UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant
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Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy
Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
First Solar, Inc.
(Name of Registrant as Specified
In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required
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First Solar, Inc.
350 West Washington Street
Suite 600
Tempe, Arizona 85281
April 6, 2016
Dear Stockholder:
You are cordially invited to attend our 2016 annual meeting of stockholders of First Solar, Inc. to be held on Wednesday, May 18,
2016 at 9:00 a.m., local time, at the Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040.
Details regarding admission to the meeting and the business to be conducted are described in the Notice of Internet Availability of Proxy Materials (the Notice) you received in the mail and in
this proxy statement. We have also made available a copy of our 2015 Annual Report to Stockholders (the 2015 Annual Report) with this proxy statement. We encourage you to read our 2015 Annual Report. It includes our audited financial
statements and information about our operations, markets and products.
We have elected to provide access to our proxy
materials on the Internet under the Securities and Exchange Commissions notice and access rules. We are pleased to take advantage of these rules and believe that they enable us to provide you with the information you need, while
making delivery more efficient and more environmentally friendly. In accordance with these rules, we have sent the Notice to each of our stockholders providing instructions on how to access our proxy materials and our 2015 Annual Report on the
Internet.
Your vote is important. Whether or not you plan to attend the annual meeting, we hope you will vote as soon as
possible. You may vote on the Internet, as well as by telephone or, if you requested to receive printed proxy materials, by mailing a proxy or voting instruction card. Please review the instructions on each of your voting options described in this
proxy statement as well as in the Notice you received in the mail.
The executive team looks forward to greeting those of you
who are able to attend the annual meeting in Phoenix.
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Sincerely,
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James A. Hughes
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Chief Executive Officer
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First Solar, Inc.
350 West Washington Street
Suite 600
Tempe, Arizona 85281
Notice of Annual Meeting of Stockholders
The 2016 annual meeting of stockholders of First Solar, Inc. will be held on Wednesday, May 18, 2016 at 9:00 a.m., local time. The annual meeting will take place at the Desert Willow Conference
Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040.
The purposes of the annual meeting are as follows:
1. to elect eleven members of the board of directors to hold office until the next annual meeting of
stockholders or until their respective successors have been elected and qualified;
2. to ratify the
appointment of PricewaterhouseCoopers LLP as First Solar, Inc.s independent registered public accounting firm for the year ending December 31, 2016; and
3. to transact such other business as may properly come before the annual meeting.
Any action may be taken on the foregoing proposals at the annual meeting on the date specified above or on any date or dates to which the
annual meeting may be adjourned or postponed.
The close of business on March 29, 2016 is the record date for determining
stockholders entitled to vote at the annual meeting. Only holders of common stock of First Solar, Inc. as of the record date are entitled to vote on some or all of the matters listed in this notice of annual meeting. A complete list of stockholders
entitled to vote at the annual meeting will be available for inspection by stockholders during normal business hours at our corporate headquarters located at 350 West Washington Street, Suite 600, Tempe, Arizona 85281, during the ten days
prior to the annual meeting as well as at the annual meeting.
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BY ORDER OF THE BOARD OF DIRECTORS,
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Peter C. Bartolino
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Secretary
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April 6, 2016
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Your vote is very important
Whether or not you plan to attend the annual meeting, we encourage you to read this proxy statement
and submit your proxy or voting instructions as soon as possible. For specific instructions on how to vote your shares, please refer to the instructions on the Notice you received in the mail, the section entitled Questions and Answers About the
Annual Meeting beginning on page 1 of this proxy statement or, if you requested to receive printed proxy materials, your enclosed proxy card.
TABLE OF CONTENTS
First Solar, Inc.
350 West Washington Street
Suite 600
Tempe, Arizona 85281
PROXY STATEMENT
This proxy statement is being furnished in connection with the solicitation of proxies by the board of directors of First Solar, Inc., a Delaware corporation (First Solar or the
Company), for use at the annual meeting of the Companys stockholders to be held on Wednesday, May 18, 2016 at the Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040, commencing at
9:00 a.m., local time, and at any adjournment or postponement. The Notice of Internet Availability of Proxy Materials (the Notice) relating to the annual meeting is first being mailed to stockholders, and this proxy statement is
first being made available to stockholders, on or about April 6, 2016.
QUESTIONS AND ANSWERS
ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the annual meeting, stockholders are being asked to consider and vote upon the following matters:
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the election of eleven members of our board of directors to hold office until the next annual meeting of stockholders or until their respective
successors have been elected and qualified; and
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the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending
December 31, 2016.
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The stockholders will also transact any other business that may properly come before
the annual meeting.
Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of
proxy materials?
In accordance with rules adopted by the Securities and Exchange Commission (the Commission or
the SEC), we may furnish proxy materials, including this proxy statement and our 2015 Annual Report to Stockholders (the 2015 Annual Report), to our stockholders by providing access to such documents on the Internet instead
of mailing printed copies. You will not receive a printed copy of the proxy materials unless you specifically request one. Instead, the Notice instructs you as to how you may access and review all of the proxy materials on the Internet. The Notice
also instructs you as to how you may submit your proxy on the Internet. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions for requesting such materials in the Notice.
How do I get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to:
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view our proxy materials for the annual meeting on the Internet; and
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instruct us to send our future proxy materials to you electronically by email.
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Choosing to receive your future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce
the environmental impact of printing and mailing these materials. If you choose to receive future proxy materials by email, you will receive an email next year with instructions containing a link to those materials and a link to the proxy voting
site. Your election to receive proxy materials by email will remain in effect until you terminate it.
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How does the board of directors recommend that I vote?
Our board of directors recommends that you vote your shares (1) FOR each of the nominees to the board of directors and
(2) FOR the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2016.
Who
is entitled to vote?
The record date for the annual meeting is March 29, 2016. Only stockholders of record at the
close of business on that date are entitled to notice of and to vote at the annual meeting. Attendance at the meeting will be limited to such stockholders of record, their proxies, beneficial owners having evidence of ownership on that date and
invited guests of the Company.
The Companys sole outstanding capital stock is its common stock, with a par value of
$0.001 per share. Each holder of the Companys common stock is entitled to one vote per share on each matter submitted at the annual meeting. At the close of business on the record date there were 102,212,838 shares of the Companys
common stock outstanding and eligible to vote at the annual meeting.
What is the difference between holding shares as a stockholder of
record and as a beneficial owner?
Most First Solar stockholders hold their shares through a broker or other nominee rather
than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record
If your shares are registered directly in
your name with our transfer agent, Computershare Trust Company, N.A., you are considered, with respect to those shares, the stockholder of record, and the Notice was sent directly to you by First Solar. As the stockholder of record, you have
the right to grant your voting proxy directly to First Solar or to vote in person at the annual meeting. If you requested to receive printed proxy materials, First Solar has enclosed or sent a proxy card for your use. You may also vote on the
Internet or by telephone, as described in the Notice and below under the heading How can I vote my shares without attending the annual meeting?
Beneficial Owner
If your shares are held in an account at a
brokerage firm, bank, broker-dealer, trust or other similar organization, like the vast majority of our stockholders, you are considered the beneficial owner of shares held in street name, and the Notice was forwarded to you by that organization. As
the beneficial owner, you have the right to direct your broker, bank, trustee or nominee how to vote your shares, and you are also invited to attend the annual meeting.
Since a beneficial owner is not the stockholder of record, you may not vote your shares in person at the annual meeting unless you obtain a legal proxy from the broker, bank, trustee or
nominee that holds your shares giving you the right to vote the shares at the meeting. If you do not wish to vote in person or you will not be attending the annual meeting, you may vote by proxy. You may vote by proxy over the Internet or by
telephone, as described in the Notice and below under the heading How can I vote my shares without attending the annual meeting?
How can I vote my shares in person at the annual meeting?
Shares held in your name as the stockholder of record may be voted by you in person at the annual meeting. Shares held beneficially in street name may be voted by you in person at the annual meeting only
if you obtain a legal proxy from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the annual meeting, we recommend that you also submit your proxy or voting
instructions as described below so that your vote will be counted if you later decide not to attend the meeting.
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How can I vote my shares without attending the annual meeting?
Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted
without attending the annual meeting. If you are a stockholder of record, you may vote by proxy. You can vote by proxy over the Internet by following the instructions provided in the Notice, or, if you requested to receive printed proxy materials,
you can also vote by mail or telephone pursuant to instructions provided on the proxy card. If you hold shares beneficially in street name, you may also vote by proxy over the Internet by following the instructions provided in the Notice, or, if you
requested to receive printed proxy materials, you can also vote by telephone or mail by following the voting instruction card provided to you by your broker, bank, trustee or nominee.
Can I change my vote after I submit my proxy?
Yes, you may change your
vote at any time prior to the vote at the annual meeting. If you are the stockholder of record, you may change your vote by granting a new proxy bearing a later date (which automatically revokes the earlier proxy), by providing a written notice of
revocation to First Solars Corporate Secretary at 350 West Washington Street, Suite 600, Tempe, Arizona 85281 prior to your shares being voted, or by attending the annual meeting and voting in person. Attendance at the annual meeting
will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, trustee or nominee
following the instruction they provided, or, if you have obtained a legal proxy from your broker or nominee giving you the right to vote your shares, by attending the annual meeting and voting in person.
How many shares must be present to hold the annual meeting?
A quorum must be present at the annual meeting for any business to be conducted. The presence at the annual meeting, in person or by proxy, of the holders of a majority of the shares of voting stock
outstanding on the record date, determined by voting power, will constitute a quorum. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum. If a quorum is not present, the
chairman of the annual meeting may adjourn the annual meeting until a quorum is present.
What is the voting requirement to approve each of
the proposals?
In the election of directors, pursuant to our by-laws, each candidate is to be elected by the affirmative
vote of a majority of the votes cast with respect to such candidates election. A person shall be considered to have received a majority of the votes cast with respect to such persons election only if the number of votes cast
for such persons election exceeds the number of votes cast against such persons election, with abstentions and broker non-votes not counted as a vote cast either for or
against such persons election. You may not accumulate your votes for the election of directors. If an incumbent director receives less than a majority of votes cast with respect to his or her election, such director shall
promptly tender his or her resignation to the Chairman of the Board for consideration by the nominating and governance committee. See Directors Majority Vote Standard below for more information regarding majority voting in
uncontested director elections.
The proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for the year ending December 31, 2016 requires the affirmative vote of holders of a majority of the stock represented and voting on such question.
If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute
broker non-votes. Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. Please note that brokers may not use
discretionary authority to vote shares on the election of directors if they have not received specific instructions from their clients. For your vote to be counted on this matter, you will need to communicate your voting decisions to your bank,
broker or other holder of record before the date of the annual meeting.
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In tabulating the voting result for any particular proposal, shares that constitute broker
non-votes and abstentions are not considered votes cast on that proposal. Thus, neither broker non-votes nor abstentions will affect the outcome of any matter being voted on at the meeting, assuming that a quorum is obtained.
What happens if a nominee is unable to stand for election?
If a nominee is unable to stand for election, the board of directors may either reduce the number of directors to be elected or cause a substitute nominee to be selected. If a substitute nominee is
selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority.
Who pays for the costs
of soliciting proxies?
The Company will pay the cost of soliciting proxies. The Company has retained Alliance Advisors LLC
(Alliance) to act as a proxy solicitor in conjunction with the annual meeting. Alliance may assist us in soliciting proxies by telephone and by other means. We anticipate paying Alliance a fee not to exceed $10,500 plus reasonable
out-of-pocket expenses for proxy solicitation services.
In addition, the Company will reimburse brokerage firms and other
custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of voting stock. In addition to solicitation by mail, directors, officers and associates (which is our term for
employees and is used throughout this proxy statement to mean employees) of the Company may solicit proxies personally, by telephone or by electronic communication, without additional compensation.
How do I obtain more information about the Company?
A copy of our 2015 Annual Report is available on the website
http://www.edocumentview.com/fslr
. Our Annual Report on Form 10-K for the year ended December 31, 2015 is available on our
investor relations website at
http://investor.firstsolar.com
under SEC Filings.
You may also obtain, free of charge, a copy of our Annual Report on Form 10-K for the year ended December 31, 2015 by writing to Investor
Relations, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281; Email: investor@firstsolar.com.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 18, 2016
This proxy statement and our 2015 Annual Report are
available at
http://www.edocumentview.com/fslr
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A Note About the Company Website
Although we include references to our website (www.firstsolar.com) throughout this proxy statement,
information that is included on our website is not incorporated by reference into, and is not a part of, this proxy statement. Our website address is included as an inactive textual reference only.
We use our website as a means of disclosing material non-public information and for
complying with our disclosure obligations under the SECs Regulation FD. Such disclosures will typically be included within the Investor Relations section of our website. Accordingly, investors should monitor such portions of our website, in
addition to following our press releases, SEC filings and public conference calls and webcasts.
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CORPORATE GOVERNANCE
We have adopted corporate governance guidelines that address the governance activities of the board of directors and include criteria for
determining the independence of the members of our board. These guidelines are in addition to the requirements of the Commission and The NASDAQ Stock Market (NASDAQ). The guidelines also include requirements for the standing committees
of the board, responsibilities for board members and the annual evaluation of the boards and its committees effectiveness. The corporate governance guidelines are available on our website at www.firstsolar.com under Investors
Corporate Governance. At any time that these guidelines are not available on our website, we will provide a copy upon written request made to Investor Relations, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe,
Arizona 85281.
Independence
The board of directors has determined that the following directors are independent as required by the Sarbanes-Oxley Act of 2002, SEC rules and regulations, the listing standards of NASDAQ and
our corporate governance guidelines (collectively, the Independence Criteria): Sharon L. Allen, Richard D. Chapman, George A. (Chip) Hambro, Craig Kennedy, James F. Nolan, William J. Post, J. Thomas Presby, Paul H.
Stebbins and Michael Sweeney. The board of directors has also concluded that the members of each of the audit, compensation and nominating and governance committees are independent in accordance with the Independence Criteria and such
other laws and regulations as may be applicable to those committees in accordance with their charters.
Code of Business Conduct and Ethics
We have a code of business conduct and ethics that applies to all directors and associates, including our chairman, chief
executive officer, chief financial officer, other directors and executive officers and all of our associates in the global organization. These standards are designed to deter wrongdoing and to promote the honest and ethical conduct of all directors
and associates. The code of business conduct and ethics is posted on our website at www.firstsolar.com under Investors Corporate Governance. Any substantive amendment to, or waiver from, any provision of the code of business
conduct and ethics with respect to any director or executive officer will be posted on our website.
Board of Directors Composition
Our board of directors is currently composed of eleven directors: nine independent directors and two non-independent
directors, our chairman of the board and our chief executive officer.
Board of Directors Leadership Structure
The boards current leadership structure separates the positions of chairman and chief executive officer. Although the roles of chief
executive officer and chairman of the board are currently separated, the board has not adopted a formal policy regarding leadership structure and instead believes that the right structure should be based on the needs and circumstances of the
Company, its board and its stockholders at a given point in time, and that the board should remain adaptable to shaping the leadership structure as those needs change. With the appointment of James A. Hughes as chief executive officer in May 2012,
the board determined that the current structure, with the role of chief executive officer and chairman of the board separated, is appropriate under Company-specific circumstances.
The Boards Role in Risk Oversight
The Company has a comprehensive
risk management process in which management is responsible for identifying and managing the Companys risks, and the board and its committees provide oversight in connection with these efforts. Risks are identified, assessed and managed on an
ongoing basis and communicated to management during periodic management meetings or otherwise as appropriate. Existing and potential material
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risks are addressed during periodic senior management meetings, resulting in both board and committee discussions and public disclosure, as appropriate. Further, risk assessment is embedded in
the Companys business decision making, business planning and strategic planning.
The board is responsible for overseeing
management in the execution of its risk management responsibilities and for assessing the Companys approach to risk management. The board administers this risk oversight function either through the full board or through one of its five
standing committees, each of which examines various components of the Companys enterprise risks as part of its responsibilities. The full board reviews enterprise-wide strategic risks and certain other higher risk areas on a regular basis. An
overall review of risk is inherent in the boards consideration of the Companys long-term strategies and in the transactions and other matters presented to the board, including capital expenditures, manufacturing capacity expansions,
acquisitions and significant financial matters. The audit committee oversees financial risks (including risks associated with accounting, financial reporting, enterprise resource planning system implementation and foreign currencies), legal and
compliance risks and other risk management functions. The compensation committee considers risks related to the attraction and retention of talent (including management succession planning) and risks relating to the design of compensation programs
and arrangements, including a periodic review of such compensation programs to ensure that they do not encourage excessive risk-taking. The nominating and governance committee considers risks related to corporate governance practices. The project
development committee considers risks related to our project development, project selling and related project finance activities. The technology committee considers risks related to our products (such as product warranties and product quality and
reliability matters) and to our ability to achieve the targets in our product and technology roadmaps.
Management regularly
reports on risk-related matters to the board or the relevant committee thereof. Management presentations containing information regarding risks and risk management initiatives are given throughout the year in connection with quarterly and special
board and committee meetings as well as other communications as needed or as requested by the board or committees. In addition, the Companys vice president of internal audit and risk management reports to the audit committee at least once per
year and has open access to the chair of the audit committee.
Policy Regarding Hedging of Company Securities
The Companys Insider Trading Policy prohibits its directors and all associates, including all named executive officers, from
engaging in any short sales with respect to Company securities, buying or selling puts, calls or derivatives on Company securities and purchases of Company securities on margin.
Share Ownership Requirements
The Company remains committed to reviewing
and tracking the implementation of share ownership guidelines pursuant to which the Companys executive officers and non-associate directors are required to achieve share holdings equal to three times their annual base salary or annual
retainer, as applicable, and six times annual base salary for the chief executive officer. Under the guidelines, executives and directors have five years to obtain the required ownership levels.
Committee Composition
We have five standing committees of the board: the audit committee, the compensation committee, the nominating and governance committee,
the project development committee and the technology committee. The committee membership and meetings during 2015 and the function of each of the committees are described below.
During 2015, the board of directors held six board meetings. Each director attended at least 75% of the aggregate of all board of
directors meetings and committee meetings for the committees on which he or she serves.
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The following is a list of all directors and the committees on which the directors serve as
of March 29, 2016:
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Board of Directors Member
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Audit Committee
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Compensation
Committee
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Nominating and
Governance
Committee
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Project
Development
Committee
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Technology Committee
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Michael J. Ahearn
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Member
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Sharon L. Allen
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Chair
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Member
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Richard D. Chapman
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Member
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George A. (Chip) Hambro
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Chair
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James A. Hughes
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Craig Kennedy
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Member
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Member
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James F. Nolan
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Member
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William J. Post
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Member
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Chair
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J. Thomas Presby
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Vice Chair
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Member
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Member
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Paul H. Stebbins
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Member
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Member
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Chair
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Member
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Michael Sweeney
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Chair
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Member
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Audit Committee
The audit committee oversees our financial reporting process on behalf of the board of directors and reports to the board of directors the results of these activities, including reviewing the systems of
internal controls established by management, our audit and compliance process and financial reporting filings. The audit committee, among other duties, engages the independent registered public accounting firm, pre-approves all audit and non-audit
services provided by the independent registered public accounting firm, reviews with the independent registered public accounting firm the plans and results of the audit engagement, considers whether any non-audit services provided by the
independent registered public accounting firm conflict with the independence of such independent registered public accounting firm and reviews the independence of the independent registered public accounting firm. During 2015, the audit committee
held eight meetings.
Sharon L. Allen (Chair), J. Thomas Presby (Vice Chair), Craig Kennedy and Paul H. Stebbins serve on
our audit committee. Each member of the audit committee meets the standards for financial knowledge for companies listed on NASDAQ. In addition, the board of directors has determined that Ms. Allen and Mr. Presby are qualified as audit
committee financial experts within the meaning of Commission regulations.
The audit committee operates pursuant to a written
charter and is of the view that it has complied with its charter. A copy of the audit committees charter is available on our website at www.firstsolar.com under Investors Corporate Governance.
Compensation Committee
The compensation committee reviews and recommends compensation and benefit plans for the Companys officers and directors, including non-associate directors, reviews the base salary and incentive
compensation for each executive officer, reviews and approves corporate goals and objectives relevant to compensation for each executive officer, including our chief executive officer, administers our incentive compensation program for key executive
and management associates and reviews at least annually the benefits strategy related to benefits for all associates. During 2015, the compensation committee held seven meetings. In 2015, as in prior years, the compensation committee directly
engaged Compensation Strategies, Inc. (Compensation Strategies), an independent compensation consulting firm, to provide data related to the compensation practices of our peer group and comparative analysis of our compensation practices
as compared to our peer group companies. The compensation committee reviews the information provided by Compensation Strategies and analyzes overall compensation to ensure that subjective factors such as responsibilities, positions, individual
performance and other similar conditions are recognized, and also considers information and recommendations from management regarding past, present and future compensation of our named executive officers under various payment scenarios.
