UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
| (Mark One) |
|
| x |
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended September 27, 2015 |
| |
or |
| ¨ |
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period From ________ to ________. |
Commission file number 1-34838
Hutchinson
Technology Incorporated
(Exact name of registrant as specified in its
charter)
| Minnesota |
|
41-0901840 |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. employer identification no.) |
| |
|
| 40 West Highland Park Drive NE |
|
| Hutchinson, Minnesota |
55350 |
| (Address of principal executive offices) |
(Zip code) |
| (320) 587-3797 |
| (Registrant’s telephone number, including area code) |
| Securities registered pursuant to Section 12(b) of the Act: |
Common Stock, par value $.01 per share |
| |
Common Share Purchase Rights |
| Name of exchange on which registered: |
NASDAQ Global Select Market |
| Securities registered pursuant to Section 12(g) of the Act: |
None |
Indicate by check mark whether the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act of 1933.
Indicate by check mark whether the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the registrant was
required to submit and post such files).
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K. x
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).
| Large Accelerated Filer ¨ |
Accelerated Filer x |
Non-accelerated Filer ¨ |
Smaller Reporting Company ¨ |
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The aggregate market value of the common stock
held by non-affiliates of the registrant as of March 27, 2015, the last business day of the registrant’s most recently
completed second fiscal quarter, was approximately $88,846,000, based on the closing sale price for the registrant’s common
stock on that date. For purposes of determining this number, all officers and directors of the registrant are considered to be
affiliates of the registrant. This number is provided only for the purpose of this report on Form 10-K and does not represent an
admission by either the registrant or any such person as to the status of such person.
As of December 9, 2015, the registrant
had 33,902,630 shares of common stock issued and outstanding.
Explanatory Note
This Amendment No. 1 on
Form 10-K/A (this “Amendment”) amends the Annual Report on Form 10-K of Hutchinson Technology Incorporated (the “Company,”
“we,” “our” or “us”) for the year ended September 27, 2015 that was originally filed with the
Securities and Exchange Commission (“SEC”) on December 11, 2015 (the “Original Filing”) and is being filed
primarily to provide the information required by Items 10, 11, 12, 13, and 14 of Part III. This information was previously omitted
from the Original Filing in reliance on General Instruction G(3) to Form 10-K, which permits the information in the above referenced
items to be incorporated in the Form 10-K by reference from a definitive proxy statement if such statement is filed no later than
120 days after our fiscal year end. We are filing this Amendment to include Part III information in our Form 10-K because we do
not expect to file a definitive proxy statement containing this information before that date. The reference on the cover of the
Original Filing to the incorporation by reference to portions of our definitive proxy statement into Part III of the Original Filing
has been deleted. This Amendment does not amend or otherwise update any other information in the Original Filing. Accordingly,
this Amendment should be read in conjunction with the Original Filing and with our filings with the SEC subsequent to the Original
Filing.
Forward-Looking Statements
Statements contained in
this Annual Report on Form 10-K that are not statements of historical fact should be considered forward-looking statements within
the meaning of the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”),
and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements
include, but are not limited to, statements regarding the following: the pending merger transaction, demand for and shipments of
our products, our market position, technology, development, program ramps, product mix, pricing, production capabilities and volumes,
product costs, inventory levels, our operations in the U.S. and Thailand, site consolidation efforts, capital spending, repayment
of debt, additional liquidity, operating expenses, cost reductions, market adoption and our production of optical image stabilization
actuators and our business model, operating performance and financial results. Words such as “believe,” “anticipate,”
“expect,” “intend,” “estimate,” “approximate,” “plan,” “goal”
and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such
statements. Although we believe these statements are reasonable, forward-looking statements involve risks and uncertainties that
may cause actual results to differ materially from those projected by such statements. Factors that could cause actual results
to differ from those discussed in the forward-looking statements include, but are not limited to, those discussed under the heading
“Risk Factors” in Part I, Item 1A of this report. This list of factors is not exhaustive, however, and these or other
factors, many of which are outside of our control, could have a material adverse effect on us and our results of operations. Therefore,
you should consider these risk factors with caution and form your own critical and independent conclusions about the likely effect
of these risk factors on our future performance. Forward-looking statements speak only as of the date on which the statements are
made, and we undertake no obligation to update any forward-looking statement for any reason, even if new information becomes available
or other events occur in the future. You should carefully review the disclosures and the risk factors described in this and other
documents we file from time to time with the SEC, including our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by
the cautionary statements set forth herein.
TABLE OF
CONTENTS
PART III
| Item 10. | Directors, Executive Officers and Corporate Governance |
Executive Officers
Our executive officers
are as follows:
| Name |
|
Age |
|
Position |
| Richard J. Penn |
|
59 |
|
President, Chief Executive Officer and Director |
| David P. Radloff |
|
56 |
|
Vice President and Chief Financial Officer |
| D. Mark Jelkin |
|
53 |
|
Vice President of Engineering |
| Connie L. Pautz |
|
57 |
|
Vice President of Human Resources & Corporate Communications |
| Dale M. Ruzicka |
|
55 |
|
Vice President of Operations |
Mr. Penn became President
and Chief Executive Officer in October 2012. Previously, he had served as Senior Vice President and President of our Disk
Drive Components Division since March 2011. He was Senior Vice President and President of our BioMeasurement Division from
April 2007 to March 2011, Senior Vice President and President of our Disk Drive Components Division from 2005 to April 2007,
and Vice President of Operations from 2003 to 2005. Mr. Penn has been with our company since 1981.
Mr. Radloff became Vice
President and Chief Financial Officer in September 2010. Previously, he had served as Corporate Controller since January 2009.
He served as Vice President of Corporate Finance from December 2007 to January 2009 and as Chief Information Officer
from February 2000 to January 2009. He has been with our company since 1986.
Mr. Jelkin became Vice
President of Engineering in June 2014. Previously, he had served as Director of Engineering and Program Development since
2006. He has been with our company since 1988.
Ms. Pautz became Vice President
of Human Resources & Corporate Communications in December 2009. Previously, she had served as Human Resources Director
since January 2009. She served as Corporate Communications Director from March 2001 to December 2009. She has been
with our company since 1984.
Mr. Ruzicka became Vice
President of Operations in December 2012. Previously, he had served as plant manager since May 2008. He served as Director
of Manufacturing Strategy from 2006 to May 2008 and Director of Asian Operations from 2000 to 2006. He has been with our company
since 1982.
Executive officers are
appointed annually by our board of directors and serve a one-year period or until their successors are elected.
None of the above-identified
executive officers is related to each other or to any of our directors.
Board of Directors
Our directors are as follows:
| Name |
|
Age |
|
Position |
| Wayne M. Fortun |
|
66 |
|
Chairman of the Board of Directors |
| Martha Goldberg Aronson |
|
48 |
|
Director |
| Russell Huffer |
|
66 |
|
Lead Director |
| Richard J. Penn |
|
59 |
|
President, Chief Executive Officer and Director |
| Frank P. Russomanno |
|
68 |
|
Director |
| Philip E. Soran |
|
59 |
|
Director |
| Thomas R. VerHage |
|
63 |
|
Director |
Wayne M. Fortun
joined our company in 1975, and has been Chairman of our board of directors since October 1, 2012. He was elected President and
Chief Operating Officer in 1983 and Chief Executive Officer in May 1996, and served as President and Chief Executive Officer until
September 30, 2012. He is also a director of G&K Services, Inc. and C.H. Robinson Worldwide, Inc.
During Mr. Fortun’s
40 years with our company, he has developed extensive experience and critical knowledge of our company and the disk drive and other
industries in which we operate. His intense familiarity with our operations and technologies enable him to be uniquely qualified
to serve on our board of directors. His service on the boards of two other public companies provides him with additional valuable
operational and managerial perspectives.
Martha Goldberg Aronson
has served as Executive Vice President of Strategic Planning at Ecolab, Inc., a global leader in water, hygiene and energy technologies
and services, since November 2015 and previously served as Ecolab’s Executive Vice President and President-Global Healthcare,
from September 2012 to November 2015. She joined Ecolab in June 2012 and initially served as Ecolab’s Executive Vice President
of Strategic Planning. Prior to joining Ecolab, Ms. Goldberg Aronson had been Senior Vice President and President, North America,
of Hill-Rom Holdings, Inc., a leading worldwide manufacturer and provider of medical technologies and related services for the
health-care industry, since August 2010. Before joining Hill-Rom, she served as Senior Vice President at Medtronic, Inc., a leading
manufacturer of medical devices, from March 2008 to November 2009. She also served as Medtronic’s Vice President –
Investor Relations, and in various other domestic and international management positions with Medtronic, since 1991.
Ms. Goldberg Aronson’s
years of executive experience in the medical technology and health-care industry provide her with knowledge and expertise in the
development and communication of effective business strategies and the pursuit of technological innovation. She provides important
perspective on international business matters, drawing upon her tenure in international executive roles, and through her prior
investor relations position at Medtronic, has insight in communicating with our company’s investors.
Russell Huffer retired
from his positions with Apogee Enterprises, Inc., a manufacturer of glass products, services and systems, in August 2011. From
1999 until January 2011, Mr. Huffer served as Chairman of Apogee’s board of directors. He also served as President, Chief
Executive Officer and a director of Apogee from 1998 until his retirement, and had served in various senior management positions
with Apogee and its subsidiaries since 1986. In October 2009, Mr. Huffer was appointed to serve as lead director of our board of
directors.
Mr. Huffer’s experience
as the chief executive officer and in other senior management positions at Apogee provides extensive operational and management
insight to our company. His many years at Apogee provide a deep familiarity with the issues associated with technology excellence
and operations in a manufacturing company. As a retired chief executive officer of a public company and a current director of NCCI
Holdings, Inc., a national workers compensation data management and services provider, he also has a keen understanding of the
management and operational requirements needed in a business environment.
Richard J. Penn
has been with our company since 1981, and has been our President and Chief Executive Officer since October 1, 2012. Mr. Penn served
as our Senior Vice President and President of our Disk Drive Components Division from March 2011 until September 30, 2012. He was
Senior Vice President and President of our BioMeasurement Division from April 2007 to March 2011. Prior to that, he was Vice President
of Operations from October 2003 to November 2005, and was Senior Vice President and President of our Disk Drive Components Division
from November 2005 to April 2007.
During his 33 years with
our company, Mr. Penn has developed broad knowledge of our company’s operations, processes and products. His deep familiarity
with our customers and with the industries in which our businesses operate, together with the division leadership positions he
has held at our company, provide him with the unique capabilities and experience to develop, implement and communicate our business
strategies and, as our chief executive officer, lead our business efforts.
Frank P. Russomanno
retired from his positions with Imation Corp., a developer, manufacturer and marketer of data storage and imaging products and
services, in May 2010. He served as Chief Executive Officer and a director of Imation from April 2007 until his retirement and
as Vice Chairman from March 2009 until his retirement. He also had served in various senior management positions, including as
President and as Chief Operating Officer, at Imation since 1996, when 3M Company (where Mr. Russomanno began his career in 1973)
spun off several business units that became Imation. Mr. Russomanno is also a director of Emrise Corporation.
Mr. Russomanno has extensive
executive experience leading a global technology company, with specific expertise in the challenges and opportunities facing the
data storage industry. His leadership roles at a publicly traded company have provided him an understanding of corporate governance
and investor relations issues. Mr. Russomanno also provides our board of directors with valuable insights on marketing technology
products globally.
