DEF 14A of Sanmina Corp
Filed Jan 26, 2024 · FY20230001308179-24-000020
Director Nominees
Director Nominees
Director Nominees
| | | Age | Independent | Director Since | Tenure (years) | Board Committees | | | | Name and Principal Position | | | | | | AC | CC | NGC | | | Jure Sola Chairman and Chief Executive Officer Sanmina Corporation | 73 | No | 1989 | 35 | | | | | | Susan K. Barnes Former Chief Financial Officer, Pacific Biosciences of California, Inc. | 70 | Yes | 2023 | <1 | | | | | | Eugene A. Delaney (Lead Independent Director) Consultant | 67 | Yes | 2013 | 11 | | | | | | David V. Hedley III Chief Strategy Officer, Bramshill Investments, LLC | 54 | Yes | 2022 | 1 | | | | | | Susan A. Johnson Executive Vice President and General Manager, Wireline Transformation and Supply Chain AT&T Communications, Inc. | 58 | Yes | 2021 | 2 | | | | | | Joseph G. Licata, Jr. Managing Partner - Private Equity, BlueArc Capital | 63 | Yes | 2007 | 17 | | | | | | Krish Prabhu Consultant | 69 | Yes | 2019 | 5 | | | | | | Mario M. Rosati Retired Member, Wilson Sonsini Goodrich & Rosati | 77 | Yes | 1997 | 27 | | | | | | Mythili Sankaran Chief Executive Officer, Neythri.org, and Founding Managing Partner, Neythri Futures Fund | 58 | Yes | 2023 | <1 | | | |
Director Nominees
| AC - Audit Committee | NGC - Nominating and Governance Committee | CC - Compensation Committee | | Chair | | Member |
Compensation Practices
| What We Don’t Do | | No guaranteed bonus payments for CEO or other NEOs. No repricing of options. No tax gross ups. No excessive change in control severance protections (the highest change in control severance multiple is two times salary plus one times target bonus). No single trigger change in control plans. No hedging or pledging of the Company’s stock by our executive officers and directors is allowed. No extraordinary perquisites. |
Director Nominees
Director Nominees
Director Nominees
| JURE SOLA Age: 73 Director Since: 1989 Principal Occupation: Chairman and Chief Executive Officer of Sanmina Corporation | Biographical Information ●Has served as Sanmina’s Chief Executive Officer since August 2020 and from April 1991 to October 2017, Chairman of Sanmina’s Board since August 2020 and from April 1991 to December 2001 and from December 2002 to October 2017, Sanmina’s Executive Chairman from October 2017 to August 2020, and Co-Chairman of Sanmina’s Board from December 2001 to December 2002. ●Co-founded Sanmina Corporation and initially held the position of Vice President of Sales in 1980. ●Became Vice President and General Manager of Sanmina Corporation, responsible for manufacturing operations and sales and marketing. ●Elected as a director and in October 1989 was appointed as President of Sanmina Corporation. Board Nominating Factor Mr. Sola’s role as the co-founder of Sanmina as well as his more than 40 years of experience in the electronics manufacturing industry and deep knowledge of the Company and its operations. |
Director Nominees
| SUSAN K. BARNES Age: 70 Director Since: June 2023 Principal Occupation: Former Chief Financial Officer, Pacific Biosciences, Inc. | Biographical Information ●Has served as a director of Sanmina since June 2023. ●Served as Executive Vice President and Chief Financial Officer of Pacific Biosciences, Inc., a life sciences technology company, from 2010 to 2020. ●Served as Senior Vice President, Finance and CFO at Intuitive Surgical from 1997 to 2005. ●Was Managing Director of the private equity group at Jefferies & Company from 1994 to 1996. ●Was CFO and Managing Director of Richard C. Blum & Associates from 1991 to 1994. ●Co-founded NeXT Computer with Steve Jobs and four others in 1985; she was Vice President and CFO until 1991. ●Was the Controller of Apple’s Macintosh division from 1981 to 1985. Board Nominating Factor Ms. Barnes’ deep operational and finance experience in leading technology companies. Board Committees N/A |
Director Nominees
| EUGENE A. DELANEY (Lead Independent Director) Age: 67 Director Since: 2013 Principal Occupation: Consultant | Biographical Information ●Has served as a director of Sanmina since December 2013 and as Lead Independent Director since March 2022. ●Served as Executive Vice President, Product and Business Operations of Motorola Solutions, Inc., a worldwide provider of communications infrastructure, devices, software and services to government and enterprise customers, from January 2011 through July 2013. ●Held the positions of Executive Vice President, President, Enterprise Mobility Solutions, Motorola Inc. from January 2009 to August 2010; Senior Vice President, President, Government and Public Safety from May 2007 to January 2009; and Senior Vice President, International Sales Operations, Networks and Enterprise from May 2006 to May 2007 with Motorola, Inc. ●Served in other senior management roles with Motorola, Inc., including Senior Vice President of the Cellular Infrastructure Group, and President of Asia/Pacific region and Chairman of Motorola China Ltd. Board Nominating Factor Mr. Delaney’s more than 25 years of senior management experience with a major global communications technology company, particularly in the areas of business transformation and corporate finance. Board Committees Compensation (Chair), Nominating and Governance |
Director Nominees
| DAVID V. HEDLEY III Age: 54 Director Since: 2022 Principal Occupation: Chief Strategy Officer of Bramshill Investments, LLC | Biographical Information ●Appointed as a director of Sanmina in December 2022. ●Has served as Chief Strategy Officer of Bramshill Investments, LLC, an alternative fixed income asset manager, since 2021. ●Served as Principal and Senior Managing Director – Head of U.S. Technology Investment Banking for Ernst & Young Capital Advisors, LLC from 2014 to 2020. ●Held senior technology investment banking roles at Canaccord Genuity, UBS Investment Bank, Thomas Weisel Partners and Merrill Lynch & Co. between 2000 and 2014. Board Nominating Factor Mr. Hedley’s extensive experience as an investment banker and deep knowledge of the EMS industry. Board Committees Audit |
Director Nominees
| SUSAN A. JOHNSON Age: 58 Director Since: 2021 Principal Occupation: Executive Vice President and General Manager, Wireline Transformation and Supply Chain at AT&T Communications, Inc. | Biographical Information ●Appointed as a director of Sanmina in December 2021. ●Has served as Executive Vice President and General Manager, Wireline Transformation and Supply Chain for AT&&T Communications, Inc., a telecommunications provider, since November 2022 and as Executive Vice President of Global Connections and Supply Chain for AT&T from 2014 until November 2022. ●Held other senior leadership positions with AT&T between 2000 and 2014, including Senior Vice President, Investor Relations, Senior Vice President, Customer Information Services, Senior Vice President, Business Development and Senior Vice President, Corporate Strategy and Planning. ●Worked in investment banking at Smith Barney. Board Nominating Factor Ms. Johnson’s wealth of experience in corporate strategy, business development, supply chain management and sustainability. Board Committees Audit (Chair) |
Director Nominees
| JOSEPH G. LICATA, JR. Age: 63 Director Since: 2007 Principal Occupation: Managing Partner - Private Equity, BlueArc Capital | Biographical Information ●Has served as a director of Sanmina since August 2007. ●Has served as the Managing Partner - Private Equity, of BlueArc Capital since April 2014. ●Current Chairman of the Board of Brunswick Bowling Products. ●Past Chairman of the Board of Choice Adhesives Corp. ●Past Chief Executive Officer of Synergy Leadership, LLC, a firm specializing in Board and CEO advisory services in the areas of corporate and growth strategy, operational full potential and enterprise value creation, a company which he also founded, from January 2011 until April 2014. ●Served as Chief Executive Officer of Peopleclick Authoria, Inc., a vendor of human resources process management software and services, from April 2010 through November 2010. ●Served as President and Chief Executive Officer of SER Solutions, Inc., a global call management and speech analytics solutions company, from July 2007 through October 2008 when the company was acquired. ●Served as President and Chief Executive Officer of Siemens Enterprise Networks, LLC, a leader of enterprise communications solutions, from 2001 to 2006. Board Nominating Factor Mr. Licata’s more than 20 years of experience as chief executive officer and chairman of companies in diverse industries providing him excellent visibility into operational and financial issues as well as creating shareholder value. Board Committees Audit, Compensation |
