UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Preliminary Proxy Statement |
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Soliciting Material pursuant to § 240.14a-12 |
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| TTM TECHNOLOGIES, INC. |
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 14, 2015
To our stockholders:
The 2015 annual meeting of stockholders of TTM Technologies, Inc. will be held at 1:30 p.m., local time, on Thursday,
May 14, 2015, at our corporate offices located at 1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626, for the following purposes:
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to elect three class III directors to serve for a term expiring in 2018; |
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to ratify the appointment of KPMG LLP as the independent registered public accounting firm for TTM Technologies, Inc. for the fiscal year ending December 28, 2015;
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to consider any other matters that properly come before the meeting and any postponement or adjournment thereof. |
We are pleased to this year again take advantage of the Securities and Exchange Commission rule allowing companies to furnish proxy
materials to their stockholders over the Internet. We believe that this e-proxy process expedites stockholders’ receipt of proxy materials, saves us the cost of printing and mailing these materials, and reduces the environmental impact of our
annual meeting by conserving natural resources.
Stockholders of record as of the close of business on March 16, 2015 are
entitled to notice of, and to vote at, the annual meeting and any postponement or adjournment thereof. Whether or not you expect to be present, please vote your shares using the Internet by following the instructions in this proxy statement. Of
course, you may also vote by signing, dating, and returning the enclosed proxy card in the enclosed pre-addressed envelope if you received a paper copy of this proxy statement. No postage is required if mailed in the United States.
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By Order of the Board of Directors |
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| Costa Mesa, California |
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| April 2, 2015 |
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Todd B. Schull, Secretary |
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDER MEETING TO BE HELD ON MAY 14, 2015
The proxy statement and annual report to stockholders and the means to vote via the Internet are available at www.ttmtech.com/stockholdersmeeting. Your Vote is Important — Please vote
as promptly as possible by using the Internet or by signing, dating, and returning the proxy card if you received a paper copy of this proxy statement.
All stockholders are invited to attend the annual meeting in person. Stockholders who vote their proxy online or by executing a proxy card may nevertheless attend the meeting, revoke their proxy, and vote
their shares in person.
TABLE OF CONTENTS
TTM TECHNOLOGIES, INC.
2015 ANNUAL MEETING OF STOCKHOLDERS
PROXY STATEMENT
This proxy
statement contains information related to our annual meeting of stockholders to be held on Thursday, May 14, 2015, beginning at 1:30 p.m., local time, at our corporate offices located at 1665 Scenic Avenue, Suite 250, Costa Mesa, California
92626, and at any adjournments or postponements of the meeting. The purpose of this proxy statement is to solicit proxies from the holders of our common stock for use at the meeting. On or about April 2, 2015, we began mailing a notice
containing instructions on how to access this proxy statement and our annual report via the Internet, and we began mailing a full set of the proxy materials to stockholders who had previously requested delivery of the materials in paper copy. For
information on how to vote your shares, see the instructions included on the proxy card and under “How do I vote?” below.
ABOUT THE MEETING
What is the purpose of the annual
meeting?
At the annual meeting, stockholders will be asked to (1) elect three class III directors to serve for a
term expiring in 2018; and (2) ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 28, 2015. In addition, our management will report on our performance during 2014 and
respond to questions from our stockholders.
Who is entitled to vote at the meeting?
Only stockholders of record at the close of business on March 16, 2015, the record date for the annual meeting, are entitled to
receive notice of the meeting and to vote the shares of our common stock that they held on that date at the meeting, and any postponements or adjournments of the meeting. Each outstanding share of common stock entitles its holder to cast one vote on
each matter to be voted upon at the meeting.
Who may attend the meeting?
All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. Please note that if you hold shares in
“street name” (that is, through a broker or other nominee), you will need to bring a copy of a brokerage statement reflecting your stock ownership as of the record date.
What constitutes a quorum?
The presence at the meeting, in person
or by proxy, of the holders of a majority of all of the shares of common stock outstanding on the record date will constitute a quorum, permitting the conduct of business at the meeting. As of the record date, 84,014,528 shares of our common stock
were outstanding. Abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.
If less than a majority of the outstanding shares of common stock entitled to vote are represented at the meeting, a majority of the shares present at the meeting may adjourn the meeting to another date,
time, or place, and notice need not be given of the new date, time, or place if the new date, time, or place is announced at the meeting before an adjournment is taken.
How do I vote?
If you are the stockholder of record (that is, the
shares are held in your name), you may vote your proxy in one of two convenient ways:
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Via the Internet
Go to www.ttmtech.com/stockholdersmeeting and follow the instructions. You will need the 11-digit control number that appears on your proxy card included with this proxy statement. This method of
voting will be available until 11:59 p.m., Eastern Time, on May 13, 2015.
By mail
If you wish to vote by traditional proxy card and did not receive one along with this proxy statement, you can receive a full set of
materials at no charge through the Internet at www.ttmtech.com/stockholdersmeeting, by telephone at (888) 776-9962, or by sending an e-mail to info@amstock.com (the subject line of your e-mail should contain the 11-digit control number
that appears in the Notice Regarding the Availability of Proxy Materials you received). If you vote by traditional proxy card, mark your selections on the proxy card, date the card, and sign your name exactly as it appears on the card, then mail it
in the postage-paid envelope enclosed with the materials. You should mail the proxy card in plenty of time to allow delivery to our transfer agent prior to the meeting.
If you are a stockholder of record and attend the meeting, you may deliver your completed proxy card in person. If you are not the stockholder of record (that is, your shares are held in the name of a
bank, broker, or other holder of record, which is often referred to as held in “street name”) then you will receive instructions from the holder of record that you must follow to ensure that your shares are voted as you wish. You will not
be able to vote those shares at the meeting unless you have received, in advance, a proxy card from the record holder (that is, the bank, broker, or other holder of record).
If you complete and properly sign and return a proxy card to us or complete your proxy online, your shares will be voted as you direct.
Can I revoke my proxy and change my vote?
Yes. You may revoke your
proxy and change your vote at any time before the annual meeting by submitting to our corporate secretary at our corporate offices a notice of revocation or a duly executed proxy bearing a later date (or voting via the Internet). The powers of the
proxy holders will be suspended if you attend the meeting in person and so request, although attendance at the meeting will not by itself revoke a previously granted proxy. Dissenting stockholders will not have rights of appraisal with respect to
any matter to be acted upon at the meeting.
What does it mean if I receive more than one notice?
This means that your shares are registered differently and are held in more than one account. To ensure that all shares are voted, please
either vote each account over the Internet or sign and return by mail all proxy cards. We encourage you to register all of your shares in the same name and address by contacting the Shareholder Services Department at our transfer agent, American
Stock Transfer & Trust Company, at (800) 937-5449. If you hold your shares through an account with a bank or broker, you should contact your bank or broker and request consolidation of your accounts.
What are the recommendations of our board of directors?
If you sign and return your proxy card but do not specify how you want your shares voted, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of our board
of directors. Each of the recommendations of our board of directors is set forth together with the description of each item in this proxy statement. In summary, our board of directors recommends a vote (1) “for” the election of
each of its nominees for class III director; and (2) “for” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 28, 2015.
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Our board of directors does not know of any other matters that may be brought before the
meeting nor does it foresee or have reason to believe that the proxy holders will have to vote for a substitute or alternate board nominee for director. In the event that any other matter should properly come before the meeting or any nominee for
director is not available for election, the proxy holders will vote as recommended by the board of directors or, if no recommendation is given, in accordance with their best judgment.
What vote is required to approve each item?
Proposal One —
Election of Directors. Assuming that a quorum is present, the three persons receiving the largest number of “for” votes of our common stock present in person or by proxy at the meeting and entitled to vote (a plurality) will be elected
as directors. Stockholders do not have the right to cumulate their votes for directors.
Proposal Two — Ratification
of the Appointment of Independent Registered Public Accounting Firm. The affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the meeting and entitled to vote will be required for approval
of the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 28, 2015.
Other Matters. For each other matter, the affirmative vote of a majority of the shares of our common stock present in person or represented by proxy at the meeting and entitled to vote will be
required for approval.
What are the effects of broker non-votes?
If you do not provide your broker or other nominee with instructions on how to vote your street name shares, your broker or nominee will
not be permitted to vote them on “non-routine” matters (a broker non-vote).
The election of directors (Proposal
One) is considered a non-routine matter under applicable rules. Shares subject to a broker non-vote will not be considered entitled to vote with respect to Proposal One and will not affect the outcome on that Proposal. Please note that brokers may
not vote your shares on Proposal One in the absence of your specific instructions as to how to vote. We encourage you to provide instructions to your broker regarding the voting of your shares.
The ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending
December 28, 2015 (Proposal Two) is considered a routine matter under applicable rules. A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected to exist in connection with Proposal Two.
How are abstentions treated?
Abstentions will have no effect on Proposal One. Abstentions will be treated as being present and entitled to vote on Proposal Two and therefore will have the effect of votes against such proposal.
Who will pay for the preparation of the proxy?