Philip E. Soran
is the founder/Executive Chairman of Vidku, Inc., a developer of a video-based discussion platform. He co-founded Compellent Technologies,
Inc., a publicly traded company that provided highly virtualized storage solutions with automated data management features for
enterprise and cloud-computing environments, in 2002. He served as its President and Chief Executive Officer until February 2011,
when it was acquired by Dell Inc. Mr. Soran served as the President of Dell Compellent from February 2011 until March 2012. Prior
to co-founding Compellent Technologies, Mr. Soran served as Chief Executive Officer and President of XIOtech Corp., a network storage
vendor that he co-founded in 1995. Mr. Soran is also a director of SPS Commerce, Inc. and Piper Jaffray Companies. Mr. Soran was
also a director of Stellent, Inc., from 2003 to 2006 when the company was acquired by Oracle Corporation.
Mr. Soran’s experience
in founding and building software and data management companies provides strategic and operational insight to our board of directors,
particularly with respect to emerging technology business opportunities. Our board also benefits from the management and leadership
experience he gained as the chief executive officer of a publicly traded company and his experience as a director of other public
companies.
Thomas R. VerHage retired
from his positions with Donaldson Company, Inc., a worldwide provider of filtration systems and replacement parts, in October 2011.
From 2004 until his retirement, Mr. VerHage served as Vice President and Chief Financial Officer of Donaldson. Prior to joining
Donaldson, he was a partner at Deloitte & Touche LLP, an independent registered public accounting firm, from 2002 to 2004,
and a partner at Arthur Andersen LLP from 1987 to 2002. He is also a director of Franklin Electric Co., Inc.
Mr. VerHage has extensive
public company finance, accounting and audit experience from his experience as chief financial officer of a publicly traded global
manufacturing company and his positions in the public accounting industry. Mr. VerHage’s financial and public accounting
experience provides him with broad knowledge related to financial oversight and management of financial resources. As a chief financial
officer of a public company, he also has relevant and valuable expertise in providing guidance on financial and risk management
processes and in communicating with investors. In addition, Mr. VerHage has valuable insights into the end markets and customers
for our disk drive industry products through his work with Donaldson Company’s disk drive filter business.
None of the above-identified
directors is related to each other or to any of our executive officers.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange
Act and the regulations promulgated thereunder require directors and certain officers and persons who own more than 10% of our
common stock to file reports of their ownership of our common stock and changes in their ownership with the SEC. None of our officers
or directors failed to file any required report on a timely basis during the fiscal year ended September 27, 2015, which we refer
to as “fiscal 2015.”
Code of Ethics
We have adopted a Code
of Ethics and Conduct, which applies to our members of the board of directors, chief executive officer, chief financial officer,
controller and other employees performing similar functions as designated by our chief executive officer. A copy of our Code of
Ethics and Conduct is available on our website at http://www.htch.com. We intend to post on our website any amendments to,
or waivers from, our Code of Ethics and Conduct pursuant to the rules of the SEC and the NASDAQ Stock Market.
Board of Directors Meetings
and Attendance
Our board of directors
held twelve meetings during fiscal 2015. During fiscal 2015, all of our directors other than Martha Goldberg Aronson attended 75%
or greater of the meetings of our board of directors and committees on which he or she served.
Committees of Our Board
of Directors
The following table summarizes
the composition of each of the committees of our board of directors:
| |
Audit Committee |
|
Compensation
Committee |
|
Governance and
Nominating Committee |
|
Competitive
Excellence
Committee |
| Independent Directors: |
|
|
|
|
|
|
|
| Martha Goldberg Aronson |
— |
|
Member |
|
Member |
|
— |
| Russell Huffer |
Member |
|
Member |
|
Chair |
|
— |
| Frank P. Russomanno |
Member |
|
— |
|
Member |
|
— |
| Philip E. Soran |
— |
|
Chair |
|
— |
|
Member |
| Thomas R. VerHage |
Chair |
|
— |
|
— |
|
Member |
| |
|
|
|
|
|
|
|
| Wayne M. Fortun, Chairman |
— |
|
— |
|
— |
|
Chair |
| Richard J. Penn, President and CEO |
— |
|
— |
|
— |
|
— |
Audit Committee
Our board of directors
has determined that all members of our audit committee are “independent” as that term is used in Section 10A(m) of
the Exchange Act and as that term is defined in the NASDAQ Stock Market Rules. Our audit committee held eight meetings in fiscal
2015. Our audit committee’s function is one of oversight and, in that regard, our audit committee meets with our management
and internal auditor, and our independent registered public accounting firm, to review and discuss our financial reporting and
our controls respecting accounting and risk of material loss. The responsibilities of our audit committee are set forth in the
Audit Committee Charter, which is regularly reviewed in light of SEC regulations and NASDAQ Stock Market Rules and is available
on our website at www.htch.com.
Our audit committee received
information from management and pre-approved all auditing services and non-audit services provided by our independent registered
public accounting firm, and considered, prior to engagement, whether the provision of the non-audit services was compatible with
maintaining the independent registered public accounting firm’s independence. Our board of directors has determined that
Mr. VerHage has been designated as our “audit committee financial expert” as defined by SEC regulations.
Compensation Committee
Our board of directors
has determined that all members of our compensation committee are “independent” and meet the further requirements for
compensation committee members contained in the NASDAQ Stock Market Rules; are “non-employee directors” as that term
is defined in Rule 16b-3 under the Exchange Act; and are “outside directors” as that term is used in Section 162(m)
of the Internal Revenue Code (the “Code”). Our compensation committee held four meetings in fiscal 2015. As described
more fully in the following paragraphs, our compensation committee is responsible for (i) reviewing and approving a program regarding
all forms of compensation for executive officers, (ii) reviewing and approving policies and processes for carrying out executive
officer evaluations and compensation reviews, (iii) approving the grant of equity-based incentive awards to each of our executive
officers and non-employee directors, and (iv) reviewing and recommending for approval by the board of directors or our independent
directors, as appropriate, compensation actions involving our executive officers and our non-employee directors. The responsibilities
of our compensation committee are set forth in the Compensation Committee Charter, which is regularly reviewed in light of SEC
regulations and NASDAQ Stock Market Rules and is available on our website at www.htch.com.
At the beginning of each
fiscal year, our compensation committee reviews and recommends to our board of directors certain compensation actions involving
our executive officers, other than the chief executive officer, including any merit increases to base salary, the payout of annual
cash incentive awards for performance in the prior fiscal year and performance targets for the annual cash incentive plan for the
current fiscal year, and approves the grant of equity awards to all of our executive officers. The compensation committee bases
these recommendations on its review of competitive market data provided by its compensation consultant, financial and operational
performance data for the prior fiscal year, projections for the current fiscal year, and the recommendations of our chief executive
officer with respect to compensation actions involving executive officers other than himself. Recommendations regarding the compensation
of our chief executive officer are made by the compensation committee in executive session without the chief executive officer
present and are based on the committee’s evaluation of the chief executive officer’s performance in the prior fiscal
year, considering feedback from each of the chief executive officer’s direct reports and all members of the board of directors.
The compensation committee’s recommendations on base salary, annual cash incentive award payout for performance in the prior
fiscal year and performance targets for the current fiscal year’s annual cash incentive plan for the chief executive officer
are presented to the independent directors for approval, and the compensation committee’s recommendations for the remaining
executive officers are presented to the full board of directors for approval. In conjunction with the committee’s compensation
consultant, our human resources department provides the compensation committee with regular updates at its scheduled meetings and
various tools and resources to keep the committee informed about current trends in executive compensation and market information
on pay philosophies, compensation elements separately and in total, and incentive mix.
Our compensation committee
also reviews compensation provided to our non-employee directors and, at the beginning of each fiscal year, recommends to our independent
directors any changes the committee considers appropriate in the amount or form of such compensation. The compensation committee
bases these recommendations primarily on its review of competitive market data, while also considering our cost-containment efforts.
The compensation committee
delegates to the chief executive officer authority to approve equity awards involving a limited number of shares per year to employees
who are not executive officers of our company. No delegation of the compensation committee’s authority is permitted with
regard to compensation actions involving executive officers or non-employee directors of our company.
Governance and Nominating Committee
All members of our governance
and nominating committee are “independent” as that term is defined in the NASDAQ Stock Market Rules. Our governance
and nominating committee held three meetings in fiscal 2015. Our governance and nominating committee assists our board of directors
in developing and implementing our Principles of Corporate Governance, identifying candidates for director positions, determining
the composition of our board of directors and our board committees, and maintaining a high standard of governance, care and due
diligence in carrying out its responsibilities. The responsibilities of our governance and nominating committee are set forth in
the Governance and Nominating Committee Charter, which is regularly reviewed in light of SEC regulations and NASDAQ Stock Market
Rules and is available on our website at www.htch.com.
Competitive Excellence Committee
Our competitive excellence
committee assesses the value to our customers of our products and services in each market we serve. The committee bases its assessment
on our competitive standing in those competencies that are central to sustaining better value in a target market. The committee
evaluates management’s identification of areas that afford opportunities for increasing our competitive standing, management’s
effectiveness in achieving such increases, and management’s effectiveness in increasing the value proposition of our products
and services in our markets. Our competitive excellence committee held three meetings in fiscal 2015. The responsibilities of our
competitive excellence committee are set forth in the Competitive Excellence Committee Charter, which is available on our website
at www.htch.com.
| Item 11. | Executive Compensation |
Compensation Discussion and Analysis
Named Executive Officers
This Compensation Discussion
and Analysis provides information about the fiscal 2015 compensation program for our named executive officers, who are:
| · | Richard J. Penn, President and Chief Executive
Officer, |
| · | David P. Radloff, Vice President and Chief
Financial Officer, |
| · | D. Mark Jelkin, Vice President of Engineering, |
| · | Connie L. Pautz, Vice President of Human
Resources, and |
| · | Dale M. Ruzicka, Vice President of Operations. |
Compensation Philosophy
A key principle we follow
in evaluating our overall executive compensation program is that the total compensation an executive receives must be aligned with
the value created for our shareholders and the executive’s impact on our company’s performance. Our program is intended
to attract, motivate and retain talented executives, and to reward our company’s executives for achieving the financial and
strategic goals essential to our company’s long-term success.
Our executive compensation
program is designed to:
| · | align the financial interests of our executives
with those of our shareholders by allocating a significant portion of their compensation opportunity to long-term equity-based
incentives; |
| · | make a significant portion of an executive’s
total compensation variable and performance-based, and place greater emphasis on the variable and performance-based elements as
the responsibilities of a position increase; |
| · | provide an annual cash incentive opportunity
that rewards executives’ achievement of financial and strategic business goals; |
| · | make our total compensation program competitive
with the compensation practices of comparable companies in the technology hardware and equipment industry; and |
| · | avoid encouraging unnecessary or excessive
risk taking. |
We hold an advisory shareholder
vote on the compensation of our named executive officers as disclosed in our proxy statement on an annual basis. While these votes
are not binding, the compensation committee considers the outcome of each vote when making future compensation decisions for our
named executive officers. Approximately 93% of the votes were cast in favor of our executive compensation at our annual shareholders
meeting in January 2015, and 94% in both January 2014 and January 2013. The compensation committee considered these favorable outcomes
in deciding not to make any significant changes in the design of our executive compensation program for or during fiscal 2015.
Compensation Elements
Total direct compensation
(“TDC”) for executives consists of three primary components: (a) base salary; (b) annual cash incentive; and (c) long-term
equity incentive.
| · | Base Salary – Our base salary component
is designed to recognize an executive’s knowledge, skills, abilities and on-going performance. We target base salary for
all executives to be at a level consistent with our assessment of their value relative to their peers in the labor market, while
also taking into account our need to reduce and control costs in response to challenging business conditions. |
| · | Annual Cash Incentive – Our annual
cash incentive plan is designed to place a substantial portion of an executive’s annual cash compensation at risk based on
achievement of financial and operational goals. The annual incentive target amounts are set to be reflective of the market information
for each executive position and, as the level of responsibility increases, represent a larger portion of an executive’s total
cash compensation opportunity. |
| · | Long-Term Equity Incentive – The
long-term incentive program for our named executive officers has historically been focused on stock options because they deliver
value to the employee only if our shareholders have realized appreciation in the value of their shares held over the same period,
which we believe is true “pay for performance.” |
In addition to these elements
of TDC, our executive compensation program includes severance arrangements for senior executives as discussed below, minimal perquisites,
and participation in the same programs involving health and welfare benefits, 401(k) retirement benefits and length of service
awards as are made available to our U.S. employees generally.