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For further discussion of the nature and scope of the independent compensation consultants assignment, see Compensation Discussion and Analysis Compensation Committee Practices
Review of Peer Company Data. The aggregate fees paid to Compensation Strategies were $291,379 and related solely to consulting services for executive and director compensation.
Pursuant to its charter, the compensation committee has implemented a number of safeguards to ensure that Compensation Strategies provides
the compensation committee with independent and objective advice, including through directly retaining Compensation Strategies, having the sole authority to terminate Compensation Strategies and determining the terms and conditions of Compensation
Strategies engagement, including the fees charged. The compensation committee also considers the independence of its advisors, including Compensation Strategies, annually on the basis of the following six independence factors under the listing
standards of NASDAQ and in accordance with Rule 10C-1(b)(4) promulgated under the Securities Exchange Act of 1934, as amended, and solicits information on these factors in annual certifications from its advisors:
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whether the advisor provides other services to the Company;
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the amount of fees received from the Company as a percentage of the advisors total revenue;
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whether the advisor has policies and procedures designed to prevent a conflict of interest;
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whether a business relationship exists between the advisor and any member of the compensation committee or management;
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whether a personal relationship exists between the advisor and any member of the compensation committee or management; and
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whether the advisor owns Company stock.
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During 2015, the compensation committee conducted an independence analysis of the relationship of Compensation Strategies to the Company, including a review of potential conflicts of interest, and
concluded that Compensation Strategies is independent and no such conflicts existed.
Michael Sweeney (Chair), Richard D.
Chapman, William J. Post and Paul H. Stebbins serve on our compensation committee.
The compensation committee operates
pursuant to a written charter and is of the view that it has complied with its charter. A copy of the compensation committees charter is available on our website at www.firstsolar.com under Investors Corporate Governance.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee has been an executive officer or associate of the Company during our last completed
fiscal year. During our last completed fiscal year, none of our executive officers served as a member of the compensation committee of any entity that has one or more executive officers serving on our compensation committee.
Nominating and Governance Committee
The nominating and governance committee reviews the composition and performance of the board and its committees and leads the process to assess their performance, assesses candidates for appointment to
the board and recommends to the board whether such candidates should stand for election at the next meeting of stockholders. During 2015, the nominating and governance committee held five meetings.
Paul H. Stebbins (Chair), J. Thomas Presby and Michael Sweeney serve on our nominating and governance committee.
The nominating and governance committee operates pursuant to a written charter and is of the view that it has complied with its charter.
A copy of the nominating and governance committees charter is available on our website at www.firstsolar.com under Investors Corporate Governance.
8
Nomination Procedures
Director nominees are recommended by the nominating and governance committee for selection by the board of directors. In considering new
nominees for the board of directors, the nominating and governance committee considers qualified and diverse individuals who, if added to the board of directors, would provide the mix of director characteristics, experience, perspectives and skills
appropriate for the Company. In accordance with the corporate governance guidelines adopted by the board and the nominating and governance committee charter, criteria for selection of candidates include, but are not limited to: (i) roles and
contributions valuable to the business community; (ii) personal qualities of leadership, character, judgment and whether the candidate possesses and maintains a reputation in the community at large of integrity, trust, respect, competence and
adherence to the highest ethical standards; (iii) relevant knowledge and diversity of background and experience in such areas as business, technology, finance and accounting, marketing, government relations and other disciplines relevant to the
Companys business; and (iv) whether the candidate is free of conflicts and has the time required for preparation, participation and attendance at all meetings.
As indicated by these criteria, the board and the nominating and governance committee seek a diversity of background and experience among board members. The nominating and governance committee does not
follow any ratio or formula to determine the appropriate mix. Rather, it uses its judgment to identify nominees whose backgrounds, attributes and experiences, taken as a whole, will contribute to the high standards of board service at the Company.
The effectiveness of this approach is evidenced by the directors participation in the insightful and robust deliberation that occurs at board and committee meetings and in shaping the agendas for those meetings.
The board of directors does not have a specific policy for consideration of nominees recommended by security holders due to the fact that,
as of March 29, 2016, JCL FSLR Holdings, LLC and its affiliates control approximately 26% of our outstanding common stock and their vote has a significant influence on whether any director nominee recommended by the board of directors or a
security holder is elected to the board of directors. However, security holders can recommend a prospective nominee for the board of directors as described below. There have been no recommended nominees from security holders.
Our bylaws require that a stockholder who wishes to nominate an individual for election as a director at our annual meeting must give us
advance written notice. The notice must be delivered to or mailed and received by the Corporate Secretary of the Company not later than 90 days or earlier than 120 days prior to the first anniversary of the preceding years annual
meeting. If the annual meeting for which the recommendation is submitted is more than 30 days before or more than 60 days after the first anniversary of the preceding years annual meeting, such recommendation must be received by the
Corporate Secretary of the Company not earlier than 120 days prior to the annual meeting and not later than 90 days prior to such annual meeting or the 10th day following the day on which public announcement of the annual meeting date
is first made by the Company.
Stockholders may contact our Corporate Secretary at First Solar, Inc., 350 West Washington
Street, Suite 600, Tempe, Arizona 85281 for a copy of the relevant bylaw provisions regarding the requirements for nominating director candidates and making stockholder proposals.
Project Development Committee
The project development committee oversees the Companys project development, project selling and related project finance activities. During 2015, the project development committee held five
meetings.
William J. Post (Chair), Craig Kennedy, J. Thomas Presby and Paul H. Stebbins serve on our project development
committee.
The project development committee operates pursuant to a written charter and is of the view that it has complied
with its charter. A copy of the project development committees charter is available on our website at www.firstsolar.com under Investors Corporate Governance.
Technology Committee
The technology committee oversees the Companys product and technology-related strategies, processes and programs. During 2015, the technology committee held six meetings.
9
George A. (Chip) Hambro (Chair), Michael J. Ahearn, Sharon L. Allen and James F.
Nolan serve on our technology committee.
The technology committee operates pursuant to a written charter and is of the view
that it has complied with its charter. A copy of the technology committees charter is available on our website at www.firstsolar.com under Investors Corporate Governance.
Stockholder Communications with Directors
A stockholder who wishes to communicate directly with the board, a committee of the board or with an individual director regarding matters related to First Solar should send the communication to:
First Solar, Inc.
Attn: Corporate Secretary
350 West Washington Street
Suite 600
Tempe, Arizona 85281
We will forward stockholder correspondence about First Solar to the board, committee or individual director, as appropriate. Please note that we will not forward communications that are spam, junk mail
and mass mailings, resumes and other forms of job inquiries, surveys and business solicitations or advertisements.
Attendance at
Stockholder Meetings
The Company does not have a policy on directors attending the annual stockholders meetings.
Last years annual stockholders meeting was held on May 20, 2015 in Phoenix, Arizona and was attended by one director.
DIRECTORS
Members of the board of directors of the Company are elected at
each annual meeting of stockholders and serve until the next annual meeting or until their respective successors have been elected and qualified. The following information provided with respect to the principal occupation, affiliations and business
experience during the last five years for each of the members of the board of directors has been furnished to us by such members.
The name and certain information regarding each director of the Company are set forth below as of March 29, 2016. There are no family relationships among directors or executive officers of the
Company. Each of the following persons has been nominated by the board of directors for election at the annual meeting. In concluding that each of the following individuals should continue to serve as a director, the board considered such
persons qualifications as described below and determined that each such person would continue to provide the contributions to the board as specified below.
|
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Name
|
|
Age
|
|
|
Current Position with First Solar
|
|
Director Since
|
|
Michael J. Ahearn
|
|
|
59
|
|
|
Chairman of the Board
|
|
|
2000
|
|
Sharon L. Allen
|
|
|
64
|
|
|
Director
|
|
|
2013
|
|
Richard D. Chapman
|
|
|
62
|
|
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Director
|
|
|
2012
|
|
George A. (Chip) Hambro
|
|
|
52
|
|
|
Director
|
|
|
2012
|
|
James A. Hughes
|
|
|
53
|
|
|
Chief Executive Officer and Director
|
|
|
2012
|
|
Craig Kennedy
|
|
|
64
|
|
|
Director
|
|
|
2007
|
|
James F. Nolan
|
|
|
84
|
|
|
Director
|
|
|
2003
|
|
William J. Post
|
|
|
65
|
|
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Director
|
|
|
2010
|
|
J. Thomas Presby
|
|
|
76
|
|
|
Director
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|
|
2006
|
|
Paul H. Stebbins
|
|
|
59
|
|
|
Director
|
|
|
2006
|
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Michael Sweeney
|
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58
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Director
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|
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2003
|
|
10
Michael J. Ahearn,
Chairman of the Boar;, Technology Committee
. Mr. Ahearn
previously served as the Companys chief executive officer from August 2000 to September 2009; interim chief executive officer from October 2011 to May 2012; executive chairman from October 2009 to December 2010 and May 2012 to July 2012; and
non-executive chairman from January 2011 to October 2011 and July 2012 to present. Mr. Ahearn is currently Chairman and Managing Partner of True North Venture Partners, L.P., a venture capital firm he launched in 2011 to invest primarily in
early stage companies in the energy, water, agriculture and waste sectors. Prior to First Solar, he was partner and president of an equity investment firm, JWMA (formerly True North Partners, L.L.C.). Prior to joining JWMA, Mr. Ahearn practiced
law as a partner in the firm of Gallagher & Kennedy. Mr. Ahearn currently serves as a member of the Board of Directors of Cox Enterprises, Inc.; a member of the Board of Directors of Endeavor Global, Inc.; and a member of the Global
Advisory Board of Beijing Climate Policy Initiative. Mr. Ahearn holds a B.A. in Finance and a J.D. from Arizona State University. During his tenure as chief executive officer of First Solar, Mr. Ahearn led the development and expansion of
First Solar from a small privately-held company to a successful multinational industry-leading public company; his experience and insights are critical assets to the board of directors.
Sharon L. Allen,
Chair, Audit Committee; Technology Committee
, was elected a director of First Solar in July 2013. Ms. Allen
served as U.S. Chairman of Deloitte LLP from 2003 to 2011, retiring from that position in May 2011. Ms. Allen was also a member of the Global Board of Directors, Chair of the Global Risk Committee and U.S. Representative of the Global
Governance Committee of Deloitte Touche Tohmatsu Limited from 2003 to May 2011. Ms. Allen worked at Deloitte for nearly 40 years in various leadership roles, including partner and regional managing partner, and was previously responsible for
audit and consulting services for a number of Fortune 500 and large private companies. Ms. Allen is currently an independent director of Bank of America Corporation, serving as Chair of the Audit Committee and a member of the Corporate
Governance Committee. Ms. Allen serves on the board of a food and drug retailer seeking to become a public company under the name Albertsons Companies, Inc. A Certified Public Accountant (inactive), Ms. Allen holds a B.S. in accounting and
received an honorary doctorate in administrative sciences from the University of Idaho. Ms. Allens deep accounting experience and overall leadership experience from a nearly 40-year career with Deloitte, together with her public company
audit committee experience, are valuable resources for the Company, particularly in her roles as chair of the audit committee and audit committee financial expert and in the areas of financial reporting, corporate governance, risk management and
overall management of large, complex businesses.
Richard D. Chapman,
Compensation Committee
, was elected a director of
First Solar in May 2012. Mr. Chapman serves as the Chief Financial Officer of Walton Enterprises, Inc., where he has worked since 1983. In this capacity, Mr. Chapman oversees all aspects of the Walton Family Office in Arkansas.
Mr. Chapman currently serves on the boards of directors of the Arvest Bank Group, the holding company for a diversified financial services company; the University of Arkansas Foundation Board, where he serves on the Executive and Finance
Committees; the Razorback Foundation, where he is a member of the Executive Committee and Chair of the Investment Committee; and the Fayetteville Campus Foundation of the University of Arkansas. Mr. Chapman also serves on the boards of
directors of the Crystal Bridges Museum of American Art, where he sits on the Executive and Investment Committees; and the Walton Family Charitable Support Foundation. Mr. Chapman was previously a member of the Board of Managers of First Solar
Holdings, LLC prior to the Company going public and JWMA (formerly True North Partners, L.L.C.), an equity investment firm. Prior to joining Walton Enterprises, Mr. Chapman worked from 1976 to 1983 in London, England and Little Rock, Arkansas,
for the accounting firm PricewaterhouseCoopers LLP. A Certified Public Accountant (inactive), Mr. Chapman holds a B.S.B.A. in Accounting from the University of Arkansas. Mr. Chapmans background in accounting and finance, as well as
his many years of experience as a corporate officer, are valuable resources to the board and the Company.
George A.
(Chip) Hambro,
Chair, Technology Committee
, was elected a director of First Solar in May 2012. Mr. Hambro previously held various positions at First Solar from June 2001 through June 2009, including serving as Chief Operating
Officer from February 2005 through May 2007. Prior to joining First Solar, he held the positions of Vice President of Engineering & Business Development for Goodrich Aerospace from May 1999 to June 2001 and Vice President of Operations for
ITT Industries from February 1997 to May 1999. In previous years, Mr. Hambro has been a director of both the Toledo Zoo and Imagination Station, Toledos childrens science museum. Mr. Hambro currently serves on the Board of
Directors of View, Inc., a developer of next-generation
11
green building solutions designed to improve energy efficiency, and Aquahydrex, which is developing and commercializing low cost hydrogen production technologies. Mr. Hambro graduated from
the University of California at Berkeley with a B.A. in Physical Science (Applied Physics). Mr. Hambro provides the board with substantial experience in research and development, engineering, manufacturing and general business matters, obtained
through his work at First Solar and other companies throughout his career.
James A. Hughes,
Chief Executive Officer,
Director
, joined First Solar in March 2012 as Chief Commercial Officer and was appointed Chief Executive Officer in May 2012. Prior to joining First Solar, Mr. Hughes served, from October 2007 until April 2011, as Chief Executive Officer
and Director of AEI Services LLC, which owned and operated power distribution, power generation (both thermal and renewable), natural gas transportation and services, and natural gas distribution businesses in emerging markets worldwide. From 2004
to 2007, he engaged in principal investing with a privately held company based in Houston, Texas that focused on micro-cap investments in North American distressed manufacturing assets. Previously, he served, from 2002 until March 2004, as President
and Chief Operating Officer of Prisma Energy International, which was formed out of former Enron interests in international electric and natural gas utilities. Prior to that role, Mr. Hughes spent almost a decade with Enron Corporation in
positions that included President and Chief Operating Officer of Enron Global Assets, President and Chief Operating Officer of Enron Asia Pacific, Africa and China and as Assistant General Counsel of Enron International. Mr. Hughes is a
Director of TPI Composites, Inc., a leading manufacturer of composite wind blades for the wind energy market. He is Chairman of the Board of Directors of the Los Angeles branch of the Federal Reserve Bank of San Francisco. Mr. Hughes holds a
juris doctor degree from the University of Texas at Austin School of Law, a Certificate of Completion in international business law from Queen Marys College, University of London, and a bachelors degree in business administration from
Southern Methodist University. As an experienced energy executive and chief executive officer of First Solar, Mr. Hughes plays an essential role at the board level in providing CEO-level visibility into the management and operations of First
Solar.
Craig Kennedy,
Audit Committee, Project Development Committee
, was elected a director of First Solar in
September 2007. From 1995 to 2014, Mr. Kennedy was president of the German Marshall Fund, an independent American organization created in 1972 as a permanent memorial to the Marshall Plan. The German Marshall Fund sponsors a wide range of
programs related to foreign, economic, immigration and environmental policy, and it operates a number of political exchanges between the United States and Europe with a special emphasis on Germany. Mr. Kennedy began his career in 1980 as a
program officer at the Joyce Foundation in Chicago. Mr. Kennedy was president of the Joyce Foundation between 1986 and 1992, where he built the Foundations environmental program and launched a new program on U.S. immigration policy.
Mr. Kennedy left the Joyce Foundation to work for Richard J. Dennis, a Chicago investor and philanthropist. During this same period, Mr. Kennedy created a consulting firm working with nonprofit and public sector clients. Mr. Kennedy
was audit committee chair of the Invesco Van Kampen Closed-End-Funds from 1999 to 2014. He also serves on the Advisory Board of True North Venture Partners, L.P. Mr. Kennedy holds a B.A., an M.A. and an MBA from the University of Chicago.
Mr. Kennedys deep public policy experience and global perspective are valuable resources to the Company, as our business is impacted by public policy issues on a global scale.
James F. Nolan,
Technology Committee
, was elected a director of First Solar in February 2003. Mr. Nolan served as the vice
president of operations of Solar Cells, Inc., the predecessor to First Solar, and was responsible for research, development and manufacturing operations. He designed and built early prototype equipment for First Solars pilot manufacturing line
and led the team that developed the process for producing large area thin film cadmium telluride solar modules. Mr. Nolan worked as a part-time consultant for First Solar from November 2000 until March 2007. Mr. Nolan has over 35 years of
experience in physics, engineering, research and development, manufacturing and process design with companies such as Westinghouse, Owens Illinois, Glasstech and Photonics Systems. Mr. Nolan holds more than 10 patents in areas of flat panel
electronic displays and photovoltaic devices and processes. Mr. Nolan earned his B.S. in Physics from the University of Scranton (Pennsylvania) and a PhD in Physics from the University of Pittsburgh. Mr. Nolan provides the board with
extensive experience in engineering, research and development, manufacturing and process design, obtained through his work at the predecessor to First Solar and other companies throughout his career.
William J. Post,
Chair, Project Development Committee; Compensation Committee
, was elected a director of First Solar in June 2010.
Mr. Post retired as chairman and chief executive officer of Pinnacle West Capital
12
Corporation (Pinnacle West) in April 2009, and he retired from the Board of Directors of Pinnacle West in May 2010. He joined Arizona Public Service (the largest subsidiary of
Pinnacle West and the largest electric utility in Arizona) in 1973 and held various officer positions at Arizona Public Service beginning in 1982 including: vice president and controller, vice president of finance and regulation, chief operating
officer, president and chief executive officer. He became president of Pinnacle West in 1997, chief executive officer in 1999 and chairman of the board in 2001. Mr. Post joined the board of Arizona Public Service in 1995 and the board of
Pinnacle West in 1997. Mr. Post is chairman of the Translational Genomics Research Institute and chairman of the Arizona State University Foundation, where he received a Bachelor of Science Degree in 1973. He also serves as a director of Blue
Cross Blue Shield of Arizona. He has served in the past as chairman of Swift Transportation Company, Suncor Development Company, Stagg Information Systems, Nuclear Assurance Corporation, Nuclear Electric Insurance Limited, the Institute of Nuclear
Power, and El Dorado Investment Company. He also served as a Director of Phelps Dodge Corporation from 2001 to 2007 and U.S. Airways from 2011 to 2013. Mr. Post brings to the board executive-level utility-sector experience, including a deep
understanding of the utility sector within the southwestern United States, a key market for the Companys systems business.
J. Thomas Presby,
Vice Chair, Audit Committee; Nominating & Governance Committee, Project Development Committee,
was
elected a director of First Solar in August 2006. Mr. Presby retired in 2002 after a 30-year career as a partner at Deloitte Touche Tohmatsu. At Deloitte, he held many positions in the United States and abroad, including Global Deputy Chairman
and Chief Operating Officer. Currently, Mr. Presby is a board member and chairs the audit committee of Exam Works Group, Inc. He is a director of World Fuel Services Corporation, where, after previously chairing the audit committee for over ten
years, he serves as Lead Director. He is also a board member of the New York Chapter of the National Association of Corporate Directors (NACD). In addition, Mr. Presby previously served as director and audit committee
chair of Invesco Ltd., Tiffany & Co., Practice Works Inc., TurboChef Technologies, American Eagle Outfitters and Greenpoint Financial Corp. He previously served as a trustee of Rutgers University and Montclair State University (N.J.),
and as a director and chairman of the audit committee of the German Marshall Fund. Mr. Presby received a B.S. in electrical engineering from Rutgers University and an MBA degree from the Carnegie Mellon University Graduate School of
Business. Mr. Presby is a certified public accountant in New York and Ohio, and a holder of the NACD Certificate of Director Education. He was named by the NACD as one of the Top 100 directors of 2011. Mr. Presbys
experience as an audit committee chair for multiple public companies, together with his 30-year career with Deloitte, provide a strong background for his roles as vice chair of the audit committee and audit committee financial expert.
Paul H. Stebbins,
Chair, Nominating & Governance Committee; Audit Committee, Compensation Committee, Project Development
Committee
, was elected a director of First Solar in December 2006. Mr. Stebbins has served as chairman emeritus and as a non-employee director of World Fuel Services Corporation (World Fuel) since January 2015. Previously,
Mr. Stebbins served as the chairman and chief executive officer of World Fuel from July 2002 to January 2012 and as executive chairman from January 2012 to May 2014. He has served as a director of World Fuel since June 1995. Between July 2000
and 2002, Mr. Stebbins also served as president and chief operating officer of World Fuel. In 1985, Mr. Stebbins co-founded Trans-Tec Services, a global marine fuel service company acquired by World Fuel in 1995. Mr. Stebbins served
for many years as a member of the Business Round Table, an influential association of chief executive officers of leading U.S. companies, and currently serves as a member of the Energy Security Leadership Council of S.A.F.E. (Securing Americas
Future Energy) and as a member of the Leadership Council of the Fix the Debt Campaign founded by Erskine Bowles and Sen. Alan Simpson. Mr. Stebbins brings to the board significant CEO-level experience in managing a large global energy-related
publicly traded company.