We will pay the cost of soliciting proxies. In addition to the use of mail, our employees may solicit proxies personally, by e-mail, facsimile, and by telephone. Our employees will receive no compensation
for soliciting proxies other than their regular salaries. We may request banks, brokers, and other custodians, nominees, and fiduciaries to forward copies of the proxy materials to the beneficial owners of our common stock and to request authority
for the execution of proxies, and we may reimburse such persons for their expenses incurred in connection with these activities.
Our principal executive offices are located at 1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626, and our telephone number is (714) 327-3000. A list of stockholders entitled to vote at the
annual meeting will be available at our offices for a period of 10 days prior to the meeting and at the meeting itself for examination by any stockholder.
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PROPOSAL ONE — ELECTION OF DIRECTORS
Directors and Nominees
Our board of directors is currently comprised of 9 directors. Our board of directors is divided into three classes with each class of
directors serving for a three-year term or until successors of that class have been elected and qualified. Each director elected at the 2015 annual meeting will serve for a term expiring at the 2018 annual meeting or until his successor has been
duly elected and qualified. At the annual meeting, our stockholders will be asked to elect three class III directors. There is currently one vacancy on our board of directors. At the time the director nominees were selected, the Nominating and
Corporate Governance Committee had not identified a qualified candidate to fill this vacancy. Rather than eliminating the vacancy by reducing the number of directors, the board of directors determined to retain the vacancy so that it may be filled
by a qualified director candidate at a future date if and when such a candidate is identified and agrees to serve.
Our board
of directors has nominated Ronald W. Iverson, Robert E. Klatell, and John G. Mayer, each of whom currently serves as a class III director, to stand for re-election at the annual meeting. If Messrs. Iverson, Klatell, and Mayer are re-elected, they
will each serve a three-year term expiring at the annual meeting of stockholders in 2018.
James K. Bass, Thomas T. Edman,
Tang Chung Yen, Tom, and Dov S. Zakheim serve as class I directors, and their terms will expire at the annual meeting of stockholders in 2016. Kenton K. Alder and Philip G. Franklin serve as class II directors, and their terms will expire at the
annual meeting of stockholders in 2017.
Our board of directors has no reason to believe that any of its nominees will refuse
or be unable to accept election. However, if any nominee is unable to accept election or if any other unforeseen contingencies should arise, our board of directors may designate a substitute nominee. If our board of directors designates a substitute
nominee, the persons named as proxies will vote for the substitute nominee designated by our board of directors.
Our board of directors
recommends a vote “for” the nominees for class III director.
The following table, together with the
accompanying text, sets forth certain information with respect to each of our continuing directors.
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| Robert E. Klatell |
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69 |
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Chairman of the Board |
| Kenton K. Alder |
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65 |
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Director |
| James K. Bass |
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58 |
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Director |
| Thomas T. Edman |
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52 |
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Chief Executive Officer, President and Director |
| Philip G. Franklin |
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63 |
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Director |
| Ronald W. Iverson |
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72 |
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Director |
| John G. Mayer |
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64 |
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Director |
| Tang Chung Yen, Tom |
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53 |
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Managing Director — Asia Pacific Region and Director |
| Dov S. Zakheim |
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66 |
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Director |
Robert E. Klatell has served as a director of our company since September 2004 and our Chairman of
the Board since May 2005. Mr. Klatell is presently retired. From September 2009 to the sale of The PBSJ Corporation in October 2010, Mr. Klatell served as a director of The PBSJ Corporation and a member of its compensation committee, its
audit committee and its strategic finance committee. From 2003 to 2009, Mr. Klatell served as a director of Datascope Corp., a medical device company that develops, manufactures, and markets proprietary products for clinical health care
markets. From December 2005 to December 2007, Mr. Klatell served as Chief Executive Officer and a director of Kofax plc (formerly DICOM Group plc), a publicly held company (London Stock Exchange) that provides information capture and
communications solutions. From 2003 to 2006, Mr. Klatell served as a director of Mediagrif Interactive Technologies, an operator of e-business networks and provider of e-business solutions. Mr. Klatell served as a consultant to Arrow
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Electronics, Inc. from January 2004 to December 2004. Mr. Klatell served in various executive capacities and as a member of the board of directors at Arrow Electronics, Inc. from February
1976 to December 2003, most recently as Executive Vice President from July 1995 to December 2003. Mr. Klatell holds a Bachelor of Arts degree in History from Williams College and a Juris Doctor from New York University School of Law.
Our board of directors has determined that Mr. Klatell is an independent director. Mr. Klatell was nominated to the
board of directors because of his extensive experience with operations management and his knowledge of corporate governance and global mergers and acquisitions. Mr. Klatell’s membership with the National Association of Corporate Directors
provides him with up-to-date information on corporate governance best practices and the tools necessary to bring his leadership to our board of directors. As a result of Mr. Klatell’s significant involvement in director professionalism
education, Mr. Klatell has been designated an NACD Governance Fellow by the National Association of Corporate Directors. Further, Mr. Klatell’s deep knowledge of the electronics industry and direct experience in the communications
industry allows him to contribute a broad perspective to discussions about our future activities and our place in the current competitive landscape.
Kenton K. Alder has served as a director since March 1999. Mr. Alder is presently retired. Mr. Alder also served as our President from March 1999 to January 2013 and as our Chief
Executive Officer from our founding through December 2013. Mr. Alder served on a part-time basis as a consultant and advisor to Mr. Edman for one year commencing on January 1, 2014 and provided counsel on strategy, attended certain
meetings, and was involved in special projects. From January 1997 to July 1998, Mr. Alder served as Vice President of Tyco Printed Circuit Group, Inc., a printed circuit board (PCB) manufacturer. Prior to that time, Mr. Alder served as
President and Chief Executive Officer of ElectroStar, Inc., previously a publicly held PCB manufacturing company, from December 1994 to December 1996. From January 1987 to November 1994, Mr. Alder served as President of Lundahl Astro Circuits
Inc., a predecessor company to ElectroStar, Inc. Mr. Alder also serves as chairman of the boards of directors of Wasatch Photonics, Inc. and as a member of the board of directors of Inovar, Inc. Mr. Alder holds a Bachelor of Science degree
in Finance and a Bachelor of Science degree in Accounting from Utah State University.
Mr. Alder was nominated to the
board of directors because of his past experience as our chief executive officer, which enables him to provide the board with insight based on his extensive knowledge about the Company and because of his significant operational expertise.
James K. Bass has served as a director of our company since September 2000. Mr. Bass is presently retired. Since
May 2010, Mr. Bass has served as a director of Tigrent Inc. (OTCBB: TIGE) and as a member of its audit committee and chairman of its compensation committee. Since October 2010, Mr. Bass has served as a director of Mercury Computer Systems,
Inc. (NASDAQ: MRCY) and as a member of its audit committee. From September 2005 to June 2009, Mr. Bass served as the Chief Executive Officer and a director of Piper Aircraft, Inc., a general aviation manufacturing company. Mr. Bass served
as the Chief Executive Officer and a director of Suntron Corporation, a provider of high mix electronic manufacturing services, from its incorporation in May 2001 until May 2005, and as Chief Executive Officer of EFTC Corporation, a subsidiary of
Suntron Corporation, from July 2000 until April 2001. From 1992 to July 2000, Mr. Bass was a Senior Vice President of Sony Corporation. Prior to that, Mr. Bass spent 15 years in various manufacturing management positions at the aerospace
group of General Electric Corporation. Mr. Bass holds a B.S.M.E. degree from Ohio State University.
Our board of
directors has determined that Mr. Bass is an independent director. Electronic manufacturing service providers represent an important part of our customer base. Mr. Bass was nominated to the board of directors because of his extensive
experience in the electronic manufacturing industry and the technology marketplace, his executive and operational experience as the chief executive officer of a public company, and his broad experience with accounting and audit matters for publicly
traded companies.
Thomas T. Edman has served as a director of our company since September 2004, as President of our
company since January 2013, and as our Chief Executive Officer since January 2014. From early 2011 to December 2012, Mr. Edman served as Group Vice President and General Manager of the AKT Display Business Group, which is a division of Applied
Materials Inc., a publicly held provider of nanomanufacturing technology
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solutions. From 2006 to 2011, Mr. Edman served as Corporate Vice President of Corporate Business Development of Applied Materials, Inc. Prior to that, Mr. Edman served as President and
Chief Executive Officer of Applied Films Corporation from May 1998 until Applied Materials, Inc. acquired Applied Films Corporation in July 2006. From June 1996 until May 1998, Mr. Edman served as Chief Operating Officer and Executive Vice
President of Applied Films Corporation. From 1993 until joining Applied Films, Mr. Edman served as General Manager of the High Performance Materials Division of Marubeni Specialty Chemicals, Inc., a subsidiary of a major Japanese trading
corporation. Mr. Edman holds a Bachelor of Arts degree in East Asian studies (Japan) from Yale University and a Master’s degree in Business Administration from The Wharton School at the University of Pennsylvania.
Mr. Edman is an employee director. Mr. Edman was nominated to the board of directors because of his proven business acumen and
experience in the technology industry, having served in numerous senior executive roles with sizeable technology companies, including as the chief executive officer of a public company. Mr. Edman also has extensive experience in Asia and with
compensation-related matters, which have proven valuable to our board of directors.