Pay for Performance
We believe that there
should be a strong relationship between pay actually received and corporate performance (as reflected in both financial results
and stock price), and our executive compensation program reflects this belief. Specifically, it has been our practice to provide
a significant portion of each executive officer’s TDC opportunity in the form of an annual cash incentive opportunity and
equity grants. An increasing emphasis is generally placed on these variable components of the TDC opportunity as the level of responsibility
of the executive officer’s position increases.
We do not, however, have
specific policies governing the allocation of the target TDC opportunity among its fixed and variable components. For example,
in recent years the depressed level of our company’s stock price, coupled with the compensation committee’s desire
to avoid unacceptable levels of shareholder dilution and share usage under our equity incentive plan, has caused the grant date
fair value of equity awards for our named executive officers to be the smallest component of their TDC.
Given the nature of the
variable compensation components, the actual compensation paid out under the annual cash incentive plan or realized through the
exercise of vested stock options or the settlement of vested restricted stock units (“RSUs”) can and does vary significantly
from targeted compensation levels. Whether and to what degree our company achieves its pre-established financial and operational
performance goals under the annual cash incentive plan, and the degree to which our company’s stock price increases or decreases,
together determine the degree to which compensation that is actually realized corresponds to targeted compensation amounts. When
we surpass performance objectives, our executives are rewarded accordingly through the operation of these variable components,
but when we fall short of our objectives, compensation actually realized decreases correspondingly.
Management Involvement in Compensation Process
Management presents to
the compensation committee the compensation history for each executive officer, recommendations for performance measures to be
used in the annual cash incentive plan and recommendations from the chief executive officer as to appropriate levels of compensation
for each executive officer other than himself. The chief executive officer provides an assessment of the performance of all executive
officers, their capabilities relative to their current positions and their future potential in order to give the compensation committee
a basis for his compensation recommendations. For the chief executive officer, the compensation committee reviews performance feedback
from each of the chief executive officer’s direct reports and from all members of the board of directors to determine the
recommended level of compensation.
The compensation committee
reviews all the executive officer total compensation packages to assure that they are appropriate as a whole and are equitable
relative to each other. All long-term equity grants are approved by the compensation committee. The compensation committee’s
recommendations on base salary and annual cash incentives are presented to the board for approval, and the chief executive officer
is not present during the voting and deliberations on his compensation.
Use of Consultants
The compensation committee
has engaged Compensia, Inc. as its independent compensation consultant to review the design and operation of our executive compensation
program, to identify potential changes in or enhancements to our compensation policies and practices and to provide ongoing advice
and information regarding executive compensation policies and practices. As part of this process, Compensia has assisted the compensation
committee in identifying a peer group of companies to serve as a source of comparative compensation market data, and has advised
the compensation committee on the competitiveness of our director and executive compensation programs, the design of incentive
awards and proposed performance metrics for incentive plans, and regulatory developments relating to compensation practices. Compensia
representatives meet with the compensation committee during its regular meetings, including in executive sessions from time to
time without members of management present, and also communicate with the compensation committee chair and the vice president of
human resources between committee meetings. Aside from advising the compensation committee on executive and director compensation
issues, Compensia performs no other services for us.
Based in part on policies
and procedures implemented by Compensia to ensure the objectivity of its executive compensation consultants, and on the compensation
committee’s assessment of Compensia’s independence pursuant to the SEC and stock exchange rules, the compensation committee
concluded that the consulting advice it receives from Compensia is objective and that no conflict of interest exists that will
prevent Compensia from being an independent consultant to the compensation committee.
Market Competitiveness Review
As an aid in establishing
competitive ranges of base salary, incentive compensation opportunities and target direct compensation, we consider peer company
compensation data compiled by Compensia from peer company proxy statement filings as well as survey data from the Radford High-Tech
Industry Executive Compensation Survey (annual revenue between $200 and $500 million). For purposes of setting executive compensation
for fiscal 2015, the compensation committee, as advised by Compensia, felt that the peer company and industry survey data utilized
by Compensia for purposes of setting fiscal 2013 executive compensation, updated to reflect the average increase in base salaries
in the market generally during 2013 and 2014, continued to provide a useful understanding of the market. In taking this approach,
the peer group continued to include the same 17 companies identified for purposes of setting fiscal 2013 compensation, without
a reassessment of selection factors such as comparability of industry (technology and hardware equipment), size (primarily from
a revenue but also from market capitalization standpoint) and operating model (large internal manufacturing operations). The 17
companies included in the peer group for purposes of setting compensation for fiscal 2013, 2014, and 2015 consisted of the following:
| Axcelis Technologies, Inc. |
Key Tronic Corporation |
Powerwave Technologies, Inc. |
| Bel Fuse, Inc. |
Measurement Specialties, Inc. |
Pulse Electronics Corporation |
| Cray, Inc. |
Methode Electronics, Inc. |
SigmaTron International, Inc. |
| Datalink Corporation |
NeoPhotonics Corporation |
SL Industries, Inc. |
| EMCORE Corporation |
Oclaro, Inc. |
STEC, Inc. |
| GSI Group, Inc. |
Oplink Communications, Inc. |
|
The compensation data
derived from these sources, which show percentile compensation levels for various executive positions with comparable job responsibilities,
has been used to inform the compensation committee’s decisions on base salary, annual cash incentives, long-term equity incentives
and allocations between these three components of TDC. The compensation committee does not, however, establish specific percentile
compensation parameters for each position based on the market data. Instead, the market data is one of many factors that the compensation
committee considers in the determination of executive compensation levels. Other factors considered include the responsibilities
of the position, the individual’s experience, individual performance in areas such as leadership, strategic contributions
and execution of responsibilities, our company’s performance and financial position, succession planning and retention strategies,
and restructuring and cost reduction efforts.
Base Salary
Annual base salaries are
set early in each fiscal year after the compensation committee gives consideration to both market data for comparable positions
and an assessment of each executive officer’s value to our company relative to peers in the labor market. In making these
assessments, the compensation committee (in setting the chief executive officer’s salary) and the chief executive officer
(in making recommendations to the compensation committee for other executive officers) consider factors such as those outlined
above in the market competitiveness discussion.
In December 2014, our
compensation committee approved increasing the base salary of each named executive officer to bring each officer’s annual
salary to at least the market 25th percentile. Base salaries for 2014 and 2015 were as follows:
| Name | |
2014 Annual Base Salary | | |
2015 Annual Base Salary | |
| Richard J. Penn | |
$ | 425,000 | | |
$ | 450,000 | |
| David P. Radloff | |
$ | 287,000 | | |
$ | 305,000 | |
| D. Mark Jelkin | |
$ | 210,000 | | |
$ | 220,000 | |
| Connie L. Pautz | |
$ | 190,000 | | |
$ | 210,000 | |
| Dale M. Ruzicka | |
$ | 211,000 | | |
$ | 217,000 | |
Annual Cash Incentive
In structuring the annual
cash incentive plan for executives for fiscal 2015, the compensation committee again decided to include both company-wide financial
and operational goals. The company financial measures utilized for fiscal 2015 were corporate revenue and the level of our company’s
profitability (measured by operating income ) The company financial goals approved for fiscal 2015 are summarized as follows:
| |
|
|
Performance Level |
| Performance Measure |
|
|
Threshold |
|
Target |
|
Maximum |
| Corporate Revenue |
|
|
$285 million |
|
$300 million |
|
$315 million |
| Profitability (annual operating income) |
|
|
Positive
operating income in 2nd half of FY2015 |
|
$4 million |
|
$10 million |
The first operational
measure selected by the compensation committee for fiscal 2015 involved achieving a reduction in the average variable production
cost per unit for dual-stage actuated (“DSA”) suspension assemblies during the fourth quarter of fiscal 2015 as compared
to the year earlier quarter. We expected DSA suspensions to represent an increasing portion of the overall product mix during fiscal
2015, and that reducing per unit cost would be critical to our longer term goal of becoming the industry’s lowest cost producer
of suspension assemblies. The second operational measure involved expanding the adoption of our shape memory alloy (“SMA”)
optical image stabilization (“OIS”) actuator, as measured by the number of smartphones in the market that incorporated
our SMA-OIS actuator.
Each named executive officer’s
annual cash incentive opportunity for fiscal 2015 was allocated among the performance measures described above as follows: 40%
to profitability, 30% to corporate revenue, and 15% to each of the operational goals. The compensation committee also determined
a recommended annual cash incentive target amount, expressed as a percentage of base salary, for each named executive officer in
the first quarter of fiscal 2015 as summarized in the following table:
| Name | |
Incentive Target Amount as % of Base Salary | |
| Richard J. Penn | |
| 100 | % |
| David P. Radloff | |
| 60 | % |
| D. Mark Jelkin | |
| 50 | % |
| Connie L. Pautz | |
| 50 | % |
| Dale M. Ruzicka | |
| 50 | % |
The 2015 incentive target percentages for Messrs.
Penn, Radloff and Jelkin and for Ms. Pautz were unchanged from fiscal 2014. Mr. Ruzicka’s incentive target was increased
from 40% to 50% of base salary to reflect the scope of his global responsibilities and potential contributions toward achievement
of our goals.
Achievement of threshold
performance with respect to any performance measure ordinarily would result in a payout of 50% of the target payout allocated to
that performance measure, while meeting or exceeding the specified maximum level of performance ordinarily would result in a payout
of 200% of the target payout allocated to that performance measure. Performance between the specified threshold, target and maximum
levels ordinarily would result in a proportionate payout between the indicated payout levels. The annual cash incentive program
for fiscal 2015 also provided that total payouts would be capped at target level if our earnings before interest and taxes was
not positive for the fiscal year.
For fiscal 2015, we achieved
performance at slightly above target level for the DSA suspension assembly average variable production cost per unit, but did not
achieve threshold level performance for any of the other goals. This equated to a payout of 18% of the respective annual incentive
amounts for each executive officer. The amounts paid to our named executive officers are summarized as follows:
| Name | |
Incentive Amount Paid | | |
Incentive Amount Paid as %
of 2015 Base Salary | |
| Richard J. Penn | |
$ | 81,000 | | |
| 18 | % |
| David P. Radloff | |
$ | 32,940 | | |
| 18 | % |
| D. Mark Jelkin | |
$ | 19,800 | | |
| 18 | % |
| Connie L. Pautz | |
$ | 18,900 | | |
| 18 | % |
| Dale M. Ruzicka | |
$ | 19,530 | | |
| 18 | % |
Long-Term Equity Incentive
For fiscal 2015, the compensation
committee decided that equity awards to our executive officers again would consist solely of stock options, reflecting the perceived
greater turnaround incentive value of stock options for our most senior employees. RSUs continue to be utilized for awards to other
employees.
Consistent with previous
years, our annual equity granting process for fiscal 2015 began with the compensation committee providing direction to management
on the total number of shares available to grant for the year, considering current and projected overhang as well as comparative
run rates determined by reference to practices within the technology industry and guidelines published by institutional investors
and proxy advisory services. For these purposes, a share multiplier of 1.5:1 was applied to any projected “full value”
RSU awards. Calculated on this basis, the compensation committee decided that the pool of shares available for equity awards to
all employees and directors in fiscal 2015 should reflect a run rate of approximately 3.2% of the shares outstanding at the beginning
of the fiscal year, which was consistent with the fiscal 2014 run rate. The targeted run rate for fiscal 2015 awards was well within
guidelines published by proxy advisory services.