Director Nominees
| KRISH PRABHU Age: 69 Director Since: 2019 Principal Occupation: Consultant | Biographical Information ●Has served as a director of Sanmina since September 2019. ●Has been an independent technology consultant since retiring from AT&T, a telecommunications service provider, in September 2016, where he had served as Chief Technology Officer and President of AT&T Labs since June 2011. ●Held senior management positions at Tellabs, Inc., a telecommunications equipment provider, as President and Chief Executive Officer, from 2004 until 2008, and at Alcatel, also a telecommunications equipment provider, between 1991 and 2001. ●Was a venture partner at Morganthaler Ventures between 2001 and 2004. ●Served as a director of Ribbon Communications Inc. between 2020 and 2022 and as a director of Altera Corporation between 2007 and 2015. ●Serves as a director of Omnitier, a private company. Board Nominating Factor Mr. Prabhu’s more than 30 years of industry experience and senior leadership roles at global public corporations. Board Committees Compensation, Nominating and Governance (Chair) |
Director Nominees
| MARIO M. ROSATI Age: 77 Director Since: 1997 Principal Occupation: Retired Member, Wilson Sonsini Goodrich & Rosati | Biographical Information ●Has served as a director of Sanmina since 1997. ●Member of the law firm of Wilson Sonsini Goodrich & Rosati from 1971 until January 2020. ●Served as a director of Aehr Test Systems, a provider of semiconductor testing equipment, from 1977 to 2008 and from 2009 until January 2023. Board Nominating Factor Mr. Rosati’s senior and significant role in a major Silicon Valley law firm serving technology companies and service on multiple company boards, giving him unique viewpoints on the technology industry and strategies for growth. Board Committees Nominating and Governance |
Director Nominees
| MYTHILI SANKARAN Age: 58 Director Since: June 2023 Principal Occupation: Chief Executive Officer, Neythri.org and Founding Managing Partner, Neythri Futures Fund | Biographical Information ●Has served as a director of Sanmina since June 2023. ●Has served as CEO and Co-founder of Neythri.org and the Founding Managing Partner of the Neythri Futures Fund since 2021. ●Was the Senior Executive Director & Head, Western Region for the U.S. India Business Council (USIBC) from 2009 to 2014. ●Was the CEO of Koollage, Inc. prior to USIBC. ●Earlier in her career, held senior leadership positions at Palmsource, eVoice, Lucent Technologies, AT&T Bell Labs Innovations and IBM Research Labs. Board Nominating Factor Ms. Sankaran’s long experience in both the technology sector and in international trade matters. Board Committees N/A |
COMPENSATION OF DIRECTORS
COMPENSATION OF DIRECTORS
Director Compensation Arrangements
Director Compensation Arrangements The Nominating and Governance Committee of the Board reviews and recommends non-employee director pay levels, which are approved by the Board. The Nominating and Governance Committee believes Sanmina’s director compensation pay levels are reasonable in light of benchmarking data prepared by the Nominating and Governance Committee’s independent compensation consultant, Exequity, LLP (“Exequity”), and reviewed by the Committee.
Cash Compensation
Cash Compensation During fiscal 2023, non-employee directors were eligible to receive an annual cash retainer of $80,000. Each such director who was a member of the Audit, Compensation or Nominating and Governance Committees of the Board also earned an annual cash retainer of $10,000 and the chairperson of each such committee earned an additional annual cash retainer of $30,000 in the case of the Audit Committee, $25,000 in the case of the Compensation Committee and $15,000 in the case of the Nominating and Governance Committee. Finally, our lead independent director earned an additional cash retainer of $40,000 for his duties as such during 2023. Directors were permitted to convert their cash retainers into RSUs vesting in one year or upon retirement with the same value as the retainer to which they were entitled.
Equity Compensation
Equity Compensation During fiscal 2023, each non-employee director received an aggregate of $180,000 in value (pro-rated for non-employee directors who joined our Board during fiscal 2023] of restricted stock units granted under our 2019 Equity Incentive Plan vesting as to 25% of the shares subject thereto on each of the first four quarterly anniversaries of the grant date.
Director Compensation Limits
Director Compensation Limits The 2019 Plan Equity Incentive provides that, in a given fiscal year, a non-employee director may not receive equity awards having a grant date fair market value greater than $900,000. Sanmina believes that having a stockholder-approved limit on equity grants to directors is consistent with best corporate governance practices. The following table presents the compensation earned by or paid to our non-employee directors during fiscal 2023.
Director Compensation Limits
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2)(3) | Total ($) | | Susan K. Barnes | 60,000 | 135,015 | 195,015(4) | | Eugene A. Delaney | 165,000 | 179,977 | 344,977 | | John P. Goldsberry(5) | 90,000 | 179,977 | 269,977 | | David V. Hedley III | 112,500 | 224,985 | 337,485(6) | | Susan A. Johnson | 120,000 | 179,977 | 299,977 | | Joseph G. Licata, Jr. | 100,000 | 179,977 | 279,977 | | Krish Prabhu | 115,000 | 179,977 | 294,977 | | Mario M. Rosati | 90,000 | 179,977 | 269,977 | | Mythili Sankaran | 60,000 | 135,015 | 195,015(4) |
Director Compensation Limits
| (1) Represents the grant date fair value of each equity award, determined in accordance with Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”). The assumptions used in the valuation of these awards are set forth in the notes to our consolidated financial statements, which are included in our Annual Report on Form 10-K for our fiscal year ended September 30, 2023, filed with the SEC on November 16, 2023. These amounts do not purport to reflect the value that will be realized upon sale of the underlying securities. | | (2) Includes the grant date fair value of restricted stock units granted in lieu of cash retainer awards, when applicable. See “Director Compensation Arrangements — Cash Compensation” above. | | (3) As of the end of fiscal 2023, the following directors held unvested restricted stock awards and outstanding stock options as follows: Ms. Barnes—2,586 and 0, respectively; Mr. Delaney— 1,573 and 15,779, respectively; Mr. Goldsberry— 1,573 and 0, respectively; Mr. Hedley—1,966 and 0, respectively; Ms. Johnson—1,573 and 0, respectively; Mr. Licata— 1,573 and 0, respectively; Mr. Prabhu— 1,573 and 0, respectively; Mr. Rosati— 1,573 and 15,779 respectively; and Ms. Sankaran— 2,586 and 0, respectively. | | (4) Compensation prorated for Board service from June 12, 2023 to March 11, 2024. | | (5) Mr. Goldsberry resigned from the Board, effective December 4, 2023. | | (6) Includes prorated compensation for Board service from December 5, 2022 to March 13, 2023. |
Director Compensation Limits
| | Proposal Two RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | | | | THE BOARD BELIEVES THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP IS IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS VOTING “FOR” THE RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING SEPTEMBER 28, 2024. | |
Director Compensation Limits
The Audit Committee has approved the engagement of PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending September 28, 2024. In the event stockholders do not ratify the Audit Committee’s selection of PwC as our independent registered public accounting firm, the Audit Committee may reconsider its selection. Representatives of PwC are expected to be present at the Annual Meeting, with the opportunity to make a statement if they desire to do so, and are expected to be available to respond to appropriate questions. The following is a summary of fees billed by our independent registered public accounting firm for the fiscal years ended October 1, 2022 (“fiscal 2022”) and September 30, 2023 (“fiscal 2023”). The Audit Committee considers the non-audit and tax fees in its assessment of the independence of the Company’s independent registered public accounting firm.