Michael T. Sweeney,
Chair, Compensation Committee; Nominating & Governance Committee
,
was elected a director of First Solar in July 2003. Mr. Sweeney has served as President and Chief Executive Officer of Steinway Musical Instruments, Inc. since October 2011, director since April 2011, and chairman of the board from July 2011
through September 2013. Mr. Sweeney served as chairman of the board of Star Tribune Media Holdings, the holding company for the Minneapolis Star Tribune, from September 2009 to September 2014, and has served as a director of Carlson Companies,
Inc. Mr. Sweeney served as managing partner in Goldner Hawn Johnson & Morrison, Inc., a private equity firm, from 2001 through 2008. He had previously served as president of Starbucks Coffee Company (UK) Ltd. in London and held
various operating management and corporate finance roles.
13
Mr. Sweeneys background in investment banking and private equity, as well as his operating company business acumen, are valuable resources to the board and the Company, particularly
with respect to the boards consideration of compensation and financial matters and strategic investments.
Majority Vote Standard
Our Board adopted in February 2016 a majority vote standard in connection with uncontested elections of directors, as set
forth in the Companys Amended and Restated Bylaws.
In an uncontested election of directors, each candidate is to be
elected by a majority of the votes cast with respect to such candidates election. With respect to any candidate in an uncontested election who is an incumbent director, such director shall promptly tender his or her resignation to the Chairman
of the Board for consideration by the nominating and governance committee if he or she receives less than a majority of votes cast with respect to his or her election. No later than 90 days following the receipt of any such tendered resignation,
(A) the Board shall, taking into account any recommendation by the nominating and governance committee, take formal action with respect thereto (which action may include accepting or rejecting such tendered resignation, or taking other action
considered appropriate) and (B) the Company shall publicly disclose the Boards decision and, in the event that the Board does not accept such tendered resignation, the rationale for such decision. The nominating and governance committee
and the Board, in making any recommendation or decision, respectively, relating hereto may consider any factors or other information they consider appropriate or relevant. As used herein, an uncontested election of directors is an
election in which the number of nominees is not greater than the number of Board seats open for election, and a person shall be considered to have received a majority of the votes cast with respect to such persons election only if the number
of votes cast for such persons election exceeds the number of votes cast against such persons election, with abstentions and broker non-votes not counted as a vote cast either
for or against such persons election.
NON-ASSOCIATE DIRECTOR
COMPENSATION
We use a combination of cash and stock-based compensation to attract and retain qualified candidates to serve
on our board of directors. When reviewing non-associate director compensation we are guided by three goals, as provided in our Corporate Governance Guidelines: (i) compensation should fairly pay directors for work required for a company of our
size and scope; (ii) compensation should align directors interests with the long-term interests of our stockholders; and (iii) the structure of the compensation should be clearly disclosed to our stockholders. The table below
summarizes the 2015 non-associate director compensation.
|
|
|
2015 Non-Associate Director Compensation
(paid in equal quarterly
installments)
|
Annual Retainer
|
|
$225,000
(consisting of $125,000 stock and $100,000
cash)
|
|
|
Additional Chair Retainers
|
Non-Executive Board
Chair
|
|
+$50,000 cash and $75,000 stock
|
Audit Committee Chair
|
|
+$35,000 cash
|
Other Committee Chairs
|
|
+$10,000 cash
|
Cash Compensation
The annual cash compensation for our non-associate directors is $100,000 (payable quarterly in four equal installments) plus an additional $50,000 (payable quarterly in four equal installments) for the
non-executive chairman of the board, an additional $35,000 annual cash retainer (payable quarterly in four equal installments) for the chairman of our audit committee and an additional $10,000 annual cash retainer (payable quarterly in four equal
installments) for the other four committee chairs.
14
Equity Compensation
The annual equity compensation for our non-associate directors is a $125,000 stock grant (granted quarterly in four equal installments), plus an additional annual $75,000 (granted quarterly in four equal
installments) for the non-executive chairman of the board. With respect to such quarterly stock grants, our practice is to issue the stock to our non-associate directors at the end of the quarter. Our practice is not to time the grant date of these
awards to take advantage of announcements of undisclosed material facts, and we do not take into account any internal black outs, during which associates and directors are prohibited by our Insider Trading Policy from trading in our
securities, without regard to whether they are in possession of undisclosed material facts or whether any undisclosed material facts could be perceived as potentially positive or negative.
Other
We reimburse all non-associate directors for reasonable and
necessary expenses they incur in performing their duties as non-associate directors of the Company. We do not provide our non-associate directors with perquisites.
While no changes were made to board of director compensation for 2015, in July 2015, Compensation Strategies presented a market study for our non-associate director compensation. The study showed that
current non-associate director compensation was below typical market levels. Based on the results of the study and in consultation with Compensation Strategies, the board of directors approved revised director compensation on July 29, 2015.
Effective January 1, 2016, the annual stock portion of the non-associate director retainer increased from $125,000 to $160,000 and the annual additional cash retainer for the compensation committee chair increased from $10,000 to $25,000, in
each case, payable on the same terms as described above. The annual cash retainer for all non-associate directors, including the additional retainer for the non-executive board chair and all other committee chairs, did not change.
Non-Associate Director Compensation Table
The following table sets forth information with respect to compensation earned by our non-associate directors for the year ended December 31, 2015:
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|
|
|
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|
|
|
|
|
|
Name
|
|
Fees Earned
or Paid in
Cash ($)
|
|
|
Stock
Awards
($)(1)(2)
|
|
|
Total
($)
|
|
Michael J. Ahearn
|
|
|
150,000
|
|
|
|
200,116
|
|
|
|
350,116
|
|
Sharon L. Allen
|
|
|
114,837
|
(4)
|
|
|
125,088
|
|
|
|
239,925
|
|
Richard D. Chapman
|
|
|
100,000
|
|
|
|
125,088
|
|
|
|
225,088
|
|
George A. (Chip) Hambro
|
|
|
110,000
|
(3)
|
|
|
125,088
|
|
|
|
235,088
|
|
Craig Kennedy
|
|
|
100,000
|
|
|
|
125,088
|
|
|
|
225,088
|
|
James F. Nolan
|
|
|
100,000
|
|
|
|
125,088
|
|
|
|
225,088
|
|
William J. Post
|
|
|
110,000
|
(3)
|
|
|
125,088
|
|
|
|
235,088
|
|
J. Thomas Presby
|
|
|
120,163
|
(4)
|
|
|
125,088
|
|
|
|
245,251
|
|
Paul H. Stebbins
|
|
|
110,000
|
(3)
|
|
|
125,088
|
|
|
|
235,088
|
|
Michael Sweeney
|
|
|
110,000
|
(3)
|
|
|
125,088
|
|
|
|
235,088
|
|
(1)
|
The amounts in this column represent the aggregate grant date fair value of fully vested common stock granted during the fiscal year ended December 31, 2015,
computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 Stock Compensation (ASC Topic 718).
|
(2)
|
The following describes the shares issued to each non-associate director for service during the quarters ended on
March 31, June 30, September 30 and December 31, 2015. On March 31, 2015, 523 shares were issued to each non-associate director (other than Mr. Ahearn) and 837 shares were issued to Mr. Ahearn, in each case at a market
price of $59.79 per share as of that date. The grant date fair value of these shares was $31,270 and
|
15
|
$50,044 respectively. On June 30, 2015, 666 shares were issued to each non-associate director (other than Mr. Ahearn) and 1,065 shares were issued to Mr. Ahearn, in each case at a market price of
$46.98 per share as of that date. The grant date fair value of these shares was $31,289 and $50,034 respectively. On September 30, 2015, 731 shares were issued to each non-associate director (other than Mr. Ahearn) and 1,170 to Mr. Ahearn in each
case at a market price of $42.75 per share as of that date. The grant date fair value of these shares was $31,250 and $50,018 respectively. On December 31, 2015, 474 shares were issued to each non-associate director (other than Mr. Ahearn), and 758
shares were issued to Mr. Ahearn, in each case at a market price of $65.99 per share as that date. The grant date fair value of these shares was $31,279 and $50,020 respectively. The dollar values of the stock awards do not equal exactly $31,250 or
$50,000 per quarter due to the fact that we issue whole shares and not fractional shares to our non-associate directors.
|
(3)
|
The chairs of the compensation, nominating and governance, project development and technology committees receive an additional annual cash retainer of $10,000 in
respect of their roles.
|
(4)
|
Mr. Presby received $20,163 as a pro rata portion of his additional annual cash retainer of $35,000 in respect of his role as audit committee chair through July 28,
2015. Ms. Allen received $14,837 as a pro rata portion of her additional cash retainer of $35,000 in respect of her role as audit committee chair starting July 29, 2015.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding the beneficial ownership of our common stock as of March 29, 2016 by:
|
|
|
each person or group who is known by us to beneficially own more than 5% of our common stock;
|
|
|
|
each member of our board of directors and each of our named executive officers; and
|
|
|
|
all members of our board of directors and our executive officers as a group.
|
Beneficial ownership is determined in accordance with the rules of the Commission and generally includes any shares over which a person
exercises sole or shared voting or investment power.
Unless otherwise indicated, each of the stockholders listed below has
sole voting and investment power (or shares such powers) with respect to the shares beneficially owned. Except as indicated below, the address for each stockholder, director or named executive officer is c/o First Solar, Inc., 350 West
Washington Street, Suite 600, Tempe, Arizona 85281.
16
This table assumes 102,212,838 shares of common stock outstanding as of March 29,
2016.
|
|
|
|
|
|
|
|
|
Name of Beneficial Owner
|
|
Shares
Beneficially
Owned
|
|
|
Percentage
Beneficially
Owned
|
|
Beneficial Owners of 5% or More
|
|
|
|
|
|
|
|
|
S. Robson Walton (1)
|
|
|
24,957,907
|
|
|
|
24.4
|
%
|
Jim C. Walton (2)
|
|
|
26,557,907
|
|
|
|
26.0
|
%
|
Alice L. Walton (3)
|
|
|
26,557,907
|
|
|
|
26.0
|
%
|
JCL FSLR Holdings, LLC (4)
|
|
|
24,957,907
|
|
|
|
24.4
|
%
|
JTW Trust No. 1 UAD 9/19/02 (5)
|
|
|
1,600,000
|
|
|
|
1.6
|
%
|
Wellington Management Group LLP (6)
|
|
|
5,566,514
|
|
|
|
5.4
|
%
|
The Vanguard Group (7)
|
|
|
6,234,408
|
|
|
|
6.1
|
%
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
Michael J. Ahearn
|
|
|
116,980
|
|
|
|
0.1
|
%
|
Sharon L. Allen
|
|
|
5,554
|
|
|
|
*
|
|
Georges J. Antoun
|
|
|
|
|
|
|
*
|
|
Richard D. Chapman
|
|
|
12,317
|
|
|
|
*
|
|
Raffi Garabedian
|
|
|
4,474
|
|
|
|
*
|
|
George A. (Chip) Hambro
|
|
|
12,317
|
|
|
|
*
|
|
James A. Hughes
|
|
|
35,980
|
|
|
|
*
|
|
Craig Kennedy
|
|
|
15,526
|
|
|
|
*
|
|
Joseph G. Kishkill
|
|
|
30,082
|
|
|
|
*
|
|
James F. Nolan
|
|
|
36,645
|
|
|
|
*
|
|
William J. Post
|
|
|
14,170
|
|
|
|
*
|
|
J. Thomas Presby
|
|
|
13,262
|
|
|
|
*
|
|
Paul H. Stebbins
|
|
|
16,235
|
|
|
|
*
|
|
Michael Sweeney
|
|
|
20,110
|
|
|
|
*
|
|
Mark R. Widmar
|
|
|
31,676
|
|
|
|
*
|
|
All directors and executive officers as a group (15 persons)
|
|
|
365,328
|
|
|
|
0.4
|
%
|
(1)
|
The number and percentage of shares of common stock shown in the table as beneficially owned by S. Robson Walton represent 24,957,907 shares held by JCL FSLR Holdings,
LLC, as to which S. Robson Walton, as a manager thereof, shares voting and dispositive power with Jim C. Walton and Alice L. Walton, as managers. With respect to JCL FSLR Holdings, LLC, dispositive and voting power over all of the shares held
thereby is exercised by the managers thereof. The shares held by JCL FSLR Holdings, LLC are for the benefit of John T. Waltons wife and his descendants and for that reason, S. Robson Walton disclaims beneficial ownership of the shares listed
above. The address of S. Robson Walton is P.O. Box 1860, Bentonville, Arkansas 72712.
|
(2)
|
The number and percentage of shares of common stock shown in the table as beneficially owned by Jim C. Walton represent (a) 24,957,907 shares held by JCL FSLR
Holdings, LLC, as to which Jim C. Walton, as a manager thereof, shares voting and dispositive power with S. Robson Walton and Alice L. Walton, as managers, and (b) 1,600,000 shares held by the JTW Trust No. 1 UAD 9/19/02, as to which Jim
C. Walton and Alice L. Walton, as co-trustees, share voting and dispositive power. With respect to JCL FSLR Holdings, LLC, dispositive and voting power over all of the shares held thereby is exercised by the managers thereof. The shares held by JCL
FSLR Holdings, LLC are for the benefit of John T. Waltons wife and his descendants. The shares held by the JTW Trust No. 1 UAD 9/19/02 are for the benefit of charitable interests and John T. Waltons descendants. For those reasons,
Jim C. Walton disclaims beneficial ownership of the shares listed in (a) and (b) above. The address of Jim C. Walton is P.O. Box 1860, Bentonville, Arkansas 72712.
|
17
(3)
|
The number and percentage of shares of common stock shown in the table as beneficially owned by Alice L. Walton represent (a) 24,957,907 shares held by JCL FSLR
Holdings, LLC, as to which Alice L. Walton, as a manager thereof, shares voting and dispositive power with S. Robson Walton and Jim C. Walton, as managers, and (b) 1,600,000 shares held by the JTW Trust No. 1 UAD 9/19/02, as to which Jim
C. Walton and Alice L. Walton, as co-trustees, share voting and dispositive power. With respect to JCL FSLR Holdings, LLC, dispositive and voting power over all of the shares held thereby is exercised by the managers thereof. The shares held by JCL
FSLR Holdings, LLC are for the benefit of John T. Waltons wife and his descendants. The shares held by the JTW Trust No. 1 UAD 9/19/02 are for the benefit of charitable interests and John T. Waltons descendants. For those reasons,
Alice L. Walton disclaims beneficial ownership of the shares listed in (a) and (b) above. The address of Alice L. Walton is P.O. Box 1860, Bentonville, Arkansas 72712.
|
(4)
|
The number and percentage of shares of common stock shown in the table as beneficially owned by JCL FSLR Holdings, LLC represent 24,957,907 shares held directly by JCL
FSLR Holdings, LLC, as to which S. Robson Walton, Jim C. Walton and Alice L. Walton, as managers of JCL FSLR Holdings, LLC, share voting and dispositive power. The shares held by JCL FSLR Holdings, LLC are held for the benefit of John T.
Waltons wife and his descendants and for that reason, S. Robson Walton, Jim C. Walton and Alice L. Walton disclaim beneficial ownership of such shares. The address of JCL FSLR Holdings, LLC is P.O. Box 1860, Bentonville, Arkansas 72712.
|
(5)
|
The number and percentage of shares of common stock shown above as beneficially owned by JTW Trust No. 1 UAD 9/19/02 represent 1,600,000 shares held directly by
JTW Trust No. 1 UAD 9/19/02, as to which Jim C. Walton and Alice L. Walton, as co-trustees of such trust, share voting and dispositive power. The shares held by JTW Trust No. 1 UAD 9/19/02 are held in a trust principally for
the benefit of charitable interests and John T. Waltons descendants. Jim C. Walton and Alice L. Walton therefore disclaim beneficial ownership of such shares. The address of JTW Trust No. 1 UAD 9/19/02 is P.O. Box 1860,
Bentonville, Arkansas 72712.
|
(6)
|
Based on information provided by Wellington Management Group LLP, 280 Congress Street, Boston, Massachusetts 02210, in a Schedule 13G filed with the SEC on
February 11, 2016 reporting beneficial ownership as of December 31, 2015. According to such Schedule 13G, Wellington Management Group LLP has shared voting power with respect to 3,293,422 shares and shared dispositive power with respect to
5,566,514 shares.
|
(7)
|
Based on information provided by The Vanguard Group, 100 Vanguard Boulevard, Malvern, Pennsylvania 19355, in a Schedule 13G filed with the SEC on February 10, 2016
reporting beneficial ownership as of December 31, 2015. According to such Schedule 13G, The Vanguard Group has sole voting power with respect to 121,312 shares, shared voting power with respect to 4,100 shares, sole dispositive power with
respect to 6,113,496 shares and shared dispositive power with respect to 120,912 shares.
|
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since December 31, 2014, we have not been a party to any
transaction or series of similar transactions in which the amount involved exceeded or will exceed $120,000 and in which any current director, executive officer, holder of more than five percent of our capital stock or any member of the immediate
family of any of the foregoing had or will have a material interest, other than in connection with the transactions described below. We had no related party debt outstanding at December 31, 2015 and did not pay any interest to related parties
during the year ended December 31, 2015.
Registration Rights
We entered into a registration rights agreement with the Estate of John T. Walton, JCL Holdings, LLC and Michael J. Ahearn. The associated
registration rights previously held by JCL Holdings, LLC and Estate of John T. Walton are now held by JCL FSLR Holdings, LLC. The registration rights agreement provides for piggyback registration rights if we register equity securities under the
Securities Act of 1933, as amended (the Securities Act), subject to certain lock-up provisions and exceptions. In addition, subject to certain lock-up provisions and exceptions, Michael J. Ahearn has three demand rights and JCL FSLR
Holdings, LLC has unlimited demand rights, provided that JCL FSLR Holdings, LLC may only exercise one such demand right within any 365-day period.
18
Review and Approval of Related Party Transactions
The Companys audit committee charter requires the review and approval by the audit committee of related party transactions, to
ensure that they are on such terms, which, in the judgment of the audit committee, are no less favorable to the Company than could be obtained from unaffiliated parties. If a member of the audit committee has an interest in the proposed transaction,
our corporate governance guidelines require the formation of a committee consisting entirely of independent directors without an interest in the proposed transaction to review and, if appropriate, approve such transaction.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees billed to us for audit and other services provided by PricewaterhouseCoopers LLP during
the years ended December 31, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
Audit Fees (1)
|
|
$
|
3,209,855
|
|
|
$
|
3,252,917
|
|
Audit-Related Fees (2)
|
|
|
666,000
|
|
|
|
758,057
|
|
Tax Fees (3)
|
|
|
177,333
|
|
|
|
138,134
|
|
All Other Fees (4)
|
|
|
2,767
|
|
|
|
173,970
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,055,955
|
|
|
$
|
4,323,078
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Represents the aggregate service fees billed for the audit of the Companys financial statements in connection with statutory and regulatory filings or engagements
for 2015 and 2014.
|
(2)
|
Represents the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the Companys
financial statements and are not reported under audit fees, and represents approximately 17% and 18% of the total fees in 2015 and 2014, respectively. This category consists primarily of services related to special projects.
|
(3)
|
Represents the aggregate fees billed for tax compliance and tax consulting services, or approximately 5% and 3% of the total fees in 2015 and 2014, respectively.
|
(4)
|
Represents the aggregate fees billed for all products and services provided that are not included under audit fees, audit-related fees or
tax fees, and represents less than 1% and 4% of the total fees in 2015 and 2014, respectively. These services include certain business process reviews and a subscription to PricewaterhouseCoopers LLP proprietary accounting research
databases.
|
Audit Committee
s Pre Approval Policies and Procedures
The audit committee has policies and procedures that require the pre-approval by the audit committee of all fees paid to, and all services
performed by, the Companys independent registered public accounting firm, subject to
de minimis
exceptions for non-audit services set forth in the applicable rules of the Commission. Each year, the audit committee pre-approves the
proposed services, including the nature, type and scope of services to be performed by the independent registered public accounting firm during the fiscal year and the related fees. Audit committee pre-approval is also required for those engagements
that may arise during the course of the year that are outside the scope of the initial services and fees pre-approved by the audit committee.
The services related to audit-related fees, tax fees and all other fees presented in the above table were approved by the audit committee pursuant to pre-approval
provisions set forth in the applicable rules of the Commission without resort to a waiver of such pre-approval provisions.