Once the size of the available
share award pool was determined based on the targeted run rate, management then developed recommended percentage allocations of
the total shares available for the annual grants to each of four employee groups (executive officers, director-level employees,
middle managers and non-management key contributors) in a manner intended to be consistent, to the greatest degree possible, with
market practices for distributing long-term equity incentives among those employee groups and with our other objectives in providing
equity-based compensation, such as retention and alignment with shareholder interests. Recommended equity grants to individuals
within the executive officer group were based on a consideration of the factors outlined earlier in the market competitiveness
discussion, including the experience of the individuals in their positions and their TDC relative to market. The chief executive
officer makes this assessment for each executive officer other than himself.
The chief executive officer
then provided these equity grant recommendations to the compensation committee for review and approval. The chief executive officer’s
fiscal 2015 equity grants were determined by the compensation committee. All annual equity grants for executive officers for fiscal
2015 were approved by the compensation committee at its last regularly-scheduled meeting during calendar year 2014, consistent
with past practice. The annual equity grants for fiscal 2015 to the named executive officers as approved by the compensation committee
are summarized as follows:
| Name | |
Options Awarded (# shares) | | |
Grant Date Fair Value ($) | |
| Richard J. Penn | |
| 100,000 | | |
| 241,450 | |
| David P. Radloff | |
| 60,000 | | |
| 144,870 | |
| D. Mark Jelkin | |
| 50,000 | | |
| 120,725 | |
| Connie L. Pautz | |
| 50,000 | | |
| 120,725 | |
| Dale M. Ruzicka | |
| 50,000 | | |
| 120,725 | |
Equity Award Grant Policy
Under our policy governing
the grant of equity awards, the compensation committee must approve awards to any officer or director of the company, and our CEO
may approve awards to other employees pursuant to authority delegated to him. Annual equity awards generally will be approved by
the compensation committee at its regularly-scheduled meeting in late November/early December of each year. Other awards may be
approved at times when a “blackout period” under our insider trading policy is not in effect, or during a blackout
period if the effective date of the award does not occur until after the blackout period ends. The grant date of any award will
be the date the award is approved by the compensation committee or the CEO, unless the approving authority specifies a later grant
date.
Severance and Change in Control Arrangements
We have entered into severance
and change in control agreements with the named executive officers. These agreements generally provide for payments of severance
benefits and health insurance premiums to an executive if the executive’s employment with the company is terminated by the
company without cause or by the executive for “good reason,” in either case within 24 months of a change in control
of the company or a division of the company. Payments and benefits available under these agreements and the company’s severance
pay plan are described more fully below under the heading “Potential Payments Upon Termination or Change in Control.”
The compensation committee believes these severance and change in control agreements are important as a recruitment and retention
device, are an important part of a competitive overall compensation program for the executives involved, and will mitigate concerns
that the executives may have regarding their continued employment prior to or following a change in control, thereby allowing the
executives to focus their undivided attention on advancing the interests of the company and its shareholders.
Stock option and any other
equity-based awards granted under our plans provide for “double trigger” treatment in the event of a change in control,
meaning that if the award continues in place after the change in control, vesting and exercisability of that award will not be
accelerated unless the executive’s employment is terminated involuntarily (other than for cause) within 24 months following
the change in control transaction, in the case of awards made under our Amended and Restated 1996 Incentive Plan (the “1996
Incentive Plan”), or one year following the change in control transaction, in the case of awards made under our 2011 Equity
Incentive Plan (the “2011 Incentive Plan”). The compensation committee believes this structure effectively creates
incentives for our executive team to obtain the highest value possible should we be acquired and provides a powerful retention
device during the uncertain times preceding a change in control transaction, without providing accelerated benefits to executives
who continue to enjoy employment after such a transaction. The compensation committee also believes this structure is more attractive
to potential acquiring companies than a “single trigger” structure, because these companies may place significant value
on retaining members of our executive team.
The severance and change
in control agreements described above are, however, limited to the degree necessary to avoid causing such payments and benefits
to be subject to the excise tax on “parachute payments” under the Code.
Ownership Guidelines
Our board of directors
believes that directors and executive officers of the company should have a significant equity interest in the company, and has
established stock ownership guidelines to encourage share ownership. The guidelines specify that each covered individual should
hold shares of our common stock equal in value to at least the amount specified in the following table:
| Leadership Position |
|
Value of Shares |
| Non-employee director |
|
5 × annual cash retainer as board member |
| Chief executive officer |
|
5 × annual base salary |
| Chief financial officer, chief technology officer and senior vice presidents |
|
2 × annual base salary |
| Vice presidents |
|
1 × annual base salary |
Individuals subject to the guidelines are expected
to hold a minimum of 50% of net profit shares from option exercises and 100% of the net profit shares from any other equity-based
awards until they satisfy the ownership guidelines. Shareholdings are valued for these purposes based on the greater of (i) the
closing price of our common stock as of the most recent fiscal year end, or (ii) the acquisition value of the shares (the purchase
price of shares that have been purchased or the taxable value of shares received through an equity-based compensation award). As
of September 27, 2015, only Messrs. Fortun, Huffer, Russomanno, Soran and VerHage among our directors and executive officers had
stock holdings with a value equal to or greater than that specified by the guidelines. Our company also has an insider trading
policy which, among other things, prohibits executive officers from hedging the economic risk of their company stock ownership
and from pledging the company shares they own.
Compensation Committee Report
The compensation committee
has reviewed and discussed with management the Compensation Discussion and Analysis contained in this Annual Report on Form 10-K.
Based on its review, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis
be included in this Annual Report on Form 10-K.
| |
Compensation Committee: |
| |
|
| |
Philip E. Soran, Chair |
| |
Martha Goldberg Aronson |
| |
Russell Huffer |
Summary Compensation Table
The table and footnotes
below describe the total compensation earned in fiscal 2015, 2014 and 2013 by our named executive officers.
Name and
Principal Position | |
Year | | |
Salary (1)
($) | | |
Stock
Awards (2)
($) | | |
Option
Awards (2)
($) | | |
Non-Equity
Incentive Plan
Compensation
(3)
($) | | |
All Other
Compensation (4)
($) | | |
Total
($) | |
| Richard J. Penn | |
| 2015 | | |
| 438,277 | | |
| – | | |
| 241,450 | | |
| 81,000 | | |
| 10,582 | | |
| 771,309 | |
| President and | |
| 2014 | | |
| 420,198 | | |
| – | | |
| 228,030 | | |
| 113,390 | | |
| 7,700 | | |
| 769,318 | |
| Chief Executive Officer | |
| 2013 | | |
| 385,005 | | |
| – | | |
| 172,050 | | |
| – | | |
| 11,194 | | |
| 568,249 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| David P. Radloff | |
| 2015 | | |
| 296,859 | | |
| | | |
| 144,870 | | |
| 32,940 | | |
| 5,383 | | |
| 480,052 | |
| Vice President and | |
| 2014 | | |
| 282,979 | | |
| – | | |
| 136,818 | | |
| 45,943 | | |
| 5,566 | | |
| 471,306 | |
| Chief Financial Officer | |
| 2013 | | |
| 256,857 | | |
| – | | |
| 69,258 | | |
| – | | |
| 5,395 | | |
| 331,510 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| D. Mark Jelkin (5) | |
| 2015 | | |
| 214,697 | | |
| | | |
| 120,725 | | |
| 19,800 | | |
| 4,749 | | |
| 359,971 | |
| Vice President of Engineering | |
| 2014 | | |
| 187,519 | | |
| 47,680 | | |
| – | | |
| 22,763 | | |
| 4,735 | | |
| 262,697 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Connie L. Pautz | |
| 2015 | | |
| 202,939 | | |
| | | |
| 120,725 | | |
| 18,900 | | |
| 5,106 | | |
| 347,670 | |
| Vice President | |
| 2014 | | |
| 187,268 | | |
| – | | |
| 114,015 | | |
| 25,346 | | |
| 5,351 | | |
| 331,980 | |
| of Human Resources | |
| 2013 | | |
| 169,712 | | |
| – | | |
| 69,258 | | |
| – | | |
| 4,313 | | |
| 243,283 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Dale M. Ruzicka (6) | |
| 2015 | | |
| 212,516 | | |
| | | |
| 120,725 | | |
| 19,530 | | |
| 5,076 | | |
| 357,847 | |
| Vice President of Operations | |
| 2014 | | |
| 209,860 | | |
| – | | |
| 114,015 | | |
| 22,518 | | |
| 4,572 | | |
| 350,965 | |
| | |
| 2013 | | |
| 163,614 | | |
| – | | |
| 46,172 | | |
| – | | |
| 3,807 | | |
| 213,593 | |
| (1) | The “Salary” column presents the base salary earned during each of the applicable fiscal
years. All of the named executive officers were required to take 10 days off without pay during the first two quarters of fiscal
2013, and the resulting reduction in base salary is reflected in the amounts shown here. |
| (2) | The amounts shown in the “Stock Awards” and “Option Awards” columns represent
the aggregate grant date fair value of the RSU and option awards, respectively, granted during each of the applicable fiscal years
computed in accordance with FASB ASC Topic 718. For additional information regarding our calculation of the grant date fair value
of equity awards granted in fiscal 2015, see Note 5 to the Consolidated Financial Statements included in the Original Filing. |
| (3) | The “Non-Equity Incentive Plan Compensation” column presents cash bonuses earned during
each of the applicable fiscal years under our annual cash incentive plan. |
| (4) | At least two-thirds of the amounts shown in the “All Other Compensation” column for
each named executive officer for fiscal 2015 represent company contributions to that officer’s 401(k) Plan account, with
the remainder composed of payments for tax and financial planning assistance and/or certain recognition awards. |
| (5) | Mr. Jelkin was promoted to Vice President of Engineering effective April 6, 2014. Amounts shown
include compensation earned by Mr. Jelkin during fiscal 2014 prior to his promotion to this executive officer position. |
| (6) | Mr. Ruzicka was promoted to Vice President of Operations effective December 5, 2012. Amounts shown
include compensation earned by Mr. Ruzicka during fiscal 2013 prior to his promotion to this executive officer position. |
Grants of Plan-Based Awards
For their service during
fiscal 2015, the named executive officers received two types of plan-based awards: a stock option award granted on December 2,
2014 under the 2011 Incentive Plan, and an award under our annual cash incentive plan that was paid in the first quarter of fiscal
2015.
Option Awards Under the 2011 Incentive
Plan
Option awards granted
under the 2011 Incentive Plan during fiscal 2015 to employees of our company, including the named executive officers, have an exercise
price equal to 100% of the fair market value of a share of our common stock on the date of grant. Each stock option vests and becomes
exercisable as to one-third of the shares subject to the option on each of the first, second and third anniversaries of the date
of grant and has a 10-year term. The vested portion of each option may be exercised while the participant is employed by us, and
ordinarily for three months after employment ends (unless employment is terminated for cause). If, however, employment ends after
the participant has been employed by us for at least 10 years and has reached age 55, the vested portion of an option will remain
exercisable for three years after the date employment ends. If a participant’s employment ends because of death or disability,
the vested portion of an option will remain exercisable for one year after the date employment ends. In no case will an option
be exercisable beyond the end of its original term.
In the event of a merger
or consolidation involving our company, an option award can be assumed by the surviving or successor corporation or replaced by
an equity-based award with the same value. If no such assumption or replacement is made, the compensation committee may accelerate
the vesting of the option or cancel the option and pay to the holder an amount in cash equal to the spread between the fair market
value of the shares subject to the option immediately prior to the change in control and the aggregate exercise price of those
option shares. In addition, if a surviving or successor corporation assumes or replaces an option award following a change in control
and subsequently terminates the employment of the holder without cause within one year of the change in control, the vesting of
such award will be accelerated. See “Potential Payments Upon Termination or Change in Control” below for more information.