Director Compensation Limits
| | Fiscal 2023 | Fiscal 2022 | | Audit Fees (1) | $8,145,305 | $5,145,385 | | Audit-Related Fees (2) | $12,000 | $10,000 | | Tax Fees (3) | $205,000 | $260,500 | | All Other Fees (4) | $10,000 | $10,000 | | TOTAL | $8,372,305 | $5,425,885 |
SHORT-TERM INCENTIVE COMPENSATION
SHORT-TERM INCENTIVE COMPENSATION Annual incentive compensation under Sanmina’s Corporate Bonus Plan is intended to incentivize and reward the achievement of short-term goals using metrics that are clear and understandable to both management and investors. Beginning in 2020 and in response to stockholder and stockholder advisory group feedback, the Compensation Committee revised the Corporate Bonus Plan to eliminate metrics that had been previously used under both the Corporate Bonus Plan and in the long-term incentive program and to reduce the number of metrics under the plan to just two: revenue and non-GAAP operating margin, with cash flow from operations as a modifier.
SHORT-TERM INCENTIVE COMPENSATION
| Short-Term Incentive Metrics | Modifier | Rationale for Selection | | ●Revenue ●Non-GAAP operating margin | ●Cash flow from operations | ●Incentivizes improvements in year-over-year ●financial performance. |
LONG-TERM EQUITY INCENTIVES
LONG-TERM EQUITY INCENTIVES The objectives of our long-term incentive program are to incentivize and reward executives for performance that leads to long-term improvements in financial performance and stockholder value creation and to promote retention of critical executives to remain with Sanmina in an environment where competition for talent is fierce. Beginning in 2020 and in response to stockholder and stockholder advisory group feedback, the Compensation Committee revised the long-term incentive program to focus on earnings per share over a three year measurement period.
LONG-TERM EQUITY INCENTIVES
| Long-Term Incentive Metrics | Rationale for Selection | | PSUs | | | ●Non-GAAP earnings per share ●Three-year cumulative metric measured at the end of the performance period ●Variable payout (55% to 145%) based upon level of achievement and, at the discretion of the Compensation Committee, relative TSR compared to peers, with minimum threshold for any payout | ●Incentivizes long-term, sustainable improvements in financial performance that the Compensation Committee believes will lead to increases in stockholder value. | | RSUs | | | ●Cliff vests in two years (CEO) and vesting over three or four years (NEOs) | ●Promotes retention of key executives over the medium to long-term. |
2023 Stockholder Engagement and Say-on-Pay Vote
| ● | Maintaining a high percentage (58% in fiscal 2023) of total target compensation comprised of performance-based long-term incentives for the CEO; | | ● | Reducing the number of performance metrics in the annual bonus plan and eliminating duplication of annual bonus plan metrics with the metrics used in long-term incentive awards; | | ● | Ceasing to award “all or nothing” long-term incentives and instead adopting a sloped relationship between performance and earned pay, consistent with market practices; and | | ● | Approving equity awards with a variable payout (55% to 145%) based upon a three-year cumulative non-GAAP EPS target and, at the discretion of the Compensation Committee, relative TSR compared to peers, with a minimum performance threshold for any payout. |
Sanmina’s Pay for Performance Compensation Philosophy
| Objective | | How Pursued | | Increase long-term stockholder value and align the interests of our executives and stockholders. | | The vast majority of total executive compensation is equity-based so that executives are rewarded more when stockholder value is created. 100% of our long-term incentive awards to our named executive officers are in the form of equity. While a portion of equity awards are time-based in order to promote executive retention over longer performance periods, the majority of our long-term incentive grant value awarded to our named executive officers is denominated in equity-based incentives that are directly tied to the achievement of multi-year financial goals. | | Create a direct link between long-term financial performance and individual rewards. | | Our executive compensation program includes performance-based awards that reward executives for achievement of financial goals that are important to the long-term health of the business. Annual bonuses tied to achievement of shorter-term critical financial goals strengthen the foundation for long-term success. Beginning in 2020, the goals for short-term and long-term performance awards were differentiated to focus executives on achievement of critical measures of both short-term and long-term performance. | | Emphasize the competitiveness of total pay rather than any one particular element. | | We design our program so that total compensation becomes competitive only if we achieve our financial goals. In furtherance of this strategy, the majority of the compensation of our executives is at risk, becoming payable only upon achievement of specific performance targets. |
ROLE AND AUTHORITY OF SANMINA’S COMPENSATION COMMITTEE
| ● | Oversees our compensation policies, plans and benefit programs; | | | ● | Reviews and approves the performance criteria and targets for our short-term and long-term incentive compensation programs; | | | ● | Administers our equity compensation plans; | | | ● | Reviews and approves the compensation of each of our executive officers, including | | | | ● | determining the amount of base salary, target performance-based cash and equity compensation and time-based equity compensation; | | | ● | determining if and to what extent Company or individual performance goals for performance-based compensation awards have been satisfied; | | | ● | determining whether circumstances warrant upward or downward adjustment of any annual incentive bonus; and | | ● | Monitors the potential risks associated with the overall compensation program. | |
ROLE AND INDEPENDENCE OF COMPENSATION CONSULTANT
ROLE AND INDEPENDENCE OF COMPENSATION CONSULTANT The Committee retained Exequity to provide advice on matters related to executive pay. During fiscal 2023, the Committee directed Exequity to:
ROLE AND INDEPENDENCE OF COMPENSATION CONSULTANT
| ● | Review our executive compensation programs to help ensure the continued alignment of our programs with our compensation philosophy and objectives, as well as with peer practices; | | ● | Provide a review of Sanmina’s incentive program design in relation to those of our peers and those among companies in the general industry; | | ● | Review materials analyzing peer compensation data provided by management to the Committee; | | ● | Provide the Committee with information regarding executive compensation trends generally, as well as industry specific compensation trends; and | | ● | Answer questions the Committee posed regarding compensation issues. |
ROLE AND INDEPENDENCE OF COMPENSATION CONSULTANT
We are required to disclose whether the work of our compensation consultant raises any conflict of interest issues and, if so, the nature of the conflict and how the conflict was addressed. The Committee does not believe the retention of Exequity creates a conflict of interest. The Committee’s belief is based on the following:
ROLE AND INDEPENDENCE OF COMPENSATION CONSULTANT
| ● | Exequity is not performing any additional service for us, other than review of our director compensation program for the Nominating and Governance Committee; | | ● | According to Exequity, fees paid by us are anticipated to represent less than 3% of Exequity’s total revenue; | | ● | Exequity has disclosed to the Committee its conflicts of interest principles concerning client engagements and the Committee believes such policy provides reasonable assurance that conflicts of interest with Exequity will not arise; | | ● | There are no business or personal relationships between Exequity and any member of the Committee or executive officer; and | | ● | Exequity has represented to the Committee that no Exequity consultant providing services to us is a stockholder of Sanmina. |
ROLE AND INDEPENDENCE OF COMPENSATION CONSULTANT
In addition, Exequity reported solely to the Committee, our management was not involved in the negotiation of fees charged by Exequity or in the determination of the scope of work performed by Exequity and the Committee has the sole authority to hire and terminate compensation consultants, including Exequity. As a result of the foregoing, the Committee believes that Exequity is independent of Sanmina. The Committee has engaged Exequity to provide a similar analysis and review of our executive compensation program for fiscal 2024.
