-market awards when the Company is performing well and places cash incentives at risk when performance targets are not achieved. See also “Annual Cash Incentive Bonus” below. Our equity program includes time-vesting restricted stock units (RSUs) and performance stock units (PSUs) that are intended to incentivize achievement of high-performance standards. In 2021, we transitioned away from performance-based market stock units (MSUs) to a performance-based PSU program, more appropriate during the period of our company’s transformation and transition to a new business model. Our PSUs require significant levels of multi-year performance, measured by our achievement against our stated financial model and growth targets. These program design changes were made in consultation with our compensation consultant. This approach provides a strong alignment between pay-for-performance, operational results and retention of key executive talent. The design appropriately establishes a clear focus on achieving our financial objectives. As such, our compensation program provides modest compensation when longer-term performance is below expectations. We believe that this approach optimally aligns the interests of management and our stockholders and results in the greatest emphasis on long-term stockholder value creation. For more information on the design of our equity programs and for awards granted in 2023, see “Long-Term Incentive Equity Awards” below.
Prior Say On Pay Vote and Shareholder Engagement
Prior Say On Pay Vote and Shareholder Engagement Our prior advisory Say-on-Pay proposal regarding the compensation of our Named Executive Officers received the support of approximately 94% of the votes cast at the 2023 Annual Meeting. The Compensation Committee and the Board reviewed the result of the Say-on-Pay vote, and appreciate the feedback and support of our shareholders for the adjustments we made to continue to strengthen our pay for performance practices. Those adjustments included approving a resolution not to provide cash severance to executive officers upon a voluntary resignation (other than as may be contractually committed, such as upon a resignation for “good reason”), and increasing our CEO stock ownership guidelines from five times to six times base salary. We believe that shareholder engagement is important, and our Compensation Committee will continue to take into account shareholder feedback, future Say-on-Pay votes and relevant market developments in order to determine whether any subsequent changes to our executive compensation program are warranted. We expect to continue our outreach efforts with respect to executive compensation in future years in order to ensure that we understand our shareholder views and concerns on each of these subjects for the consideration of our Compensation Committee and the full Board.
Compensation Elements
Annual Cash Incentive Bonus. Each year, the Compensation Committee adopts a bonus plan (the “Bonus Plan”) to reward exceptional performance and align the incentives of our Named Executive Officers with our short-term operating plan and long-term strategic objectives and the interests of our stockholders. The Compensation Committee approves the design, structure, and performance objectives, as well as each objective’s relative weighting, under the Bonus Plan. The Compensation Committee designs the Bonus Plan to pay each Named Executive Officer up to 150% of the NEO’s target annual cash incentive bonus opportunity for outstanding performance. Consistent with our “pay-for-performance” philosophy, however, no payment is guaranteed if the minimum established performance objectives under the Bonus Plan are not achieved. Our Board of Directors and the Compensation Committee may exercise discretion either to make payments absent attainment of the relevant performance metric target levels or to reduce or increase the size of any award payment. For 2023, consistent with our business strategy, the Compensation Committee established adjusted revenue and adjusted non-GAAP operating income as a percentage of adjusted revenue as the principal corporate financial metrics. For this purpose, “adjusted revenue” and “adjusted non-GAAP operating income” mean revenue and operating income as determined under generally accepted accounting principles (GAAP) modified for stock compensation expense, intangible asset amortization, acquisition-related items and restructuring charges. These adjusted measures more clearly highlight the results of core ongoing operations. For purposes of cash incentive bonuses, the Compensation Committee reserves the authority to determine whether to exclude any item when making adjustments from the corresponding GAAP metric. For 2023, the Compensation Committee continued to include diversity, equity and inclusion (DEI) metrics as a component of bonus compensation. For each of the applicable bonus metrics, the percentage payout is determined using a sliding scale based on actual performance, with no minimum payout and a maximum payout of 150% of the executive’s target annual cash incentive bonus opportunity for above-target performance. The financial components of the plan allowed for 100% payout at 100% of plan target. For the adjusted revenue component, there was a decreasing scale to 10% at 90% of plan target, no payment below 90% of target and a maximum payout of 150% at 110% of target. For the adjusted non-GAAP operating income components, there was a decreasing scale to 10% at 80% of plan target, no payment below 80% of target and a maximum payout of 150% at 120% of target. The DEI components of the plan were based on a set of challenging qualitative and quantitative goals representing core education and inclusion objectives of our DEI strategy but were not quota-based. If three of five goals were achieved, the plan allowed for 60% payout. If four of five goals were achieved, the plan allowed for 80% payout. If all five goals were achieved, the plan allowed for 100% payout. Two accelerators were added to the DEI goal set to allow for a payout above 100% to a maximum payout of 150% of target. These accelerators were only applicable if all five goals were already achieved. The Compensation Committee exercised its discretion in July of 2023 to cancel the annual bonus opportunity for all NEOs due to overall Company performance, so no bonus was paid to the CEO or remaining NEOs for the 2023 performance year.