19
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
First
Solar is a leading global provider of comprehensive photovoltaic (PV) solar energy solutions. We are implementing a long-term strategic plan (Long Term Strategic Plan) that focuses on providing utility-scale PV solar energy
solutions to key geographic markets. We endeavor to align our compensation decisions with our operating and strategic plans. As in prior years, the core philosophy underlying our compensation decisions remains unchanged: we pay executives for
performance and seek to align their interests with those of our stockholders. The individuals in the Summary Compensation Table below are referred to in this Compensation Discussion and Analysis as the named executive officers.
Highlighted below are a number of key compensation-related decisions we made or advanced in 2015:
|
|
|
Commitment to Best Practices.
Consistent with regulatory requirements and evolving best compensation practices, our
compensation committee has determined to evaluate periodically, and not less than annually, the independence of its consultants. In 2015, the compensation committee again analyzed its consultant, Compensation Strategies, including the relationship
of Compensation Strategies to the Company, and concluded that Compensation Strategies is independent. Further, in the context of the total compensation review and the adoption of our 2015 incentive programs, the compensation committee considered
whether our compensation structure and programs encourage excessive or inappropriate risk taking and concluded that they did not do so.
|
|
|
|
Executive Perquisites.
Consistent with our compensation philosophy, we do not typically provide our named executive
officers with any perquisites not available to our associates generally.
|
|
|
|
2015 Omnibus Incentive Compensation Plan.
In 2015, our board of directors adopted and our stockholders approved the 2015
Omnibus Incentive Compensation Plan (the 2015 Omnibus Plan) with approximately 85% of votes cast on the proposal to adopt the plan voting in favor. The 2015 Omnibus Plan replaced the predecessor 2010 Omnibus Incentive Compensation Plan
(the 2010 Omnibus Plan) and reflects current compensation and governance best practices and changes in the law, including an increased percentage threshold for triggering a change in control, the elimination of certain types of share
recycling for purposes of determining the shares available for issuance under the plan and a refined list of metrics that may be applicable to performance-based awards granted under the 2015 Omnibus Plan.
|
|
|
|
Shareholder Engagement and Outreach
. In 2015, we engaged with our larger shareholders and sought input on a variety of
topics, including our governance and compensation practices. Our outreach efforts were aimed at creating a mutually informative and beneficial discussion with our shareholders. We remain committed to fostering further ongoing shareholder dialogue.
|
|
|
|
Clawback Policy.
Since 2012, we have included clawback provisions with respect to compensation awards and newly-entered
employment agreements and change in control severance agreements (the CIC Agreements), which would allow us to recoup, to the extent required by applicable law, incentive and separation payments made to our named executive officers if we
later determine that the basis on which such compensation was earned was erroneous. All incentive and equity awards and agreements with our named executive officers are subject to clawback in accordance with all applicable laws.
|
|
|
|
Hedging Policy.
The Companys hedging policy prohibits our directors and associates, including all named executive
officers, from (i) engaging in any short sales with respect to any Company securities, (ii) buying or selling puts, calls or derivatives on any Company securities and (iii) purchasing any Company securities on margin.
|
|
|
|
Share Holding/Ownership Guidelines.
To better align the interests of executives with those of our stockholders, the
Company remains committed to reviewing and tracking our share ownership guidelines. First Solar and our independent compensation consultant routinely review the share ownership guidelines against evolving market practice and in 2015 our share
ownership guidelines remained unchanged. Under these guidelines the chief executive officers share ownership requirement is six times base pay and the share ownership requirement of all other named executive officers is three times base pay.
Executives have five
|
20
|
years from the date they become senior executives to obtain the required ownership levels. Currently, all executives are either meeting the share ownership requirements or are on track to meet
the requirements within the allowable timeframe. In addition, our practice is generally to call for each of our executive officers to hold shares through at least the time that he or she meets the share ownership guidelines.
|
|
|
|
Double-Trigger Equity Vesting
. In July 2013, our compensation committee determined that the CIC Agreements which we enter
into with newly hired executives will no longer provide for full vesting of unvested time-vested equity-based compensation upon a change in control of the Company and will instead provide for vesting of such equity-based compensation only upon a
termination without cause or resignation for good reason within two years following a change in control of the Company. All CIC Agreements entered into since July 2013 provide for such double-trigger equity vesting.
|
|
|
|
Elimination of Tax Gross-ups.
In 2011, we determined not to provide any newly hired executives with 280G tax gross-ups,
and, consistent with that decision, our employment agreements with executives hired thereafter do not provide this benefit. Since 2014, none of our named executive officers have been entitled to excise tax gross-ups.
|
|
|
|
KSTEPP Partial Condition Vesting.
On November 9, 2015, the compensation committee certified achievement as of
September 30, 2015 of the partial vesting condition. From October 1, 2014 through September 30, 2015, and in line with our Long Term Strategic Plan, the Company achieved at least 1.35 gigawatts DC of modules sold in sustainable
markets and 13% cash adjusted return on invested capital, and therefore KSTEPP participants, including all named executive officers, became vested in one-third of their KSTEPP awards (subject to proration for KSTEPP participants who had a qualifying
separation from service prior to such vesting date).
|
Overview
Our named executive officers for 2015 were:
|
|
|
Mr. James A. Hughes, Chief Executive Officer;
|
|
|
|
Mr. Mark R. Widmar, Chief Financial Officer;
|
|
|
|
Mr. Georges J. Antoun, President U.S.;
|
|
|
|
Mr. Joseph G. Kishkill, President International; and
|
|
|
|
Mr. Raffi Garabedian, Chief Technology Officer.
|
The solar industry continues to be characterized by intense pricing competition, both at the module and system levels. In light of such market realities, we are executing our Long Term Strategic Plan,
under which we are focusing on our competitive strengths. Such strengths include our advanced module and system technologies as well as our differentiated, vertically-integrated business model that enables us to provide utility-scale PV solar energy
solutions to key geographic markets with immediate electricity needs. Execution of our Long Term Strategic Plan entails a prioritization of market opportunities worldwide relative to our core strengths and a corresponding allocation of resources
around the globe. The ultimate aim of our Long Term Strategic Plan is to increase business growth, improve profitability and enhance liquidity.
In an effort to best align executive talent with our Long Term Strategic Plan, on July 1, 2015 the Company revised its management structure and Mr. Antoun moved to a role of president, United
States, having responsibility for all U.S. business and project development, and Mr. Kishkill became president, international, having responsibility for all international business and project development. Mr. Widmar remained chief
financial officer, and Mr. Garabedian remained chief technology officer. No compensation changes, beyond those made in the annual pay cycle in the first quarter of the year as described below, were made as part of this new structure.
Our Long Term Strategic Plan represents a comprehensive strategy for the Company, and, in order to ensure leadership alignment
with that strategy, required us to reevaluate our approach to compensation beginning in 2012 to ensure that it reflected the elements needed to effectively compensate and retain the senior leadership team as well as recruit exceptional new talent.
We continued to evaluate our approach to compensation in 2015, ultimately
21
concluding that few changes to our revised compensation structure from 2012 were necessary to continue aligning our compensation structure with our Long Term Strategic Plan and stockholders
objectives. However, where such changes were made, they are noted below. We will continue to evaluate our approach to compensation to ensure it is fully aligned with our Long Term Strategic Plan, evolving market practices and legal requirements.
Context and Overview
Calibrating Performance Metrics and Compensation Components in Light of our Long Term Strategic Plan
. The compensation committee has adopted plans and programs that are
consistent with the Companys compensation philosophy in order to best align our compensation practices with our Long Term Strategic Plan.
We Consider our Stockholders Feedback Regarding our Compensation Practices
. At the 2014 annual meeting, the stockholder advisory vote on the Companys executive
compensation (say on pay) was approved by 97.6% of our stockholders voting. At the 2011 annual meeting, a triennial cycle for our executive compensation advisory votes was selected by 69.5% of the stockholders voting on the timing of
such votes (say when on pay). The compensation committee, taking these results into account, adopted a triennial vote cycle and, for 2015, continued with its executive compensation philosophy. The next say on pay and say when on pay
advisory votes will be held at the 2017 annual meeting. In addition, the Company routinely meets with investors to solicit feedback and recommendations to the Company, including feedback on our compensation practices, though concerns with regards to
our compensation practices and programs have not been raised in such meetings.
First Solar Compensation Philosophy
First Solars compensation philosophy rests on foundational principles that inform the way we design our
compensation programs and pay our named executive officers. This philosophy can be understood in the following ways:
First
Solar Pay Is Simple and Is Designed to Align the Interests of Executive Management and Stockholders
. The Companys approach to compensation is straightforward, and this is reflected in the components of our
executives aggregate annual pay. The three primary components of First Solar executive compensation are: (1) base salary, (2) cash incentive compensation (short-term incentive) and (3) equity compensation (long-term incentive).
Our named executive officers have the largest percentage of total compensation at risk (i.e., the portion of compensation that is not payable to such executives unless certain performance targets are achieved) with a heavy weighting towards equity
compensation to align their interests with stockholders. There are no supplemental executive retirement programs or other deferred compensation arrangements and generally no perquisites that are available solely for the named executive officers.
Our Compensation Levels Are Consistent with Market Levels, and We Apply Discretion to Conform to, or Reward, Actual
Performance.
We believe that our named executive officers should be compensated at a level that ensures their continued dedication to the Company and creates potential rewards for extraordinary results when advancing the
goals and strategy of the Company, particularly with respect to the furtherance of our Long Term Strategic Plan. The Company works with an independent compensation consultant, Compensation Strategies, who regularly compiles and analyzes market data
to determine the pay practices of our peer group, which we use in determining the level of our named executive officers pay (generally targeted at the 50th percentile, with deviations possible when warranted by role, skill set, performance or
other extraordinary considerations). See Compensation Committee Practices 2015 Compensation Decisions. Similarly, our choice of metrics (both financial and operating) related to our annual incentive plan and Key Senior Talent
Equity Performance Program (KSTEPP), and the compensation committees discretion to reduce awards granted under the annual incentive plan, are meant to ensure that our named executive officers are not rewarded unless performance
goals are achieved and that operational metrics are not achieved at the expense of financial performance.
22
Executive Compensation Principles
The compensation committee has responsibility for establishing and overseeing our compensation program as it applies to our named
executive officers. The compensation committee bases its executive compensation programs on the principles set forth below, which have generally remained constant from prior years:
|
|
|
Pay to Market
|
|
Compensation should be based on the level of job responsibility, individual performance and Company performance. Compensation should also reflect the value of the job in the
marketplace. To attract and retain a highly skilled workforce, we must provide pay that remains competitive with the pay of other employers who compete with us for talent.
|
|
|
More Responsibility, More Pay at Risk; We Pay for Performance
|
|
As associates progress to higher levels in the organization, an increasing proportion of their pay should be linked to Company performance and stockholder returns; our senior
executives are better able, relative to other associates, to affect the Companys results.
|
|
|
Metrics Should Motivate Associates to Achieve the Mission
|
|
To be effective, performance-based compensation programs should enable participants to easily understand how their efforts can affect their pay through contributions to the
Companys achievement of its strategic and operational goals.
|
Evaluating the Market
. Although our determination of the amount and mix of
compensation elements for our named executive officers is generally not influenced by short-term market shifts, when extraordinary business changes occur, we believe that our compensation practices should include the requisite flexibility to respond
to those changes while remaining consistent with our compensation philosophy.
When setting compensation, we review
compensation paid by other companies of comparable size in the same or similar industries, as well as where our compensation falls within our peer group. Our objective is to generally pay median compensation while providing an opportunity to
increase compensation further through successful performance in our incentive compensation programs. Depending on the role, the experience an individual brings to the role, and individual performance, we broadly aim to set our executive total cash
targets (base salary and incentive targets) at the 50th percentile of our peer group, and continued our efforts in this regard in 2015, favoring performance bonus opportunities as the means by which our executives may earn higher pay.
We do not exclusively rely on market data to determine executive compensation. Instead, we incorporate flexibility into our compensation
program and in our assessment process to respond to and adjust for the dynamic business environment in which we operate. As the solar industry and our operating initiatives evolve, we will continue to evaluate our approach to compensation to ensure
it is fully aligned with both the business environment and any future updates to our strategic plans.
Equity
Policies
. To better align the interests of executives with those of our stockholders, we previously adopted share ownership guidelines that cover our officers, including the named executive officers, and certain other
members of senior management. In addition, our practice is generally to call for each of our named executive officers to hold shares through at least the time that he or she meets the share ownership guidelines. We also prohibit our associates from
engaging in hedging transactions with respect to our shares. We continue to periodically assess our policies in order to ensure that they are consistent with our philosophies and best practices in the market
23
Components of 2015 Executive Compensation
For 2015, the compensation of named executive officers consisted primarily of three components: base salary, short-term cash incentive
compensation (i.e., an annual bonus) and long-term equity-based compensation (i.e., a multi-year equity award). These components are described in the chart below, including how each fits into our overall executive compensation package (i.e., the
particular objectives and the specific elements that our compensation programs are designed to address).
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Component
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Objective
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Focus
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Base
Salary
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ü
ü
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Provides fixed portion of compensation
Paid in cash
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ü
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Compensates based on market value for position, individual performance, level
of experience and critical nature of role to the Company
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Cash Incentive
Compensation
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ü
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Provides at-risk variable compensation linked to short-term corporate, organizational and strategic goals without sacrificing long-term Company
performance
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ü
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Compensates based on
performance on shorter-term objectives
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ü
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Paid in cash
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Equity-Based
Compensation
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ü
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Provides at-risk variable pay compensation linked to long-term performance of the Company, individual performance and critical nature of
role
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ü
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Aligns the long-term interests of our stockholders and our named executive
officers
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ü
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Paid in restricted stock units and KSTEPP performance units
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ü
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Assists in attracting and retaining qualified executives
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ü
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Compensates for overall Company performance
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Each of our named executive officers is party to an employment agreement and a CIC Agreement that protect
him or her in the event of certain employment terminations, as well as agreements related to restrictive covenants including confidentiality, non-competition and director and officer indemnification agreements. The employment and CIC Agreements
provide severance in exchange for a release of claims and equity vesting acceleration under certain circumstances. Since July 2013, employment agreements and CIC Agreements entered into with newly hired executives have provided for equity vesting
acceleration only upon a termination without cause or resignation for good reason following a change in control of the Company, as described in more detail in Employment Agreements and Related Arrangements and
Change in Control Severance Agreements.
Generally, the types of compensation and benefits provided to the named
executive officers are similar to those provided to other members of our senior executive team.
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Compensation Committee Practices
Selection of Peer Companies
In 2015, the compensation committee retained Compensation Strategies as a consultant to provide data and analysis regarding the selection of companies in our executive compensation peer group, the pay
practices of such companies and results of a comparison of each of the components of the compensation of our named executive officers against the compensation paid to executives in similarly-situated positions at our peer group companies.
Compensation Strategies also advised the compensation committee on such matters in prior years. The consultants benchmarking services in 2015 were limited to comparing each element of compensation for a particular position against similar
elements provided by members of the peer group.
The compensation committee routinely analyzes our peer group to determine if
it accurately reflects our competitors in the industry, and we have made certain changes to our peer group makeup over the last two years in order to conform the group to include companies comparable in size and revenue to us, and with whom we
compete for talent. Our peer group is comprised of U.S.-based public companies with 2015 estimated annual revenues generally greater than $1 billion that are (i) engaged in the solar, energy, semiconductor, high-tech, engineering, construction,
independent power production or energy service sectors, (ii) our vendors or suppliers falling within the above parameters whose business has some comparability to ours, (iii) companies with whom we compete for executive talent and/or
(iv) the companies who comprise the peer groups of the companies with whom we compete for executive talent, if relevant.
The current peer group includes thirty-five (35) companies that are generally reflective of a company of our size. We include some
larger engineering and construction firms (e.g., Chicago Bridge & Iron Company N.V., Jacobs Engineering Group Inc. and Fluor Corporation) to align with this key piece of our business. Similarly, larger independent power producers (e.g., NRG
Energy, Inc. and Public Service Enterprise Group Incorporated) and component manufacturers (e.g. Micron Technology, Inc.) are also included to ensure that these critical and relevant elements of our business are also captured. Regression is used to
adjust for these peers larger sizes. Our 2015 peer group had median and average annual 2014 revenues of $3.2 billion and $5.8 billion respectively. While the range of 2014 revenues was broad ($0.4 billion to $21.5 billion), the median and
average revenues of the group (excluding certain larger yet key comparison companies) were comparable to that of the full group: $2.9 billion and $3.8 billion, respectively. Similarly, the median and average April 30, 2015 market
capitalization for the full group were $7.2 billion and $9.5 billion, respectively, closely approximating the range for the group minus certain larger comparison companies ($6.9 billion and $8.7 billion). We believe including certain larger key
comparison companies in our peer group is important in order to fully reflect the various aspects of our business and, through our focus on 50th percentile pay practices and the use of statistical regression to adjust for size differences among the
peers, the inclusion of such companies in the peer group of thirty-five companies does not result in the upward biasing of compensation levels.
25
The 2015 peer group consisted of:
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Advanced Micro Devices, Inc.
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Agilent Technologies, Inc.
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Altera Corporation
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Analog Devices, Inc.
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Applied Materials, Inc.
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Broadcom Corporation
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Calpine Corporation
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Chicago Bridge & Iron Company N.V.
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Corning Incorporated
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Dynegy Inc.
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Exterran Holdings, Inc.
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Fairchild Semiconductor International, Inc.
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FLIR Systems, Inc.
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Fluor Corporation
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FMC Technologies, Inc.
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Jacobs Engineering Group Inc.
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JDS Uniphase Corporation
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KLA-Tencor Corporation
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Lam Research Corporation
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Linear Technology Corporation
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Marvell Technology Group Ltd.
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Maxim Integrated Products, Inc.
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McDermott International, Inc.
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Micron Technology, Inc.
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NRG Energy, Inc.
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NVIDIA Corporation
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Oceaneering International, Inc.
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ON Semiconductor Corporation
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Public Service Enterprise Group Incorporated
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RPC, Inc.
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SunEdison, Inc.
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SunPower Corporation
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Teradyne, Inc.
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Veeco Instruments Inc.
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Willbros Group, Inc.
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Review of Peer Company Data
On at least a biennial basis, but typically annually, the compensation committee evaluates the compensation payable to our named executive
officers against data regarding the pay practices of companies in our peer group, looking at individual components of pay, including total amount paid or payable. In addition, the compensation committee annually reviews any payments to our named
executive officers that would be required under various severance scenarios. When conducting this review, the compensation committee also considers information and recommendations from management regarding past, present and future compensation of
our named executive officers under various payment scenarios.
Based on its review and analysis of the pay practices of our
peers, Compensation Strategies concluded, and our compensation committee agreed, that the compensation paid to our named executive officers was consistent with our stated compensation objectives regarding our target pay as compared to our peer
group, and was thus reasonable in the aggregate as compared to the peer group above. See Executive Compensation PrinciplesEvaluating the Market.
Consultant Fees and Independence Review
The aggregate fees paid to
Compensation Strategies in 2015 were $291,379 and related solely to consulting services for executive and director compensation. During 2015, the compensation committee conducted an independence analysis of the relationship of Compensation
Strategies to the Company, including a review of potential conflicts of interest, and concluded that Compensation Strategies is independent and no such conflicts existed.
Individual Compensation Review
The individual performance of each
of our named executive officers has been, and continues to be, a major factor in the compensation committees decision regarding such executives level of compensation. Absent unusual circumstances, our process for review of individual
compensation of our named executive officers is generally as follows. After the completion of each year, our independent directors (meeting in executive session under the direction of the chair of the compensation committee) review the performance
of our chief executive officer for the prior year, evaluating his achievement against individual and Company objectives (which objectives were agreed upon between him and the compensation committee early in the prior year), his contributions to the
Companys performance and other leadership accomplishments.
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Our chief executive officer provides the compensation committee with an assessment of prior
year performance of, and a recommendation for compensation changes with respect to, our other named executive officers, evaluating each executive based on achievement of objectives by the executive and his or her organization, his or her
contribution to the Companys performance and other leadership accomplishments. Based on these considerations, and following an exercise of its independent judgment on the boards interactions with the named executive officers, the
compensation committee (i) sets base salary and target bonus percentages for the current year, (ii) determines the appropriate level, if any, of cash-incentive compensation for the prior year and (iii) determines the appropriate
equity incentive compensation for the named executive officer.
Consistent with its approach in prior years, the compensation
committees decision regarding pay increases and awards in 2015 was influenced in part by prospective considerations regarding the measures that would most effectively ensure the uninterrupted focus of our named executive officers during this
key growth period for the Company.
Compensation Risk Analysis
In the context of the total compensation review and the adoption of our 2015 incentive programs, the compensation committee considered
whether our compensation structure and programs encourage excessive or inappropriate risk taking and concluded that they did not do so.
2015 Compensation Decisions
The following is a discussion of the considerations taken into account in establishing compensation for our named executive officers in 2015.