HOW WE DETERMINE AWARD TARGET COMPENSATION OPPORTUNITIES
| ● | The need to offer compensation packages that are comparable in total amount and in pay mix to those offered by companies competing with us for executive talent; | | ● | The relationship of the Chief Executive Officer’s compensation to that of the other NEOs; | | ● | The individual performance of the NEO; | | ● | The executive’s experience level, responsibilities, performance, and contributions to stockholder value creation; and | | ● | With respect to equity awards, the Committee also takes into account unvested holding power and the total potential value of such awards should vesting conditions be met. |
REVIEW OF PEER GROUP DATA
REVIEW OF PEER GROUP DATA In making compensation decisions for fiscal 2023, the Committee examined competitive market practices for base salary, incentive compensation and equity compensation awards of global, diversified electronics manufacturing services companies and high-technology product manufacturing companies. The Committee included these types of companies in the peer group because, like us, they have numerous, geographically dispersed manufacturing operations and design, manufacture, assemble and sell complex, highly-engineered products and components. Data on compensation practices of peer group companies generally was gathered through publicly available information. Based on a thorough review of these factors in fiscal 2023, all of the peer companies referenced for executive pay benchmarking in fiscal 2023 and listed below were deemed to appropriately reflect competitive executive pay levels and practices. The Committee also considered data from third-party surveys, which are reported on an aggregate, not individual company, basis. The peer group companies considered by the Committee in determining named executive officer compensation for fiscal 2023 are listed below:
REVIEW OF PEER GROUP DATA
| Amphenol Corporation Avnet, Inc. Fabrinet NCR Corporation TTM Technologies, Inc. | Applied Materials, Inc. Benchmark Electronics, Inc. Flex Ltd Plexus Corp Western Digital Corporation | Arrow Electronics Celestica Inc. Jabil Inc. Seagate Technology |
Base Salary
Base Salary Base salary compensates named executive officers for their services rendered on a day-to-day basis. The Committee primarily considers individual performance, experience level, changes in individual roles and responsibilities during the year and peer group compensation data in determining whether to adjust base salary levels for individual named executive officers. During early fiscal 2023, the Committee reviewed the base salary of each of the named executive officers. Based upon benchmark data and in light of their contributions to the Company during the fiscal year, the Committee increased the base salary of Mr. Mason from $310,000 to $350,000 and determined not to adjust the base salaries of the other named executive officers.
2023 Short-Term Incentive Compensation
2023 Short-Term Incentive Compensation
APPROVAL OF FISCAL 2023 CORPORATE BONUS PLAN
APPROVAL OF FISCAL 2023 CORPORATE BONUS PLAN Short-term incentives are awarded under an annual Corporate Bonus Plan. In December 2022, the Committee approved the Sanmina Fiscal 2023 Corporate Bonus Plan (the “2023 Bonus Plan”). The 2023 Bonus Plan contained the fiscal 2023 annual incentive compensation targets, expressed as a percentage of salary, for the named executive officers. The 2023 Bonus Plan also contained the performance metrics on which award payouts were based, together with target measures for each metric. For 2023, the performance metrics were: revenue and non-GAAP operating margin, with cash flow from operations as a modifier. Each 2023 Bonus Plan participant’s actual incentive compensation for fiscal 2023 was determined by reference to his or her target incentive compensation opportunity, the Company’s achievement against the corporate performance targets and achievement of the participant’s individual/divisional performance goals for fiscal 2023. Individual goals differed by NEO and included, as applicable and appropriate, demonstrated organizational leadership, strategic contributions and improvement of customer relationships and engagement. The Committee retained discretion under the 2023 Bonus Plan to amend or terminate the 2023 Bonus Plan in any respect and to adjust the individual bonuses payable under the 2023 Bonus Plan upwards or downwards based on individual performance. The Committee approved the targets contained in the 2023 Bonus Plan based primarily upon forecasts for fiscal 2023 financial performance, the Committee’s view of the likelihood of underachievement or overachievement of the targets and the competitiveness of total cash compensation that would be paid to executives compared to peer companies if the plan funded at target levels. When it approved the 2023 Bonus Plan, the Committee believed that achievement of the target corporate performance factor of 100% under the 2023 Bonus Plan would be challenging based upon industry-wide conditions and our internal forecasts at the time, including anticipated continued impacts of the COVID-19 pandemic and related supply chain shortages and delays.
OVERVIEW OF FISCAL 2023 CORPORATE BONUS PLAN DESIGN
OVERVIEW OF FISCAL 2023 CORPORATE BONUS PLAN DESIGN Step 1: The determination of the earned bonus amounts under the 2023 Bonus Plan started with the “base corporate performance factor.” The base corporate performance factor is determined in reference to two financial metrics; fiscal 2023 revenue and non-GAAP operating margin. The base corporate performance factor ranged from 0% to 130% depending on the level of fiscal 2023 revenue and non-GAAP operating margin, but the corporate performance factor is zero (and no bonus can therefore be payable) unless a certain minimum level of both revenue and non-GAAP operating margin is achieved. Step 2: Once the base corporate performance factor was determined, it was then adjusted by cash flow from operations for fiscal 2023. Actual results above a certain goal for cash flow could result in an increase in the base corporate performance factor of up to 30%, and actual results below a specified threshold could result in a decrease to the base corporate performance factor of up to 15%. Step 3: Final payout for each NEO was determined by this formula: NEO target opportunity X Adjusted Corporate Performance Factor = Annual Incentive Award Payout, adjusted by the Committee, if appropriate, for individual performance and subject to caps
DETERMINATION OF BASE CORPORATE BONUS FACTOR
DETERMINATION OF BASE CORPORATE BONUS FACTOR Shown below is an excerpt of the 2023 Bonus Plan, showing how the corporate performance factor is determined for differing levels of revenue, non-GAAP operating margin and cash flow from operations. The components of the FY23 corporate performance factor yielded by actual performance in fiscal 2023 are highlighted. As shown below, the calculated fiscal 2023 corporate performance factor was 140%. Incentive compensation can be adjusted upwards or downwards by the Committee pursuant to the exercise of discretion afforded to the Committee under the 2023 Bonus Plan based on individual performance factors.