Philip G. Franklin has served as a
director of our company since November 2010. Since 1998, Mr. Franklin has served in various capacities with Littelfuse, Inc. (NASDAQ: LFUS), a designer, manufacturer, and seller of circuit protection devices for use in electronics, automotive
and electrical markets, and currently serves as Executive Vice President and Chief Financial Officer. Prior to joining Littelfuse, Inc., Mr. Franklin was Vice President and Chief Financial Officer for OmniQuip International, a construction
equipment manufacturer, which he helped take public. Prior to that, Mr. Franklin served as Chief Financial Officer of Monarch Marking Systems and Hill Refrigeration. Mr. Franklin also serves as a member of the board of directors of Tribune
Publishing Company and currently serves on its audit committee. Mr. Franklin holds a Bachelor’s degree in Economics from Dartmouth College and a Master’s degree in Business Administration from the Amos Tuck School at Dartmouth
College.
Our board of directors has determined that Mr. Franklin is an independent director and an “audit committee
financial expert” as described in applicable SEC rules. Mr. Franklin was nominated to the board of directors because of his financial and accounting expertise, including a deep understanding of accounting principles, financial reporting
rules and regulations, and knowledge of audit procedures.
Ronald W. Iverson has served as a director of our company
since July 2010. Mr. Iverson is presently retired. From January 2007 to July 2012, Mr. Iverson served as Chief Executive Officer of LGS Innovations, a wholly-owned subsidiary of Alcatel-Lucent (EURONEXT PARIS: ALU). From June 2006 to
December 2006, Mr. Iverson served as Vice President, Bell Labs for Special Projects. From July 2003 to June 2006, Mr. Iverson served as an Executive Account Manager for Air Force and Joint Systems with Northrop Grumman. Prior to that,
Mr. Iverson served in the Senior Executive Service within the DoD as the Deputy Director for Industrial Security. Mr. Iverson spent 32 years with the U.S. Air Force, retiring as a Lieutenant General in 1997. Mr. Iverson serves as a
member of the board of directors of Systems Engineering and Technology, LLC (known as “SeaTec”). Mr. Iverson holds a Bachelor of Science degree in Agricultural Economics from the University of Idaho, is a graduate of the U.S. Air
Force Fighter Weapons School, a graduate of the National War College, and a graduate of the Kennedy School of Government at Harvard University.
Our board of directors has determined that Mr. Iverson is an independent director. Mr. Iverson was nominated to the board of directors because of his extensive experience in the
aerospace/defense industry, his prior service with the U.S. Department of Defense and intimate knowledge of government security matters, and his prior senior role with the U.S. military.
John G. Mayer has served as a director of our company since September 2000. Mr. Mayer is presently retired. From January 1997
to November 1999, Mr. Mayer served as Vice President of Tyco Printed Circuit Group, Inc., a PCB manufacturer. Mr. Mayer served as Chief Operating Officer of ElectroStar, Inc., previously a publicly held PCB manufacturing company, from
December 1994 to December 1996. From April 1986 to November 1994, Mr. Mayer served as President of Electro-Etch Circuits, Inc., a predecessor company to
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ElectroStar, Inc. Mr. Mayer is also a member of the board of trustees of the Cottonwood Gulch Foundation, an organization that sponsors educational wilderness expeditions in the American
Southwest. Mr. Mayer holds a Bachelor of Arts degree in History, the Arts and Letters from Yale University and a Juris Doctor from UCLA School of Law.
Our board of directors has determined that Mr. Mayer is an independent director. Mr. Mayer was nominated to the board of directors because of his extensive experience in the PCB business and his
demonstrated depth of business experience in our company’s industry.
Tang Chung Yen, Tom has served as our
Managing Director — Asia Pacific Region and as a director of our company since April 2010. Prior to that, he was the Executive Chairman and Group Managing Director of Meadville Holdings Limited (Meadville), the business of which he joined in
1991. Mr. Tang was also the Chairman of Meadville’s Executive Committee and was responsible for the leadership of Meadville’s board of directors. Mr. Tang was also a director of certain of Meadville’s subsidiaries.
Mr. Tang has served as the honorary chairman and honorary founding chairman of The Hong Kong Printed Circuit Association Limited since 2005 and 2009, respectively, and has been the honorary chairman of The Hong Kong Exporters’ Association
since 2012. Mr. Tang is the chairman of The Hong Kong Standards and Testing Centre Limited and The Hong Kong Safety Institute Limited, a council member of Hong Kong Trade Development Council, and a vice chairman of HK Wuxi Trade Association
Limited. Since 2008, Mr. Tang has been a member of the Shanghai & Wuxi Committee of The Chinese People’s Political Consultative Conference. Mr. Tang holds a Master of Business Administration from New York University.
Mr. Tang is an employee director. Mr. Tang was proposed as a nominee for our board of directors by the principal
shareholders of Meadville in accordance with the stock purchase agreement and the shareholders agreement (as amended) entered into in connection with our acquisition of the PCB operations of Meadville. Our board of directors accepted Mr. Tang
as a nominee given his extensive experience with PCB operations in Asia and his business acumen, as evidenced by his senior executive role with Meadville. Mr. Tang is our Managing Director — Asia Pacific Region and provides an
insider’s perspective to our Asian operations.
Dov S. Zakheim has served as a director of our company since July
2010. Dr. Zakheim is currently a Senior Fellow at CNA: Analysis & Solutions, a federally funded think tank, and a Senior Advisor at the Center for Strategic and International Studies. From May 2004 to July 2010, Dr. Zakheim served
as Vice President and subsequently as Senior Vice President of Booz Allen Hamilton, a global strategy and technology consulting firm, where he was a leader in the firm’s global defense practice. From May 2001 to April 2004, Dr. Zakheim was
Under Secretary of Defense (Comptroller) and Chief Financial Officer for the DoD. From October 2002 to April 2004, Dr. Zakheim served as the DoD’s coordinator of civilian programs in Afghanistan. Dr. Zakheim serves as a member of the
board of directors of Sprint Federal Operations LLC and currently serves on its compensation committee. Dr. Zakheim has also served as a member of the board of directors of Standard Aero Corp. since 2008 and as a member of their audit committee
since 2012. Dr. Zakheim also serves as a board member of the American Jewish Committee, the Foreign Policy Research Institute, and the Center for the National Interest. Dr. Zakheim holds a Bachelor of Arts degree from Columbia College at
Columbia University, was a General Course student at the London School of Economics, and holds a Doctor of Philosophy from St. Antony’s College at the University of Oxford.
Our board of directors has determined that Dr. Zakheim is an independent director. Dr. Zakheim was nominated to the board of
directors because of his substantial financial and accounting experience acquired in the course of acting as Chief Financial Officer for the U.S. Department of Defense, his expertise and leadership skills in global defense, and his national security
qualifications.
There are no family relationships among any of our directors, director nominees, or executive officers.
7
Information Relating to Corporate Governance and the Board of Directors
Our board of directors has determined, after considering all the relevant facts and circumstances, that Messrs. Bass, Franklin, Iverson,
Klatell, Mayer, and Zakheim are independent directors, as “independence” is defined by the listing standards of the Nasdaq Stock Market (referred to as Nasdaq) and by the Securities and Exchange Commission (referred to as the SEC).
Accordingly, a majority of the members of our board of directors is independent. Mr. Edman is not considered to be an independent director as a result of his positions as an executive officer of our company. Mr. Tang is not considered to
be an independent director as a result of his former position as an executive with Meadville and certain of its subsidiaries, and as our Managing Director — Asia Pacific Region. Mr. Alder is not considered to be an independent
director as a result of his former position as an executive officer of our company.
Our bylaws authorize our board of
directors to appoint its members to one or more committees, each consisting of one or more directors. Our board of directors has established four standing committees: an audit committee, a compensation committee, a nominating and corporate
governance committee, and a government security committee. Each of our committees, with the exception of the government security committee (of which Messrs. Alder and Edman are also members), is comprised entirely of independent directors, as
“independence” is defined by the listing standards of Nasdaq and by the SEC. Our board of directors holds executive sessions following all in-person board meetings at which the independent directors meet without the presence or
participation of management.
Our board of directors has adopted charters for the audit, compensation, and nominating and
corporate governance committees describing the authority and responsibilities delegated to the committee by the board of directors. Our board of directors has also adopted corporate governance guidelines, a whistle blower policy, and a code of
ethics for our chief executive officer and senior financial officers. We post on our website, at www.ttmtech.com, the charters of our audit, compensation, and nominating and corporate governance committees; our corporate governance
guidelines; our whistle blower policy; our code of ethics for our chief executive officer and senior financial officers, and any amendments or waivers thereto. These documents are also available in print to any stockholder requesting a copy in
writing from our corporate secretary at 1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626.
Interested parties may
communicate with our board of directors or specific members of our board of directors, including the members of our various board committees, by submitting a letter addressed to the board of directors of TTM Technologies, Inc., c/o any specified
individual director or directors, at 1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626. We will forward any such letters to the indicated directors.
Meetings of the Board of Directors
Our board of directors held eight
meetings (regular and special) during 2014. All of our directors attended more than 75% of the aggregate of (i) the total number of meetings of the board of directors held during 2014, and (ii) the total number of meetings held by all
committees of our board of directors on which such person served during 2014. We have adopted a policy encouraging each of our directors to attend each annual meeting of stockholders and, to the extent reasonably practicable, we regularly schedule a
meeting of the board of directors on the same day as the annual meeting of stockholders. All of our directors attended the 2014 annual meeting of shareholders.