Base Salary
Base salary is the fixed element of our named executive officers annual cash compensation. The value of base salary for each named executive officer reflects the requirements of such
executives employment agreement and his or her individual performance and skill set, including the market value of that skill set. The Company seeks to maintain base salary levels for our executives at the 50th percentile of our peer group
(with the expectation that generally any compensation paid at a level above the 50th percentile is warranted only due to extraordinary performance, critical skill sets or similar considerations). The base salaries for our named executive officers,
including our chief executive officer, are generally positioned at or below the 50th percentile.
The compensation committee
evaluates market data and the individual performance of executives during our regular annual salary review process, which we refer to as our annual pay cycle. At the beginning of 2015, the base salaries of our named executive officers
were as follows: Mr. Hughes ($750,000 which was subsequently increased to $850,000); Mr. Widmar ($550,000); Mr. Antoun ($550,000); Mr. Kishkill ($400,000 which was subsequently increased to $440,000); and Mr. Garabedian
($420,250 which was subsequently increased to $440,000).
Cash Incentive Compensation
Our cash incentive compensation consists primarily of our annual bonus program, which for 2015 was designed under our 2010 Omnibus Plan,
and cash sign-on bonuses that we use to create incentives for individuals to join our Company, including to compensate such individuals for payments forfeited upon leaving their prior employment to join us or to offset relocation costs.
Annual Bonus Program.
We use our annual bonus program to encourage achievement of specified strategic and
operational objectives and focus on those objectives to help us achieve our mission of enabling a world powered by clean, affordable solar energy. On February 19, 2015, the compensation committee adopted a 2015 bonus program (the 2015
Bonus Plan) for executives, including our named executive officers, with a single threshold operating income metric as well as various performance metrics, each of which is weighted equally, to strengthen
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the connection between executive performance and incentive pay, which is one of our core executive compensation principles. The compensation committee selected the metrics and weighting
applicable to the 2015 Bonus Plan with the Long Term Strategic Plan in mind, believing that these metrics correlated directly with the current year milestones set under the Long Term Strategic Plan. Upon achievement of the threshold operating income
metric, the maximum bonus pool may be funded, but the amount of each participants actual bonus will be determined based on the achievement of the various performance metrics, which will result in actual payouts less than the maximum bonus
pool. Allocation of the bonus pool among various regions and among the individual named executive officers will additionally be subject to the discretion of our chief executive officer (and the compensation committee, in the case of our chief
executive officer), but will not result in payment to any of the named executive officers of a bonus amount greater than the maximum bonus amount approved by the compensation committee with respect to each of our named executive officers.
Furthermore, the compensation committee retains discretion to reduce any award achieved under the program to the extent appropriate. All bonus payments will be subject to clawback to the extent required by applicable law.
Bonus Program Targets, Objective and Calculation.
The 2015 Bonus Plan, as applicable to our named executive
officers, had a $170 million adjusted operating income
1
minimum threshold level and a matrix of the following four performance metrics, which were established based on the goals set forth in our confidential annual operating plan for 2015: (i) operating cash flow, (ii) cost per watt, at both
the module and balance of system levels, (iii) stabilized efficiency and (iv) sales metrics (i.e., bookings and gross margins on bookings; operations and maintenance (O&M) bookings, and O&M margins). We believe that
these four metrics are key drivers of the Companys long-term success by aligning directly with our Long Term Strategic Plan, and are critical measures of success with respect to our annual operating plan. The relative achievement of these
performance metrics is linked to enhancing our competitive position in the marketplace by improving our liquidity, reducing our variable costs, reducing manufacturing and fixed spending and increasing our product efficiency. We also established
sales metrics that would ensure we were selling the right mix of product at a reasonable gross margin profile, which increases the Companys future profitability and sustainability while acknowledging the pricing pressure of the current
environment. By recognizing achievement of these performance metrics, we align bonuses with our overall Company goals.
Each
performance metric was weighted equally because each was equally important in achieving the goals laid out in our confidential annual operating plan. Additionally, the compensation committee considered how these metrics, taken together, would
provide proper incentives supplemental to the KSTEPP awards and further concluded that the 2015 Bonus Plan did not involve unnecessary risk for the Company. Performance levels were set for each performance metric ranging from a threshold level of
0.5 in cases of weaker performance to 2.0 in cases of stronger performance. A 0.5 multiplier was assigned to performance at a level that, while not certain at the time targets were set, we considered likely that such performance would be achieved by
the end of the year. A 1.0 multiplier was assigned to performance at a level that, while not certain at the time targets were set, aligned with the goals in our confidential annual operating plan, and thus was a level that we expected we could
achieve by the end of the year. A 2.0 multiplier was assigned to a performance level that was substantially more uncertain (i.e., that we expected we would have approximately a 50% chance of achieving by year end). If the minimum threshold level of
performance was not achieved for a specific metric, the multiplier for that metric would be zero. The maximum bonus percentage payable under this formula in the 2015 Bonus Plan was approximately 200% of target.
1
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In order to determine adjusted operating income, we take the Companys operating income (as defined by U.S. GAAP and described in the Companys
2015 Annual Report on Form 10-K filed with the Securities and Exchange Commission (the Financial Statements)) and adjust for (i) stock-based compensation expense, (ii) bonus expense and (iii) foreign currency gains or
losses.
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Based on an assessment of the 2015 Company results against the criteria described above, the
2015 Bonus Plan results were:
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2015 Bonus
Plan Threshold Metric Results
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Threshold Metric
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Minimum Threshold Level (must be met for
any
bonus payout to occur)
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2015 Result
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Adjusted operating income
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$170 Million
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Exceeded
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2015 Bonus
Plan Performance Metric Results
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Metric
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Weighting
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Main Focus
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2015 Payout Factor
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Adjusted
operating cash flow
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25%
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Liquidity
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1.32
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Cost per
watt
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25%
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Profitability
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1.32
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Stabilized efficiency
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25%
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Profitability
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1.2
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Sales
metrics (bookings and gross margins on bookings; O&M bookings and O&M margins)
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25%
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Growth/Profitability
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1.36
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2015
Bonus Plan Payout Level
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1.3
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2015 Bonus Payout Results
. The 2015 Bonus Plan yielded a 130% payout level.
See Summary Compensation Table Non-Equity Incentive Plan Compensation for specific payout levels for each named executive officer.
Target Bonus Percentage
. Target bonus percentages are established based on job responsibilities, internal equity and peer group data. Our objective is to generally set bonus
targets to be consistent with total cash payments at the 50th percentile of our peer group. The target bonus percentage is evaluated during our annual pay cycle on the same basis as annual base salary (as discussed above in 2015 Compensation
Decisions Base Salary). As of early 2015, the target bonus percentages of our named executive officers were as follows: Mr. Hughes (145%, subsequently raised to 150%); Mr. Widmar (90%, subsequently raised to 100%);
Mr. Antoun (90%, subsequently raised to 100%); Mr. Kishkill (70%, subsequently raised to 75%); and Mr. Garabedian (75%).
These target bonus percentages represent, for each of Messrs. Hughes, Widmar, Antoun and Kishkill an increase of 5, 10, 10 and 5 percentage points, respectively, from the target bonus percentages
applicable to each such executive during the 2014 pay cycle, consistent with our objective to set bonus targets in recognition of the key roles and responsibilities of each such named executive officer.
Equity-Based Compensation
We have always been a firm proponent of equity-based compensation. With the transition of our Company from hi-tech growth to a sustainable provider of solar energy solutions, we adjusted our historical
broad-based granting practices to those that are more consistent with our evolving business model. Notably, we (i) continue to grant time-based restricted stock units with longer vesting schedules to address retention concerns, while tying
realizable compensation to the returns of our stockholders and (ii) granted, on a one-time basis, performance-based share units under the KSTEPP program, which we adopted in 2012 to incentivize performance over a long performance period, based
on metrics tied to our Long Term Strategic Plan. In 2015, we granted restricted stock units with time-based vesting criteria to each of our named executive officers and made no additional KSTEPP grants. The compensation committee continues to
believe that granting restricted stock units, in addition to the outstanding KSTEPP grants, furthers the Companys goal of aligning executive and stockholder interests and mitigating any distractions that our executives may feel regarding
KSTEPPs potential for full vesting as a result of the ongoing volatility in the solar industry.
Our practice is to grant
our equity awards relatively early in the year. We do not time our grants specifically to avoid any internal blackouts or other periods during which our executives and directors may be prohibited by our Insider Trading Policy or
applicable law from trading in our securities, or otherwise to provide any preferential benefit to our executives and directors. Equity grants to our named executive officers are described in greater detail in the Grants of Plan Based
Awards table and the Outstanding Equity Awards at Fiscal Year-End table.
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Long-Term Incentive Program
. We believe that a long-term
incentive program provides significant benefit to the Company and routinely reevaluate the components of our long-term incentive program. Awards under the long-term incentive program (i) represent the largest component of executives
compensation (see Components of 2015 Executive Compensation), (ii) serve as a retention tool and (iii) ensure that our executives compensation is linked to the long-term interests of our stockholders and our Company
performance, consistent with our compensation philosophy. Currently, our long-term incentive program is comprised of a one-time grant of KSTEPP awards, which reward our named executive officers contributions toward key elements of our Long
Term Strategic Plan, and annual awards of time-based restricted stock units, which are intended to provide some certainty to our named executive officers, to ensure, during their employment, their focus on our Long Term Strategic Plan, as a
complement to the performance-based character of the KSTEPP awards. While the KSTEPP awards remain outstanding, the number of restricted stock units with time-based vesting criteria granted annually will vary, based in part on the compensation
committees view of the annualized value of outstanding KSTEPP units, with the aggregate annual equity award for named executive officers targeted at the 50th percentile of our peer group (with some flexibility to increase that target based on
extraordinary contributions by the executive).
The Company did not grant KSTEPP awards to our named executive officers
in 2015, consistent with the atypically long vesting and overall term applicable to the KSTEPP awards, described in greater detail below. Unlike a typical performance-based equity compensation program in which awards are made each year, we expect
that once we have granted our named executive officers a KSTEPP award (which, for Messrs. Hughes, Widmar, Antoun and Garabedian, occurred in 2012, and for Mr. Kishkill, occurred upon his hire in 2013), no additional performance-based awards
will be granted until the outstanding KSTEPP awards vest or are forfeited during the performance period (which varies based on the date of grant, but generally begins on the first day of the quarter in which the award was granted and ends in 2020).
In determining the 2015 grants of time-vested restricted stock units, the compensation committee considered the value of each
named executive officers outstanding KSTEPP awards and determined to grant each named executive officer an award of time-vested restricted stock units with a value that, in the aggregate, was at or near the 50th percentile.
Annual Equity Grant
. For 2015, the compensation committee granted our named executive officers restricted
stock units that vest 25% per year, beginning on the first anniversary of the grant date.
The grant value for our
named executive officers was: Mr. Hughes ($2,000,000); Mr. Widmar ($873,000); Mr. Antoun ($863,000); Mr. Kishkill ($738,000); and Mr. Garabedian ($718,000).
KSTEPP
. In May 2012, the compensation committee approved and adopted the KSTEPP, a performance unit program
under the 2010 Omnibus Plan. This program is intended to link the compensation of the Companys senior executives with the success of our Long Term Strategic Plan by rewarding achievement of key performance objectives over an extended period of
time. The goals of our Long Term Strategic Plan are to increase the Companys growth, profitability and liquidity, which results in greater return to our stockholders. Consistent with our compensation philosophy, the KSTEPP metrics were derived
from our Long Term Strategic Plan in order to align the interests of our executives with those of our stockholders, and the compensation committee believes that the use of rigorous performance objectives over a relatively long performance period
encourages sustained focus on our long-term strategy. The provisions allowing for partial vesting described below provide our executives with some benefit for partial achievement of performance goals made during this extended period, given the
uncertainty of full vesting of the KSTEPP awards, and mitigate anxiety that could otherwise distract from focus on our Long Term Strategic Plan. Because the KSTEPP awards vest over an extended period, as further described below, the value of such
awards is considered annually during the period they are outstanding in determining overall compensation for our named executive officers. The compensation committee certified that the conditions required for partial vesting of the KSTEPP awards
were achieved in late 2015.
Each KSTEPP award (or portion thereof) was initially subject to a threshold performance goal. The
awards would not vest unless and until the compensation committee certified that the Company had achieved the applicable
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level of KSTEPP adjusted operating income
2
within a rolling annual period during the performance period applicable to such award (which for Messrs. Hughes, Widmar, Antoun and Garabedian, is at least $400 million, and for Mr. Kishkill is $350
million). In 2014, the compensation committee certified achievement of this threshold goal for Messrs. Hughes, Widmar, Antoun, Kishkill and Garabedian.
A named executive officer will receive one share of Company common stock for each performance unit that vests. The threshold performance goal and the partial vesting condition have been achieved. The
remaining KSTEPP awards may vest (reduced by any previously vested portion), upon the Companys achievement in any
12-month
period beginning and ending on a calendar quarter (which we refer to as
rolling annual period) that occurs within the performance period specified for each grant (which we refer to as the performance period, and which varies based on the date of grant, but generally begins on the first day of the
quarter in which the award was granted and ends in 2020) of at least 2.8 gigawatts DC of modules sold in sustainable markets and 15% cash adjusted return on invested capital
3
(which we refer to as the full vesting condition). In 2015, as noted above, one-third of each KSTEPP award
vested sooner, since the vesting condition that required the Companys achievement in any rolling annual period during the performance period of at least 1.35 gigawatts DC of modules sold in sustainable markets and 13% cash adjusted return on
invested capital (which we refer to as the partial vesting condition) was achieved.
The remaining unvested
two-thirds portion of each KSTEPP award is subject to the named executive officer being continuously employed by the Company or an affiliate through the applicable vesting date, except if the named executive officer is eligible for a pro-rata
settlement as described below. Although the KSTEPP units partially vested in 2015, our named executive officers still have the potential to realize vesting of the remaining outstanding portion. Additionally, KSTEPP awards are forfeited upon
termination of employment, unless employment is terminated due to death, disability, retirement or termination without cause, and thereafter the applicable vesting condition is achieved, in which case the named executive officers are eligible for a
full settlement of their vested award, otherwise they will be eligible for a pro-rata settlement of their non-vested awards. The pro-rata settlement will be based on the length of the named executive officers tenure with the Company during the
performance period. Additionally, KSTEPP awards will expire and be forfeited with respect to the unvested portion thereof if the vesting conditions are not satisfied and the Company has not achieved in any rolling annual period during the
performance period the applicable KSTEPP adjusted operating income goal, in each case, as of the last day of the performance period.
Notwithstanding the foregoing, in the event of a change of control (as defined in the 2010 Omnibus Plan) that occurs during the performance period, regardless of whether the Company has
achieved in any rolling annual period during the performance period the applicable KSTEPP adjusted operating income goal, 25% of the then-unvested and outstanding portion of the award will accelerate and become vested, in order to allow our
executives to share in the gains that would, at such time, be realized by our stockholders. The 25% vesting provision supersedes the change of control provisions in the CIC Agreements between the Company and the named executive officers, which would
otherwise provide for, in the case of the named executive officers whose employment with the Company commenced prior to 2013, full acceleration of the award in the event of a change of control. See Change in Control Severance Agreements.
In addition, the compensation committee has discretion to further accelerate the vesting of the award in connection with a
change of control, including to amend the award to increase the vested percentage payable upon the occurrence of a change of control, which discretion is expected to be exercised based on the Companys actual
2
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In order to determine KSTEPP adjusted operating income applicable to a given award, we take the Companys operating income (as defined by U.S. GAAP and
described in the Financial Statements) for a rolling annual period during the KSTEPP performance period and adjust for (i) extraordinary, unusual and nonrecurring items including restructuring expenses and (ii) KSTEPP related stock-based
compensation expense.
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Cash adjusted return on invested capital for the Company is calculated as follows: (i) KSTEPP adjusted operating income as defined above
minus income tax expense for such KSTEPP adjusted operating income plus depreciation and amortization expense divided by (ii) stockholders equity plus debt plus accumulated depreciation minus cash and cash equivalents and
marketable securities.
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performance tracking relative to the vesting conditions, providing some flexibility to reward our named executive officers at a level that is consistent with our stockholders if the Company is
performing well in advance of any such change. Periodically throughout the performance period and at any time when a change of control is anticipated, the compensation committee will review the Companys progress towards achievement of the full
vesting condition and evaluate whether it is appropriate to amend the award to provide accelerated vesting of the award, effective in all cases only upon an actual change of control.
Double-Trigger Equity Vesting
. Prior to 2013, the CIC Agreements entered into with newly hired executives provided for full vesting
of unvested equity-based compensation (other than KSTEPP awards) upon a change in control of the Company. As of July 2013, our compensation committee determined that the CIC Agreements entered into with newly hired executives will instead provide
for vesting of equity-based compensation (other than KSTEPP awards, which have separate CIC vesting provisions described above) only upon a termination without cause or resignation for good reason within two years
following a change in control of the Company. Consistent with that decision, the CIC Agreement entered into with Mr. Kishkill effective September 2013, provides for such double-trigger equity vesting.
Other Executive Compensation Information
Broad-based Benefit Programs and Other Compensation
Our named
executive officers are entitled to participate in the various benefit programs we offer to all of our associates, including a 401(k) plan, medical plan, dental plan, vision plan, life insurance plan and long-term and short-term disability plans. In
addition, Mr. Kishkill received reimbursement from the Company for premiums paid in 2015 under an Argentinian family medical plan. Under our 401(k) plan, we make a matching contribution equal to 100% of our associates contributions to the
plan up to a maximum of 4% of an associates plan-eligible compensation. In 2015, each of Messrs. Hughes, Widmar, Antoun, Kishkill and Garabedian received the maximum matching contribution of $10,600. Our named executive officers each have
vacation entitlements of four weeks per year.
Employment Agreements and Related Arrangements
We have entered into employment, confidentiality, non-competition, non-solicitation and director and officer indemnification agreements
with each of our named executive officers. The compensation committee believes these contracts are fair, reasonable, appropriate and necessary to attract and retain the executives who are party to these agreements.
The employment agreements generally provide that if the executives employment is terminated without cause (as defined
therein) (or, in the case of Messrs. Hughes and Antoun if they resign for good reason (as defined therein)), then the executive shall be eligible for (i) salary continuation for a severance period subject to the execution of a
release of claims in favor of the Company and subject to a reduction based on earnings during the severance period, (ii) health benefit coverage for the severance period, subject to certain contingencies and (iii) an additional
12 months service credit for purposes of determining vesting of equity-based compensation awards (this service credit will not have an effect on KSTEPP awards). The employment agreements also provide for an additional 12 months
service credit for purposes of determining vesting of equity-based compensation in the event employment terminates due to the executives death or disability (as defined therein).
Severance benefits, by their nature, require compensation payments without the receipt of corresponding services. We believe that our
employment agreements set a proper balance between providing sufficient protection on employment termination and ensuring the executive has sufficient personal investment with respect to his or her employment with the Company and generally provide
severance benefits consistent with market practice.
We consistently review the employment agreements we enter into with our
named executive officers to address market changes and, in July 2013, our compensation committee adopted a number of changes to be applied prospectively when entering into agreements with newly hired executives to more closely align with market
practice. Included among such changes is the elimination of severance benefits upon a resignation for good reason
32
(except in connection with a change in control of the Company), the addition of provisions that make clear that all payments to our executives under such agreements other than base salary are
subject to the Companys clawback policy, all severance payments and benefits are subject to the execution of an irrevocable release of claims in favor of the Company and sign-on bonuses are subject to recoupment in the event of a termination
for cause within one year of the executives start date.
The confidentiality agreements describe the
Companys expectations of the executives regarding the Companys proprietary and confidential information. The non-competition and non-solicitation agreements establish a protected period that generally matches the severance
period. During the protected period, the senior executives are subject to restrictive covenants as described in the agreement.
For more details on these employment agreements and the compensation and benefits payable or to be provided in the event of a termination
of employment, see Executive Compensation Employment Agreements and Arrangements and Executive Compensation Potential Payments Upon Termination or Change in Control Potential Payments Upon Termination of
Employment (Other Than in the Context of a Change in Control).
Change in Control Severance Agreements
We have entered into CIC Agreements with each of our named executive officers. These agreements are intended to align
the interests of the executives with our stockholders in a potential change in control situation by mitigating the uncertainty and questions a potential change in control may raise among such executives, allowing them to focus their continued
attention and dedication to their assigned duties.