Compensation Elements
| 2023 Bonus Metrics | 2023 Target | Metric Weighting | | Adjusted Revenue | $1,131,229 | 45% | | Adjusted Non-GAAP Operating Income % | 21.7% | 45% | | DEI Scorecard | 5 goals | 10% |
Compensation Elements
| Named Executive Officer | Target Bonus as a Percent of Base Salary (%) | Actual Bonus as a Percent of Base Salary (%) | | R. Matthew Johnson | 130% | 0% | | John Hollister | 100% | 0% | | Brandon Tolany | 100% | 0% | | Sandeep Kumar | 75% | 0% |
Compensation Elements
Long-Term Incentive Equity Awards. The Compensation Committee uses long-term incentive compensation, typically in the form of equity awards, to retain our Named Executive Officers, to align their interests with the interests of our stockholders and to provide incentives that we believe encourage behaviors that will maximize stockholder value. For 2023, the Compensation Committee used a mix of PSUs and RSUs. PSU Awards Granted in 2021, 2022, and 2023. In 2021, we replaced our performance based MSU program with a performance-based PSU program that we believe is appropriate during the period of our company transformation and transition to a new business model. PSUs allow us to directly tie executive compensation to specific company financial targets that are critical to the long-term success of our pure-play IoT model. The PSU program measures performance achievement against our multi-year growth targets and financial plan. We continued to offer PSU awards in 2023. For each PSU award, a payment in shares of our common stock relative to the target number of units may be earned upon the Company achieving goals based on a three-year revenue compound annual growth rate (CAGR) and non-GAAP operating income margin (OI) in Years 2 and 3. The CAGR metric is set at the beginning of the performance period and is measured at the end of Year 3 and weighted at 50%. The OI margin metric is also a long-term multi-year metric that is set at the beginning of the performance period, with two measurement points. The first measurement is made at the end of Year 2. The second and final OI margin measurement is made at the end of Year 3. Each of these OI margin measurements is weighted at 25%. Award payments may range from 0% up to 200% of the target number of units and are scaled linearly against a base revenue or non-GAAP operating income margin percentage for each measurement, all tracking to our stated financial model. Each measurement has a discrete achievement threshold below which the payout value is 0. The PSU Awards will be earned based upon the level of achievement of the following multi-year performance criteria:
RSU Awards Granted in 2023
RSU Awards Granted in 2023 The RSU awards granted in 2023 provide a retention incentive and align the interests of our executive officers with those of our stockholders. These RSUs generally vest in three annual installments on each anniversary of the date of grant. The Named Executive Officers were granted the following PSU and RSU awards during 2023:
RSU Awards Granted in 2023
| | PSU Awards | | RSU Awards | | | Named Executive Officer | Target Number of Shares (#) | Grant Date Fair Value ($) | Number of Shares (#) | Grant Date Fair Value ($) | | R. Matthew Johnson | 21,976 | 4,141,377 | 15,992 | 2,180,029 | | John Hollister | 7,535 | 1,419,971 | 6,397 | 872,039 | | Brandon Tolany | 9,105 | 1,715,837 | 4,798 | 654,063 | | Sandeep Kumar | 3,140 | 591,733 | 3,199 | 436,088 |
Compensation Arrangements Upon Termination of Employment or a Change in Control
Compensation Arrangements Upon Termination of Employment or a Change in Control The equity awards granted to our Named Executive Officers under the Company’s 2009 Stock Incentive Plan, as amended and restated on April 22, 2021, and the CEO Severance Agreement and the Executive Severance Agreements approved by the Board in May 2021 provide for the following potential payments and benefits upon a Change in Control Termination (as defined in the agreements): (a) 100% of annual base salary (200% in the case of the CEO), (b) 100% of target variable compensation for a full fiscal year (200% in the case of the CEO), (c) any actual earned bonus, commission or other short term cash incentive compensation for the fiscal year preceding the Change in Control Termination to the extent such amount has not already been paid, (d) a pro-rated portion of target variable compensation for the full fiscal year in which the Change in Control Termination occurs, (e) stock options, restricted stock, and RSUs shall become fully vested, (f) MSU and PSU units shall be vested at the greater of actual performance or 100% of the target value, and (g) a lump sum equal to the pre-tax cost of 12 months of continued COBRA coverage (24 months in the case of the CEO). In addition, the Executive Severance Agreements provide certain specified severance benefits to the Named Executive Officers upon a Non-CIC Termination (as defined in the agreements). The benefits are provided at a level that the Compensation Committee believes to be comparable to those of companies of similar size in our industry sector. Detailed information concerning the CEO Severance Agreement and the Executive Severance Agreements and the treatment of equity awards under the Company’s 2009 Stock Incentive Plan in the event of a change in control, including the events that trigger benefits and the severance benefits provided upon the occurrence of such events, is discussed below under the heading “Potential Payments Upon Termination or Change in Control.” We have provided for this treatment based on our belief that such treatment ensures that the executive officers remain focused on their responsibilities in the event of a potential transaction that will result in a significant benefit to our stockholders.