DETERMINATION OF BASE CORPORATE BONUS FACTOR
| | FY’23 Revenue (in billions)(1) | | | | | Non-GAAP Operating Margin(1) | $7.100 - $7.500 | $7.501 - $7.900 | $7.901 - $8.500 | >$8.501 | | <3.799% | 0% | 0% | 0% | 0% | | 3.800 – 4.100% | 40% | 50% | 60% | 70% | | 4.101% - 4.500% | 50% | 60% | 70% | 80% | | 4.501% - 4.900% | 60% | 70% | 80% | 90% | | 4.901% - 5.300% | 70% | 80% | 90% | 100% | | 5.301% - 5.600% | 80% | 90% | 100% | 110% | | 5.601% - 5.700% | 90% | 100% | 110% | 120% | | >5.701% | 100% | 110% | 120% | 130% |
DETERMINATION OF BASE CORPORATE BONUS FACTOR
| (1) Actual FY23 revenue and non-GAAP operating margin were $8.9 billion and 5.8% respectively. |
DETERMINATION OF BASE CORPORATE BONUS FACTOR
ADDITIONS/SUBTRACTIONS (-15% TO 30%):
DETERMINATION OF BASE CORPORATE BONUS FACTOR
| Cash flow from operations & Other (before acquisitions)(2) | >225M+ 10% | >$250M+15% | >$325M+20% | $350M+30% | | | <$200M (-15%) | <$200M (-15%) | <$200M (-15%) | <$200M%(-15%) |
DETERMINATION OF BASE CORPORATE BONUS FACTOR
| (2) Actual FY23 cash flow from operations was $235 million. |
ADJUSTMENTS TO FISCAL 2023 NEO BONUSES
ADJUSTMENTS TO FISCAL 2023 NEO BONUSES As described above, short-term incentive compensation may be adjusted upwards or downwards by the Committee on a discretionary basis. Beginning in the third quarter of fiscal 2023, the Company began to experience a reduction in demand due primarily to inventory adjustments in the communications end market that decreased revenue in both the third and fourth fiscal quarters. While the financial results for fiscal 2023 as a whole were good, the Committee ultimately determined that this second half weakness justified a discretionary reduction in NEO bonuses of 50% below the amounts that would have been payable had these bonuses been determined using a corporate performance factor of 140% alone. The fiscal 2023 bonuses actually paid to the NEOs are listed below.
CEO BONUS FOR FISCAL 2023
CEO BONUS FOR FISCAL 2023 Shown below is the calculation of the bonus payment approved by the Committee for the CEO pursuant to the 2023 Bonus Plan:
CEO BONUS FOR FISCAL 2023
| Name and Position of Named Executive Officer | Base Salary (A) | Target Incentive Compensation Percentage (% of Base Salary) (B) | Target Incentive Compensation (A)x(B)x100% ($)(C) | Potential Incentive Compensation Using 140% Corporate Performance Factor (A)x(B)x 140%(1) ($)(D) | Maximum Incentive Compensation ($)(E)(2) | Approved 2023 Incentive Compensation ($)(F) | % Paid of Max Potential | | Jure Sola Chairman and Chief Executive Officer | $1,250,000 | 187.5% | $2,343,750 | $3,281,250 | $3,750,000 | $1,600,000 | 43% |
CEO BONUS FOR FISCAL 2023
| (1) The Company’s achievement against its targets contained in the 2023 Plan resulted in a corporate performance factor of 140%, applying the criteria shown above in “Determination of Base Corporate Bonus Factor”. | | (2) Under the 2023 Bonus Plan, Mr. Sola’s maximum bonus is capped at 300% base salary. |
OTHER NEO INDIVIDUAL BONUSES FOR FISCAL 2023
OTHER NEO INDIVIDUAL BONUSES FOR FISCAL 2023 Shown below are the calculations of the bonus payments approved by the Committee for the other named executive officers pursuant to the 2023 Bonus Plan:
OTHER NEO INDIVIDUAL BONUSES FOR FISCAL 2023
| Name and Position of Named Executive Officer | Base Salary (A) | Target Incentive Compensation Percentage (% of Base Salary) (B) | Target Incentive Compensation (A)x(B)x100% ($)(C) | Potential Incentive Compensation Using 140% Corporate Performance Factor (A)x(B)x140%(1) ($)(D) | Maximum Incentive Compensation ($)(E)(1) | Approved 2023 Incentive Compensation ($)(F) | % Paid of Max Potential | | Kurt Adzema Former Executive Vice President and Chief Financial Officer | $550,000 | 80% | $440,000 | $550,000 | $550,000 | $275,000 | 50% | | Alan McW. Reid Executive Vice President, Global Human Resources | $385,000 | 80% | $308,000 | $385,000 | $385,000 | $192,500 | 50% | | Charles C. Mason Executive Vice President, Worldwide Sales | $350,000 | 70% | $245,000 | $343,000 | $350,000 | $171,500 | 49% |
OTHER NEO INDIVIDUAL BONUSES FOR FISCAL 2023
| (1) Maximum bonus capped at 100% base salary. |
2023 Long-Term Equity-Based Incentive Awards
2023 Long-Term Equity-Based Incentive Awards Our practice has always been to subject a substantial portion of executive equity awards to performance-based vesting conditions tied to the achievement of certain financial objectives. In this way, our equity compensation program aligns the interests of our named executive officers with those of our stockholders by creating an incentive for our named executive officers to help maximize stockholder value. The type of equity granted to the named executive officers by the Committee during fiscal 2023 was made by reference to competitive practices among the peer companies and industry trends. In addition, the Committee takes into account previous equity award levels to executives and the unvested holding power of such awards when making new award determinations. Our long-term incentive grant practices are designed to provide, when base and incentive cash compensation are also considered, substantially comparable target compensation opportunities for the key executive managers who are also recruited by other manufacturing and high technology companies, particularly in Silicon Valley where our headquarters are located. In addition, our equity compensation program encourages our named executive officers to remain employed with us for a substantial period of time because unvested awards are forfeited upon termination of employment, except in connection with certain qualifying terminations following a change of control, as provided in the Change-in-Control plan as outlined below. For 2023, our long-term equity incentive awards were comprised of:
2023 Long-Term Equity-Based Incentive Awards
| ● | PSUs, vesting of which requires achievement of a three-year non-GAAP EPS target; and | | ● | RSUs, vesting of which requires the executive to remain employed by Sanmina for a specified period of time, but which is not dependent upon a particular level of financial performance. |
PERFORMANCE STOCK UNITS
PERFORMANCE STOCK UNITS In fiscal 2023, performance-based PSUs accounted for a substantial portion of the total equity grant value awarded to our NEOs, as shown below:
PERFORMANCE STOCK UNITS
| CEO LONG-TERM INCENTIVE MIX | | |
PERFORMANCE STOCK UNITS
| OTHER NEOs LONG-TERM INCENTIVE MIX | | |
PERFORMANCE STOCK UNITS
Below is a table illustrating the operation of our performance-based long-term incentive awards granted in 2023.
PERFORMANCE STOCK UNITS
| 2023-2025 |
PERFORMANCE STOCK UNITS
| 3-Year Cumulative Non-GAAP Earnings Per Share Goal | | | 3-Year Relative TSR vs. Peers (+/- up to 15% at the discretion of the Compensation Committee) | | Payout (55% to 145%) No payout if cumulative non-GAAP EPS is below minimum threshold | | Performance Level | Payout (% of Target) | | | | | | Minimum | 70% | | | | | | Target | 100% | | | | | | Maximum | 130% | | | | |
RESTRICTED STOCK UNITS
RESTRICTED STOCK UNITS The Committee believes that the continued retention of our executive team should be supported by awards of time-based restricted stock units. Enhancing retention of valued top executives through such restricted stock awards is typical practice among Silicon Valley-based companies, where talent competition is intense. The Committee selects time-based vesting periods based on various factors, including the minimum amount of time for which continued service is expected, to align with performance goals or periods for such executive, if applicable, and industry practice. The time-based restricted stock units granted to the NEOs during fiscal 2023 vest between three and four years after grant, except in the case of the CEO’s RSUs, which vest after two years. At the time, this vesting schedule was seen as the minimum additional service period sought to be obtained from the CEO. For fiscal 2024, the Committee resumed granting equity awards with a minimum three-year total term, including for the CEO. By combining both performance-based awards containing conditions that the Committee believed to be challenging at the time of grant and time-based awards not tied to a particular level of financial performance, the Committee seeks to maximize executives’ contribution to increasing stockholder value while providing retention incentive.