Equity Vesting
. The CIC Agreements with
Messrs. Hughes, Widmar, Antoun and Garabedian, entered into prior to July 2013, provide for full vesting of unvested equity-based compensation upon a change in control of the Company. While such vesting ensures that the executives are fairly
compensated for the lost opportunity to realize the value of awards that is typically precipitated by a change in control, which is particularly salient for our named executive officers who receive a substantial portion of their income in
equity-based compensation that vests over time (see Components of 2015 Executive Compensation), the compensation committee determined that the CIC Agreements entered into with newly hired executives on or after July 2013 should provide
for vesting only upon a termination without cause (as defined therein) or a resignation for good reason (as defined therein) within two years following a change in control of the Company, which is reflected in our agreement
with Mr. Kishkill. While our equity plans also contemplate vesting of equity if such equity is not assumed by a successor entity (see Executive Compensation Potential Payments Upon Termination or Change in Control Potential
Payments Upon a Change in Control Consequences of Change in Control Under Equity-Based Compensation Plans), the CIC Agreements address vesting whether or not the equity-based awards are assumed for executives with these arrangements;
however, the provisions of the award agreements for KSTEPP awards supersede the change of control provisions in the CIC Agreements. See Compensation Discussion and Analysis 2015 Compensation Decisions Equity-Based Compensation
KSTEPP.
Severance Benefits
. The CIC Agreements provide a double-trigger severance
package for all of our named executive officers in the event their employment is terminated without cause or they resign for good reason within two years following a change in control. A resignation for good
reason includes any material reduction in the authority, duties or responsibilities held by the executive immediately prior to the CIC date, any material reduction in the annual base salary or annual incentive opportunity of the executive as
in effect immediately prior to the CIC date or any change of the executives principal place of employment to a location more than fifty miles from the executives principal place of employment immediately prior to the CIC date. We believe
this standard benefit reinforces the notion that in a change in control situation, all of the executives are similarly situated and must remain focused. The standard benefit is two times their base salary; two times a bonus amount (which is defined
as the greater of (i) the executives target annual bonus for the year of termination and (ii) the average of the annual cash bonuses payable to the executive in respect of the three full calendar years immediately preceding the
calendar year that includes the termination date or, if the executive has not been employed for three full calendar years preceding the calendar year that includes the termination date, the average of the annual cash bonuses payable to the executive
for the number of full calendar years prior to the termination date that he or she has been
33
employed); a pro-rated target bonus; 18 months health benefit continuation and outplacement benefits (maximum of $20,000). Severance benefits are subject to the executives execution
of a release in favor of the Company.
Tax Gross-Ups
. None of the CIC Agreements in effect with
our named executive officers provide a parachute tax gross-up, and gross-ups with respect to taxes related to legal fees or expenses incurred in connection with disputes related to the CIC Agreements are not provided in agreements with executives
hired on or after July 2013.
Evaluation by the Compensation Committee
. The compensation
committee reviews the terms of the CIC Agreements in consultation with its independent compensation consultant, assesses the impact of possible payouts under the CIC Agreements in the event of a change in control and confirms that the CIC Agreements
are fair and reasonable to both the executive and the Company. Estimates of change in control payments are presented to, and reviewed by, the compensation committee when compensation is evaluated. Based on its most recent annual review of the CIC
Agreements, the compensation committee continues to believe the payments are fair and reasonable. For a further description of compensation provided in the event of a change in control, see Executive Compensation Potential Payments Upon
Termination or Change in Control Potential Payments Upon a Change in Control.
Tax and Accounting
Implications
Section 162(m) of the Code
. With certain material exceptions,
Section 162(m) of the Internal Revenue Code (the Code) limits the deductibility of compensation paid by a public company in any year to $1 million to each of the chief executive officer and the next three most highly paid
executive officers other than the chief financial officer.
The 2010 and 2015 Omnibus Plans are designed to enable most
executive compensation to be deductible by the Company under Section 162(m) of the Code; however, the compensation committee has not adopted a policy that all compensation must be deductible, particularly where additional compensation may be
needed to attract or retain executives for key leadership positions in the Company.
Accounting for Equity-Based
Compensation
. The Company uses ASC Topic 718 for purposes of determining the fair value of its equity-based compensation. The assumptions used in the calculations of these amounts are included in Note 18, Share-Based
Compensation, to the Companys audited financial statements for the fiscal year ended December 31, 2015, included in the Companys Annual Report on Form 10-K filed with the Commission on February 24, 2016. The fair value of
awards made to each named executive officer in 2015 is set forth under Summary Compensation Table.
34
COMPENSATION COMMITTEE REPORT
The following report of the compensation committee is not soliciting material, is not deemed filed with the
Commission and is not to be incorporated by reference into any other of the Companys filings under the Securities Act or the Securities Exchange Act of 1934, as amended (the Exchange Act), except to the extent we specifically
incorporate this report by reference therein.
Since the formation of the compensation committee in October 2006, Michael
Sweeney has served as chair of the compensation committee. Paul H. Stebbins has served on the compensation committee since his appointment to the board of directors on December 19, 2006. William J. Post has served on the compensation
committee since July 26, 2010. Richard D. Chapman has served on the compensation committee since July 31, 2012.
The
compensation committee is comprised solely of non-associate directors who are each: (i) independent as defined under the NASDAQ listing standards, (ii) a non-associate director for purposes of Rule 16b-3 of the Exchange Act and
(iii) an outside director for purposes of Section 162(m) of the Code.
With a keen sense of awareness of its
fiduciary obligations, the compensation committee actively engages management and reviews data on (i) the relationship between the Companys incentive compensation programs and the Companys long-term strategic goals, (ii) the
impact of any individual compensation changes on total compensation (including reviewing executive tally sheets) and (iii) the possibility that any particular program or arrangement could incentivize inappropriate risk-taking behaviors. The
compensation committee believes that the Companys compensation philosophy is appropriate and that the Companys incentive compensation programs are important tools that allow all associates, including management, to successfully focus on
matters critical to the Companys long-term success.
The compensation committee has reviewed and discussed the
Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the compensation committee recommended to the board of directors that the Compensation
Discussion and Analysis be included in this Proxy Statement on Schedule 14A and incorporated by reference in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
|
Submitted by the Members of the Compensation
Committee
|
Michael Sweeney
(Chair)
Richard D. Chapman
William J. Post
Paul H. Stebbins
|
35
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information with respect to compensation earned for the fiscal years ended December 31, 2015, 2014 and
2013, respectively, by each of our chief executive officer, our chief financial officer and our three other most highly compensated executive officers.
|
|
|
|
|
|
|
|
|
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|
|
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Name and Principal Position
|
|
Year
|
|
|
Salary
($)(1)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(2)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)(3)
|
|
|
All
Other
Compensation
($)(4)
|
|
|
Total
($)
|
|
James A. Hughes
|
|
|
2015
|
|
|
|
859,615
|
|
|
|
|
|
|
|
2,000,004
|
|
|
|
1,657,500
|
|
|
|
10,600
|
|
|
|
4,527,719
|
|
Chief Executive Officer
|
|
|
2014
|
|
|
|
750,000
|
|
|
|
|
|
|
|
2,000,011
|
|
|
|
1,015,725
|
|
|
|
10,400
|
|
|
|
3,776,136
|
|
|
|
|
2013
|
|
|
|
750,000
|
|
|
|
|
|
|
|
2,000,015
|
|
|
|
928,125
|
|
|
|
12,132
|
|
|
|
3,690,272
|
|
|
|
|
|
|
|
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Mark R. Widmar
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|
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2015
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|
|
|
571,154
|
|
|
|
|
|
|
|
873,044
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|
|
|
715,000
|
|
|
|
10,600
|
|
|
|
2,169,798
|
|
Chief Financial Officer
|
|
|
2014
|
|
|
|
550,000
|
|
|
|
|
|
|
|
800,028
|
|
|
|
485,100
|
|
|
|
10,400
|
|
|
|
1,845,528
|
|
|
|
|
2013
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|
|
|
550,000
|
|
|
|
|
|
|
|
900,020
|
|
|
|
490,050
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|
|
|
11,100
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|
|
|
1,951,170
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|
|
|
|
|
|
|
|
|
Georges J. Antoun
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|
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2015
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|
|
|
571,154
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|
|
|
|
|
|
|
863,055
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|
|
|
715,000
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|
|
|
10,600
|
|
|
|
2,159,809
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President U.S.
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2014
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|
|
|
550,000
|
|
|
|
|
|
|
|
800,028
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|
|
|
485,100
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|
|
|
10,400
|
|
|
|
1,845,528
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|
|
|
|
2013
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|
|
|
550,000
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|
|
|
|
|
|
|
1,500,025
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|
|
|
462,825
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|
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11,580
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|
|
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2,524,430
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|
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|
|
|
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Joseph G. Kishkill (5)
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2015
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447,692
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|
|
|
|
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738,009
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|
|
|
429,000
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|
|
|
25,418
|
|
|
|
1,640,119
|
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President International
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|
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2014
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|
|
|
400,000
|
|
|
|
|
|
|
|
610,052
|
|
|
|
274,400
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|
|
|
10,400
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|
|
|
1,294,852
|
|
|
|
|
2013
|
|
|
|
115,385
|
|
|
|
100,000
|
|
|
|
5,230,008
|
|
|
|
86,486
|
|
|
|
15,284
|
|
|
|
5,547,163
|
|
|
|
|
|
|
|
|
|
Raffi Garabedian
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|
|
2015
|
|
|
|
452,365
|
|
|
|
|
|
|
|
718,031
|
|
|
|
429,000
|
|
|
|
10,600
|
|
|
|
1,609,996
|
|
Chief Technology Officer
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|
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2014
|
|
|
|
417,490
|
|
|
|
|
|
|
|
500,032
|
|
|
|
311,973
|
|
|
|
10,400
|
|
|
|
1,239,895
|
|
|
|
|
2013
|
|
|
|
400,577
|
|
|
|
500
|
|
|
|
1,000,008
|
|
|
|
304,425
|
|
|
|
10,831
|
|
|
|
1,716,341
|
|
(1)
|
Salary represents actual salary earned during each applicable year, and includes base salary and actual payments for vacation and holidays.
|
(2)
|
The amounts reported in these columns reflect the aggregate grant date fair value of these awards computed in accordance with ASC Topic 718, excluding the effect of
estimated forfeitures. The assumptions and methodologies used in the calculations of these amounts for 2015 are set forth in Note 18, Share-Based Compensation, to the Companys audited financial statements for the fiscal year ended
December 31, 2015 included in the Companys Annual Report on Form 10-K filed with the Securities and Exchange Commission. Under generally accepted accounting principles, compensation expense with respect to stock awards granted to our
executive officers is generally recognized over the vesting periods applicable to the awards. The Securities and Exchange Commission disclosure rules require that we present the stock award amounts in the applicable column of the table above using
the grant date fair value of the awards granted during the corresponding year (regardless of the period over which the awards are scheduled to vest). For a discussion of specific stock awards granted during 2015, see also Grants of Plan-Based
Equity Awards below and the narrative discussion that follows.
|
(3)
|
For a description of Non-Equity Incentive Plan Compensation, see Compensation Discussion and Analysis Components of 2015 Executive Compensation and
Compensation Discussion and Analysis 2015 Compensation Decisions Cash Incentive Compensation.
|
(4)
|
The components of All Other Compensation are provided in the table below for fiscal years 2015, 2014 and 2013.
|
36
|
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Name
|
|
Year
|
|
|
Relocation
Benefits
($)
|
|
|
401(k)
Matching
Contribution
($)
|
|
|
Insurance
Benefits
($)
|
|
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Other
($)
|
|
|
Total
All
Other
Compensation
($)(6)
|
|
James A. Hughes
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2015
|
|
|
|
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|
|
|
10,600
|
|
|
|
|
|
|
|
|
|
|
|
10,600
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|
|
|
|
2014
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|
|
|
|
|
|
|
10,400
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|
|
|
|
|
|
|
|
|
|
|
10,400
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|
|
|
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2013
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|
|
|
|
|
|
|
10,200
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|
|
|
|
|
|
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|
|
12,132
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|
Mark R. Widmar
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|
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2015
|
|
|
|
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|
|
|
10,600
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|
|
|
|
|
|
|
|
|
|
|
10,600
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|
|
|
|
2014
|
|
|
|
|
|
|
|
10,400
|
|
|
|
|
|
|
|
|
|
|
|
10,400
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|
|
|
|
2013
|
|
|
|
|
|
|
|
10,200
|
|
|
|
|
|
|
|
|
|
|
|
11,100
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|
George J. Antoun
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|
|
2015
|
|
|
|
|
|
|
|
10,600
|
|
|
|
|
|
|
|
|
|
|
|
10,600
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
10,400
|
|
|
|
|
|
|
|
|
|
|
|
10,400
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
10,200
|
|
|
|
|
|
|
|
|
|
|
|
11,580
|
|
Joseph G. Kishkill
|
|
|
2015
|
|
|
|
|
|
|
|
10,600
|
|
|
|
14,818
|
(7)
|
|
|
|
|
|
|
25,418
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
10,400
|
|
|
|
|
|
|
|
|
|
|
|
10,400
|
|
|
|
|
2013
|
|
|
|
12,086
|
|
|
|
3,077
|
|
|
|
|
|
|
|
|
|
|
|
15,824
|
|
Raffi Garabedian
|
|
|
2015
|
|
|
|
|
|
|
|
10,600
|
|
|
|
|
|
|
|
|
|
|
|
10,600
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
10,400
|
|
|
|
|
|
|
|
|
|
|
|
10,400
|
|
|
|
|
2013
|
|
|
|
|
|
|
|
10,200
|
|
|
|
|
|
|
|
|
|
|
|
10,831
|
|
(5)
|
Mr. Kishkills employment commenced on September 9, 2013.
|
(6)
|
In 2013, we voluntarily included in Total All Other Compensation amounts paid for insurance premiums relating to a group life insurance scheme sponsored by
the Company. Because we provide benefits under this scheme to our named executives on generally the same basis as provided to all of our associates, disclosure of such amounts is not required by SEC rules. As of 2014, we have determined not to
include these amounts. For Messrs. Hughes, Widmar, Antoun and Kishkill, Total All Compensation above still includes such premiums paid in 2013 as follows: Mr. Hughes, $1,932; Mr. Widmar, $900; Mr. Antoun, $1,380;
Mr. Kishkill, $121; and Mr. Garabedian. $631.
|
(7)
|
Mr. Kishkill received reimbursement from the Company for premiums paid in 2015 under an Argentinian family medical plan.
|
37
Grants of Plan-Based Equity Awards
The following table sets forth summary information regarding all grants of plan-based awards made to our named executive officers during
the year ended December 31, 2015. Unless otherwise noted in the table below, the restricted stock units granted in 2015 vest over four years at a rate of 25% per year, commencing on the first anniversary of the grant date. No stock options
were granted in 2015. The minimum award (below threshold performance) under the cash and equity plan-based award programs was $0.
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future
Payouts Under
Non-Equity
Incentive
Plan Awards (1)
|
|
|
All
Other Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
|
|
|
Market
Price on
Grant
Date
($/Sh)
|
|
|
Grant
Date Fair
Value of
Stock
Awards
($)(2)
|
|
|
|
Award Type
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
James A. Hughes
|
|
RSU
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32,436
|
|
|
|
61.66
|
|
|
|
2,000,004
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
637,500
|
|
|
|
1,275,000
|
|
|
|
2,550,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark R. Widmar
|
|
RSU
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,159
|
|
|
|
61.66
|
|
|
|
873,044
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
275,000
|
|
|
|
550,000
|
|
|
|
1,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Georges J. Antoun
|
|
RSU
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13,997
|
|
|
|
61.66
|
|
|
|
863,055
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
275,000
|
|
|
|
550,000
|
|
|
|
1,100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Joseph G. Kishkill
|
|
RSU
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,969
|
|
|
|
61.66
|
|
|
|
738,009
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
165,000
|
|
|
|
330,000
|
|
|
|
660,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raffi Garabedian
|
|
RSU
|
|
|
3/5/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,645
|
|
|
|
61.66
|
|
|
|
718,031
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
165,000
|
|
|
|
330,000
|
|
|
|
660,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For a description of Non-Equity Incentive Plan Compensation, see Compensation Discussion and Analysis Components of 2015 Executive Compensation and
Compensation Discussion and Analysis 2015 Compensation Decisions Cash Incentive Compensation Annual Bonus Program.
|
(2)
|
The grant date fair value of the stock awards was determined in accordance with ASC Topic 718. The assumptions used in the calculation of these amounts are included in
Note 18, Share-Based Compensation to the Companys audited financial statements for the fiscal year ended December 31, 2015 included in the Companys Annual Report on Form 10-K filed with the Commission on
February 24
,
2016.
|
38
Outstanding Equity Awards at Fiscal Year-End
The following table sets forth information with respect to outstanding stock awards held by our named executive officers at
December 31, 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards (1)
|
|
|
Equity Incentive Plan
Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
|
|
|
Market Value of
Shares or Units
of Stock That
Have Not
Vested
($)(2)
|
|
|
Number
of Shares
or Units of
Stock
That Have
Not
Vested
(#)
|
|
|
Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(2)
|
|
James A. Hughes
|
|
|
3/19/12
|
|
|
|
10,464
|
|
|
|
690,519
|
|
|
|
|
|
|
|
|
|
|
|
|
3/13/13
|
|
|
|
37,174
|
|
|
|
2,453,112
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/14
|
|
|
|
25,795
|
|
|
|
1,702,212
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/15
|
|
|
|
32,436
|
|
|
|
2,140,452
|
|
|
|
|
|
|
|
|
|
|
|
|
5/7/12
|
|
|
|
|
|
|
|
|
|
|
|
333,333
|
(3)
|
|
|
21,996,645
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
105,869
|
|
|
|
6,986,295
|
|
|
|
333,333
|
|
|
|
21,996,645
|
|
Mark R. Widmar
|
|
|
4/4/12
|
|
|
|
14,461
|
|
|
|
954,281
|
|
|
|
|
|
|
|
|
|
|
|
|
4/4/12
|
|
|
|
9,940
|
(4)
|
|
|
655,941
|
|
|
|
|
|
|
|
|
|
|
|
|
3/13/13
|
|
|
|
16,728
|
|
|
|
1,103,881
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/14
|
|
|
|
10,318
|
|
|
|
680,885
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/15
|
|
|
|
14,159
|
|
|
|
934,352
|
|
|
|
|
|
|
|
|
|
|
|
|
5/7/12
|
|
|
|
|
|
|
|
|
|
|
|
176,667
|
(3)
|
|
|
11,658,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
65,606
|
|
|
|
4,329,340
|
|
|
|
176,667
|
|
|
|
11,658,255
|
|
Georges J. Antoun
|
|
|
7/2/12
|
|
|
|
16,361
|
|
|
|
1,079,662
|
|
|
|
|
|
|
|
|
|
|
|
|
3/13/13
|
|
|
|
27,881
|
|
|
|
1,839,867
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/14
|
|
|
|
10,318
|
|
|
|
680,885
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/15
|
|
|
|
13,997
|
|
|
|
923,662
|
|
|
|
|
|
|
|
|
|
|
|
|
7/2/12
|
|
|
|
|
|
|
|
|
|
|
|
176,667
|
(3)
|
|
|
11,658,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
68,557
|
|
|
|
4,524,076
|
|
|
|
176,667
|
|
|
|
11,658,255
|
|
Joseph G. Kishkill
|
|
|
9/9/13
|
|
|
|
5,884
|
|
|
|
388,285
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/14
|
|
|
|
7,868
|
|
|
|
519,209
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/15
|
|
|
|
11,969
|
|
|
|
789,834
|
|
|
|
|
|
|
|
|
|
|
|
|
9/9/13
|
|
|
|
|
|
|
|
|
|
|
|
83,333
|
(3)
|
|
|
5,499,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
25,721
|
|
|
|
1,697,328
|
|
|
|
83,333
|
|
|
|
5,499,145
|
|
Raffi Garabedian
|
|
|
3/21/12
|
|
|
|
4,513
|
|
|
|
297,813
|
|
|
|
|
|
|
|
|
|
|
|
|
3/13/13
|
|
|
|
18,587
|
|
|
|
1,226,556
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/14
|
|
|
|
6,449
|
|
|
|
425,570
|
|
|
|
|
|
|
|
|
|
|
|
|
3/5/15
|
|
|
|
11,645
|
|
|
|
768,454
|
|
|
|
|
|
|
|
|
|
|
|
|
5/7/12
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
(3)
|
|
|
5,939,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
41,194
|
|
|
|
2,718,393
|
|
|
|
90,000
|
|
|
|
5,939,100
|
|
(1)
|
Unless otherwise noted, the restricted stock units vest 25% annually, subject to the named executive officers continued employment.
|
(2)
|
The market value was calculated using the closing market price on December 31, 2015 of $65.99.
|
39
(3)
|
This plan-based award vests in two separate tranches, each contingent upon the achievement of a threshold performance goal as well as pre-established performance
criteria within a defined performance period. The vesting of the first such tranche was certified on November 9, 2015 for the rolling annual period ended September 30, 2015. For a description of this award see Compensation Discussion
and Analysis Components of 2015 Executive Compensation and Compensation Discussion and Analysis 2015 Compensation Decisions Equity-Based Compensation KSTEPP. The amounts shown above assume full vesting
of the second tranche as of December 31, 2015. These amounts are not necessarily indicative of actual payouts for the second tranche of the KSTEPP awards, which are not now known but will ultimately be determined based on our certification of
performance through the entire performance period (and actual payout may range from $0 to the maximum payout).
|
(4)
|
The restricted stock units for this grant vest 40% on the first anniversary of the grant date, and ratably for the remaining three years at 20%.
|
Stock Vested
The following table provides information, on an aggregate basis, about stock awards that vested during the fiscal year ended December 31, 2015 for each of the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares
Acquired on
Vesting (#)
|
|
|
Value Realized
on
Vesting
($)(1)
|
|
James A. Hughes
|
|
|
204,318
|
|
|
|
12,019,312
|
|
Mark R. Widmar
|
|
|
128,284
|
|
|
|
7,599,047
|
|
Georges J. Antoun
|
|
|
122,075
|
|
|
|
6,953,725
|
|
Joseph G. Kishkill
|
|
|
47,232
|
|
|
|
2,735,092
|
|
Raffi Garabedian
|
|
|
62,251
|
|
|
|
3,673,265
|
|
(1)
|
For a description of vesting of restricted stock units see Compensation Discussion and Analysis Components of 2015 Executive Compensation and
Compensation Discussion and Analysis 2015 Compensation Decisions Equity-Based Compensation.
|
Pensions and Nonqualified Deferred Compensation
We do not currently provide our named executive officers with pension benefits (other than a tax-qualified 401(k) plan benefit) or other nonqualified deferred compensation arrangements that could be
characterized as nonqualified deferred compensation arrangements under Section 409A of the Code.