Income Tax and Accounting Considerations
Income Tax and Accounting Considerations Section 280G of the Internal Revenue Code. Section 280G of the Code disallows a tax deduction with respect to excess parachute payments to certain executives of companies that undergo a change in control. In addition, Section 4999 of the Code imposes a 20% penalty on the individual receiving the excess payment. Parachute payments are compensation that is linked to or triggered by a change in control and may include, but are not limited to, transaction bonus payments, severance payments, certain fringe benefits and payments and acceleration of vesting under long-term incentive plans. Excess parachute payments are parachute payments that exceed a threshold determined under Section 280G of the Code based on the executive’s prior compensation. In approving the compensation arrangements for our named executive officers in the future, our Compensation Committee will consider all elements of the cost to the Company of providing such compensation, including the potential impact of Section 280G of the Code. However, our Compensation Committee may, in its judgment, authorize compensation arrangements that could give rise to loss of deductibility under Section 280G of the Code and the imposition of excise taxes under Section 4999 of the Code when it believes that such arrangements are appropriate to attract and retain executive talent. Note that none of our NEOs (or other executives or employees) are entitled to any tax gross-up or similar payments with respect to any excise taxes that may be imposed in accordance with the foregoing. Accounting Treatment of Executive Compensation. The Company follows Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC Topic 718”) in accounting for our stock-based awards. ASC Topic 718 requires companies to measure the compensation cost for all stock-based options and awards to employees (including our executive officers) and directors based on the “fair value” on the date of grant. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the fair value of their stock-based options and awards in their income statements over the period that an executive officer is required to render service in exchange for his or her grant.
Summary Compensation Table
Summary Compensation Table
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | R. Matthew Johnson President and Chief Executive Officer | 2023 | 563,710(7) | 0 | 6,321,406 | — | 0 | 9,605 | 6,894,721 | | | 2022 | 650,000 | 1,000 | 4,935,285 | — | 1,159,027 | 10,921 | 6,756,233 | | | 2021 | 416,000(5) | 1,000 | 7,736,057 | — | 567,319 | 10,212 | 8,730,589 | | John Hollister(8) Senior Vice President and Chief Financial Officer | 2023 | 409,019(7) | 0 | 2,292,010 | — | 0 | 6,446 | 2,707,475 | | | 2022 | 430,039(6) | 1,000 | 1,974,207 | — | 590,642 | 9,139 | 3,005,027 | | | 2021 | 408,720 | 1,000 | 2,160,802 | — | 592,644 | 12,934 | 3,176,100 | | Brandon Tolany Senior Vice President of Worldwide Sales | 2023 | 379,288(7) | 0 | 2,369,900 | — | 0 | 10,197 | 2,759,385 | | | 2022 | 410,972(6) | 1,000 | 1,480,701 | — | 564,463 | 10,761 | 2,467,897 | | | 2021 | 401,700 | 1,000 | 1,809,016 | — | 582,465 | 6,460 | 2,800,641 | | Sandeep Kumar Senior Vice President of Worldwide Operations | 2023 | 346,721(7) | 0 | 1,027,821 | — | 0 | 13,382 | 1,387,924 | | | 2022 | 376,196(6) | 1,000 | 987,175 | — | 387,524 | 8,179 | 1,760,074 | | | 2021 | 367,608 | 1,000 | 2,034,360 | — | 399,774 | 13,729 | 2,816,471 |
Summary Compensation Table
| (1) Represents holiday or profit-sharing bonus provided to all employees. |
Summary Compensation Table
| (2) Amounts shown do not reflect compensation actually received by the Named Executive Officer but represent the grant date fair value of RSUs and PSUs as determined pursuant to ASC Topic 718 (disregarding any estimate of forfeitures). The assumptions underlying the calculation under ASC Topic 718 are discussed under Note 15, Stock-Based Compensation, in our Form 10-K for the fiscal year ended December 30, 2023. |
Summary Compensation Table
| The PSUs are shown at target because target was determined to be the probable outcome for the performance period at the time of grant. The following is the aggregate grant date fair value of PSUs granted if we assumed the maximum amounts (200% of target) will be earned: For 2023: Mr. Johnson - $8,282,755, Mr. Hollister - $2,839,942, Mr. Tolany - $3,431,674, and Mr. Kumar - $1,183,467. For 2022: Mr. Johnson - $4,643,663, Mr. Hollister - $1,857,593, Mr. Tolany - $1,393,356, and Mr. Kumar - $928,797. For 2021: Mr. Johnson - $13,272,698, Mr. Hollister - $2,650,119, Mr. Tolany - $2,298,332, and Mr. Kumar - $3,012,860. |
Summary Compensation Table
| (3) Represents amounts earned under the 2022 Bonus Plan for services rendered in fiscal 2022 and the 2021 Bonus Plan for services rendered in fiscal 2021 although amounts were paid in the following year. No amounts were earned under the 2023 Bonus Plan for fiscal 2023. |
Summary Compensation Table
| (4) 2023 Other Compensation for Messrs. Johnson, Hollister, Tolany and Kumar consists of Company-paid life insurance premiums, disability premiums, and employer matching contributions into the Company’s 401(k) Plan, executive physicals for Messrs. Johnson, Tolany and Kumar, and international travel bonuses and a charitable contribution match for Mr. Kumar. 2022 Other Compensation for Messrs. Johnson, Hollister, Tolany and Kumar consists of Company-paid life insurance premiums, disability premiums, and employer matching contributions into the Company’s 401(k) Plan, executive physicals for Messrs. Johnson, Hollister and Tolany, and a charitable contribution match for Mr. Kumar. 2021 Other Compensation for Messrs. Johnson, Hollister, Tolany and Kumar consists of Company-paid life insurance premiums, disability premiums, and employer matching contributions into the Company’s 401(k) Plan, and executive physicals for Messrs. Johnson, Hollister and Kumar. |
Summary Compensation Table
| (5) Amount shown reflects the two different base salary rates paid to Mr. Johnson in fiscal 2021 due to his promotion to President in April 2021. |
Summary Compensation Table
| (6) Amount shown reflects the two different base salary rates paid to Messrs. Hollister, Tolany, and Kumar in fiscal 2022 due to market based salary increases provided on April 1, 2022. |
Summary Compensation Table
| (7) Amount shown reflects the different base salary rates paid to Messrs. Johnson, Hollister, and Kumar in fiscal 2023 due to market based salary increases provided on April 2,2023 and a 2023 reduction in base salary rates for the same plus Messr.Tolany effective from August 1 to December 30, 2023. |
Summary Compensation Table
| (8) Mr. Hollister terminated his employment with Silicon Laboratories on February 2, 2024. |
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table contains information concerning all equity and non-equity plan-based awards granted during fiscal 2023 to our Named Executive Officers. All equity plan-based awards were granted under our 2009 Stock Incentive Plan, as amended and restated on April 22, 2021, and all non-equity plan-based awards were granted under our 2023 Bonus Plan.