Annual Cash Incentive Plan
Under the annual cash
incentive plan, executive officers can receive cash payouts after the completion of each fiscal year if specified performance objectives
established at the beginning of the fiscal year are attained. An annual incentive target amount, expressed as a percentage of base
salary, is approved for each executive officer. The plan for fiscal 2015 was structured so that the actual cash incentive paid
to an executive officer could range from 0 to 200% of that officer’s annual incentive target, depending on the performance
of our company against the relevant financial and operational business goals.
For each executive officer,
40% of the total cash incentive opportunity was dependent on the degree to which our company achieved a corporate operating income
goal, 30% was dependent on the degree to which a corporate revenue goal was achieved, and 15% was dependent on the degree to which
each of two operational goals (production cost reductions per unit of DSA suspension assemblies and expanding market adoption of
our SMA-OIS actuator) was achieved. The company achieved slightly above target performance on the DSA suspension assemblies goal,
but did not achieve threshold level performance for any of the other goals, resulting in the payouts reflected in the “Non-Equity
Incentive Plan Compensation” column of the Summary Compensation Table. Please see the “Compensation Discussion and
Analysis” section above for more information regarding the plan’s goals and the company’s performance against
those goals.
The following table summarizes
the stock option and annual cash incentive plan awards made to the named executive officers during fiscal 2015:
Grants of Plan-Based Awards in Fiscal 2015
| | |
| |
| | |
| | |
| | |
All Other Option | | |
| | |
| |
| | |
| |
| | |
| | |
| | |
Awards: | | |
| | |
Grant Date Fair | |
| | |
| |
Estimated
Future Possible Payouts Under | | |
Number
of | | |
Exercise or Base | | |
Value of Stock | |
| | |
| |
Non-Equity
Incentive Plan Awards | | |
Securities | | |
Price of Option | | |
and Option | |
| | |
| |
Threshold
(1) | | |
Target
(2) | | |
Maximum
(3) | | |
Underlying | | |
Awards (4) | | |
Awards (5) | |
| Name | |
Grant
Date | |
($) | | |
($) | | |
($) | | |
Options (#) | | |
($/Sh) | | |
($) | |
| Richard
J. Penn | |
| |
| 33,750 | | |
| 450,000 | | |
| 900,000 | | |
| – | | |
| – | | |
| – | |
| | |
12-02-14 | |
| | | |
| | | |
| | | |
| 100,000 | | |
| 3.43 | | |
| 241,450 | |
| David P. Radloff | |
| |
| 13,725 | | |
| 183,000 | | |
| 366,000 | | |
| – | | |
| – | | |
| – | |
| | |
12-02-14 | |
| – | | |
| – | | |
| – | | |
| 60,000 | | |
| 3.43 | | |
| 144,870 | |
| D. Mark Jelkin | |
| |
| 8,250 | | |
| 110,000 | | |
| 220,000 | | |
| – | | |
| – | | |
| – | |
| | |
12-02-14 | |
| – | | |
| – | | |
| – | | |
| 50,000 | | |
| 3.43 | | |
| 120,725 | |
| Connie L. Pautz | |
| |
| 7,875 | | |
| 105,000 | | |
| 210,000 | | |
| – | | |
| – | | |
| – | |
| | |
12-02-14 | |
| – | | |
| – | | |
| – | | |
| 50,000 | | |
| 3.43 | | |
| 120,725 | |
| Dale M. Ruzicka | |
| |
| 8,138 | | |
| 108,500 | | |
| 217,000 | | |
| – | | |
| – | | |
| – | |
| | |
12-02-14 | |
| – | | |
| – | | |
| – | | |
| 50,000 | | |
| 3.43 | | |
| 120,725 | |
| (1) | Threshold amounts can be calculated for each individual performance measure, and in each case are
equal to 50% of the target amount payable with respect to that measure. The amounts reported as threshold amounts in the table
represent the payout that would have been made if threshold performance was achieved for the performance measure assigned the lowest
weight in the plan, assuming that threshold performance was not achieved for any other performance measure. |
| (2) | Target amounts represent a percentage of each named executive officer’s base salary at the
time of grant: 100% for Mr. Penn, 60% for Mr. Radloff, 50% for Mr. Jelkin, Ms. Pautz and Mr. Ruzicka. |
| (3) | Maximum amounts represent 200% of each named executive officer’s target amount. |
| (4) | The exercise price of options awarded during fiscal 2015 was the closing sale price of a share
of our company’s common stock on the NASDAQ Global Select Market on the date of grant. |
| (5) | Represents the grant date fair value of options awarded during fiscal 2015 computed in accordance
with FASB ASC Topic 718. For additional information regarding our calculation of the grant date fair value of equity awards granted
in fiscal 2015, see Note 5 to the Consolidated Financial Statements included in the Original Filing. |
Outstanding Equity Awards
The table below provides
information on each named executive officer’s outstanding equity awards as of September 27, 2015. The equity awards consist
of stock options granted under the 1996 Incentive Plan and 2011 Incentive Plan and RSUs granted under the 2011 Incentive Plan.
Outstanding Equity Awards
at Fiscal 2015 Year-End
| | |
| |
Option
Awards | |
Stock
Awards | |
| Name | |
Grant Date | |
Number of
Securities Underlying
Unexercised Options
(#)
Exercisable | | |
Number of Securities
Underlying
Unexercised Options
(#)
Unexercisable (1) | | |
Option
Exercise
Price
($) | | |
Option
Expiration
Date | |
Number of Shares
or
Units of Stock That
Have Not Vested (2)
(#) | | |
Market Value of
Shares or Units of
Stock That Have
Not Vested (3)
($) | |
| Richard
J. Penn | |
11-30-05 | |
| 15,500 | | |
| – | | |
| 27.46 | | |
11-30-15 | |
| | | |
| | |
| | |
11-29-06 | |
| 30,000 | | |
| – | | |
| 23.05 | | |
11-29-16 | |
| | | |
| | |
| | |
11-28-07 | |
| 30,000 | | |
| – | | |
| 26.21 | | |
11-28-17 | |
| | | |
| | |
| | |
12-03-08 | |
| 40,000 | | |
| – | | |
| 3.03 | | |
12-03-18 | |
| | | |
| | |
| | |
12-02-09 | |
| 55,000 | | |
| – | | |
| 7.35 | | |
12-02-19 | |
| | | |
| | |
| | |
12-01-10 | |
| 55,000 | | |
| – | | |
| 3.03 | | |
12-01-20 | |
| | | |
| | |
| | |
11-29-11 | |
| 33,000 | | |
| – | | |
| 1.70 | | |
11-29-21 | |
| | | |
| | |
| | |
10-11-12 | |
| 33,334 | | |
| 16,666 | | |
| 1.59 | | |
10-11-22 | |
| | | |
| | |
| | |
12-04-12 | |
| 75,000 | | |
| 25,000 | | |
| 1.53 | | |
12-04-22 | |
| | | |
| | |
| | |
12-03-13 | |
| 33,334 | | |
| 66,666 | | |
| 2.98 | | |
12-03-23 | |
| | | |
| | |
| | |
12-02-14 | |
| – | | |
| 100,000 | | |
| 3.43 | | |
12-02-24 | |
| | | |
| | |
| | |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| David
P. Radloff | |
11-30-05 | |
| 6,000 | | |
| – | | |
| 27.46 | | |
11-30-15 | |
| | | |
| | |
| | |
11-29-06 | |
| 10,000 | | |
| – | | |
| 23.05 | | |
11-29-16 | |
| | | |
| | |
| | |
11-28-07 | |
| 10,000 | | |
| – | | |
| 26.21 | | |
11-28-17 | |
| | | |
| | |
| | |
12-03-08 | |
| 10,000 | | |
| – | | |
| 3.03 | | |
12-03-18 | |
| | | |
| | |
| | |
12-02-09 | |
| 16,000 | | |
| – | | |
| 7.35 | | |
12-02-19 | |
| | | |
| | |
| | |
12-01-10 | |
| 30,000 | | |
| – | | |
| 3.03 | | |
12-01-20 | |
| | | |
| | |
| | |
11-29-11 | |
| 24,000 | | |
| – | | |
| 1.70 | | |
11-29-21 | |
| | | |
| | |
| | |
12-04-12 | |
| 45,000 | | |
| 15,000 | | |
| 1.53 | | |
12-04-22 | |
| | | |
| | |
| | |
12-03-13 | |
| 20,000 | | |
| 40,000 | | |
| 2.98 | | |
12-03-23 | |
| | | |
| | |
| | |
12-02-14 | |
| – | | |
| 60,000 | | |
| 3.43 | | |
12-02-24 | |
| | | |
| | |
| | |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| D.
Mark Jelkin | |
11-30-05 | |
| 1,600 | | |
| – | | |
| 27.46 | | |
11-30-15 | |
| | | |
| | |
| | |
11-29-06 | |
| 4,000 | | |
| – | | |
| 23.05 | | |
11-29-16 | |
| | | |
| | |
| | |
11-28-07 | |
| 5,000 | | |
| – | | |
| 26.21 | | |
11-28-17 | |
| | | |
| | |
| | |
12-02-09 | |
| 12,000 | | |
| – | | |
| 7.35 | | |
12-02-19 | |
| | | |
| | |
| | |
12-01-10 | |
| 12,000 | | |
| – | | |
| 3.03 | | |
12-01-20 | |
| | | |
| | |
| | |
11-12-12 | |
| | | |
| | | |
| | | |
| |
| 4,750 | | |
| 6,697 | |
| | |
12-03-13 | |
| | | |
| | | |
| | | |
| |
| 10,666 | | |
| 15,039 | |
| | |
12-02-14 | |
| – | | |
| 50,000 | | |
| 3.43 | | |
12-02-24 | |
| | | |
| | |
| | |
| |
| | | |
| | | |
| | | |
| |
| | | |
| | |
| Connie
L. Pautz | |
11-30-05 | |
| 3,500 | | |
| – | | |
| 27.46 | | |
11-30-15 | |
| | | |
| | |
| | |
11-29-06 | |
| 3,500 | | |
| – | | |
| 23.05 | | |
11-29-16 | |
| | | |
| | |
| | |
11-28-07 | |
| 4,000 | | |
| – | | |
| 26.21 | | |
11-28-17 | |
| | | |
| | |
| | |
12-03-08 | |
| 5,500 | | |
| – | | |
| 3.03 | | |
12-03-18 | |
| | | |
| | |
| | |
12-02-09 | |
| 20,000 | | |
| – | | |
| 7.35 | | |
12-02-19 | |
| | | |
| | |
| | |
12-01-10 | |
| 20,000 | | |
| – | | |
| 3.03 | | |
12-01-20 | |
| | | |
| | |
| | |
11-29-11 | |
| 15,000 | | |
| – | | |
| 1.70 | | |
11-29-21 | |
| | | |
| | |
| | |
12-04-12 | |
| 45,000 | | |
| 15,000 | | |
| 1.53 | | |
12-04-22 | |
| | | |
| | |
| | |
12-03-13 | |
| 16,667 | | |
| 33,333 | | |
| 2.98 | | |
12-03-23 | |
| | | |
| | |
| | |
12-02-14 | |
| – | | |
| 50,000 | | |
| 3.43 | | |
12-02-24 | |
| | | |
| | |
| | |
| |
Option
Awards | |
Stock
Awards |
| Name | |
Grant Date | |
Number of
Securities Underlying
Unexercised Options
(#)
Exercisable | | |
Number of Securities
Underlying
Unexercised Options
(#)
Unexercisable (1) | | |
Option
Exercise
Price
($) | | |
Option
Expiration
Date | |
Number of Shares
or
Units of Stock That
Have Not Vested (2)
(#) | |
Market Value of
Shares or Units of
Stock That Have
Not Vested (3)
($) | |
| Dale
M. Ruzicka | |
11-30-05 | |
| 6,000 | | |
| – | | |
| 27.46 | | |
11-30-15 | |
| |
| | |
| | |
11-29-06 | |
| 5,000 | | |
| – | | |
| 23.05 | | |
11-29-16 | |
| |
| | |
| | |
11-28-07 | |
| 5,000 | | |
| – | | |
| 26.21 | | |
11-28-17 | |
| |
| | |
| | |
12-03-08 | |
| 7,500 | | |
| – | | |
| 3.03 | | |
12-03-18 | |
| |
| | |
| | |
12-02-09 | |
| 12,000 | | |
| – | | |
| 7.35 | | |
12-02-19 | |
| |
| | |
| | |
12-01-10 | |
| 12,000 | | |
| – | | |
| 3.03 | | |
12-01-20 | |
| |
| | |
| | |
12-04-12 | |
| 30,000 | | |
| 10,000 | | |
| 1.53 | | |
12-04-22 | |
| |
| | |
| | |
12-03-13 | |
| 16,667 | | |
| 33,333 | | |
| 2.98 | | |
12-03-23 | |
| |
| | |
| | |
12-02-14 | |
| – | | |
| 50,000 | | |
| 3.43 | | |
12-02-24 | |
| |
| | |
| (1) | Each stock option granted on December 2, 2014 and on December 3, 2013 vests and becomes exercisable
as to one-third of the shares subject to the option on each of the first, second and third anniversaries of the date of grant.