Employment Agreements and
Arrangements
Although some of our employment agreements include specific provisions subjecting only certain payments
thereunder to clawback to the extent required by law, as a result of the Companys adoption of a broadly applicable clawback policy, certain payments to our executives under each of the agreements below are subject to clawback to the extent
required by applicable law.
James A. Hughes
Effective as of May 3, 2012, we entered into an amended and restated employment agreement with Mr. James A. Hughes in light of
our appointment of Mr. Hughes as our chief executive officer. Under the terms of his employment agreement, during 2015 Mr. Hughes was entitled to an annual base salary as described under 2015 Compensation Decisions Base
Salary, the opportunity to participate in the Companys annual bonus program with a target annual bonus of 145% (which was subsequently increased to 150% and is subject to such clawbacks as may be required by law), as described under
Compensation Discussion and Analysis 2015 Compensation Decisions Cash Incentive Compensation, other senior level incentive programs (subject to such clawbacks as may be required by law), standard employee benefits and four
weeks of vacation.
40
Our employment agreement with Mr. Hughes provides that, in the event
Mr. Hughes employment is terminated by us without cause or by Mr. Hughes for good reason, Mr. Hughes is eligible to receive the following: (i) severance equal to two years of his annual base salary,
payable over the 24 months following termination, (ii) continued medical benefits until the earlier of two years following termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year
of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting credit described in (iii) above also applies if Mr. Hughes employment terminates due to his death or disability.
In the event of termination of Mr. Hughes employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The severance benefits described in clause (i) above are conditioned upon
Mr. Hughes timely delivering a valid and irrevocable release of claims in favor of the Company.
Mr. Hughes is also
subject to a separate confidentiality and intellectual property agreement and a separate non-competition and non-solicitation agreement, the latter of which provides that Mr. Hughes will not compete with the Company or solicit Company
associates during the two-year period after termination of his employment for any reason (the period after the respective termination date of an employee by the Company, such employees Restricted Period).
Mr. Hughes has also entered into a separate CIC Agreement with the Company, the terms of which are described in Potential
Payments Upon Termination or Change in Control Potential Payments Upon a Change in Control Change in Control Severance Agreements.
Mark R. Widmar
Effective as of April 4, 2011, we entered into
an employment agreement with Mr. Mark R. Widmar, our chief financial officer. Under the terms of his employment agreement, during 2015 Mr. Widmar was entitled to an annual base salary as described under Compensation Discussion and
Analysis 2015 Compensation Decisions Base Salary, the opportunity to participate in the Companys annual bonus program with a target annual bonus of 90% (which was subsequently increased to 100% and is subject to such
clawbacks as may be required by law), as described under Compensation Discussion and Analysis 2015 Compensation Decisions Cash Incentive Compensation, other senior level incentive programs (subject to such clawbacks as may
be required by law), standard employee benefits and four weeks of vacation.
Our employment agreement with Mr. Widmar
provides that, in the event Mr. Widmars employment is terminated by us without cause, Mr. Widmar is eligible to receive the following: (i) severance equal to one year of his annual base salary, payable over the
12 months following termination, (ii) continued medical benefits until the earlier of one year following termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit
for purposes of determining vesting of time-based equity compensation awards. The additional vesting described in (iii) above also applies if Mr. Widmars employment terminates due to his death or disability. In the event of
termination of Mr. Widmars employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The severance benefits described in clause (i) above are conditioned upon Mr. Widmar timely
delivering a valid and irrevocable release of claims in favor of the Company.
Mr. Widmar is also subject to a separate
confidentiality and intellectual property agreement and a separate non-competition and non-solicitation agreement, the latter of which provides that Mr. Widmar will not compete with the Company or solicit Company associates during a one-year
Restricted Period.
Mr. Widmar has also entered into a separate CIC Agreement with the Company, the terms of which are
described in Potential Payments Upon Termination or Change in Control Potential Payments Upon a Change in Control Change in Control Severance Agreements.
Georges J. Antoun
Effective as of July 1, 2012, we entered into an employment agreement with Mr. Georges J. Antoun to serve as our chief operating officer. Effective July 1, 2015, Mr. Antoun was
appointed to President United States. Under the terms of his employment agreement, during 2015 Mr. Antoun was entitled to an annual base salary as described
41
under Compensation Discussion and Analysis 2015 Compensation Decisions Base Salary, the opportunity to participate in the Companys annual bonus program with a
target annual bonus of 90% (which was subsequently increased to 100% and is subject to such clawbacks as may be required by law), as described under Compensation Discussion and Analysis 2015 Compensation Decisions Cash Incentive
Compensation, other senior level incentive programs (subject to such clawbacks as may be required by law), standard employee benefits and four weeks of vacation.
Our employment agreement with Mr. Antoun provides that, in the event Mr. Antouns employment is terminated by us without cause or by Mr. Antoun for good reason,
Mr. Antoun is eligible to receive the following: (i) severance equal to one year of his annual base salary, payable over the 12 months following termination, (ii) continued medical benefits until the earlier of one year following
termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting described
in (iii) above also applies if Mr. Antouns employment terminates due to his death or disability. In the event of termination of Mr. Antouns employment for any reason, he is entitled to payment of his earned and unused (and
unforfeited) vacation. The severance benefits described in clause (i) above are conditioned upon Mr. Antoun timely delivering a valid and irrevocable release of claims in favor of the Company.
Mr. Antoun is also subject to a separate confidentiality and intellectual property agreement and a separate non-competition and
non-solicitation agreement, the latter of which provides that Mr. Antoun will not compete with the Company or solicit Company associates during a one-year Restricted Period.
Mr. Antoun has also entered into a separate CIC Agreement with the Company, the terms of which are described in Potential
Payments Upon Termination or Change in Control Potential Payments Upon a Change in Control Change in Control Severance Agreements.
Joseph G. Kishkill
Effective as of September 9, 2013, we
entered into an employment agreement with Mr. Joseph G. Kishkill to serve as our chief commercial officer. Effective July 1, 2015 Mr. Kishkill was appointed president international. Under the terms of his employment
agreement, during 2015 Mr. Kishkill was entitled to an annual base salary as described under Compensation Discussion and Analysis 2015 Compensation Decisions Base Salary, the opportunity to participate in the
Companys annual bonus program with a target annual bonus of 70% (which was subsequently increased to 75% and is subject to such clawbacks as may be required by law), as described under Compensation Discussion and Analysis 2015
Compensation Decisions Cash Incentive Compensation, other senior level incentive programs (subject to such clawbacks as may be required by law), standard employee benefits and four weeks of vacation.
Our employment agreement with Mr. Kishkill provides that, in the event Mr. Kishkills employment is terminated by us
without cause Mr. Kishkill is eligible to receive the following: (i) severance equal to one year of his annual base salary, payable over the 12 months following termination, (ii) continued medical benefits until the
earlier of one year following termination or his coverage under the medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The
additional vesting described in (iii) above also applies if Mr. Kishkills employment terminates due to his death or disability. In the event of termination of Mr. Kishkills employment for any reason, he is entitled to
payment of his earned and unused (and unforfeited) vacation. The severance and accelerated vesting benefits described in clauses (i) and, in the case of termination without cause, (iii) above are conditioned upon
Mr. Kishkill timely delivering a valid and irrevocable release of claims in favor of the Company.
Mr. Kishkill is
also subject to a separate confidentiality and intellectual property agreement and a separate non-competition and non-solicitation agreement, the latter of which provides that Mr. Kishkill will not compete with the Company or solicit Company
associates during a one-year Restricted Period.
Mr. Kishkill has also entered into a separate CIC Agreement with the
Company, the terms of which are described in Potential Payments Upon Termination or Change in Control Potential Payments Upon a Change in Control Change in Control Severance Agreements.
42
Raffi Garabedian
Effective as of May 1, 2012, we entered into an employment agreement with Mr. Raffi Garabedian, to reflect his promotion to
chief technology officer. Under the terms of his employment agreement, during 2015 Mr. Garabedian was entitled to an annual base salary as described under Compensation Discussion and Analysis 2015 Compensation Decisions Base
Salary, the opportunity to participate in the Companys annual bonus program with a target annual bonus of 75% (subject to such clawbacks as may be required by law), as described under Compensation Discussion and Analysis
2015 Compensation Decisions Cash Incentive Compensation, other senior level incentive programs, standard employee benefits and four weeks of vacation.
Our employment agreement with Mr. Garabedian provides that, in the event Mr. Garabedians employment is terminated by us without cause Mr. Garabedian is eligible to receive
the following: (i) severance equal to one year of his annual base salary, payable over the 12 months following termination, (ii) continued medical benefits until the earlier of one year following termination and his coverage under the
medical benefit plan of another employer and (iii) an additional one year of service credit for purposes of determining vesting of time-based equity compensation awards. The additional vesting described in (iii) above also applies if
Mr. Garabedians employment terminates due to his death or disability. In the event of termination of Mr. Garabedians employment for any reason, he is entitled to payment of his earned and unused (and unforfeited) vacation. The
severance benefits described in clause (i) above are conditioned upon Mr. Garabedians timely delivering a valid and irrevocable release of claims in favor of the Company.
Mr. Garabedian is also subject to an intellectual property agreement that includes confidentiality, non-competition and
non-solicitation provisions, which provide that Mr. Garabedian will not compete with the Company or solicit Company associates during a one-year Restricted Period.
Mr. Garabedian has also entered into a separate CIC Agreement with the Company, the terms of which are described in Potential Payments Upon Termination or Change in Control Potential
Payments Upon a Change in Control Change in Control Severance Agreements.
Potential Payments Upon Termination or Change in
Control
Potential Payments Upon Termination of Employment (Other Than in the Context of a Change in Control)
The table below reflects the estimated amount of compensation payable to each of the named executive officers in the
event of termination of such executives employment as of December 31, 2015. The amount of compensation payable to each named executive officer upon involuntary termination without cause (or, for Messrs. Hughes and Antoun, a
resignation for good reason) and termination due to disability or death of the executive, in each case, other than in connection with a change in control, is shown below. The amounts shown assume that such termination was effective as of
December 31, 2015, and thus include amounts earned through such time and are estimates of the amounts that would be paid out to the executives upon their termination. The actual amounts to be paid out can only be determined at the time of the
executives separation from the Company. As noted above, KSTEPP awards may remain outstanding and eligible to vest upon achievement of the performance criteria following a qualifying termination (i.e., due to disability, death of the executive,
involuntary termination without cause or retirement); however, any payout to terminated participants would be pro-rated, taking into account the portion of the performance period during which such executive was employed. See
Compensation Discussion and Analysis 2015 Compensation Decisions Equity-Based Compensation KSTEPP. Because it is not possible at this time to estimate whether the remaining tranche of such awards will vest, for the
purposes of this table, the remaining tranche of the awards is assumed to vest in full on December 31, 2015. Moreover, because the SEC rules require us to assume that the named executive officers were terminated on such date, no proration has
been applied to such assumed payouts. These amounts are not necessarily indicative of actual payouts for the remaining KSTEPP awards, which are not now known but will ultimately be determined based on our certification of performance through the
entire performance period (and actual payout may range from $0 to the maximum payout). Unless noted below, for purposes of the calculations below, we have used a share value of $65.99 per share, which was the closing price of our common stock on
December 31, 2015, the last trading day in 2015. None of the named executive officers are entitled to compensation upon a termination for cause (except for the value of any earned and unused (and unforfeited) vacation).
43
For descriptions relating to these payments and benefits, including any release,
non-competition, non-solicitation or similar requirements, see Employment Agreements and Arrangements. The amounts do not include amounts payable pursuant to the Companys contracts, agreements, plans or arrangements to the extent
they do not discriminate in scope, terms or operation, in favor of executive officers of the Company and that are available generally to all salaried associates, including payment of accrued rights such as payment for accrued and unpaid vacation.
|
|
|
|
|
|
|
|
|
Name
|
|
Involuntary Not
for
Cause Termination
($)(1)
|
|
|
Termination Due
to
Death or Disability
($)
|
|
James A. Hughes
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
1,700,000
|
(2)
|
|
|
1,275,000
|
(5)
|
Health Coverage
|
|
|
33,336
|
(3)
|
|
|
|
|
Equity Treatment
|
|
|
25,016,215
|
(4)
|
|
|
25,016,215
|
(4)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
26,749,551
|
|
|
|
26,291,215
|
|
Mark R. Widmar
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
550,000
|
(2)
|
|
|
550,000
|
(5)
|
Health Coverage
|
|
|
16,668
|
(3)
|
|
|
|
|
Equity Treatment
|
|
|
14,281,028
|
(4)
|
|
|
14,281,028
|
(4)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
14,847,696
|
|
|
|
14,831,028
|
|
Georges J. Antoun
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
550,000
|
(2)
|
|
|
550,000
|
(5)
|
Health Coverage
|
|
|
18,295
|
(3)
|
|
|
|
|
Equity Treatment
|
|
|
14,115,855
|
(4)
|
|
|
14,115,855
|
(4)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
14,684,150
|
|
|
|
14,665,855
|
|
Joseph G. Kishkill
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
440,000
|
(2)
|
|
|
440,000
|
(5)
|
Health Coverage
|
|
|
16,954
|
(3)
|
|
|
|
|
Equity Treatment
|
|
|
6,063,887
|
(4)
|
|
|
6,063,887
|
(4)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,520,841
|
|
|
|
6,503,887
|
|
Raffi Garabedian
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
440,000
|
(2)
|
|
|
440,000
|
(5)
|
Health Coverage
|
|
|
16,586
|
(3)
|
|
|
|
|
Equity Treatment
|
|
|
7,184,265
|
(4)
|
|
|
7,184,265
|
(4)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,640,851
|
|
|
|
7,624,265
|
|
(1)
|
For Messrs. Hughes and Antoun, amounts reflected in these columns would also be payable upon a resignation for good reason.
|
(2)
|
Estimates based on aggregate payments made over the severance period, which period for Mr. Hughes is 24 months and for all other executives is 12 months.
|
(3)
|
Represents maximum aggregate value of continued health benefit coverage based on 2016 costs for this benefit, to be provided over the health benefit continuation
period, which is 24 months for Mr. Hughes and 12 months for all other named executive officers.
|
(4)
|
Amounts are estimates, based on the aggregate value of 12 months acceleration of the vesting of equity-based awards outstanding on
December 31, 2015, as provided under the terms of each named executive officers employment agreement. As noted above, for the purposes of this calculation, outstanding KSTEPP awards (i.e., the second tranche) are assumed to have vested on
December 31, 2015. The amounts shown for the KSTEPP
|
44
|
awards are not necessarily indicative of actual payouts, which are not now known but will ultimately be determined based on our certification of performance through the performance period (and
actual payout may range from $0 to the maximum payout). KSTEPP awards may remain outstanding and eligible to vest upon achievement of the performance criteria following a qualifying termination (i.e., due to disability, death of the executive,
involuntary termination without cause or retirement); however, any payout to terminated participants would be prorated, taking into account the portion of the performance period during which the executive was employed. See
Compensation Discussion and Analysis 2015 Compensation Decisions Equity-Based Compensation KSTEPP.
|
(5)
|
Our 2015 annual cash incentive compensation plan requires that all associates be employed on the bonus payout date with the following exceptions: retirement, death and
long-term disability. These exceptions allow eligibility for a pro-rated award based on days of service completed during the performance year. Calculation is shown as target payout of 1X assuming employment through the bonus payout date.
|
Potential Payments Upon a Change in Control
Consequences of Change in Control Under Equity-Based Compensation Plans
. The 2015 Omnibus Plan (and its
predecessor, the 2010 Omnibus Plan) provide that, unless otherwise provided in an award agreement, or unless provision is made in connection with the change of control (as defined below) for assumption of, or substitution for, awards previously
granted, in the event of a change of control, any equity awards outstanding as of the date the change of control shall be treated as follows as of the date immediately prior to the change of control: (i) awards subject only to time-based
vesting criteria would become (or would be deemed) fully vested and/or exercisable, and all restrictions and forfeiture provisions related thereto would lapse, as applicable, and (ii) all performance units, cash incentive awards and other
awards designated as performance compensation awards would be paid out as if the date of the change of control were the last day of the applicable performance period and target performance levels had been attained.
The term change of control in the 2010 Omnibus Plan is defined generally as the occurrence of any of the following events:
|
|
|
during any period of 24 consecutive months, a change in the composition of a majority of our board of directors that is not supported by a majority of
the incumbent board of directors;
|
|
|
|
the consummation of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the total gross fair market
value (determined without regard to liabilities) of our assets, subject to certain exceptions for transactions that would not constitute a change in control; or
|
|
|
|
the approval by our stockholders of a plan of our complete liquidation or dissolution; or an acquisition by any individual, entity or group of
beneficial ownership of a percentage of the combined voting power of our then outstanding voting securities entitled to vote generally in the election of directors that is equal to or greater than the greater of (a) 20% and (b) the
percentage of the combined voting power of the outstanding voting securities owned by certain specified stockholders, with exceptions for certain acquisitions.
|
The term change of control in the 2015 Omnibus Plan is defined generally as the occurrence of any of the following events:
|
|
|
During any period of 24 consecutive months, individuals who were members of the board of directors at the beginning of such period cease at any time
during such period for any reason to constitute at least a majority of the board of directors;
|
|
|
|
The consummation of (i) a merger, consolidation, statutory share exchange or similar form of corporate transaction involving (x) the Company
or (y) any of its subsidiaries, (but in the case of this clause (y) only if voting securities of the Company are issued or issuable in connection with such transaction) or (ii) a sale or other disposition of all or substantially all
the assets of the Company, in each case, unless following which (A) the stockholders of the Company as of just prior to such consummation continue to own in substantially the same proportions more than 50% of the combined voting power of the
surviving entity (disregarding any interests in the surviving entity that such stockholders owned before such
|
45
|
consummation), (B) no person (excluding employee benefit plans or related trusts and specified shareholders (defined below)) owns 20% or more of the combined voting power of the surviving
entity and (C) a majority of the members of the board of directors of the surviving entity were members of the Companys board of directors as of the time such transaction was agreed upon or approved;
|
|
|
|
The approval by the stockholders of the Company of a plan of complete liquidation or dissolution of the Company, unless such liquidation or dissolution
is part of a transaction or series of transactions described in the preceding bullet that does not otherwise constitute a change of control; or
|
|
|
|
The date that any legal person, corporation or other entity or group (as defined) other than any specified shareholder becomes the
beneficial owner, directly or indirectly, of securities of the Company representing a percentage of the combined voting power of that is equal to or greater than 30%. For this purpose, the specified shareholders are (i) JCL FSLR
Holdings, LLC and its beneficiaries, (ii) JTW Trust No. 1 UAD 9/19/02 and its beneficiaries, (iii) any legal person directly or indirectly controlled by any of the foregoing and (iv) any trust for the direct or indirect benefit
of any of the foregoing.
|
KSTEPP
In the event of a change of control (as defined in the 2010 Omnibus Plan) that occurs during the performance period for our KSTEPP awards
granted under the 2010 Omnibus Plan, 25% of the then-unvested portion of each award will accelerate and become vested without regard to achievement of the performance goal as of such time, in order to allow our executives to share in the gains that
would, at such time, be realized by our stockholders. The 25% vesting provision supersedes the change of control provisions in the CIC Agreements between the Company and the named executive officers (described below). For more detail about our
KSTEPP program, see Compensation Discussion and Analysis 2015 Compensation Decisions Equity-Based Compensation KSTEPP.