Committees of the Board of Directors
Audit Committee. Our
audit committee reviews and monitors our corporate financial reporting and our external audit, including, among other things, our internal control functions, the results and scope of the annual audit, and other services provided by our independent
registered public accounting firm and our compliance with legal requirements that have a significant impact on our financial reports. Our audit committee also consults with our management and our independent registered public accounting firm
regarding the preparation of financial statements and, as appropriate, initiates inquiries into aspects of our financial affairs. In addition, our audit committee has the responsibility to consider and recommend the appointment of, and to
pre-approve services
8
provided by, and fee arrangements with, our independent registered public accounting firm. The current members of our audit committee are Messrs. Franklin (chairman), Mayer, and Zakheim, each of
whom is an independent director under Nasdaq listing standards as well as under SEC rules. The board of directors has determined that Mr. Franklin qualifies as an “audit committee financial expert” in accordance with applicable rules
and regulations of the SEC. Our audit committee held five meetings during 2014.
Nominating and Corporate Governance
Committee. The nominating and corporate governance committee oversees the selection and composition of our board of directors and oversees the management continuity planning processes. It establishes, monitors, and recommends the purpose,
structure, and operations of the various committees of our board of directors, the criteria and qualifications for membership of each board committee, and recommends whether rotations or term limits are appropriate for the chair or committee members
of the various committees. In addition, the nominating and corporate governance committee recommends individuals to stand for election as directors and recommends directors to serve on each committee as a member or as chair of the committee. The
nominating and corporate governance committee reviews director compensation and recommends changes in director compensation to our board of directors. The nominating and corporate governance committee reviews and makes recommendations regarding our
governing documents (including our certificate of incorporation and bylaws) and our corporate governance principles. The nominating and corporate governance committee is also responsible for considering policies relating to the meetings of our board
of directors and considers questions of independence and possible conflicts of interest of members of our board of directors and executive officers. Finally, the nominating and corporate governance committee oversees the evaluation of our board of
directors and management.
The nominating and corporate governance committee will consider persons recommended by stockholders
for inclusion as nominees for election to our board of directors if the information required by our bylaws is submitted in writing in a timely manner addressed and delivered to our company’s secretary at 1665 Scenic Avenue, Suite 250, Costa
Mesa, California 92626. A stockholder who intends to recommend a nominee to our board of directors must provide (a) all information relating to the individual subject to the nomination that is required to be disclosed in opposition proxy
statements for election of directors filed by stockholders, at their own expense, in a contested election, or is otherwise required under Regulation 14A under the Securities Exchange Act of 1934, as amended (referred to as the Exchange Act), and
(b) the individual’s written consent to being named in a proxy statement as a nominee and to serving as a director if elected. The stockholder making the nomination must also provide the information required by our bylaws relating to such
stockholder, including information pertaining to ownership of our capital stock, and must make certain representations relating to voting intent and delivery of proxies. The stockholder’s nominee must also deliver to our secretary a written
questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made. The questionnaire is available from our secretary upon written request and
upon the requesting person’s providing certain written representations required by our bylaws.
The nominating and
corporate governance committee identifies and evaluates nominees for our board of directors, including nominees recommended by stockholders, based on numerous factors it considers appropriate, some of which may include strength of character, mature
judgment, career specialization, relevant technical skills, diversity, and the extent to which the nominee would fill a present need on our board of directors. The nominating and corporate governance committee evaluates nominees for director in the
same manner, regardless of whether the nominee is recommended by a stockholder or other person or entity.
In making its
selection of director candidates, our nominating and corporate governance committee bears in mind that the foremost responsibility of a director is to represent the interests of our stockholders as a whole. Directors are expected to exemplify the
highest standards of personal and professional integrity and to constructively challenge management through their active participation and questioning. In consideration of these expectations, the nominating and corporate governance committee seeks
directors with established strong professional reputations and expertise in areas relevant to the strategy and operations of our business. The activities and associations of candidates are reviewed for any legal impediment, conflict of interest, or
other consideration that might prevent service on our board of directors.
9
The charter of our nominating and corporate governance committee provides that the value of
diversity on our board of directors should be considered, and the nominating and corporate governance committee includes diversity as one of its criteria for board composition. While we do not have a formal policy outlining the diversity standards
to be considered when evaluating director candidates, our objective is to foster diversity of thought on our board of directors. To accomplish that objective, the nominating and corporate governance committee considers ethnic and gender diversity,
as well as differences in perspective, professional experience, education, national security qualifications, skill and other qualities in the context of the needs of our board of directors. The nominating and corporate governance committee evaluates
its effectiveness in achieving diversity on the board of directors through its annual review of board member composition, which includes an assessment of directors’ ethnicity, gender, and industry experience, prior to recommending nominees for
election.
The current members of our nominating and corporate governance committee are Messrs. Klatell (chairman), Mayer, and
Zakheim (with Dr. Zakheim having joined the nominating and corporate governance committee effective April 24, 2014), each of whom is an independent director under Nasdaq listing standards as well as under SEC rules. The nominating and
corporate governance committee held five meetings during 2014.
Compensation Committee. Our compensation
committee provides a general review of our compensation and benefit plans to ensure that they meet our corporate objectives. The compensation committee reviews and determines, or recommends to our board of directors, the compensation of our chief
executive officer and all other individuals designated by our board of directors as executive officers of our company. In addition, our compensation committee reviews and approves our corporate goals and objectives relevant to the compensation for
our chief executive officer and other executive officers, including annual performance objectives, and evaluates the performance of our chief executive officer and other executive officers in light of these goals and objectives. The compensation
committee reviews and makes recommendations to our board of directors with respect to, or approves, our incentive compensation plans and equity-based plans, and activities relating to those plans. The compensation committee also establishes and
periodically reviews policies in the area of perquisites for executive officers. The compensation committee may, from time to time, delegate any or all of its responsibilities to a subcommittee.
In discharging its responsibilities, our compensation committee is empowered to investigate any matter of concern that it deems
appropriate and has the sole authority, without seeking approval from the entire board of directors, to retain outside consultants for this purpose, including the authority to approve any terms of retention. Additional information regarding the role
of compensation consultants and executive officers in assisting our compensation committee in determining the amount or form of executive compensation may be found in “Compensation Discussion and Analysis” below. The current members of our
compensation committee are Messrs. Bass (chairman), Iverson and Klatell, each of whom is an independent director under Nasdaq listing standards as well as under SEC rules. The compensation committee held eight meetings during 2014.
Government Security Committee. As previously disclosed in our filings with the SEC, a portion of our business consists of
manufacturing defense and defense-related items for various departments and agencies of the U.S. government, including the U.S. Department of Defense, which requires that we maintain facility security clearances under the National Industrial
Security Program (referred to as NISP). The NISP requires that a corporation maintaining a facility security clearance take steps to mitigate foreign ownership, control, or influence (referred to as FOCI). As we have also previously reported, we are
party to a special security agreement with the U.S. government. That special security agreement, among other things, requires that our board of directors appoint a government security committee comprised of outside directors and directors who are
officers of our company, each of whom must be a U.S. resident citizen with a security clearance. The government security committee is responsible for ensuring that we maintain appropriate policies and procedures to safeguard the classified and
export-controlled information in our possession and to ensure that we comply with applicable laws and agreements. The current members of our government security committee are Messrs. Iverson (chairman), Alder, Bass, Edman, Franklin, Klatell, Mayer,
and Zakheim. The government security committee held four meetings during 2014.
10
Board Leadership Structure
We believe it is our chief executive officer’s responsibility to manage our company’s operations and the chairman’s responsibility to lead our board of directors. Given the significant
responsibilities with which our chairman is tasked and his active role in our governance, we believe it is beneficial to have an independent chairman whose sole job is leading the board of directors. To this end, our corporate governance guidelines
provide that our chief executive officer may not be our chairman, and that our chairman will be selected from our independent directors. In making its decision to separate the chief executive officer and chairman roles, our board of directors
considered the time that Mr. Edman is required to devote to the chief executive officer position in the current economic environment, particularly given the demands imposed on our global company. By segregating the role of the chairman, we
reduce any duplication of effort between the chief executive officer and the chairman. We believe this provides strong leadership for our board of directors, while also positioning our chief executive officer as the leader of the company in the eyes
of our customers, employees, and other stockholders. By having another director serve as chairman of the board, Mr. Edman is better able to focus his attention on running our company. Our board of directors believes that Mr. Klatell is the
most appropriate individual to serve as chairman because of his deep knowledge of our business and strategy, his experience with corporate governance matters, and his demonstrated skill and commitment to performing effectively as chairman of our
board of directors.
Our board of directors has six independent members and three non-independent members, including our chief
executive officer and president, Mr. Alder and Mr. Tang. A number of our independent board members are currently serving or have served as members of senior management of other public companies or governmental agencies and have served as
directors of other public companies. We believe that the number of independent, experienced directors that make up our board, along with the independent oversight of the board of directors by a non-executive chairman, benefits our company and our
stockholders.