Grants of Plan-based Awards Table for Fiscal 2023
Grants of Plan-based Awards Table for Fiscal 2023
Grants of Plan-based Awards Table for Fiscal 2023
| | 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 | Grant Date Fair Value of Stock Awards | | Names | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | Units(3) (#) | Awards(4) ($) | | R. Matthew Johnson | | 132,454 | 883,025 | 1,324,537 | — | — | — | — | — | | | | | | | — | — | — | — | — | | | 2/15/2023 | — | — | — | 1 | 21,976 | 43,952 | — | 4,141,377 | | | 5/15/2023 | — | — | — | — | — | — | 15,992 | 2,180,029 | | John Hollister | | 67,013 | 446,750 | 670,125 | — | — | — | — | — | | | 2/15/2023 | — | — | — | 1 | 7,535 | 15,070 | — | 1,419,971 | | | 5/15/2023 | — | — | — | — | — | — | 6,397 | 872,039 | | Brandon Tolany | | 62,100 | 414,000 | 621,000 | — | — | — | — | — | | | 2/15/2023 | — | — | — | 1 | 9,105 | 18,210 | — | 1,715,837 | | | 5/15/2023 | — | — | — | — | — | — | 4,798 | 654,063 | | Sandeep Kumar | | 43,313 | 288,750 | 433,125 | — | — | — | — | — | | | 2/15/2023 | — | — | — | 1 | 3,140 | 6,280 | — | 591,733 | | | 5/15/2023 | — | — | — | — | — | — | 3,199 | 436,088 |
Grants of Plan-based Awards Table for Fiscal 2023
| (1) Amounts shown represent amounts that were available under the 2023 Bonus Plan. Actual bonuses received under the 2023 Bonus Plan by the executive officers are reported in the Summary Compensation Table under the column entitled “Non-Equity Incentive Plan Compensation.” |
Grants of Plan-based Awards Table for Fiscal 2023
| (2) Represents PSUs. |
Grants of Plan-based Awards Table for Fiscal 2023
| (3) Represents RSUs. |
Grants of Plan-based Awards Table for Fiscal 2023
| (4) Includes grant date fair value of equity awards. A discussion of the assumptions underlying the calculation under ASC Topic 718 is found under Note 15, Stock-Based Compensation in our Form 10-K for the fiscal year ended December 30, 2023. |
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table shows all holdings of unexercised stock options and unvested RSU and PSU awards for each of our Named Executive Officers as of December 30, 2023
Outstanding Equity Awards at Fiscal 2023 Year-End Table
Outstanding Equity Awards at Fiscal 2023 Year-End Table
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| | | Option Awards | | | | Stock Awards | | | | | | | | | | | | | Equity Incentive Plan Awards: | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units That Have Not Vested ($) | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | | Exercisable | Unexercisable | | | | | | | | R. Matthew Johnson | 5/15/2021 | — | — | — | — | 2,926(1) | 387,022 | — | — | | | 5/15/2021 | — | — | — | — | — | — | 8,778(2) | 1,161,066 | | | 6/03/2021 | — | — | — | — | — | — | 3,686(3) | 487,547 | | | 12/22/2021 | — | — | — | — | — | — | 25,014(4) | 3,308,602 | | | 2/15/2022 | — | — | — | — | — | — | 14,424(5) | 1,907,862 | | | 5/15/2022 | — | — | — | — | 12,132(6) | 1,604,700 | — | — | | | 2/15/2023 | — | — | — | — | — | — | 21,976(7) | 2,906,766 | | | 5/15/2023 | — | — | — | — | 15,992(8) | 2,155,262 | — | — | | John Hollister | 5/15/2021 | — | — | — | — | 2,224(1) | 294,168 | — | — | | | 5/15/2021 | — | — | — | — | — | — | 6,671(2) | 882,373 | | | 6/03/2021 | — | — | — | — | — | — | 3,686(3) | 487,547 | | | 2/15/2022 | — | — | — | — | — | — | 5,770(5) | 763,198 | | | 5/15/2022 | — | — | — | — | 4,853(6) | 641,906 | — | — | | | 2/15/2023 | — | — | — | — | — | — | 7,535(7) | 996,654 | | | 5/15/2023 | — | — | — | — | 6,397(8) | 846,131 | — | — | | Brandon Tolany | 1/28/2016 | 18,270(9) | — | 