In addition, the compensation committee has discretion to further accelerate the vesting of the KSTEPP awards in connection with a change of control, including to amend an award to increase the vested
percentage payable upon the occurrence of a change of control, which discretion is expected to be exercised based on the Companys actual performance relative to the vesting conditions. Periodically (and at any time when a change of control is
anticipated), the compensation committee will review the Companys progress towards achievement of either the partial or the full vesting condition and evaluate whether it is appropriate to amend the award (or, if a change of control is
expected, to exercise its discretion) to provide accelerated vesting of a higher portion of the award, effective in all cases only upon an actual change of control.
Change in Control Severance Agreements
The Company has entered into CIC
Agreements with its executive officers and certain senior management, including each of its named executive officers. As of July 2013, our compensation committee determined that such CIC Agreements will no longer provide for full vesting of unvested
time-vested equity-based compensation upon a change in control of the Company and will instead provide for vesting of such equity-based compensation only upon a termination without cause or resignation for good reason within
two years following a change in control of the Company. Consistent with the decision, pursuant to the CIC Agreement entered into with Mr. Kishkill, if a change in control occurs (substantially as defined in the 2015 Omnibus Plan, except that a
change in control will only be deemed to have occurred if such change in control constitutes a change in the ownership or effective control of the Company or a change in the ownership or a substantial portion of the assets of the Company within the
meaning of Section 409A of the Code), Mr. Kishkill will only become entitled to accelerated vesting of all equity-based, long-term incentive awards (other than awards which by their express terms do not accelerate under the CIC Agreements)
upon termination without cause or resignation for good reason within two years following a change in control of the Company. Under the legacy CIC Agreements with Messrs. Hughes, Widmar, Antoun and Garabedian, if a change in
control occurs (substantially as defined in the 2010 Omnibus Plan, except that, pursuant to an August 2013 amendment to such CIC Agreements, a change in control will only be deemed to have occurred if such change in control constitutes a change in
the ownership or effective control of the Company or a change in
46
the ownership or a substantial portion of the assets of the Company within the meaning of Section 409A of the Code), the executive would become immediately entitled to accelerated vesting of
all equity-based, long-term incentive awards (other than awards which by their express terms do not accelerate under the CIC Agreements).
Named executive officers who are party to a CIC Agreement will also be entitled to severance payments and benefits if, in the case of each named executive officer other than Mr. Kishkill, the
executives employment with the Company is terminated in anticipation of a change in control or if, with respect to each named executive officer, during the two-year period after a change in control, the executives employment is
terminated without cause or the executive resigns for good reason (which includes material changes in an executives duties, responsibilities or reporting relationships, failure to provide equivalent compensation and
benefits and being required to relocate 50 or more miles) (such termination, a qualifying termination). If terminated or separated from the Company under those circumstances, the executive would be entitled to the following additional
benefits under the CIC Agreement:
|
|
|
a lump-sum cash severance payment equal to two times the sum of (i) the executives annual base salary (without regard to any reduction
giving rise to good reason) and (ii) the greater of -
|
|
|
|
the executives target annual bonus for the year of termination; or
|
|
|
|
the average of the annual cash bonuses payable to the executive in respect of the three full calendar years immediately preceding the calendar year
that includes the termination date or, if the executive has not been employed for three full calendar years preceding the calendar year that includes the termination date, the average of the annual cash bonuses payable to the executive for the
number of full calendar years prior to the termination date that he or she has been employed;
|
|
|
|
a pro-rated target annual bonus;
|
|
|
|
the continuation of, or reimbursement for, medical and dental benefits for 18 months after termination of employment; and
|
|
|
|
reimbursement for the cost of executive-level outplacement services (subject to a $20,000 limit).
|
Pursuant to Mr. Kishkills CIC Agreement as well as the August 2013 amendment to the legacy CIC Agreements, the lump-sum cash
severance payment and the 18-month medical and dental reimbursement period will be reduced by the severance payments payable and the period of time in which each executive receives benefits following termination, as applicable, pursuant to each
executives employment agreement.
To obtain severance benefits under a CIC Agreement, an executive must first execute a
separation agreement with the Company that includes a waiver and release of any and all claims against the Company. For terminations other than a qualifying termination following a change in control, the executive is entitled to accrued rights only.
As a result of our compensation committees decision in 2011 to no longer provide any newly hired executives with 280G
tax gross-up payments, we no longer have any legacy employment agreements with our named executive officers that allow for 280G tax gross-up payments.
The table below shows the amounts that would be payable to each of the named executive officers who is party to a CIC Agreement in the event of a qualifying termination following a change in control, if a
change in control and the qualifying termination had occurred on December 31, 2015, using a share value of $65.99 per share, which was the closing price of our common stock on December 31, 2015, the last trading day in 2015.
47
The amounts do not include amounts payable pursuant to the Companys contracts,
agreements, plans or arrangements to the extent they do not discriminate in scope, terms or operation, in favor of executive officers of the Company and that are available generally to all salaried associates, including payment of accrued rights
such as payment for accrued and unpaid vacation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Cash
Severance
Payment
Amount
($)(1)
|
|
|
Value of
Accelerated
Equity
Awards
($)(2)
|
|
|
Estimated
Value of
Medical and
Welfare
Benefits
($)(3)
|
|
|
Estimated
Value of
Outplacement
Assistance
($)(4)
|
|
|
Total
($)
|
|
James A. Hughes
|
|
|
5,525,000
|
|
|
|
12,485,555
|
|
|
|
25,002
|
|
|
|
20,000
|
|
|
|
18,055,557
|
|
Mark R. Widmar
|
|
|
2,750,000
|
|
|
|
7,243,937
|
|
|
|
25,002
|
|
|
|
20,000
|
|
|
|
10,038,939
|
|
Georges J. Antoun
|
|
|
2,750,000
|
|
|
|
7,438,624
|
|
|
|
27,442
|
|
|
|
20,000
|
|
|
|
10,236,066
|
|
Joseph G. Kishkill
|
|
|
1,870,000
|
|
|
|
3,072,131
|
|
|
|
25,431
|
|
|
|
20,000
|
|
|
|
4,987,562
|
|
Raffi Garabedian
|
|
|
1,870,000
|
|
|
|
4,203,167
|
|
|
|
24,879
|
|
|
|
20,000
|
|
|
|
6,118,046
|
|
(1)
|
The Company will pay the executive an amount equal to two times the sum of (a) the executives annual base salary (without regard to any reduction giving rise
to good reason) and (b) the greater of (i) the annual bonus or (ii) the average annual cash bonuses payable to the executive in respect of the three calendar years immediately preceding the calendar year that includes the
termination date, or if the executive has not been employed for three full calendar years preceding the calendar year that includes the termination date, the average of the annual cash bonuses payable to the executive for the number of full calendar
years prior to the termination date that he/she has been employed. In addition, the Company will pay the executive a prorated bonus based on the number of days the Executive was employed by the Company in the fiscal year containing the termination
date.
|
(2)
|
All time-based equity awards for Messrs. Hughes, Widmar, Antoun and Garabedian vest upon a change in control. The vesting of all time-based equity awards for
Mr. Kishkill is a double-trigger benefit; the time-based equity awards vest upon a termination without cause or for resignation for good reason within two years following a change in control (without regard
to any qualifying termination) of the Company. The remaining unvested portion of each KSTEPP performance grant (two-thirds) would vest at 25% upon a change in control assumed to occur on December 31, 2015 with additional vesting subject to
compensation committee discretion. Because the compensation committee has not applied discretion to date, KSTEPP vesting is reflected at 25%. For information about full vesting of the KSTEPP awards upon termination, see Potential Payments Upon
Termination of Employment (Other Than in the Context of a Change in Control).
|
(3)
|
Estimated value of 18 months continued health benefits based on 2016 costs for these benefits.
|
(4)
|
Assumes a maximum payment of $20,000 which may be made for outplacement assistance.
|
48
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
Upon the recommendation of the nominating and governance committee of the board of directors, the board of directors has nominated for election at the annual meeting the following slate of eleven
nominees. Information about these nominees is provided above under the heading Directors. Each of the nominees is currently serving as a director of the Company. The persons appointed in the enclosed proxy intend to vote such proxy for
the election of each of the eleven nominees named below, unless the stockholder indicates otherwise on the proxy. The Company expects each nominee for election as a director at the annual meeting to be able to accept such nomination. If any nominee
is unable to accept the nomination, proxies will be voted in favor of the remainder of those nominated and may be voted for substitute nominees.
Nominees
The Board of Directors has nominated for election to the Board of
Directors the following eleven nominees:
Michael J. Ahearn
Sharon L. Allen
Richard D. Chapman
George A. Hambro
James A. Hughes
Craig Kennedy
James F. Nolan
William J. Post
J. Thomas Presby
Paul H. Stebbins
Michael Sweeney
Required
Vote
The affirmative vote of a majority of the votes cast is required to elect each of the eleven nominees as directors. A
person shall be considered to have received a majority of the votes cast with respect to such persons election only if the number of votes cast for such persons election exceeds the number of votes cast against
such persons election, with abstentions and broker non-votes not counted as a vote cast either for or against such persons election. You may not accumulate your votes for the election of
directors. If an incumbant director receives less than a majority of votes cast with respect to his or her election, such director shall promptly tender his or her resignation to the Chairman of the Board for consideration by the nominating and
governance committee. See Directors Majority Vote Standard.
Unless marked to the contrary, proxies received
will be voted FOR each of these nominees.
Recommendation
Our board of directors recommends a vote FOR the election to the board of directors of each of the foregoing nominees.
49
PROPOSAL NO. 2:
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP
The audit committee of the board of directors
has appointed PricewaterhouseCoopers LLP as the independent registered public accounting firm to audit our consolidated financial statements for the fiscal year ending December 31, 2016. During fiscal years 2015, 2014 and 2013,
PricewaterhouseCoopers LLP served as our independent registered public accounting firm and also provided certain tax and other audit-related services. See Principal Accountant Fees and Services. Representatives of PricewaterhouseCoopers
LLP are expected to attend the annual meeting, where they will be available to respond to appropriate questions and, if they desire, to make a statement.
Required Vote
Ratification of the appointment of PricewaterhouseCoopers
LLP as our independent registered public accounting firm for the year ending December 31, 2016 requires the affirmative vote of holders of a majority of the stock represented and voting on such question.
Unless marked to the contrary, proxies received will be voted FOR ratification of the appointment of PricewaterhouseCoopers
LLP.
Recommendation
Our board of directors recommends a vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending
December 31, 2016.
50
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires our directors, executive officers and holders of more than 10% of our common stock to
file with the Commission reports regarding their ownership and changes in ownership of our securities. We believe that, during the fiscal year ended December 31, 2015, our directors, executive officers and 10% stockholders complied with all
Section 16(a) filing requirements.
In making these statements, we have relied upon examination of the copies of
Forms 3, 4 and 5 provided to us and the written representations of our directors, executive officers and 10% stockholders.
OTHER MATTERS
It is not anticipated that any matters other than those described in this proxy statement will be brought before the annual meeting. If any other matters are presented, however, it is the intention of the
persons named in the proxy to vote the proxy in accordance with the discretion of the persons named in the proxy.
HOUSEHOLDING
The Commission permits companies to send a single set of certain disclosure documents to any household at which two or more stockholders reside, unless contrary instructions have been received, but only
if the Company provides advance notice and follows certain procedures. In such cases, each stockholder continues to receive a separate notice of the meeting and proxy card. This householding process reduces the volume of duplicate information and
reduces printing and mailing expenses. We will promptly deliver a separate copy of the proxy materials to each stockholder who has been householded if he or she requests the Company to do so. If you desire to receive separate copies of
any of our future proxy materials, or if you are receiving multiple copies of such proxy materials and would like to receive only one copy for your household, you should contact your brokerage firm, bank, broker-dealer, trust or other similar
organization, or you may contact us by telephone at (602) 414-9300 or by mail at First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281, Attn: Investor Relations. Our proxy materials are also available on the Internet
free of charge at
http://www.edocumentview.com/fslr
.
STOCKHOLDER PROPOSALS
A stockholder who would like to have a proposal considered for inclusion in our 2017 proxy statement must submit the proposal so that it
is received by us no later than December 7, 2016. Commission rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholder proposals should be addressed to the
Corporate Secretary, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe, Arizona 85281.
If a
stockholder does not submit a proposal for inclusion in next years proxy statement, but instead wishes to present it directly at next years annual meeting of stockholders, our bylaws require that the stockholder notify us in writing on
or before February 17, 2017, but no earlier than January 18, 2017, to be included in our materials relating to that meeting. Proposals received after February 17, 2017 will not be voted on at the annual meeting. In addition, such
proposal must also include, among other things, a brief description of the business desired to be brought before the annual meeting; the text of the proposal or business (including the text of any resolutions proposed for consideration) and the
reasons for conducting such business at the annual meeting; the name and address, as they appear on the Companys books, of the stockholder proposing such business or nomination and the name and address of the beneficial owner, if any, on whose
behalf the nomination or proposal is being made; the class or series and number of shares of the Company which are beneficially owned or owned of record by the stockholder and the beneficial owner; any material interest of the stockholder in such
business; and a representation that the stockholder is a holder of record of stock of the Company entitled to vote at such annual meeting and intends to appear in person or by proxy at such meeting to propose such business. If the stockholder wishes
to nominate one or more persons for election as a director, such stockholders notice must comply with additional provisions as set forth in our bylaws, including certain information with respect to the persons nominated for election as
directors and any information relating to the stockholder that would need to be disclosed in a proxy filing. Any such proposals should be directed to the Corporate Secretary, First Solar, Inc., 350 West Washington Street, Suite 600, Tempe,
Arizona 85281.
51
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following report of the audit committee is not soliciting material, is not deemed filed
with the Commission and is not to be incorporated by reference into any other of the Companys filings under the Securities Act or the Exchange Act, except to the extent we specifically incorporate this report by reference therein.
The Audit Committee is comprised of four non-management directors, each of whom is independent as that term is defined in
the NASDAQ Marketplace Rules and satisfies the audit committee independence standard under Rule 10A-3(b)(1) of the Exchange Act.
The Audit Committee was formed by a resolution of the board of directors on October 3, 2006 and held eight meetings during 2015.
The Audit Committee operates under a written Audit Committee Charter that was approved by the Audit Committee and approved by the board.
The Audit Committee has reviewed and discussed with management of the Company and PricewaterhouseCoopers LLP, the independent
registered public accounting firm for the Company, the audited financial statements of the Company for the fiscal year ended December 31, 2015 (the Audited Financial Statements). The Audit Committee has discussed with
PricewaterhouseCoopers LLP the matters required to be discussed by Statement on Auditing Standards No. 61 (as amended by SAS 89 and SAS 90), as in effect on the date of this proxy statement.
PricewaterhouseCoopers LLP provided to the Audit Committee the written disclosures and the letter required by the applicable requirements
of the Public Company Accounting Oversight Board regarding the independent accountants communication with the Audit Committee concerning independence, and the Audit Committee discussed with PricewaterhouseCoopers LLP the latters
independence, including whether its provision of non-audit services compromised such independence.
Based on the reviews and
discussions described above, the Audit Committee recommended to the board of directors of the Company that the audited financial statements be included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31,
2015 for filing with the Securities and Exchange Commission.
|
Submitted by the Members of the Audit Committee
|
Sharon L. Allen
(Chair)
J. Thomas Presby (Vice Chair)
Craig Kennedy
Paul H. Stebbins
|
52
DIRECTIONS TO THE 2016 ANNUAL MEETING OF STOCKHOLDERS
Desert Willow Conference Center
4340 East Cotton Center Boulevard
Phoenix, AZ 85040
From North
Take I-17 South towards Tucson. Merge onto I-10 East via the exit on the left towards Globe/Tucson. Exit at 40th Street. Turn right onto South 40th Street and left onto East Cotton Center Boulevard.
Desert Willow will be on your left.
From Tuscon (South)
Take I-10 West towards Phoenix and exit at Broadway Road. Turn left onto Broadway Road and left onto South 48th Street. Turn right onto East Cotton Center Boulevard, pass through 1 roundabout and Desert
Willow will be on your right.
From East Valley
Take US 60 West, merge onto I-10 West and exit at Broadway Road. Turn left onto Broadway Road and left onto South 48th Street. Turn right onto East Cotton Center Boulevard, pass through 1 roundabout and
Desert Willow will be on your right.
From West
Take I-10 East to 40th Street. Turn right onto 40th Street and turn left onto East Cotton Center Boulevard. Desert Willow will be on your left.
From Airport
Go East on East Sky Harbor Boulevard and merge onto AZ-153
South towards AZ-143/I-10. Take the University Drive exit on the left and bear left onto East University Drive. Merge onto AZ-143 South. Stay straight towards South 48th Street for 0.2 miles and turn right onto East Cotton Center Boulevard. Desert
Willow will be on your right.
53
IMPORTANT
ANNUAL MEETING INFORMATION 000004
ENDORSEMENT_LINE______________ SACKPACK_____________
MR A SAMPLE
DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4
MMMMMMMMM ADD 5
ADD 6
Using a black ink pen, mark your votes with
an X as shown in this example. Please do not write outside the designated areas.
MMMMMMMMMMMM
MMMMMMMMMMMMMMM C123456789
000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext
Electronic Voting Instructions
You can vote by Internet or telephone! Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on May 18, 2016.
Vote by Internet
Go to
www.envisionreports.com/FSLR
Or scan the QR code with your smartphone
Follow the steps outlined on the secure website
Vote by telephone
Call toll free 1-800-652-VOTE
(8683) within the USA, US territories & Canada on a touch tone telephone
Follow the instructions
provided by the recorded message
Annual Meeting Proxy Card
1234 5678 9012 345
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2.
1. Election of Directors:
01 - Michael J. Ahearn
04 - George A. Hambro
07 - James F. Nolan
10 - Paul H. Stebbins
For Against Abstain
02 - Sharon L. Allen
05 - James A. Hughes
08 - William J. Post
11 - Michael Sweeney
For Against Abstain
03 - Richard D. Chapman
06 - Craig Kennedy
09 - J. Thomas Presby
For Against Abstain
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Independent Registered Public
Accounting Firm for the fiscal year ending December 31, 2016.
For Against Abstain
B Non-Voting Items
Change of Address Please print new address below.
C Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor,
administrator, corporate officer, trustee, guardian, or custodian, please give full title.
Date (mm/dd/yyyy)
Please print date below.
Signature 1 Please keep signature within the box.
Signature 2 Please keep signature within the box.
C 1234567890 J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND
MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND
MMMMMMM1UP X 2746841 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND +
02AITA
IF YOU
HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy First Solar, Inc.
Solicited on
Behalf of the Board of Directors for the Annual Meeting, May 18, 2016, Phoenix, Arizona
2016 Annual Meeting of
First Solar, Inc. Stockholders May 18, 2016, 9:00 a.m. (Local Time)
Desert Willow Conference Center, 4340 East
Cotton Center Boulevard, Phoenix, Arizona 85040
The undersigned hereby appoints James A. Hughes, Paul J.
Kaleta and Peter C. Bartolino (the proxies), or any of them, with full power of substitution, to represent and to vote the Common Stock of the undersigned at the annual meeting of stockholders of First Solar, Inc., to be held at the
Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040, on May 18, 2016, at 9:00 a.m., or at any adjournment thereof as stated on the reverse side.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any
boxes if you wish to vote in accordance with the Board of Directors recommendations. The proxies cannot vote your shares unless you sign and return this card.
IMPORTANT
ANNUAL MEETING INFORMATION
Using a black ink pen, mark your votes with an X as shown in this example. Please
do not write outside the designated areas.
Annual Meeting Proxy Card
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposal 2.
1. Election of Directors:
01 - Michael J. Ahearn
04 - George A. Hambro
07 - James F. Nolan
10 - Paul H. Stebbins
For Against Abstain
02 - Sharon L. Allen
05 - James A. Hughes
08 - William J. Post
11 - Michael Sweeney
For Against Abstain
03 - Richard D. Chapman
06 - Craig Kennedy
09 - J. Thomas Presby
For Against Abstain
For Against Abstain
2. Ratification of the appointment of PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2016.
B Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney,
executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) Please print date below. Signature 1 Please keep signature within the box. Signature 2 Please keep signature
within the box.
1UP X 2746842 +
02AIUA
PLEASE
FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy First
Solar, Inc.
Solicited on Behalf of the Board of Directors for the Annual Meeting, May 18, 2016, Phoenix,
Arizona
2016 Annual Meeting of First Solar, Inc. Stockholders May 18, 2016, 9:00 a.m. (Local Time)
Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040
The undersigned hereby appoints James A. Hughes, Paul J. Kaleta and Peter C. Bartolino (the proxies), or any
of them, with full power of substitution, to represent and to vote the Common Stock of the undersigned at the annual meeting of stockholders of First Solar, Inc., to be held at the Desert Willow Conference Center, 4340 East Cotton Center Boulevard,
Phoenix, Arizona 85040, on May 18, 2016, at 9:00 a.m., or at any adjournment thereof as stated on the reverse side.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you wish to vote in accordance with the Board of
Directors recommendations. The proxies cannot vote your shares unless you sign and return this card.
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