Each stock option granted on December 4, 2012 vests and becomes exercisable as to 50% of the shares subject to the option on the
first anniversary of the date of grant and as to 25% of the shares subject to the option on each of the second and third anniversaries
of the date of grant. |
| (2) | The RSU award granted to Mr. Jelkin on December 3, 2013 vests as to one-third of the units subject
to the award on each of the first, second and third anniversaries of the date of grant. The RSU award granted to Mr. Jelkin on
November 12, 2012 vests as to 50% of the units subject to the award on the first anniversary of the date of grant and as to 25%
of the units subject to the award on each of the second and third anniversaries of the date of grant. |
| (3) | Equals the number of unvested units multiplied by the fair market value of a share of our common
stock on September 27, 2015 (using the $1.41 closing sale price of a share of our common stock on the NASDAQ Global Select Market
on September 25, 2015, the last trading day of the fiscal year). |
Option Exercises and Stock Vested
None of the named executive
officers exercised stock options during fiscal 2015. During fiscal 2015, one-third of the units subject to Mr. Jelkin’s RSU
awards granted in fiscal 2014 and 2012 vested, and 25% of the units subject to Mr. Jelkin’s RSU award granted in fiscal 2013
vested.
Option Exercises and Stock Vested During
Fiscal 2015
| | |
Option Awards | | |
Stock Awards | |
| Name | |
Number of Shares
Acquired on Exercise
(#) | | |
Value Realized on
Exercise
($) | | |
Number of Shares
Acquired on Vesting
(#) | | |
Value Realized on
Vesting
($) | |
| Richard J. Penn | |
| – | | |
| – | | |
| – | | |
| – | |
| David P. Radloff | |
| – | | |
| – | | |
| – | | |
| – | |
| D. Mark Jelkin | |
| – | | |
| – | | |
| 12,750 | | |
| 45,681 | (1) |
| Connie L. Pautz | |
| – | | |
| – | | |
| – | | |
| – | |
| Dale M. Ruzicka | |
| – | | |
| – | | |
| – | | |
| – | |
| (1) | Equals the number of vested units (4,750, 2,666 and 5,334) multiplied by the fair market value
of our stock on the vesting dates of November 12, 2014, November 29, 2014 and December 3, 2014, respectively (using the closing
sale price of a share of our common stock on the NASDAQ Global Select Market on those dates). |
Potential Payments Upon Termination or Change in Control
The information below
describes the compensation that would become payable under existing plans and arrangements if the employment of the five named
executive officers were to terminate under certain circumstances or if a change in control of our company were to occur.
Severance Pay Plan
We maintain a severance
pay plan that is applicable generally to all U.S.-based full-time employees, including the named executive officers. Benefits under
the severance pay plan are available to qualifying employees whose employment ends due to a “severance event” as determined
by company management. Examples of a severance event include the closure of the facility at which an employee works or elimination
of the employee’s position as a result of a permanent reduction in our workforce or an organizational change.
The severance pay plan
provides that each of our chief executive officer and chief financial officer (and our chief technology officer, if any) will receive
a lump sum severance payment equal to (a) 1.5 times his or her annual base salary in effect immediately prior to termination of
employment, (b) an amount equal to the officer’s average annual cash incentive plan payout received for the most recent three
fiscal years, and (c) premiums for 12 months of coverage under our group health and dental plans, calculated by reference to the
officer’s coverage and enrollment level in effect as of the termination of his or her employment. Each such officer will
also receive outplacement services for 12 months.
The severance pay plan
provides that each vice president will receive a lump sum severance payment equal to (a) one times his or her annual base salary
in effect immediately prior to termination of employment, (b) an amount equal to the officer’s average annual cash incentive
plan payout received for the most recent three fiscal years, and (c) premiums for six months of coverage under our group health
and dental plans, calculated by reference to the officer’s coverage and enrollment in effect as of the termination of his
or her employment. Each such officer will also receive outplacement services for six months.
Different tiers of benefits
are provided to director-level employees and plant managers, and to all other qualifying employees. Receipt of severance benefits
is conditioned upon the execution of a release agreement.
Severance and Change in Control Agreements
Each of our named executive
officers is party to a severance and change in control agreement pursuant to which he or she will be eligible to receive specified
payments and benefits if our company terminates such officer’s employment other than for cause, or such officer terminates
his or her employment with our company for good reason, within 24 months following a “change in control event.” Under
the agreement, a “change in control event” generally means the occurrence of any of the following:
| · | any person becomes the beneficial owner
of 50% or more of the voting power of our equity securities; |
| · | a majority of our board of directors no
longer consists of individuals who were directors on the effective date of the agreement or who, since that time, were nominated
for election or elected by our board of directors; |
| · | a reorganization, merger or consolidation
involving our company, or a sale of all or substantially all of our company’s assets, is consummated; |
| · | our shareholders approve a complete liquidation
or dissolution of our company; or |
| · | the sale, discontinuation or disposition
of all or substantially all, or a material portion of, the business or assets of a division to which such key employee was assigned. |
A change in control event will not, however,
occur in connection with a transaction described if 50% or more of the voting power of the buyer or surviving party in the transaction
is beneficially owned in substantially the same proportions by persons who were beneficial owners of our voting securities before
the transaction.
The payments and benefits
provided under the severance and change in control agreements will be in lieu of any payments and benefits to which the officer
would otherwise be entitled under our severance pay plan in connection with such a termination of employment.
The severance and change
in control agreements entered into with the chief executive officer and chief financial officer provide for a lump sum payment
in the event of such a termination of employment equal to (a) two times the greater of the officer’s annual base salary immediately
prior to the termination of employment or such annual base salary immediately prior to the change in control event, (b) an amount
equal to the greater of the officer’s target bonus for the bonus period in which the termination occurs or for the bonus
period in which the change in control event occurs, and (c) premiums for 24 months of coverage under our group health and dental
plans, calculated by reference to the officer’s coverage and enrollment level in effect as of the termination of his or her
employment or, if it results in a greater benefit, as of the date immediately prior to the change in control event.
The severance and change
in control agreements entered into with each vice president provide for a lump sum payment in the event of such a termination of
employment equal to (a) 1.5 times the greater of the officer’s annual base salary immediately prior to the termination of
employment or such annual base salary immediately prior to the change in control event, (b) an amount equal to the greater of the
officer’s target bonus for the bonus period in which the termination occurs or for the bonus period in which the change in
control event occurs, and (c) premiums for 18 months of coverage under our group health and dental plans, calculated by reference
to the officer’s coverage and enrollment level in effect as of the termination of his or her employment or, if it results
in a greater benefit, as of the date immediately prior to the change in control event.
Equity Incentives
All outstanding stock
options granted under the 1996 Incentive Plan are fully vested and exercisable, and if a plan participant’s employment ends
because of death or disability, all outstanding stock options remain exercisable for three years after the date employment ends.
If employment ends for a reason other than death or disability or cause, the 1996 Incentive Plan provides that a stock option will
remain exercisable for the following periods of time after the date employment ends: for participants who have been employed by
our company for at least 10 years and who have reached the age of 55, the stock option will remain exercisable for three years
after the date employment ends; for all other participants, the stock option will remain exercisable for three months after the
date employment ends. In no case will an option be exercisable beyond the end of its original term. If employment ends for cause,
no stock options may be exercised after the date employment ends.
If a change in control
occurs, the 1996 Incentive Plan provides that our compensation committee may cancel outstanding stock options and pay to the holders
an amount in cash equal to the spread, if any, between the fair market value of the shares subject to the option immediately prior
to the change in control and the aggregate exercise price of those option shares, or, in connection a change in control involving
a merger or consolidation, substitute for any existing stock options new options or voting common stock issued by the corporation
surviving any merger or consolidation or, if appropriate, its parent corporation.
Under the 1996 Incentive
Plan, a “change in control” generally occurs if (i) any person becomes the beneficial owner of 30% or more of the voting
power of our equity securities; (ii) a majority of our board of directors no longer consists of individuals who were directors
at the time the plan was adopted or who, since that time, were nominated for election or elected by our board of directors; (iii)
a reorganization, merger or consolidation involving our company, or a sale of all or substantially all of our company’s assets,
is consummated (unless 70% or more of the voting power of the buyer or surviving party in the transaction is beneficially owned
in substantially the same proportions by persons who were beneficial owners of our voting securities before the transaction); or
(iv) our shareholders approve a complete liquidation or dissolution of our company.
Under our 2011 Incentive
Plan, the definition of “change in control” is substantially the same as the definition in the 1996 Incentive Plan.
The termination and change in control provisions applicable to stock option and RSU awards granted under the 2011 Incentive Plan
can generally be summarized as follows:
| · | If a plan participant’s employment
ends because of termination for cause, all awards are immediately forfeited. If employment ends for any other reason, the unvested
portion of any award is immediately forfeited, and the vested portion of any option remains exercisable after termination for one
year if termination is due to death or disability, or three months if termination is for any reason other than cause, death or
disability (unless, in such case, the participant has reached the age of 55 and has completed 10 years of service with our company,
in which case the post-termination exercise period is three years). |
| · | If a change in control involving a reorganization,
merger or consolidation, or asset sale occurs, the vesting of awards can be accelerated or the awards cancelled in exchange for
payment only if the awards are not continued, assumed or replaced by the surviving or successor entity. If a change in control
involving a change in shareholder ownership or a turnover in the majority of the board, however, the 2011 Incentive Plan provides
that the compensation committee has discretion in deciding whether to accelerate the vesting of awards or cancel them in exchange
for payment. |
| · | The 2011 Incentive Plan provides that
if a surviving or successor entity continues, assumes or replaces an award following a change in control and subsequently terminates
the employment of the holder without cause, the vesting of such award will be accelerated if the termination occurs within one
year of the change in control. |
| · | In the event our shareholders approve
the complete liquidation or dissolution of our company, all outstanding awards under the 2011 Incentive Plan will vest and will
terminate immediately prior to the consummation of any such proposed action. |
Annual Incentive Payouts
An executive officer must
be employed on the last day of a fiscal year to be entitled to receive annual cash incentive compensation pursuant to our annual
cash incentive plan. If employment ends due to death or disability before the last day of a fiscal year, our compensation committee
has discretion to pay a prorated amount of the cash incentive the executive officer would have received under the annual cash incentive
plan had the death or disability not occurred.