RESTRICTED STOCK UNITS
| Name and Position of Named Executive Officer | Vesting Requirements | | Jure Sola Chairman and Chief Executive Officer | Vests in full on the second anniversary of the grant date | | Kurt Adzema Former Executive Vice President and Chief Financial Officer | Vests one-third on each of the first three anniversaries of the date of grant | | Alan McW. Reid Executive Vice President, Global Human Resources | Vests one-third on each of the first three anniversaries of the date of grant | | Charles C. Mason Executive Vice President, Worldwide Sales | Vests one quarter on each of the first four anniversaries of the date of grant |
Change-in-Control and Severance Plan
Change-in-Control and Severance Plan In order to continue to attract and retain key employees and to provide incentive for their continued service in case of an acquisition of Sanmina, the Committee approved a change-in-control plan in December 2009 to provide benefits to such employees, including the named executive officers, in the event that their employment terminates under certain circumstances following a change-in-control of Sanmina. The amount of these benefits is generally below competitive market amounts, and upon a qualifying termination would be: (1) payment, in a lump sum, of one, one and one-half or two times base salary and one times target incentive compensation for the year, (2) acceleration in full of all unvested stock options and restricted stock units held by the employee and (3) payment, in a lump sum, of premiums for continued health insurance coverage for a period of 18 months. A change-in-control is defined as an acquisition, in a merger or otherwise, of more than 50% of the voting power of Sanmina, a sale of substantially all of the assets of Sanmina or a change in a majority of the Board other than upon recommendation of the incumbent Board. The plan does not provide for a tax gross-up for any of the benefits payable thereunder. In addition, the plan does not provide benefits unless the employee is terminated without cause, or terminates for good reason, within a specified period of time following a change-in-control, as such terms are defined in the plan. Among the factors considered by the Committee in establishing the arrangements were the multiple of base salary and incentive compensation used by peer companies to calculate severance benefits and the Committee’s assessment of the extent to which such benefits would motivate named executive officers to remain with Sanmina. Finally, under the 2019 Plan, all unvested equity vests under certain circumstances following a change of control of the Company. See “Employment, Termination and Change in Control Arrangements” on page 56 and “Proposal Five: Approval of the Reservation of an Additional 1,200,000 Shares of Common Stock for Issuance under the 2019 Equity Incentive Plan – Change in Control” on page 67. The Committee believes that these arrangements will help Sanmina’s key employees maintain continued focus and dedication to their assigned duties to maximize stockholder value during circumstances in which a qualifying termination following a change-in-control is possible or likely to occur.
Tax and Accounting Considerations
Tax and Accounting Considerations Section 162(m) of the Internal Revenue Code of 1986 limits the deductibility of compensation paid to named executive officers to $1 million. While the Committee considers the deductibility of compensation as one factor in determining executive compensation, the Committee believes that it is in the best interests of our stockholders to structure our executive compensation program in the manner it considers to be the most effective in attracting, motivating and retaining key executives. Accounting rules require us to expense the GAAP-based grant-date fair values of our equity awards, which lowers the amount of our reported profits under U.S. GAAP. In recognition of this equity award expensing and the impact of dilution to our stockholders, we closely monitor the share amounts and the grant-date fair values of the equity awards that are granted each year and provide non-GAAP results that exclude this and certain other expenses that the Company has determined are unusual or infrequent, non-cash or not relating to our operational results. See Appendix B for reconciliation information.
Summary Compensation Table
Summary Compensation Table The following table presents the compensation for the persons who served as our Chief Executive Officer and Chief Financial Officer during the last fiscal year and our next most highly compensated executive officers for such fiscal year.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) | | Jure Sola Chairman and Chief Executive Officer | 2023 | 1,245,192 | 12,058,000 | 1,600,000 | 42,164(3) | 14,945,356 | | | 2022 | 1,218,750 | 11,867,000 | 3,632,813 | 41,930 | 16,760,493 | | | 2021 | 1,125,000 | 10,293,000 | 3,075,000 | 42,131 | 14,535,131 | | Kurt Adzema Former Executive Vice President and Chief Financial Officer | 2023 | 550,000 | 2,049,860 | 275,000 | 1,701(4) | 2,876,561 | | | 2022 | 537,500 | 1,773,250 | 550,000 | 1,378 | 2,862,128 | | | 2021 | 500,000 | 1,708,600 | 500,000 | 1.522 | 2,710,122 | | Alan McW. Reid Executive Vice President, Global Human Resources | 2023 | 385,000 | 1,145,510 | 192,500 | 1,190(4) | 1,724,200 | | | 2022 | 376,250 | 1,183,980 | 385,000 | 965 | 1,946,195 | | | 2021 | 350,000 | 1,523,250 | 350,000 | 1,065 | 2,224,315 | | Charles C. Mason Executive Vice President, Worldwide Sales | 2023 | 340,000 | 1,446,960 | 171,500 | 959(4) | 1,959,419 |
Summary Compensation Table
| (1) Represents the grant date fair value of each equity award, determined in accordance with ASC 718. The assumptions used in the valuation of these awards are set forth in the notes to our consolidated financial statements, which are included in our Annual Report on Form 10-K for our fiscal year ended September 30, 2023, filed with the SEC on November 16, 2023. These amounts do not purport to reflect the value that will be realized upon sale of the underlying shares. | | (2) Represents bonuses earned pursuant to Sanmina’s Corporate Bonus Plan for the fiscal year indicated. | | (3) Comprised of (i) $40,000 in premiums for life insurance and (ii) $2,164 in premiums for business travel accident insurance. | | (4) Consists of premiums for business travel accident insurance. |
Grants of Plan Based Awards
Grants of Plan Based Awards The following table presents information regarding grants of plan based awards made to each of our named executive officers during fiscal 2023. All equity awards were granted under our 2019 Plan.
Grants of Plan Based Awards
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Plan Awards(2) | | | All Other Stock Awards; Number of Shares or Units (#)(3) | Grant Date Fair Value of Stock Awards(4) | | | Grant Date | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Jure Sola Chairman and Chief Executive Officer | 12/15/22 | — | — | — | 105,000 | 150,000 | 195,000 | 50,000 | $12,058,000 | | | 12/5/22 | $585,938 | $2,343,750 | $3,750,000(5) | | | | | | | Kurt Adzema Former Executive Vice President and Chief Financial Officer | 12/15/22 | — | — | — | 11,900 | 17,000 | 22,100 | 17,000 | $2,049,860 | | | 12/5/22 | $110,000 | $440,000 | $550,000(6) | | | | | | | Alan McW. Reid Executive Vice President, Global Human Resources | 12/15/22 | — | — | — | 7,000 | 10,000 | 13,000 | 9,000 | $1,145,510 | | | 12/5/22 | $77,000 | $308,000 | $385,000(6) | | | | | | | Charles C. Mason Executive Vice President, Worldwide Sales | 12/15/22 | — | — | — | 8,400 | 12,000 | 15,600 | 12,000 | $1,446,960 | | | 12/5/22 | $61,250 | $245,000 | $350,000(6) | | | | | |
Grants of Plan Based Awards
| (1) Represents potential cash payments under Sanmina’s Fiscal Year 2023 Corporate Bonus Plan approved on December 5, 2022. Actual cash awards made under this plan are shown in the Summary Compensation Table above under the column entitled “Non-Equity Plan Incentive Compensation.” | | (2) Represents potential shares issuable upon vesting of performance stock units (PSUs). PSUs vest based upon extent of achievement of a three-year non-GAAP EPS target. Amounts shown can, at the discretion of the Compensation Committee, be further adjusted by up to 15% up or down based on relative TSR of the Company over the three-year measurement period compared to TSR of the Company’s EMS peers, which is not reflected in the information set forth in the table. No shares are payable if cumulative non-GAAP EPS over the measurement period is less than a minimum level of performance over the three-year period. | | (3) Number of time-based RSUs granted. | | (4) Represents the grant date fair value of stock awards, determined in accordance with ASC 718. | | (5) Bonus compensation is capped at 300% base salary. | | (6) Bonus compensation is capped at 100% of base salary. |
Outstanding Equity Awards at Fiscal 2023 Year-End
Outstanding Equity Awards at Fiscal 2023 Year-End
Option Exercises and Stock Vested in Last Fiscal Year
Option Exercises and Stock Vested in Last Fiscal Year The following table presents certain information regarding exercises of options and vesting of stock awards for each of our named executive officers during fiscal 2023.