43.82 | 1/28/2026 | — | — | — | — | | | 5/15/2021 | — | — | — | — | 1,756(1) | 232,266 | — | — | | | 5/15/2021 | — | — | — | — | — | — | 5,267(2) | 696,666 | | | 6/03/2021 | — | — | — | — | — | — | 3,686(3) | 487,547 | | | 2/15/2022 | — | — | — | — | — | — | 4,328(5) | 572,465 | | | 5/15/2022 | — | — | — | — | 3,640(6) | 481,463 | — | — | | | 2/15/2023 | — | — | — | — | — | — | 9,105(7) | 1,204,318 | | | 5/15/2023 | — | — | — | — | 4,798(8) | 634,631 | — | — |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| | | Option Awards | | | | Stock Awards | | | | | | | | | | | | | Equity Incentive Plan Awards: | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) | | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units That Have Not Vested ($) | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | | Exercisable | Unexercisable | | | | | | | | Sandeep Kumar | 5/15/2021 | — | — | — | — | 1,405(1) | 185,839 | — | — | | | 5/15/2021 | — | — | — | — | — | — | 4,214(2) | 557,386 | | | 6/03/2021 | — | — | — | — | — | — | 7,371(3) | 974,962 | | | 2/15/2022 | — | — | — | — | — | — | 2,885(5) | 381,599 | | | 5/15/2022 | — | — | — | — | 2,427(6) | 321,019 | — | — | | | 2/15/2023 | — | — | — | — | — | — | 3,140(7) | 415,328 | | | 5/15/2023 | — | — | — | — | 3,199(8) | 423,132 | — | — |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (1) Assuming continued service, the Vesting Date is May 15, 2024. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (2) Represents PSUs granted on May 15, 2021 and vesting on May 15, 2024. The final number of shares of common stock to be earned and settled will be subject to the terms of applicable award agreements. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (3) Represents PSUs granted on June 03, 2021 and vesting on May 15, 2024. The final number of shares of common stock to be earned and settled will be subject to the terms of applicable award agreements. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (4) Represents PSUs granted on December 22, 2021 and vesting on February 15, 2025. The final number of shares of common stock to be earned and settled will be subject to the terms of applicable award agreements. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (5) Represents PSUs granted on February 15, 2022 and vesting on February 15, 2025. The final number of shares of common stock to be earned and settled will be subject to the terms of applicable award agreements. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (6) Assuming continued service, the RSUs shall vest one-half on each of May 15, 2024 and May 15, 2025, respectively. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (7) Represents PSUs granted on February 15, 2023 and vesting on February 15, 2026. The final number of shares of common stock to be earned and settled will be subject to the terms of applicable award agreements. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (8) Assuming continued service, the RSUs shall vest one-third on each of May 15, 2024, May 15, 2025 and May 15, 2026, respectively. |
Outstanding Equity Awards at Fiscal 2023 Year-End Table
| (9) Represents 18,270 Non-qualified stock options outstanding of the 72,940 options granted on January 28, 2016, the options associated with this grant were fully vested as of January 28, 2020. |
Option Exercises and Stock Vested Table
Option Exercises and Stock Vested Table The following table shows gains realized from the exercise of stock options and shares acquired upon the vesting of stock awards with respect to our Named Executive Officers during fiscal 2023.