Estimated Payments That Would Have Been
Made to the Named Executive Officers
The compensation amounts
shown below are estimates of the amounts that would have become payable to each of the named executive officers if his or her employment
had terminated on September 27, 2015, the last day of our most recent fiscal year. The calculations for severance in connection
with a change in control assume that the change in control and severance both occurred on that date and that equity awards were
not continued, assumed or replaced by a surviving or successor entity in connection with the change in control. Vesting of equity
awards granted under the 2011 Incentive Plan does not accelerate upon death or disability or any other termination of employment
not related to a change in control, and all outstanding options granted under the 1996 Incentive Plan are already fully vested.
Name | |
Severance Without a
Change in Control
($) | | |
Severance in Connection
With a Change in Control
($) | |
| Richard J. Penn | |
| | | |
| | |
| Severance Pay Plan (1) | |
| 756,503 | | |
| – | |
| Severance and Change in Control Agreement (2) | |
| – | | |
| 1,383,404 | |
| Acceleration of unvested stock options (3) | |
| – | | |
| – | |
| Acceleration of unvested RSUs (4) | |
| – | | |
| – | |
| Total | |
| 756,503 | | |
| 1,383,404 | |
| David P. Radloff | |
| | | |
| | |
| Severance Pay Plan (1) | |
| 500,505 | | |
| – | |
| Severance and Change in Control Agreement (2) | |
| – | | |
| 826,410 | |
| Acceleration of unvested stock options (3) | |
| – | | |
| – | |
| Acceleration of unvested RSUs (4) | |
| – | | |
| – | |
| Total | |
| 500,505 | | |
| 826,410 | |
| D. Mark Jelkin | |
| | | |
| | |
| Severance Pay Plan (5) | |
| 242,536 | | |
| | |
| Severance and Change in Control Agreement (6) | |
| – | | |
| 465,043 | |
| Acceleration of unvested stock options (3) | |
| – | | |
| – | |
| Acceleration of unvested RSUs (4) | |
| – | | |
| 45,681 | |
| Total | |
| 242,536 | | |
| 510,724 | |
| Connie L. Pautz | |
| | | |
| | |
| Severance Pay Plan (5) | |
| 233,114 | | |
| – | |
| Severance and Change in Control Agreement (6) | |
| – | | |
| 445,067 | |
| Acceleration of unvested stock options (3) | |
| – | | |
| – | |
| Acceleration of unvested RSUs (4) | |
| – | | |
| – | |
| Total | |
| 233,114 | | |
| 445,067 | |
| Dale M. Ruzicka | |
| | | |
| | |
| Severance Pay Plan (5) | |
| 236,671 | | |
| – | |
| Severance and Change in Control Agreement (6) | |
| – | | |
| 450,954 | |
| Acceleration of unvested stock options (3) | |
| – | | |
| – | |
| Acceleration of unvested RSUs (4) | |
| – | | |
| – | |
| Total | |
| 236,671 | | |
| 450,954 | |
| (1) | Lump sum payment equal to 1.5 times annual base salary; average annual cash incentive payout for
fiscal 2015, 2014 and 2013; and 12 months of medical and dental insurance premiums. |
| (2) | Lump sum payment equal to two times annual base salary, target annual cash incentive amount for
fiscal 2015, and 24 months of medical and dental insurance premiums. |
| (3) | The value of the accelerated vesting is equal to the difference, if any, between the fair market
value of our stock on September 27, 2015 (using the $1.41 closing sale price of a share of our common stock on the NASDAQ Global
Select Market on September 25, 2015, the last trading day of the fiscal year) and the exercise price of each unvested option. As
of September 27, 2015, all outstanding options had exercise prices greater than $1.41. |
| (4) | The value of the acceleration is equal to the fair market value of our stock on September 27, 2015
(using the closing sale price of a share of our common stock on the NASDAQ Global Select Market on September 25, 2015, the last
trading day of the fiscal year) for each unvested RSU. |
| (5) | Lump sum payment equal to one times annual base salary; average annual cash incentive payout for
fiscal 2015, 2014 and 2013; and six months of medical and dental insurance premiums. |
| (6) | Lump sum payment equal to 1.5 times annual base salary, target annual cash incentive amount for
fiscal 2015, and 18 months of medical and dental insurance premiums. |
Director Compensation
Directors who are employees
receive no additional compensation for serving on our board of directors. Non-employee directors receive annual cash retainers,
cash fees for attendance at board and committee meetings (except for the chairman), and equity awards in the form of stock options.
Cash retainers and attendance fees were unchanged for 2015, but annual stock option awards were increased to 10,000 shares. The
following table describes the compensation arrangements with our non-employee directors for the one-year period commencing with
our annual shareholder meeting held January 29, 2015.
Compensation Element | |
Amount Payable | |
| Annual cash retainers | |
| | |
| · Board chairman | |
$ | 125,000 | |
| · Board member (other than chairman) | |
$ | 30,048 | |
| · Audit committee chair | |
$ | 15,000 | |
| · Compensation committee and governance and nominating committee chairs | |
$ | 5,000 | |
| · Audit committee member (other than the chair) | |
$ | 5,000 | |
| Meeting fee (1) (not payable to chairman) | |
$ | 1,188 | |
| Stock option award (2) | |
| 10,000 shares | |
| Shares in lieu of cash retainer | |
| Unrestricted shares equal in value to 100% of cash retainer elected to be paid in equity. | |
| (1) | We pay a meeting fee for each board of directors and committee meeting attended by a non-employee
director (other than the chairman) in person or by telephone. We also reimburse directors for travel and lodging expenses incurred
in connection with their attendance at board of directors and committee meetings and shareholder meetings, and for traveling to
visit company operations. |
| (2) | We historically provide a stock option award to each non-employee director on
the date he or she is first elected or appointed to the board and on the date of each annual meeting of stockholders if the director’s
service will continue beyond that annual meeting of shareholders. In accordance with the restrictions on grants of equity awards
contained in the agreement and plan of merger pursuant to which our company will be acquired by TDK Corporation, no new equity
awards have been granted since November 1, 2015. |
The following table summarizes
compensation provided to each non-employee director for services provided during fiscal 2015.
Director Compensation
for Fiscal 2015
| Name | |
Fees Earned or Paid
in Cash ($) (1) | | |
Option Awards
($) (2) | | |
All Other
Compensation
($) | | |
Total
($) | |
| Wayne M. Fortun | |
| 125,000 | | |
| 24,451 | | |
| – | | |
| 149,451 | |
| Martha Goldberg Aronson | |
| 46,678 | | |
| 24,451 | | |
| – | | |
| 71,129 | |
| Russell Huffer | |
| 72,119 | | |
| 24,451 | | |
| – | | |
| 96,570 | |
| Frank P. Russomanno | |
| 62,368 | | |
| 24,451 | | |
| – | | |
| 86,819 | |
| Philip E. Soran | |
| 55,240 | | |
| 24,451 | | |
| – | | |
| 79,691 | |
| Thomas R. VerHage | |
| 72,368 | | |
| 24,451 | | |
| – | | |
| 96,819 | |
| (1) | For fiscal 2015, each non-employee director could elect to receive some or all of the retainer
payments to which he or she was entitled in the form of shares of our common stock, with the number of shares determined by dividing
the amount of the retainer payment to be received in shares by the fair market value of a share of our common stock on the date
the cash retainer payment would have been made, rounded down to the nearest whole share. The following directors made such elections
and received the number of shares indicated during fiscal 2015: |
| Name | |
Shares Received
(#) | | |
Cash Retainer
Foregone ($) | |
| Frank P. Russomanno | |
| 11,318 | | |
| 26,286 | |
| Philip E. Soran | |
| 8,621 | | |
| 20,024 | |
| (2) | Each non-employee director who was a member of our board on January 29, 2015, the date of our 2015
Annual Meeting of Shareholders, received a non-statutory stock option award with an exercise price of $3.50 per share on that date.
The amounts shown in the “Option Awards” column represent the aggregate grant date fair value of these awards computed
in accordance with FASB ASC Topic 718. For additional information regarding our calculation of the grant date fair value of options
granted in fiscal 2015, see Note 5, “Employee Benefits – Stock Options,” in the Notes to Consolidated Financial
Statements included in the Original Filing. |
The aggregate number of shares subject
to exercisable and non-exercisable options held by each non-employee director as of September 27, 2015 was as follows:
Name | |
Number of Shares Underlying
Exercisable Options at 9/27/15 | | |
Number of Shares Underlying
Unexercisable Options at 9/27/15 | |
| Wayne M. Fortun | |
| 566,481 | | |
| 20,740 | |
| Martha Goldberg Aronson | |
| 20,001 | | |
| 14,999 | |
| Russell Huffer | |
| 38,001 | | |
| 14,999 | |
| Frank P. Russomanno | |
| 15,001 | | |
| 14,999 | |
| Philip E. Soran | |
| 7,500 | | |
| 14,999 | |
| Thomas R. VerHage | |
| 38,001 | | |
| 14,999 | |
Stock Option Grants
We grant each non-employee
director a non-statutory stock option award on the date he or she is first elected or appointed to our board of directors and grant
an award to each non-employee director whose service will continue beyond the annual meeting of shareholders on the date of each
annual meeting. Each option has an exercise price equal to the fair market value per share of the common stock on the day the option
was granted. Each option granted in fiscal 2015 becomes exercisable as to one-third of the shares subject to the option on each
of the first, second and third anniversaries of the date of grant. Exercisability of an option will be accelerated if a director
dies or becomes disabled or upon a change in control of our company. The normal term of a stock option is 10 years from the date
of grant. If a director’s service on our board of directors ends prior to that time, vested options will remain exercisable
for three months, unless the director’s service ended due to death or disability or after at least five years of service
as a director, in which case vested options will remain exercisable for three years after service ends (but not beyond the end
of their original 10-year term). If a director has reached age 65 and has completed at least five years of service when his or
her service as a director ends, each vested option will remain exercisable until the end of its originally scheduled term. Our
compensation committee retains discretion to accelerate the exercisability of any option, and to cancel any option in connection
with certain mergers, sales of corporate assets or statutory share exchanges, or any dissolution or liquidation involving our company.
Compensation Committee Interlocks and Insider Participation
No member of the compensation
committee has ever been an officer or employee of our company or of any of our subsidiaries or affiliates, or has had any relationship
with our company requiring disclosure herein other than service as a director. None of our executive officers has served on the
board of directors or on the compensation committee of any other entity, any officers of which served either on our board of directors
or on our compensation committee.