Option Exercises and Stock Vested in Last Fiscal Year
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(2) | | Jure Sola Chairman and Chief Executive Officer | 200,000 | $7,717,000 | — | — | | Kurt Adzema Former Executive Vice President and Chief Financial Officer | — | — | 73,031 | $4,094,506 | | Alan McW. Reid Executive Vice President, Global Human Resources | — | — | 35,313 | $2,093,519 | | Charles C. Mason Executive Vice President, Worldwide Sales | — | — | 17,839 | $1,059,386 |
Option Exercises and Stock Vested in Last Fiscal Year
| (1) The aggregate value realized upon exercise of stock options represents the difference between (1) the fair market value of Sanmina’s common stock on the date of exercise and (2) the price paid by the named executive officer to exercise the options, multiplied by the number of options exercised. | | (2) The aggregate value realized upon vesting of stock awards represents Sanmina’s closing price on the date of vesting multiplied by the number of awards vested. |
Non-Qualified Deferred Compensation Plan
Non-Qualified Deferred Compensation Plan Pursuant to Sanmina’s non-qualified deferred compensation plan, certain highly compensated employees may defer the receipt of certain compensation, and such deferrals are not subject to income tax until the year in which they are paid. Only members of management or highly compensated employees with a projected base salary of at least $130,000 may participate in the plan, subject to the approval of our Chief Executive Officer. Sanmina does not provide matching contributions under this plan. The following table presents certain information concerning participation in our non-qualified deferred compensation plan by the named executive officers during fiscal 2023.
Non-Qualified Deferred Compensation Plan
| Name | Executive Contributions | Aggregate Earnings | Aggregate Withdrawals/ Distributions | Aggregate Balance | | Jure Sola Chairman and Chief Executive Officer | — | $1,023,969 | — | $8,992,489 | | Kurt Adzema Former Executive Vice President and Chief Financial Officer | — | $195,459 | — | $1,099,852 | | Alan McW. Reid Executive Vice President, Global Human Resources | $231,000 | $103,908 | — | $1,394,987 | | Charles C. Mason Executive Vice President, Worldwide Sales | — | — | — | — |
Pay Versus Performance
Pay Versus Performance The information below presents the relationship between the compensation of the company’s NEOs and certain performance measures in accordance with Item 402(v) of Regulation S-K (“Pay Versus Performance Table”). For a discussion of the company’s compensation programs and pay for performance philosophy, please refer to the section captioned “Compensation Discussion and Analysis,” above.
Pay Versus Performance Table
Pay Versus Performance Table The information below presents the relationship between compensation actually paid (CAP) of the company’s NEOs and certain performance measures in accordance with Item 402(v) of Regulation S-K.
Pay Versus Performance Table
| | Summary Compensation Table Total for First PEO (b)(1) | Compensation Actually Paid to First PEO (c)(1) | Average Summary Compensation Table Total for Non-PEO NEOs (d)(2) | Average Compensation Actually Paid to Non-PEO NEOs (e)(2) | Value of Initial Fixed $100 Investment Based on: | | Net Income (millions) (h) | Company Selected Measure(4) (i) | | Year (a) | | | | | Total Shareholder Return (f) | Peer Group Total Shareholder Return(3) (g) | | | | 2023 | $14,945,356 | $18,663,356 | $2,186,727 | $3,007,319 | 204 | 274 | $310 | $6.26 | | 2022 | $16,760,493 | $20,787,493 | $1,638,603 | $2,165,569 | 174 | 150 | $240 | $4.68 | | 2021 | $14,535,131 | $16,678,631 | $1,957,866 | $2,695,765 | 148 | 159 | $250 | $3.61 |
Pay Versus Performance Table
| 1. | For 2021, 2022, and 2023, the PEO is Mr. Sola. Our Non-PEO NEOs for the covered years are as follows: |
Pay Versus Performance Table
| 2021 | 2022 | 2023 | | Kurt Adzema | Kurt Adzema | Kurt Adzema | | Alan Reid | Alan Reid | Alan Reid | | Dennis Young | Dennis Young | Charles Mason |
Pay Versus Performance Table
| 2. | The following adjustments relating to equity awards were made to total compensation for each year to determine CAP as computed in accordance with Item 402(v) of Regulation S-K: |
Pay Versus Performance Table
| | PEO | | | | | | NEOs | | | | | | | Name | 2023 | | 2022 | | 2021 | | 2023 | | 2022 | | 2021 | | | Summary Compensation Table Total | | 14,945,356 | | 16,760,493 | | 14,535,131 | | 2,186,727 | | 1,638,603 | | 1,957,866 | | Value of Equity Awards Disclosed in the Summary Compensation Table | -$ | 12,058,000 | -$ | 11,867,000 | -$ | 10,293,000 | -$ | 1,547,443 | -$ | 985,743 | -$ | 1,146,633 | | Year End Fair Value of Equity Awards Granted in the Year and Unvested | | 10,856,000 | | 13,824,000 | | 11,754,000 | | 1,393,187 | | 1,152,000 | | 1,306,000 | | Year-Over Year Change in Fair Value of Outstanding and Unvested Equity Awards | | 4,920,000 | | 2,070,000 | | 0 | | 422,751 | | 356,500 | | 502,392 | | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Change in Fair Value of Equity Awards from the Prior Year that Vested in the Year | | 0 | | 0 | | 682,500 | | 552,098 | | 4,209 | | 76,140 | | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | | 0 | | 0 | | 0 | | 0 | | 0 | | 0 | | Compensation Actually Paid | | 18,663,356 | | 20,787,493 | | 16,678,631 | | 3,007,319 | | 2,165,569 | | 2,695,765 |
Pay Versus Performance Table
The valuation methodologies used to calculate fair values for each measurement date do not materially differ from those used at the time of grant of each respective award.