Option Exercises and Stock Vested Table During Fiscal 2023
Option Exercises and Stock Vested Table During Fiscal 2023
Option Exercises and Stock Vested Table During Fiscal 2023
| | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | R. Matthew Johnson | — | — | 16,220 | 2,449,024 | | John Hollister | — | — | 11,879 | 1,857,259 | | Brandon Tolany | — | — | 9,282 | 1,453,132 | | Sandeep Kumar | — | — | 7,184 | 1,129,604 |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Consistent with practices within our industry, we also provide certain post-employment termination benefits. We have implemented these programs in order to ensure we are able to continue to attract and retain top talent as well as ensure that during the uncertainty associated with a potential change in control or succession plan, the executives remain focused on their responsibilities and ensure a maximum return for our stockholders. Executive Agreements. We have entered into a CEO Severance Agreement with Mr. Johnson and Executive Severance Agreements with Messrs. Hollister, Tolany, and Kumar. The agreements provide for the following potential payments and benefits upon a Change in Control Termination (as defined in the agreements): (a) 100% of annual base salary (200% in the case of the CEO), (b) 100% of target variable compensation for a full fiscal year (200% in the case of the CEO), (c) any actual earned bonus, commission or other short term cash incentive compensation for the fiscal year preceding the Change in Control Termination to the extent such amount has not already been paid (d) a pro-rated portion of target variable compensation for the full fiscal year in which the Change in Control Termination occurs, (e) stock options, restricted stock, and restricted stock units shall become fully vested, (f) market stock units and performance stock units shall be vested at the greater of actual performance or 100% of the target value and (g) a lump sum equal to the pre-tax cost of 12 months of continued COBRA coverage (24 months in the case of the CEO). Change in Control Termination occurs if the executive officer is demoted, relocated, or terminated other than for misconduct within the period beginning upon the earlier of our execution of a definitive agreement that results in a change in control or 90 days prior to a change in control and ending 18 months following the change in control transaction. The agreements provide for any change in control payments subject to Section 280G of the Code to be equal to the greater of: (i) the aggregate parachute payments reduced to the maximum amount that would not subject the executive to relevant excise taxes; or (ii) the aggregate parachute payments, with the executive paying the relevant excise taxes and such other applicable federal, state and local income and employment taxes. Under this “best after tax” provision, the NEO is solely responsible for payment of excise taxes and other applicable federal, state, and local income and employment taxes. The agreements also provide for the following potential payments and benefits upon a Non-CIC Termination (as defined in the agreements): (a) 100% of annual base salary, (b) 100% of target variable compensation for a full fiscal year, (c) any actual earned bonus, commission or other short term cash incentive compensation for the fiscal year preceding the Non-CIC Termination to the extent such amount has not already been paid, (d) a pro-rated portion of actual earned bonus for the full fiscal year in which the Non-CIC Termination occurs, (e) restricted stock units that would have vested within 12 months following such termination shall become fully vested, and (f) a lump sum equal to the pre-tax cost of 12 months of continued COBRA coverage. Equity Compensation. At our 2009 annual stockholders’ meeting, our stockholders approved the 2009 Stock Incentive Plan (the “2009 Plan”) and the 2009 Plan became effective immediately. On April 15, 2014, our stockholders approved amendments of the 2009 Plan. The amendments updated the 2009 Plan to comply with changes in local laws, authorized additional shares of common stock for future issuance, improved the Company’s corporate governance and implemented other best practices. The 2009 Plan governs the equity awards granted to our Named Executive Officers and other participants. The Plan includes the following general change in control provisions, which may result in the accelerated vesting of outstanding stock options and stock awards:
Potential Payments Upon Termination or Change in Control
| • | Automatic Acceleration of Awards if not Assumed: In the event that we experience a change in control, the vesting of outstanding equity awards will automatically fully accelerate and any transfer restrictions or repurchase rights will lapse, unless the awards are assumed or replaced by the successor company or otherwise continued in effect. |
Potential Payments Upon Termination or Change in Control
| • | Discretionary Acceleration of Awards: Our Compensation Committee, as plan administrator of the Plans, has the authority to accelerate the vesting of all outstanding equity awards at any time, including in the event of a change in control of the Company, by means of a “hostile take-over” or otherwise, whether or not those awards are assumed or replaced or otherwise continued in effect. |
Potential Payments Upon Termination or Change in Control
| • | Acceleration Upon Termination After a Change in Control: During a change in control, our Compensation Committee may provide for the acceleration of vesting if a participant (including a Named Executive Officer) is involuntarily terminated within a period of 18 months following a change in control. Pursuant to this authority, the terms of the stock options and stock awards granted to the Named Executive Officers and other participants under the Plans provide for such acceleration in vesting in the event of involuntary termination within 18 months following a change in control. Involuntary Termination includes termination by the successor company for reasons other than misconduct or resignation by the individual following a material reduction in duties, a material reduction in compensation, or involuntary relocation. |
Potential Payments Upon Termination or Change in Control
The following table depicts potential compensation arrangements with our NEOs as a result of a change in control that subsequently results in involuntary termination. Such termination is assumed to occur on December 30, 2023, the last business day of our fiscal 2023, and the amounts shown are based on each NEO’s target compensation for 2023, without giving effect to the temporary reductions to base salary that were made during the year.
Potential Payments Upon Termination or Change in Control
| Name | Severance Payment ($) | Target Bonus Payment(2) ($) | Intrinsic Value of Accelerated Equity(1) ($) | COBRA Payment ($) | Total ($) | | R. Matthew Johnson | 1,378,000 | 1,791,400 | 13,878,827 | 62,474 | 17,110,701 | | John Hollister (3) | 450,000 | 450,000 | 4,911,979 | 46,931 | 5,858,910 | | Brandon Tolany | 414,000 | 414,000 | 4,309,357 | 35,241 | 5,172,598 | | Sandeep Kumar | 387,000 | 290,250 | 3,259,265 | 34,832 | 3,971,347 |
Potential Payments Upon Termination or Change in Control
| (1) Value is based upon the closing selling price per share of our common stock on the NASDAQ Global Select Market on the last trading day of fiscal 2023, which was $132.27, less (if applicable) the option exercise price payable per share. |
Potential Payments Upon Termination or Change in Control
| (2) Target bonus values have not been reduced even though the Compensation Committee made the decision to cancel the 2023 bonus opportunity. |
Potential Payments Upon Termination or Change in Control
| (3) Mr. Hollister resigned as Senior Vice President and Chief Financial Officer effective February 2, 2024, and no severance benefits or payments were made in connection with the resignation. |
Potential Payments Upon Termination or Change in Control
The following table depicts potential compensation arrangements with our NEOs as a result of a termination in employment that is not covered by change in control. Such termination is assumed to occur on December 30, 2023, the last business day of our fiscal 2023, and the amounts shown are based on each NEO’s target compensation for 2023, without giving effect to the temporary reductions to base salary that were made during the year.