The special security agreement to which we are a party establishes certain criteria for the qualifications of
our directors and the composition of our board of directors, and also requires that a certain number of directors have strong national security qualifications, have no prior relationship with certain “affiliates” described in the special
security agreement, and be U.S. citizens holding or eligible to hold personnel security clearances. Our board of directors meets the composition criteria set forth in the special security agreement, and any future replacement directors and director
nominees will be required to meet such criteria.
We believe that we have a strong corporate governance structure that ensures
independent discussion among, evaluation of, and communication with and access to, senior management. With the exception of our government security committee, of which Messrs. Alder and Edman are members, all of our board committees are composed
solely of independent directors, which provides independent oversight of management. Also, our corporate governance guidelines provide that our independent directors will meet in executive session not less frequently than quarterly.
Risk Management and Oversight Process
While our management is primarily responsible for managing risk, our board of directors and each of its committees play a role in overseeing our risk management practices. Our full board of directors is
ultimately responsible for risk oversight, and it discharges this responsibility by, among other things, receiving regular reports from our management concerning our business and the material risks that our company faces. Our board of directors
annually reviews key enterprise risks identified by management, such as financial, reputational, safety and security, and compliance risks, and it monitors key risks through reports and discussions regarding key risk areas at meetings of our board
of directors and in committee meetings. Our board of directors also focuses on specific strategic and emerging risks in periodic strategy reviews. Our board of directors annually reviews and approves our corporate strategy and goals and our capital
budgets, and in connection with that review, it considers risks associated with our company.
11
Our board of directors allocates responsibility for overseeing risk management for our
company among the full board and each of its committees. Specifically, the full board oversees significant risks primarily relating to operations, strategy, and finance. In addition, each of our committees considers risks within its area of
responsibilities, as follows:
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• |
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Our audit committee is primarily responsible for overseeing matters involving major financial risk exposures and actions management is taking to
monitor such risk exposures. This includes risks relating to financial reporting and internal controls; litigation; environmental, health, and safety matters; tax matters; liability insurance programs; and compliance with legal and regulatory
requirements and our code of ethics. In addition, the audit committee reviews our quarterly and annual financial reports, including any disclosure in those reports of risk factors affecting our company and business. |
| |
• |
|
Our compensation committee is primarily responsible for overseeing risks that may be implicated by our executive compensation programs and risks
relating to the administration of those programs. In setting compensation, the compensation committee strives to create incentives that encourage appropriate risk-taking behavior consistent with our business strategy. In making compensation
determinations, the compensation committee considers the overall mix of compensation for employees as well as the various risk control and mitigation features of our compensation plans, including appropriate performance measures and targets and
incentive plan payout maximums. To assist in satisfying these oversight responsibilities, the compensation committee retains an outside compensation consultant and meets regularly with management to understand the financial, human resources, and
stockholder implications of compensation decisions being made. Additional information on risk management considerations of our compensation committee is discussed in this proxy statement under “Compensation Discussion and Analysis — Risk
Management Considerations.” |
| |
• |
|
Our nominating and corporate governance committee is primarily responsible for risks that may be mitigated by the continued effective functioning of
our board of directors and our corporate governance practices. Under its charter, the nominating and corporate governance committee is responsible for, among other things, developing and recommending to our board of directors a set of effective
corporate governance principles designed to assure compliance with applicable standards. |
| |
• |
|
Our government security committee is primarily responsible for ensuring compliance with the policies and procedures mandated by the U.S. government
with respect to classified and export-controlled information in our possession and for ensuring the mitigation of FOCI. |
Through the activities of our audit, compensation, nominating and corporate governance, and government security committees, as well as the full board of directors’ interactions with management
concerning our business and the material risks that may impact our company, the board of directors is able to monitor our risk management process and offer critical insights to our management.
Our compensation committee considers the impact of our executive compensation program, and the incentives created by the compensation
awards that it administers, on our risk profile. The compensation committee reviews all of its employee compensation policies and practices, including the incentives that they create and factors that may reduce the likelihood of excessive risk
taking, to assess whether such policies and practices are reasonably likely to have a material adverse effect on our company. Based on this review, the compensation committee has determined that we do not utilize compensation policies or practices
that create risks that are reasonably likely to have a material adverse effect on our company.
Related Party Transaction Policies and
Procedures
It is the responsibility of our full board of directors and our audit committee to review and approve related
party transactions. It is our management’s responsibility to bring such related party transactions to the attention of our board of directors and members of our audit committee. From time to time our nominating and corporate governance
committee, in accordance with its charter, will also review potential conflict of interest transactions involving members of our board of directors and our executive officers.
12
In accordance with our corporate governance guidelines, any monetary engagement (other than
director or employee compensation or transactions which would not require disclosure under Item 404 of Regulation S-K) (a) between a director (including any entity of which the director is a director or executive officer and any member of
a director’s family as defined in Nasdaq rules) and our company or any of its affiliates or members of senior management or their families, and (b) between executive officers of our company (as designated by our board of directors) and our
company or any of its affiliates, is subject to the approval of our audit committee or our independent directors. Each of our directors and executive officers must notify our board of directors in advance of entering into any such transaction.
Our corporate governance guidelines task our board of directors, in consultation with our nominating and corporate governance
committee, with reviewing annually the relationships that each director has with us, directly or indirectly. Further, our nominating and corporate governance committee is tasked with periodically reviewing the compensation arrangements and other
business relationships between our directors and our company, including charitable and political contributions, in order to monitor the independence of our directors. Our corporate governance guidelines also provide that if an actual or potential
conflict of interest develops, a director should report the matter immediately to the full board of directors and our audit committee for evaluation and appropriate resolution. If a director has a personal interest in a matter before our board of
directors, the director must disclose the interest to the full board of directors and our audit committee, must recuse himself or herself from participation in the related discussion, and must abstain from voting on the matter.
DIRECTOR COMPENSATION
Effective beginning with the third quarter of 2014, our non-employee directors receive the following compensation: an annual cash retainer of $57,000, an annual cash retainer of $6,000 for each board
committee of which such director is a member (except for the government security committee), and reimbursement of expenses relating to attendance at board and board committee meetings. In addition, the chairman of the board receives an annual cash
retainer of $57,000, and the chairmen of our various board committees receive annual cash retainers as follows: $17,000 to our audit committee chairman, $14,500 to our compensation committee chairman, $11,000 to our government security committee
chairman, and $10,000 to our nominating and corporate governance committee chairman.
Upon initial election, each non-employee
director receives an option to purchase 20,000 shares of our common stock. The options provided to the non-employee directors expire on the tenth anniversary of the grant date and vest over a four-year period. At each annual meeting of stockholders,
each non-employee director receives restricted stock units (referred to as RSUs) having a value on the award date of $82,000 based upon the average closing price of our common stock over the six-month period preceding the grant date. The RSUs
awarded to the non-employee directors vest in full on the first anniversary of the grant date and delivery of the shares of common stock underlying the RSUs is deferred until retirement from the board of directors (or until one year after retirement
in the case of certain prior grants).
Our board of directors recognizes that stock ownership by directors may strengthen
their commitment to the long-term future of our company and further align their interests with those of our stockholders. Accordingly, our corporate governance guidelines provide that our independent directors are ordinarily expected over time to
beneficially own shares of our common stock (including shares owned outright, unvested shares, restricted stock units, and stock options) having a value of at least three times their annual retainer.
Mr. Edman is not compensated for his service as a director. Mr. Edman’s compensation as our chief executive officer and
president is described below under “Compensation Discussion and Analysis” and “Executive Compensation.” Mr. Tang is also not separately compensated for his service as a director. Mr. Tang received total 2014
compensation of $612,578 for his service as Managing Director — Asia Pacific Region, which total compensation consisted of the following: (i) base salary of $465,501, (ii) an additional component of base salary in the amount of
$73,744 paid subsequent to 2014 year end, as is consistent with competitive practices in the region in recognition of the Chinese New Year, (iii) a discretionary bonus of $50,058 to be paid
13
in April 2015 in recognition of the financial performance of our company in 2014, and (iv) $23,275 of contributions made by us on Mr. Tang’s behalf to the Mandatory Provident Fund,
a saving program for the retirement of residents in Hong Kong. The amounts paid to Mr. Tang were paid in Hong Kong Dollars (HKD) and converted to U.S. Dollars using an exchange rate of 0.1290 HKD per U.S. Dollar.
Our directors are eligible to participate in our Executive and Director Deferred Compensation Plan. For a discussion of the Executive and
Director Deferred Compensation Plan, see “2014 Nonqualified Deferred Compensation Table” below. Dr. Zakheim was our only non-employee director who participated in the Executive and Director Deferred Compensation Plan in 2014.
Director Summary Compensation Table for Fiscal Year 2014
The following table sets forth the compensation earned by our non-employee directors in respect of their services as such during 2014.