Pay Versus Performance Table
| 3. | Represents the TSR of a peer group comprising Flex Ltd., Jabil Inc., Celestica Inc., Benchmark Electronics, Inc., Plexus Corp. |
Pay Versus Performance Table
| 4. | Represents Non-GAAP EPS, which is defined in Appendix B of this Proxy Statement. |
CEO PAY RATIO
CEO PAY RATIO Under SEC rules, we are required to provide the following information regarding the relationship between the annual total compensation of Jure Sola, our Chief Executive Officer, and the median annual total compensation of our employees (other than Mr. Sola) for fiscal 2023:
CEO PAY RATIO
| ● | The median of the annual total compensation of all employees (other than Mr. Sola) of the Company (including our consolidated subsidiaries) was approximately $13,400. | | ● | The annual total compensation of our CEO was $14,945,356. This amount equals the CEO’s compensation as reported in the “Summary Compensation Table.” | | ● | Based on the above, for fiscal 2023, the ratio of Mr. Sola’s annualized total compensation to the median of the annual total compensation of all employees (other than Mr. Sola) was 1,115 to 1. |
CEO PAY RATIO
This pay ratio is an estimate calculated in a manner consistent with Item 402(u) of Regulation S-K and based upon our reasonable judgments and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratios. Accordingly, the pay ratios disclosed by other companies may not be comparable to our pay ratio as disclosed above. For our fiscal 2023 pay ratio disclosure, we determined our median employee as of September 30, 2023, which was the last day of fiscal 2023, at which time we had 35,096 full-time, part-time and temporary employees, 4,459 of whom were U.S. employees, and 30,637 of whom were located outside of the United States, generally in lower cost locations such as China and Mexico. To find our median employee, we compared the target total cash compensation (base plus target incentive) of all such employees as shown in our global HRIS systems, annualizing the compensation of full-time employees who did not work for us for the entire year. Employees who worked for us part-time were included at their part-time pay rate and not converted to a full-time equivalent pay level. Once we identified our median employee, we estimated such employee’s annual total compensation in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K. We determined that our median employee in fiscal 2023 was a full-time, salaried employee working in Mexico and used that employee’s annual total cash compensation for fiscal 2023 to calculate the CEO pay ratio for that year. For fiscal 2023, our median employee’s total cash compensation was approximately $13,400. For purposes of this disclosure, we converted the employee’s total cash compensation from Mexican pesos to U.S. dollars using the exchange rate as of September 29, 2023 (16.88 MXN to 1 USD).
CEO PAY RATIO
| Proposal Four APPROVAL, ON AN ADVISORY (NON-BINDING) BASIS, OF FREQUENCY OF VOTE ON EXECUTIVE COMPENSATION | | | The Dodd-Frank Act also enables our stockholders to indicate, at least once every six years, how frequently we should seek an advisory or non-binding vote on the compensation of our named executive officers, as disclosed pursuant to the SEC’s compensation disclosure rules. In this Proposal 4, our Board of Directors is asking our stockholders to cast a non-binding advisory vote indicating whether they would prefer an advisory vote on named executive officer compensation, such as that set forth in Proposal 3, every one year, two years or three years. Stockholders last voted on this proposal in 2018, at which time an overwhelming majority of shares voted in favor of an annual non-binding vote on executive compensation. Our Board of Directors has determined that an advisory vote on executive compensation that occurs every year provides important information for our Compensation Committee to consider in making executive compensation decisions each year. Therefore, our Board of Directors recommends that you vote for a one-year interval for the advisory vote on executive compensation. An advisory vote every year on executive compensation will facilitate regular stockholder input on our executive compensation philosophy, policies, and practices that are disclosed in the proxy statement. We recognize that our stockholders may have differing views on the appropriate frequency for the advisory vote on executive compensation, and you may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to the resolution set forth below: “RESOLVED, the option of every one year, two years or three years that is approved by our stockholders on an advisory (non-binding) basis will be considered to be the preferred frequency of stockholders for the Company to hold future advisory (non-binding) votes on the compensation of our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the summary compensation table and the other related tables and disclosure. However, in the event that no voting option receives a majority, then the option that receives the most votes will be considered to be the preference of our stockholders.” Our Board of Directors will select a vote frequency for this matter taking into account the results of the stockholder vote on this matter and announce its choice within 150 days of the date of the Annual Meeting. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE ADVISORY VOTE ON EXECUTIVE COMPENSATION BE CONDUCTED EVERY “ONE YEAR.” | |
CEO PAY RATIO
| Proposal Five APPROVAL OF THE RESERVATION OF AN ADDITIONAL 1,200,000 SHARES OF COMMON STOCK FOR ISSUANCE UNDER THE 2019 EQUITY INCENTIVE PLAN | | | | The Board believes that equity compensation programs align the interests of management, directors and the stockholders to increase long-term stockholder value by giving directors, executives and other key employees a stake in our success. By permitting us to grant equity in our company, our 2019 Equity Incentive Plan (the “2019 Plan”) is a key tool for attracting, rewarding, motivating and retaining the key personnel necessary for us to achieve our business objectives and increase stockholder value. At the Annual Meeting, we are requesting that stockholders approve the reservation of an additional 1,200,000 shares of common stock for future issuance under the 2019 Plan in order to ensure that we continue to have sufficient shares available for (1) our annual grants to non-executive employees, (2) grants to potential executive new hires and (3) annual grants to executive management. Reasons for Request We believe this increase is reasonable for the following reasons: | | | | 1. | Our burn rate is in line with to our peers. Sanmina’s three-year average net burn rate (grants less cancellations divided by outstanding shares) of 2.0%, compared to a 1.13% median net burn rate for the peer companies listed in the “Compensation Discussion and Analysis” on page 41 of the Proxy Statement for their three most recent fiscal years for which data is publicly available. | | | 2. | Our share repurchases in the last two fiscal years have more than offset the dilutive effect of grants made under the 2019 Plan during the same time period. During the last two fiscal years, we have repurchased approximately 9.6 million shares of our common stock in the open market, more than offsetting the potential dilution from the approximately 2.6 million shares granted under our stock plan during that same time period. | | | 3. | Our overhang is reasonable compared to our peers. As of December 31, 2023, 3.3 million shares were subject to outstanding equity awards under our 2019 Plan and 2009 Incentive Plan (the “2009 Plan”) and 5.5 million shares were reserved for issuance under our 2019 Plan, inclusive of outstanding equity awards, representing 6% and 10% of our shares outstanding, respectively. This “overhang” is reasonable compared to average net and gross overhang of our peers. | | | 4. | Adherence to Proxy Advisory Firm Guidelines. We have implemented several plan features recommended by proxy advisory firms in the 2019 Plan, including: | | | | a. | All awards granted under the 2019 Plan must have a minimum vesting period of at least one year, subject to certain de minimis exceptions; | | | b. | All shares received by the Chief Executive Officer upon exercise, settlement or issuance of an award must be held for a minimum of one year before being sold or, if earlier, until the termination of the Chief Executive Officer’s service; |
CEO PAY RATIO
| c. | Reasonable and appropriate change in control provisions; | | d. | No dividends payable on unvested awards; and | | e. | No liberal recycling of full value awards (e.g., shares withheld from vesting awards to pay taxes are not returned to the plan for future grant). | | For these reasons, Sanmina requests stockholders approve the reservation of an additional 1,200,000 shares of common stock for issuance under the 2019 Plan. We expect that the share reserve under the 2019 Plan, as proposed to be increased, will allow us to continue to grant equity-based compensation at levels we deem necessary and appropriate for at least the next two years. We base this belief upon our historical annual equity award grant rate (otherwise known as burn rate), our historical forfeiture rate and our estimate of the number of shares we will need to attract new senior and executive hires and in connection with potential merger and acquisition transactions. This belief could change, however, based upon a number of factors, including the need to increase our burn rate over historical averages in order to attract and retain key talent and the price of our common stock (because we determine the size of equity awards to be granted in part based on the price of our common stock at the time of grant, if our stock price on the date the award is granted is significantly lower than the stock price assumed in our forecast, we would need to grant a larger number of shares than anticipated to deliver the same value to participants). THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE APPROVAL OF THE RESERVATION OF AN ADDITIONAL 1,200,000 SHARES FOR ISSUANCE UNDER THE 2019 PLAN. | |