Potential Payments Upon Termination or Change in Control
| Name | Severance Payment ($) | Target Bonus Payment (4) ($) | Pro-rata Current Year Bonus Payment (1) ($) | Intrinsic Value of Accelerated Equity (2) ($) | COBRA Payment ($) | Total ($) | | R. Matthew Johnson | 689,000 | 895,700 | 0 | 1,894,371 | 31,237 | 3,510,308 | | John Hollister (3) | 450,000 | 450,000 | 0 | 897,055 | 46,931 | 1,843,986 | | Brandon Tolany | 414,000 | 414,000 | 0 | 684,497 | 35,241 | 1,547,738 | | Sandeep Kumar | 387,000 | 290,250 | 0 | 487,283 | 34,832 | 1,199,365 |
Potential Payments Upon Termination or Change in Control
| (1) Pro-rata current year bonus payment calculation based upon 2023 full fiscal year as all Named Executive Officers worked through the end of the fiscal year. Note that no bonus was paid in 2023 based upon business results. |
Potential Payments Upon Termination or Change in Control
| (2) Value is based upon the closing selling price per share of our common stock on the NASDAQ Global Select Market on the last trading day of fiscal 2023, which was $132.27, less (if applicable) the option exercise price payable per share. |
Potential Payments Upon Termination or Change in Control
| (3) Mr. Hollister resigned as Senior Vice President and Chief Financial Officer effective February 2, 2024, and no severance benefits or payments were made in connection with the resignation. |
Potential Payments Upon Termination or Change in Control
| (4) Target bonus values have not been reduced even though the Compensation Committee made the decision to cancel the 2023 bonus opportunity. |
CEO Pay Ratio
CEO Pay Ratio The CEO Pay Ratio analysis is a required disclosure enacted by the Securities and Exchange Commission (“SEC”) pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). A reasonable estimate was prepared of the ratio of our CEO’s annual total compensation for fiscal year 2023 to the annual total compensation of our median employee for the same period. The 2023 calculation of all employees’ compensation was determined in the same manner as the “Total Compensation” shown for our CEO in the “Summary Compensation Table” with some adjustments necessary to report all amounts in US currency. Pay elements included in the annual total compensation for our median employee may include all or some of the following:
CEO Pay Ratio
| • | Base salary including 13th month payments |
CEO Pay Ratio
| • | Bonus, including quarterly profit sharing, recruiting referral bonuses, and ad-hoc bonuses earned via outstanding performance or for international travel |
CEO Pay Ratio
| • | Sales commissions |
CEO Pay Ratio
| • | Benefits, as provided to eligible roles in certain markets such as Company-paid life insurance premiums, car allowances or reimbursement for Company-paid executive physicals |
CEO Pay Ratio
| • | Long term incentives including RSUs and Restricted Cash Awards (“RCAs”) as provided to eligible roles in certain markets |
CEO Pay Ratio
Our calculations were prepared consistent with past years and based on our median employee as of December 30, 2023. We determined the compensation of our median employee by calculating the annual total compensation using the applicable components above. The annual total compensation for our CEO as represented in the Summary Compensation Table was $6,894,721 and the compensation of our median employee was $99,184. The resulting ratio is 69.5 to 1. The shift in ratio is representative of the targeted growth of our employee population in certain countries outside of the United States. This information is being provided in order to comply with the SEC’s disclosure rules. In calculating the pay ratio, SEC rules allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions reflecting their unique employee populations. Therefore, our reported pay ratio may not be comparable to that reported by other companies due to differences in industries, scope of international operations, business models and scale, as well as the different estimates, assumptions, and methodologies applied by other companies in calculating their respective pay ratios. Neither the Compensation Committee nor management of the Company used the pay ratio measure in making compensation decisions.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. The amounts reported in this table are not additional amounts received by our chief executive officer and non-PEO NEOs in excess of the amounts reported in the Summary Compensation Table (“SCT”). The “compensation actually paid” set forth in the table below does not reflect amounts actually realized by our NEOs, and the Compensation Committee did not consider the pay versus performance disclosure below when making compensation decisions for any of the years presented. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.” Fair value amounts below are computed in a manner consistent with the fair value methodology used to account for share-based payments in our financial statements under generally accepted accounting principles. Total shareholder return (“TSR”) has been calculated in a manner consistent with Item 402(v) of Regulation S-K.