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| Name |
|
Fees Earned or
Paid in Cash(1) |
|
|
Stock
Awards(2)
|
|
|
All Other
Compensation |
|
|
Total |
|
| Robert E. Klatell |
|
$ |
132,500 |
|
|
$ |
77,620 |
|
|
|
— |
|
|
$ |
210,120 |
|
| Kenton K. Alder |
|
|
— |
|
|
$ |
77,620 |
|
|
$ |
431,523 |
(3) |
|
$ |
509,143 |
|
| James K. Bass |
|
$ |
75,000 |
|
|
$ |
77,620 |
|
|
|
— |
|
|
$ |
152,620 |
|
| Philip G. Franklin |
|
$ |
77,000 |
|
|
$ |
77,620 |
|
|
|
— |
|
|
$ |
154,620 |
|
| Jacques S. Gansler(4) |
|
$ |
30,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
30,000 |
|
| Ronald W. Iverson |
|
$ |
72,000 |
|
|
$ |
77,620 |
|
|
|
— |
|
|
$ |
149,620 |
|
| John G. Mayer |
|
$ |
67,000 |
|
|
$ |
77,620 |
|
|
|
— |
|
|
$ |
144,620 |
|
| Dov S. Zakheim |
|
$ |
64,500 |
|
|
$ |
77,620 |
|
|
|
— |
|
|
$ |
142,120 |
|
| (1) |
Amounts include fees payable for service as a director, committee membership, or committee chair as described in the narrative accompanying this table.
|
| (2) |
Amounts shown reflect the fair value of RSUs at the date of grant. The value is calculated in accordance with ASC Topic 718, Compensation — Stock Compensation. The
fair value of an RSU is based on the closing market price of our common stock on the date of grant. Pursuant to SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. For a discussion of
valuation assumptions, see Note 14 to our 2014 consolidated financial statements, included in our annual report on Form 10-K filed with the SEC. These amounts reflect our accounting expense for these awards and do not correspond to the actual value
that will be recognized by the directors with respect to these awards. A supplemental table following these footnotes sets forth for non-employee directors: (i) the aggregate number of RSUs and option awards outstanding as of December 29,
2014, and (ii) the number of RSUs that were not vested as of December 29, 2014. |
| (3) |
Mr. Alder received other compensation of $431,523 for services provided as Advisor and Consultant to the Chief Executive Officer pursuant to the Letter Agreement
by and between us and Mr. Alder dated December 20, 2013, which was effective from January 1, 2014 to January 1, 2015. This compensation consisted of the following: (i) base salary of $421,038, (ii) matching
contributions made by us to our 401(k) plan in the amount of $10,400, and (iii) a Health Wellness Incentive of $85. |
| (4) |
Mr. Gansler’s term of service as a director concluded on April 23, 2014. |
14
Outstanding Equity Awards Held by Non-Employee Directors at Fiscal 2014 Year End
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| Name |
|
RSUs
Outstanding at
Fiscal Year
End |
|
|
Number of
RSUs that
Have Not
Vested(1) |
|
|
Options
Outstanding at
Fiscal Year
End(2) |
|
| Robert E. Klatell |
|
|
54,558 |
|
|
|
9,739 |
|
|
|
8,000 |
|
| Kenton K. Alder(3) |
|
|
79,293 |
|
|
|
79,293 |
|
|
|
257,149 |
|
| James K. Bass |
|
|
54,558 |
|
|
|
9,739 |
|
|
|
8,000 |
|
| Philip G. Franklin |
|
|
34,332 |
|
|
|
9,739 |
|
|
|
20,000 |
|
| Ronald W. Iverson |
|
|
38,123 |
|
|
|
9,739 |
|
|
|
20,000 |
|
| John G. Mayer |
|
|
54,558 |
|
|
|
9,739 |
|
|
|
8,000 |
|
| Dov S. Zakheim |
|
|
38,123 |
|
|
|
9,739 |
|
|
|
20,000 |
|
| (1) |
Mr. Alder’s RSUs vest on the following schedule: (i) 19,738 RSUs vest on March 1, 2015, (ii) 24,908 RSUs vest on February 28, 2015,
(iii) 9,739 RSUs vest on April 24, 2015, and (iv) 24,908 RSUs vest on February 28, 2016. The RSUs for other directors vest on April 24, 2015. |
| (2) |
All outstanding options are fully vested. |
| (3) |
As of December 29, 2014, Mr. Alder had (i) 78,216 PRUs granted in fiscal 2012, adjusted for actual achievement during 2012, 2013 and 2014, and
(ii) 130,837 PRUs granted in fiscal 2013, adjusted for actual achievement during 2013 and 2014. The actual achievements related to 2012 and 2013 PRU grants are discussed in footnotes 7 and 8 of the Outstanding Equity Awards at Fiscal Year-End
2014 table. |
Payments to Compensation Consultant and its Affiliates
In October 2012, our compensation committee determined to engage Radford, an Aon Hewitt Company (referred to as Radford) as its
independent adviser for 2013 executive compensation matters. In September 2013, our compensation committee engaged Radford with respect to 2014 compensation matters. In July 2014, our compensation committee determined to engage Radford with respect
to 2015 compensation matters. Radford was retained by our compensation committee to provide an independent review of the company’s executive compensation programs, including an analysis of both the competitive market and the design of the
programs. More specifically, Radford evaluated our selected peer companies and provided competitive compensation data and analysis relating to the compensation of our chief executive officer and our other senior officers. Radford also furnished the
compensation committee with reports on peer company practices relating to the following matters: short-term and long-term compensation program design; equity compensation; vesting practices and ownership guidelines; retention value of current equity
holdings; target incentive opportunities; and compensation trends for board and committee members. In addition, Radford assisted the compensation committee with its evaluation of the risks associated with our compensation programs and provided our
nominating and corporate governance committee with a director compensation assessment. During 2014, we incurred $91,075 for such services rendered by Radford. In addition, during 2014, we paid Aon Hewitt, an affiliate of Radford, $15,900 for
services rendered in connection with the administration of our deferred compensation plan. We also paid Radford $13,000 for services rendered in connection with the computation of TSR relative to the S&P 600 and our TSR Peer Group and $14,800
for compensation survey data. For further discussion of the work conducted by Radford as our compensation consultant, see “Compensation Discussion and Analysis — Role of the Compensation Committee.”
15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of each class of common stock beneficially owned as of March 13, 2015, by
(a) each of our directors and named executive officers; (b) all of our directors and executive officers as a group; and (c) each person known by us to own beneficially more than five percent of our outstanding common stock.
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| |
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Shares Beneficially Owned |
|
| Name of Beneficial Owner(1) |
|
Number |
|
|
Percent(2) |
|
| Directors and Executive Officers: |
|
|
|
|
|
|
|
|
| Thomas T. Edman(3) |
|
|
32,720 |
|
|
|
* |
|
| Chung Tai Keung, Canice |
|
|
258,996 |
|
|
|
* |
|
| Douglas L. Soder(4) |
|
|
114,041 |
|
|
|
* |
|
| Todd B. Schull |
|
|
18,244 |
|
|
|
* |
|
| Kenton K. Alder(5) |
|
|
511,953 |
|
|
|
* |
|
| James K. Bass(6) |
|
|
12,000 |
|
|
|
* |
|
| Philip G. Franklin(7) |
|
|
20,000 |
|
|
|
* |
|
| Ronald W. Iverson(8) |
|
|
20,000 |
|
|
|
* |
|
| Robert E. Klatell(9) |
|
|
10,500 |
|
|
|
* |
|
| John G. Mayer(10) |
|
|
16,000 |
|
|
|
* |
|
| Tang Chung Yen, Tom |
|
|
— |
|
|
|
* |
|
| Dov S. Zakheim(8) |
|
|
20,000 |
|
|
|
* |
|
| All directors and executive officers as a group (12 persons) |
|
|
1,034,454 |
|
|
|
1.2 |
% |
| 5% Stockholders |
|
|
|
|
|
|
|
|
| Su Sih (BVI) Limited(11) |
|
|
27,561,874 |
|
|
|
32.8 |
% |
| FMR LLC(12) |
|
|
12,501,692 |
|
|
|
14.9 |
% |
| AllianceBernstein L.P.(13) |
|
|
5,487,315 |
|
|
|
6.5 |
% |
| BlackRock, Inc.(14) |
|
|
4,798,704 |
|
|
|
5.7 |
% |
| * |
Represents less than 1% of our outstanding common stock. |
| (1) |
Except as otherwise indicated, the address of each person listed on the table is 1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626. |
| (2) |
We have determined beneficial ownership in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage
ownership of that person, we have included the shares of common stock subject to options, RSUs, performance-based restricted stock units (PRUs), and warrants held by that person that are currently exercisable or will become exercisable or releasable
within 60 days after March 13, 2015, but we have not included those shares for purposes of computing percentage ownership of any other person. We have assumed unless otherwise indicated that the persons and entities named in the table have sole
voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Beneficial ownership is based on 83,997,153 shares of our common stock outstanding as of March 13, 2015.
|
| (3) |
Includes 8,000 shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13, 2015. Does not
include 35,261 shares issuable upon delivery of shares underlying vested RSUs. The delivery of 18,826 shares is deferred until retirement, and the delivery of 16,435 shares is deferred until one year after retirement from our board of directors.
|
| (4) |
Includes 39,998 shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13, 2015.
|
| (5) |
Includes 222,399 shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13, 2015. Does not
include 9,739 shares issuable upon delivery of shares underlying RSUs that will become vested on April 24, 2015, the delivery of which is deferred until retirement from our board of directors. |
| (6) |
Includes 8,000 shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13,
2015. Does not include 44,819 shares issuable upon delivery of shares underlying vested RSUs. The delivery of 28,384 shares is deferred until retirement, and the delivery of |
16
| |
16,435 shares is deferred until one year after retirement from our board of directors. Does not include 9,739 shares issuable upon delivery of shares underlying RSUs that will become vested on
April 24, 2015, the delivery of which is deferred until retirement from our board of directors. |
| (7) |
Represents shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13, 2015. Does not include
24,593 shares issuable upon delivery of shares underlying vested RSUs, the delivery of which is deferred until retirement from our board of directors. Does not include 9,739 shares issuable upon delivery of shares underlying RSUs that will become
vested on April 24, 2015, the delivery of which is deferred until retirement from our board of directors. |
| (8) |
Represents shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13, 2015. Does not include
28,384 shares issuable upon delivery of shares underlying vested RSUs, the delivery of which is deferred until retirement from our board of directors. Does not include 9,739 shares issuable upon delivery of shares underlying RSUs that will become
vested on April 24, 2015, the delivery of which is deferred until retirement from our board of directors. |
| (9) |
Includes 8,000 shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13, 2015. Does not
include 44,819 shares issuable upon delivery of shares underlying vested RSUs. The delivery of 28,384 shares is deferred until retirement, and the delivery of 16,435 shares is deferred until one year after retirement from our board of directors.