Item 12. Security Ownership
of Certain Beneficial Owners and Management and Related Stockholder Matters
Securities Authorized for Issuance under Equity Compensation
Plans
The following table provides
information as of September 27, 2015 for compensation plans under which securities may be issued:
| Plan Category | |
Securities to be Issued Upon
Exercise of Outstanding Options,
Warrants and Rights
(#) | | |
Weighted-Average Exercise Price
of
Outstanding Options, Warrants and
Rights
($) | | |
Securities Remaining Available for
Future Issuance Under Equity
Compensation Plans
(#) | |
| Equity
Compensation Plans Approved by Securityholders | |
| 4,045,316 | (1) | |
| 8.175 | (2) | |
| 923,396 | (3) |
| Equity
Compensation Plans Not Approved by Securityholders | |
| – | | |
| – | | |
| 49,481 | (4) |
| Total | |
| 4,045,316 | | |
| | | |
| 972,877 | |
| (1) | Reflects securities to be issued under the 1996 Incentive Plan and 2011 Incentive Plan, and
includes 3,335,417 shares issuable upon the exercise of outstanding stock options, and 691,899 shares issuable upon the
settlement of outstanding RSUs. |
| (2) | Reflects the weighted average exercise price of outstanding options. There is no exercise price
for outstanding RSUs. |
| (3) | Includes securities available for future issuance under the 2011 Incentive Plan, other than upon
the exercise of an outstanding option or the vesting of an outstanding RSU. |
| (4) | Includes securities available for future issuance under the Hutchinson Technology Incorporated
Non-Employee Directors Equity Plan, through which our non-employee directors can elect to receive some or all of the cash retainer
payments to which they are entitled in the form of shares of our common stock. |
Security Ownership of Principal Shareholders and Management
The following table sets
forth, as of January 22, 2016, the ownership of common stock by each shareholder who we know beneficially owns more than 5% of
our outstanding common stock, each director and director nominee, each named executive officer listed in the Summary Compensation
Table, and all executive officers and directors as a group. At January 22, 2016, there were 33,904,128 shares of common stock issued
and outstanding, each of which is entitled to one vote.
| Name of Beneficial Owner or Identity of Group | |
Amount and Nature of
Beneficial Ownership(1) | | |
Percentage of
Outstanding
Shares(2) | |
| Directors, director nominees and executive officers: | |
| | | |
| | |
| Wayne M. Fortun | |
| 876,108 | (3) | |
| 2.5 | % |
| Martha Goldberg Aronson | |
| 76,668 | (4) | |
| * | |
| Russell Huffer | |
| 89,361 | (5) | |
| * | |
| Frank P. Russomanno | |
| 88,471 | (6) | |
| * | |
| Philip E. Soran | |
| 89,364 | (7) | |
| * | |
| Thomas R. VerHage | |
| 251,067 | (8) | |
| * | |
| Richard J. Penn | |
| 591,459 | (9) | |
| 1.7 | % |
| David P. Radloff | |
| 243,008 | (10) | |
| * | |
| D. Mark Jelkin | |
| 76,169 | (11) | |
| * | |
| Connie L. Pautz | |
| 183,773 | (12) | |
| * | |
| Dale M. Ruzicka | |
| 138,904 | (13) | |
| * | |
| Executive officers and directors as a group (11 persons) | |
| 2,704,352 | (14) | |
| 7.6 | % |
| Other beneficial owners: | |
| | | |
| | |
Whitebox Advisors LLC
3033 Excelsior Boulevard,
Suite 300
Minneapolis, MN 55416 | |
| 3,714,247 | (15) | |
| 11.0 | % |
Dimensional Fund Advisors LP
Palisades West, Building One
6300 Bee Cave Road
Austin, Texas 78746 | |
| 2,022,881 | (16) | |
| 6.0 | % |
| (1) | Unless otherwise indicated in the footnotes to this table,
(a) the listed beneficial owner has sole voting power and investment power with respect to the number of shares shown, and (b)
no director or executive officer has pledged as security any shares shown as beneficially owned. Includes shares subject to options
and warrants or issuable upon conversion of convertible debt that is currently exercisable/convertible or will be exercisable/convertible
within 60 days of January 22, 2015. Excludes fractional shares held by any listed beneficial owner. |
| (2) | For purposes of computing percentage ownership of each
listed beneficial owner or group, shares subject to options and warrants or issuable upon conversion of convertible debt held
by that person or members of the group that are currently exercisable/convertible or exercisable/convertible within 60 days of
January 22, 2015 are deemed to be outstanding and beneficially owned by that person or group. These shares, however, are not deemed
outstanding for purposes of computing the percentage ownership of any other person. |
| (3) | Of these shares, Mr. Fortun holds 177,038 in joint tenancy
with his wife. Includes 538,889 shares covered by options granted to Mr. Fortun. |
| (4) | Includes 26,668 shares covered by options granted to Ms.
Goldberg Aronson and 50,000 held in a trust of which Ms. Goldberg Aronson is the trustee. |
| (5) | Includes 41,668 shares covered by options granted to Mr.
Huffer. |
| (6) | Includes 21,668 shares covered by options granted to Mr.
Russomanno. |
| (7) | Includes 7,500 shares covered by options granted to Mr.
Soran. |
| (8) | Of these shares, Mr. VerHage holds 196,975 in joint tenancy
with his wife. Includes 44,668 shares covered by options granted to Mr. VerHage. |
| (9) | Includes 493,001 shares covered by options granted to Mr.
Penn. |
| (10) | Includes 220,000 shares covered by options granted to Mr.
Radloff. |
| (11) | Includes 49,667 shares covered by options granted to Mr.
Jelkin. |
| (12) | Includes 178,001 shares covered by options granted to Ms.
Pautz. |
| (13) | Includes 131,501 shares covered by options granted to Mr.
Ruzicka. |
| (14) | Includes 1,759,898 shares covered by options granted to
our executive officers and directors. |
| (15) | Based on information contained in a Schedule 13G/A filed
with the SEC on August 12, 2015, reflecting the shareholder’s beneficial ownership as of August 3, 2015. Whitebox Advisors
LLC had shared voting and dispositive power for all 3,714,247 shares as a result of its ownership of the convertible notes. All
of the 3,714,247 shares are beneficially owned by Whitebox General Partner LLC as a result of its ownership of the convertible
notes. |
| (16) | Based on information contained in a Schedule 13G/A filed
with the SEC on February 5, 2015, reflecting the shareholder’s beneficial ownership as of December 31, 2014. Dimensional
Fund Advisors LP had sole voting power for 1,948,460 of the shares and sole dispositive power for all 2,022,881 shares. Dimensional
Fund Advisors LP furnishes investment advice to four investment companies and serves as investment manager or sub-adviser to certain
other commingled funds, group trust and separate accounts (such investment companies, trusts and accounts, collectively referred
to as “funds”). In certain cases, subsidiaries of Dimensional Fund Advisors LP may act as an advisor or sub-advisor
to certain funds. In its roles as an investment advisor, sub-adviser, or manager, Dimensional Fund Advisors LP or its subsidiaries
(collectively, “Dimensional”) may possess voting or investment power over our securities that are owned by the funds,
and may be deemed to be the beneficial owner of the shares held by the funds. However, all of the securities reported are owned
by the funds. Dimensional disclaims beneficial ownership of such securities. |
| Item 13. | Certain Relationships and Related Transactions, and Director
Independence |
Related Person Transactions
Our audit committee must
approve any related person transaction in which our company is a participant before commencement of the transaction, provided,
however, that if a related person transaction is identified after it commences, it will be brought to the audit committee for review
and possible ratification. The audit committee will approve or ratify a transaction only if it determines that the transaction
is beneficial to our company and that the terms of the transaction are fair to our company.
For these purposes, a
“related person” includes our directors, nominees for director, executive officers, any holder of more than 5% of our
common stock, and any immediate family member of any of the foregoing persons. A “related person transaction” means
any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which our
company is a participant and in which a related person has a direct or indirect interest, other than the following:
| · | payment of compensation by us to a related person for service as a
director or executive officer; |
| · | transactions available to all employees or all shareholders on the
same terms; and |
| · | transactions that, when aggregated with the amount of all other transactions
between the related person and us, involve less than $120,000 in a fiscal year. |
In determining whether
to approve a related person transaction, our audit committee will analyze factors such as whether the transaction is material to
our company, the role the related person has played in arranging the transaction, the structure of the transaction and the interests
of all related persons in the transaction.
Our audit committee may,
in its sole discretion, approve or disapprove any related person transaction. Approval of a related person transaction may be conditioned
upon our company and the related person following certain procedures designated by the audit committee. With regard to any transaction
for which ratification is sought, the audit committee may require amendment or termination of the transaction.
No related person transactions
were approved or identified in fiscal 2015.
Director Independence
Our board of directors
has determined that Ms. Goldberg Aronson and Messrs. Huffer, Russomanno, Soran and VerHage are “independent,” as that
term is defined by the NASDAQ Stock Market Rules.
| Item
14. | Principal Accountant Fees and Services |
The firm of Deloitte &
Touche LLP, the member firms of Deloitte Touche Tohmatsu Ltd. and their respective affiliates, known collectively as Deloitte &
Touche, have served as our independent registered public accounting firm since June 13, 2002.
Fees
The following table presents
the aggregate fees paid or accrued by us for professional services provided by Deloitte & Touche for fiscal 2015 and 2014.
| Description of Fees | |
Fiscal 2015 Amount | | |
Fiscal 2014 Amount | |
| Audit Fees | |
$ | 517,000 | | |
$ | 506,000 | |
| Audit-Related Fees | |
| 97,000 | | |
| – | |
| Total Audit and Audit-Related Fees | |
| 614,000 | | |
| 506,000 | |
| Tax Fees: | |
| | | |
| | |
| Tax Compliance Fees | |
| 135,000 | | |
| 131,000 | |
| Tax Consultation and Advice Fees | |
| 32,000 | | |
| 17,000 | |
| Total Tax Fees | |
| 167,000 | | |
| 148,000 | |
| All Other Fees | |
| 2,000 | | |
| 2,000 | |
| Total | |
$ | 783,000 | | |
$ | 656,000 | |
Audit Fees
The audit fees set forth
above consist of fees paid or accrued by us for professional services provided by Deloitte & Touche for audit services during
each fiscal year in connection with the audit of our annual financial statements, reviews of our interim financial statements,
audit services that are normally provided by an independent registered public accounting firm in connection with statutory and
regulatory audits and/or filings, or consultations on financial accounting and reporting matters arising during the course of the
audit, and audit of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.
Audit-Related Fees
The audit-related fees
set forth above consist of fees paid or accrued by us for professional services provided by Deloitte & Touche related to registration
statements, other SEC-required correspondence and filings, consultation on financial accounting standards and other services in
connection with TDK Corporation’s pending acquisition of our company.
Tax Fees
The tax fees set forth
above consist of fees paid or accrued by us for professional services provided by Deloitte & Touche for tax compliance, consisting
of preparation of tax returns, tax consultation and tax advice, consisting primarily of international tax planning.
All Other Fees
The amounts shown for
fiscal 2015 and 2014 consist of fees for research services.
Approval of Independent
Registered Public Accounting Firm Services and Fees
The
Audit Committee Charter requires that our audit committee approve the retention of our independent registered public accounting
firm for any audit and non-audit service and consider whether the provision of any non-audit services by our independent registered
public accounting firm is compatible with maintaining our independent registered public accounting firm’s independence, prior
to engagement for these services. Our audit committee actively monitors the relationship between audit and non-audit services provided.
In fiscal 2015 and 2014, all of the services listed under the headings Audit-Related Fees, Tax Fees and All Other Fees were pre-approved
by our audit committee.
PART IV
Item 15. Exhibits and Financial
Statement Schedules
| Exhibit
No. |
|
Description |
| 31.1 |
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. |
| 31.2 |
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. |
SIGNATURES
Pursuant to the requirements
of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized, on January 25, 2016.
| |
|
HUTCHINSON TECHNOLOGY INCORPORATED |
| |
|
|
| |
By |
/s/ Richard J. Penn |
| |
|
Richard J. Penn, |
| |
|
President and Chief Executive Officer |
Exhibit Index
| Exhibit
No. |
|
Description |
|
Method of Filing |
| 31.1 |
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer. |
|
Filed Electronically |
| 31.2 |
|
Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer. |
|
Filed Electronically |
Exhibit 31.1
CERTIFICATIONS
I, Richard J. Penn, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K/A of Hutchinson Technology Incorporated; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report; |
| 3. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) designed such disclosure
controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
(b) designed such internal
control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) disclosed in this report
any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most
recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
| 4. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent functions): |
(a) all significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or
not material, that involves management or other employees who have a significant role in the registrant’s internal control
over financial reporting.
| |
/s/ Richard J. Penn |
| |
Richard J. Penn |
| |
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATIONS
I, David P. Radloff, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K/A of Hutchinson Technology Incorporated; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report; |
| 3. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being prepared;
(b) designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
and
(d) disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,
or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
| 4. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or
persons performing the equivalent functions): |
(a) all
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;
and
(b) any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
| |
/s/ David P. Radloff |
| |
David P. Radloff |
| |
Vice President and Chief Financial Officer |
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