Pay Versus Performance
| (a) Year | (b) SCT Total for CEO (1) | (c) Compensation Actually Paid to CEO (2) | (d) Average SCT Total for non-CEO NEOs (3) | (e) Average Compensation Actually Paid to non-CEO NEOs (4) | (f) Company TSR (5) | (g) Index TSR (6) | (h) Net Income (7) | (i) Adjusted Revenue (8) | | FY2023 | $6,894,721 | $(3,944,626) | $2,284,928 | $(376,763) | $113.52 | $237.57 | $(34,516,000) | $782,258,000 | | FY2022 | $6,756,233 | $647,273 | $2,411,000 | $(874,461) | $116.43 | $142.26 | $91,402,000 | $1,024,106,000 | | FY2021 | $17,016,409 | $21,049,328 | $4,380,950 | $11,180,775 | $177.15 | $218.45 | $2,117,399,000 | $926,572,000 | | FY2020 | $6,204,724 | $3,366,644 | $2,273,365 | $1,487,824 | $109.29 | $152.93 | $12,531,000 | $886,677,000 |
Pay Versus Performance
| (1) G. Tyson Tuttle was CEO during FY2020 and FY2021, and R. Matthew Johnson became CEO in FY2022, effective January 2, 2022. The dollar amounts reported in column (b) are the amounts of total compensation reported for the CEO for each corresponding year in the “Total” column of the Summary Compensation Table. |
Pay Versus Performance
| (2) The Compensation Actually Paid Schedule shown below sets forth the adjustments made to arrive at the “compensation actually paid” to our Chief Executive Officer. |
Pay Versus Performance
| (3) During FY2020, our non-CEO NEOs were John Hollister, Brandon Tolany, D. Mark Thompson, and R. Matthew Johnson. During FY2021, our non-CEO NEOs were R. Matthew Johnson, John Hollister, Brandon Tolany, and Sandeep Kumar. During FY2022 and FY2023, our non-CEO NEOs were John Hollister, Brandon Tolany, and Sandeep Kumar. The dollar amounts reported in column (d) represent the average of the compensation reported for the NEOs for each corresponding year in the “Total” column of the Summary Compensation Table. |
Pay Versus Performance
| (4) The Compensation Actually Paid Schedule shown below sets forth the adjustments made to arrive at the average “compensation actually paid” to our non-CEO NEOs for F Y 2023. |
Pay Versus Performance
| (5) Represents the Company’s common stock cumulative TSR on a fixed investment of $100 over the FY starting from the market close on the last trading day of FY2019 through the end of each appliable year in the table, assuming reinvestment of any dividends. |
Pay Versus Performance
| (6) Represents the cumulative TSR of the PHLX Semiconductor Index, the Company’s peer group for this purpose, on a fixed investment of $100 over the FY starting from the market close on the last trading day of FY2019 through the end of each applicable year in the table. |
Pay Versus Performance
| (7) GAAP Net Income as reported under the Company’s Consolidated Statements of Income on Form 10-K of the applicable year. |
Pay Versus Performance
| (8) Refers to the GAAP Revenue as reported under the Company’s Consolidated Statements of Income on Form 10-K of the applicable year. The amount shown for FY2021 included $205,712,000 to adjust for the revenue earned in the divested infrastructure and automotive business of the Company through July 3, 2021 of that year, as more fully discussed under Note 3, Discontinued Operations , in our Form 10-K for the most recently completed fiscal year. The amount shown for FY2020 is the Company’s GAAP revenue as originally reported in Form 10-K for the year prior to the business divestiture. |
List of Most Important Financial Performance Measures
| | FY2023 | | | Compensation Actually Paid Schedule: | CEO | Average non-CEO NEO | | Summary Compensation table total for applicable year. | 6,894,721 | 2,284,928 | | Deduction for amounts reported under the “Stock Awards ” and “Option Awards” columns in the Summary Compensation table for applicable year. | (6,321,406) | (1,896,577) | | Increase based on ASC Topic 718 fair value of Awards granted during applicable year that remain unvested as of applicable year end, determined as of applicable year end . | 6,982,641 | 2,094,963 | | Increase/deduction for Awards granted in prior years that were outstanding and unvested as of applicable year end, determined based on change in ASC Topic 718 fair value from the prior year end to the applicable year end. | (11,197,405) | (2,613,088) | | Increase/deduction for Awards granted in prior years that vested during the applicable year, determined based on change in ASC Topic 718 fair value from the prior year end to the vesting date . | 248,457 | 198,143 | | Deduction of Awards granted in prior year that were forfeited in the applicable year, determined based on ASC Topic 718 fair value as of prior year end. | (551,634) | (445,133) | | Compensation Actually Paid - | (3,944,626) | (376,763) |
Pay Versus Performance Relationship Disclosures
Pay Versus Performance Relationship Disclosures The chart below provides a comparison between the compensation actually paid to our CEO and our average compensation actually paid to our other NEOs against the Company total shareholder return and the PHLX Semiconductor Index total shareholder return. As demonstrated below, the trend in NEO compensation has largely been aligned to the trend in TSR. The chart below illustrates the correlation between compensation actually paid to our CEO and average compensation actually paid to our other NEOs against the Company’s GAAP net income for FY2020, FY2021, FY2022, and FY2023. Our 2021 net income was heavily influenced by our divestiture event. The chart below illustrates the correlation between compensation actually paid to our CEO and average compensation actually paid to our other NEOs against the Company’s GAAP annual revenue for FY2020, FY2021, FY2022, and FY2023. FY2021 actual compensation values were heavily influenced by our stock price increase and our PSU overperformance, post our divestiture event. FY2022 actual compensation values were heavily influenced by our prior MSU underperformance and related CAP deductions. FY2023 actual compensation values were heavily influenced by our PSU underperformance and related CAP deductions.