Does not include 9,739 shares issuable upon delivery of shares underlying RSUs that will become vested on April 24, 2015, the delivery of which is deferred until retirement from our board of directors. |
| (10) |
Includes 8,000 shares issuable upon the exercise of stock options that are currently vested or will become vested within 60 days after March 13, 2015. Does not
include 44,819 shares issuable upon delivery of shares underlying vested RSUs. The delivery of 28,384 shares is deferred until retirement, and the delivery of 16,435 shares is deferred until one year after retirement from our board of directors.
Does not include 9,739 shares issuable upon delivery of shares underlying RSUs that will become vested on April 24, 2015, the delivery of which is deferred until retirement from our board of directors. |
| (11) |
Represents shares of our common stock held by Su Sih (BVI) Limited, a company organized under the laws of the British Virgin Islands, referred to as Su Sih. Su Sih is a
holding company owned by Mr. Tang Hsiang Chien and Mein et Moi Limited, referred to as MML, a company organized under the laws of the British Virgin Islands and wholly owned by Mr. Tang Ying Yen, Henry. Both Messrs. Tang Hsiang Chien and
Tang Ying Yen, Henry are citizens of Hong Kong Special Administrative Region of People’s Republic of China. Su Sih has sole voting and dispositive power over 27,561,874 shares. Messrs. Tang Hsiang Chien, Tang Ying Yen, Henry and MML each have
shared voting and dispositive power of 27,561,874 shares. Mr. Tang Hsiang Chien reported beneficial ownership of 22,987,384 shares. Mr. Tang Ying Yen, Henry and MML each reported beneficial ownership of 4,574,490 shares. Such information
is as reported on Schedule 13D/A filed by Su Sih, MML, and Messrs. Tang Hsiang Chien and Tang Ying Yen, Henry with the SEC on April 16, 2014. The address of Su Sih is Room 2407, ING Tower, 308 Des Voeux Road, Central, Hong Kong.
|
| (12) |
Represents shares of our common stock held by FMR LLC, on behalf of itself and its affiliates, referred to as FMR. Based on the information reported on Schedule 13G/A
filed by FMR with the SEC on February 13, 2015: (i) FMR reported beneficial ownership of 12,501,692 shares, sole voting power as to 8,200 of the shares, and sole dispositive power as to 12,501,692 of the shares; (ii) members of the
family of Edward C. Johnson 3d, including Abigail P. Johnson, are the predominant owners of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC, and may be deemed to form a controlling group; and
(iii) neither FMR LLC nor Edward C. Johnson 3d nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies (referred to as the Fidelity Funds) advised by Fidelity
Management & Research Company, a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Board of Trustees. The address for FMR is 245 Summer Street, Boston, Massachusetts 02210. |
| (13) |
Represents shares of our common stock held by AllianceBernstein L.P. and certain of its affiliates, referred to as AllianceBernstein. AllianceBernstein has sole voting
power over 4,725,849 shares and sole dispositive power over 5,487,315 shares. Such information is as reported on Schedule 13G/A filed by AllianceBernstein with the SEC on February 10, 2015. The address for AllianceBernstein is 1345 Avenue of
the Americas, New York, New York 10105. |
17
| (14) |
Represents shares of our common stock held by BlackRock, Inc. and certain of its affiliates, referred to as BlackRock. BlackRock has sole voting power over 4,654,028
shares and sole dispositive power over 4,798,704 shares. Such information is as reported on Schedule 13G/A filed by BlackRock with the SEC on February 2, 2015. The address for BlackRock is 55 East 52nd Street, New York, New York 10022.
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, officers, and persons who own more than 10% of a registered class of our
securities to file reports of ownership and changes in ownership with the SEC. Directors, officers, and greater than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based solely upon our review of the copies of such forms that we received during the fiscal year ended December 29, 2014, and
written representations that no other reports were required, we believe that each person who at any time during such year was a director, officer, or beneficial owner of more than 10% of our common stock complied with all Section 16(a) filing
requirements during the fiscal year ended December 29, 2014.
EXECUTIVE OFFICERS OF THE
COMPANY
The names, ages and positions of our executive officers currently serving are provided below. Biographical
information regarding these officers is set forth under the following table, except for Mr. Edman, whose biography is set forth above with our other directors.
|
|
|
|
|
|
|
| Name |
|
Age |
|
|
Position(s) Held With the Company |
| Thomas T. Edman |
|
|
52 |
|
|
President, Chief Executive Officer and Director |
| Chung Tai Keung, Canice |
|
|
59 |
|
|
Executive Vice President and President, Asia Pacific Business Unit |
| Todd B. Schull |
|
|
56 |
|
|
Executive Vice President, Chief Financial Officer, Treasurer and Secretary |
| Douglas L. Soder |
|
|
54 |
|
|
Executive Vice President and President, North America Business Unit |
Chung Tai Keung, Canice has served as our Executive Vice President and President, Asia Pacific
Business Unit since April 2012, and prior to that served as Chief Executive Officer of our Asia Pacific operating segment since April 8, 2010. Prior to joining our company, Mr. Chung served as Deputy Managing Director of Meadville Group
since 2005. Prior to joining the Meadville Group, Mr. Chung was an executive director of Elec & Eltek International Holdings Limited (formerly listed on The Stock Exchange of Hong Kong Limited) from August 1993 to March 2005 and
Elec & Eltek International Company Limited (a company listed on the Singapore Exchange Securities Trading Limited) from April 1994 to March 2005. Mr. Chung had been Chief Executive Officer of Elec & Eltek Group’s PCB
business and held various management positions at Fairchild Semiconductors (HK) Limited, China Cement Company (Hong Kong) Limited, the Astec Group and Chen Hsong Machinery Co, Limited. Mr. Chung graduated from the Hong Kong Polytechnic
University in 1979 in Accountancy. Mr. Chung is currently the chairman of the Hong Kong Printed Circuit Association Limited.
Todd B. Schull became our Executive Vice President, Chief Financial Officer, Treasurer and Secretary in March 2013, having joined our company as an Executive Vice President in February 2013. Prior
to joining us, Mr. Schull served as Senior Vice President of Finance and Corporate Controller of Sanmina Corporation. Prior to joining Sanmina, Mr. Schull was Corporate Controller of Ultratech from 2003 to 2005. Mr. Schull started his
career with Deloitte LLP and then held leadership positions with Verbatim Corporation, Solectron Corporation, Tidal Software, Repeater Technologies, and VA Linux. Mr. Schull holds a Bachelor of Science degree in accounting from the University
of Utah.
Douglas L. Soder has served as an Executive Vice President and President, North America Business Unit since
April 2012, and prior to that as our Executive Vice President since November 2006. Prior to joining our company, Mr. Soder held the position of Executive Vice President for Tyco Electronics — Printed Circuit Group from January 2001 until
our acquisition of that company in October 2006. During an almost 24-year career at
18
Tyco Electronics, Mr. Soder served in a variety of sales, sales management, and operations management positions at its AMP Incorporated and Tyco Printed Circuit Group (PCG) subsidiaries.
From November 1996 to January 2001, Mr. Soder was Vice President of Sales and Marketing for PCG. Mr. Soder holds a Bachelor of Arts degree in Political Science from Dickinson College.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Philosophy and Objectives
Our executive compensation
program, which is established by the compensation committee of our board of directors, is intended to attract, motivate, and retain executives and key employees and reward the creation of stockholder value. We seek to provide executive compensation
packages that are competitive with comparable companies and reward the achievement of short-term and long-term performance goals.
Like most companies, we use a combination of fixed and variable compensation programs to reward and incentivize strong performance, as well as to align the interests of our executives with those of our
stockholders. Historically, our compensation philosophy targeted total compensation at the 50th percentile of comparable companies. However, in 2013, after comparing the profitability, market capitalization and certain other non-revenue metrics of
our company relative to other members of our peer group, our compensation committee determined to revise its compensation philosophy to generally target total compensation between the 25th and 50th percentile of comparable companies. We believe that
targeting compensation at the 25th-to-50th percentile will continue to enable us to remain competitive in attracting and retaining qualified executive officers while avoiding paying amounts in excess of what we believe is necessary to attract and
retain such executive officers. However, our compensation committee’s decisions on target compensation for specific individuals are also influenced by a variety of additional factors, including compensation practices of businesses acquired by
us and company and individual performance.
Each year our compensation committee, together with our senior management,
establishes performance targets for short-term and long-term incentive plans that require the achievement of significant financial results. Each year our compensation committee determines compensation by assessing prior year performance against
these established financial targets, as well as other factors such as the compensation paid by comparable companies, achievement of strategic objectives, improvements in market share and the professional development and potential of individual
officers. Ultimately, the amount of compensation awarded to our executives is determined based on our performance and what our compensation committee believes is in the best interests of our stockholders.
We believe that our use of performance-based restricted stock units (referred to as PRUs) instead of stock options, together with an
annual incentive bonus program that is based on various combinations of global operating income, business unit operating income and individual goals, shows that we have closely linked executive officer pay to performance. Our pay mix consists
primarily of base salary, annual performance-based bonuses, performance-based equity incentives and time-based equity incentives, and we have limited all other compensation to our corporate officers. We have no pension plans or other executive
retirement plans except our 401(k) plan available to North America employees and, except for the housing allowance provided to our President, Asia Pacific Business Unit, no executive perquisites such as company-paid personal travel, financial
planning assistance or car allowances.
Our executive officers discussed in this CD&A are:
| |
• |
|
Thomas T. Edman, President and Chief Executive Officer |
| |
• |
|
Chung Tai Keung, Canice, Executive Vice President and President, Asia Pacific Business Unit |
| |
• |
|
Douglas L. Soder, Executive Vice President and President, North America Business Unit |
| |
• |
|
Todd B. Schull, Executive Vice President, Chief Financial Officer, Treasurer and Secretary |
19
Executive Summary and Impact of 2011 Say-On-Pay Vote
At our 2014 annual meeting, our stockholders overwhelmingly approved, on an advisory basis, the compensation of our executive officers
described in our 2014 proxy statement. Approximately 95.05% of the votes cast on the matter were voted “For” such advisory “say-on-pay” approval, while approximately 4.72% were voted “Against.” In addition, at our 2011
annual meeting, a majority of our stockholders supported our board of directors’ recommendation to hold a vote on our executive compensation program every three years. As a result of the support received for its recommendation, the board of
directors determined to hold a vote on executive compensation every three years.
As discussed more fully below, and in light
of our focus on pay for performance and the high support our say-on-pay proposal received in 2014, for 2014 and 2015 our compensation committee continued to:
| |
• |
|
use both our peer group and certain composite global compensation survey data as the primary benchmarking tools for evaluating executive compensation,
taking into account evolving global and business unit roles and responsibilities of our management team; |
| |
• |
|
tie a substantial portion of our annual incentive bonus plan for our executive officers to our consolidated operating income to support collaboration
within our senior management team and reward our executive officers for company-wide performance; |
| |
• |
|
use PRUs as an integral component of our long-term incentive program in order to strengthen pay-for-performance and directly incorporate revenue and
earnings before interest, tax, depreciation and amortization expense (referred to as EBITDA) objectives; |
| |
• |
|
include in our PRU program the use of a modifier tied to our total stockholder return over a three-year period relative to a group of peer companies
selected by our compensation committee, thereby providing balance between retention and linkage to stockholder value creation; |
| |
• |
|
provide that the mix of equity awards to our executive officers is weighted more toward performance than time-vest RSUs; and
|
| |
• |
|
calculate the number of shares of our common stock subject to PRUs and RSUs by using the six-month trailing average closing sale price of our common
stock as of the date of grant, thereby mitigating the effects of our stock price volatility. |
An important
principle driving our compensation programs is our belief that it benefits our stockholders for management’s compensation to be tied to our company’s current and long-term performance. As a result, at-risk pay is expected to continue to
comprise a significant portion of our executive compensation, particularly for our most senior officers. As indicated above, approximately 95.05% of the votes cast on the 2014 advisory vote on executive compensation were in favor of our executive
compensation as described in our 2014 proxy statement. Our board and compensation committee considered these final vote results and determined that, given the significant level of support, no material changes to our executive compensation philosophy
were necessary based on the vote results. Nevertheless, our compensation committee strives to continually improve our executive compensation programs.
Role of the Compensation Committee
General. Our compensation
committee, which is currently comprised of three independent members of our board of directors, as discussed in greater detail under “Information Relating to Corporate Governance and the Board of Directors,” is responsible for, among other
things:
| |
• |
|
the review and approval of our compensation philosophy; |
| |
• |
|
the review of all executive compensation plans and structures, including that of our executive officers and other members of senior management;
|
20
| |
• |
|
the approval (or recommendation to our board of directors) of individual compensation for our executive officers, including our chief executive
officer; |
| |
• |
|
the approval of annual and long-term incentive performance metrics as well as payouts thereunder; and |
| |
• |
|
the review of other executive benefit plans, including perquisites. |
Our compensation committee, in consultation with the outside executive compensation consultant retained by our compensation committee,
also analyzes the reasonableness of our overall executive compensation package. Our compensation committee has a written charter that delineates its responsibilities, a full copy of which is posted on our website at www.ttmtech.com.
While our chief executive officer and other executive officers may attend meetings of the compensation committee or our board of
directors from time to time, the ultimate decisions regarding executive officer compensation are made solely by the members of our compensation committee and, in the case of compensation decisions for our chief executive officer, the non-employee
members of our board of directors. These decisions are based not only on our compensation committee’s deliberations, but also on input requested from outside advisors, including our compensation committee’s outside compensation consultant,
with respect to, among other things, market data analyses. The final decisions relating to our chief executive officer’s compensation have historically been based on recommendations of our compensation committee and included discussions with
and approval by all of our non-employee directors without the presence of our chief executive officer or other management. Our compensation committee typically discusses proposals for our chief executive officer’s compensation package with him
but always makes final decisions regarding his compensation when he is not present. Decisions regarding other executive officers have typically been made by our compensation committee after considering recommendations from our chief executive
officer.
Compensation Consultant. Our compensation committee has historically engaged the services of an outside
compensation consultant to provide independent advice in connection with making executive compensation determinations. The chairman of our compensation committee, in consultation with other committee members, defines the scope of any
consultant’s engagement and related responsibilities. These responsibilities may include, among other things, advising on issues of executive compensation and equity compensation structure and assisting in the preparation of compensation
disclosure for inclusion in our SEC filings. In fulfilling its responsibilities, the outside compensation consultant may interact with management or our other outside advisors to the extent necessary or appropriate.
In October 2013, our compensation committee determined to engage Radford with respect to 2014 compensation matters. In July 2014, our
compensation committee determined to engage Radford with respect to 2015 compensation matters. Radford was retained by our compensation committee to provide an independent review of the company’s executive compensation programs, including an
analysis of both the competitive market and the design of the programs. More specifically, Radford evaluated our selected peer companies and provided competitive compensation data and analysis relating to the compensation of our chief executive
officer and our other senior officers. Radford also furnished the compensation committee with reports on peer company practices relating to the following matters: short-term and long-term compensation program design; equity compensation, vesting
practices and ownership guidelines; retention value of current equity holdings; target incentive opportunities; and compensation trends for board and committee members. In addition, Radford assisted the compensation committee with its evaluation of
the risks associated with our compensation programs and provided our nominating and corporate governance committee with a director compensation assessment.
The compensation committee’s outside compensation consultant provides analyses and recommendations that inform the committee’s decisions, but it does not decide or approve any compensation
decisions. For both 2014 and 2015, Radford reviewed various proposals presented to the committee by management, and provided updates on market trends and the regulatory environment as it related to executive compensation. Aon-Hewitt, Radford’s
parent company, also computes our TSR relative to the S&P SmallCap 600 (referred to as the S&P 600) and, for our performance awards in 2013, 2014, and 2015, TSR peer group.
21
Radford, who reports directly to our compensation committee and not to management, is
independent from TTM. Except for TTM’s subscription to certain broad-based compensation survey data, Radford has not provided any services to TTM other than to the compensation committee and receives compensation from TTM only for services
provided to the committee. We also use Aon Hewitt, an affiliate of Radford, to administer our deferred compensation program. Our compensation committee assessed the independence of Radford pursuant to SEC and NASDAQ rules and concluded that the work
of Radford has not raised any conflict of interest. For a discussion of amounts paid to Radford and Aon Hewitt for executive and director compensation consulting and other services, please see “Payments to Compensation Consultant and its
Affiliates” above.
Management Role in Setting Compensation. Members of our human resources and finance
departments work with our chief executive officer to recommend changes to existing compensation plans and programs, to recommend financial and other targets to be achieved under those programs, to prepare analyses of financial data and other
briefing materials to assist the compensation committee in making its decisions and, ultimately, to implement the decisions of our compensation committee.
Our chief executive officer is actively engaged in setting compensation for other executives through a variety of means, including recommending for committee approval the financial goals and the annual
variable pay amounts for his executive team. He works closely with other members of executive management in analyzing relevant market data to determine base salary and annual target bonus opportunities for senior management and to develop targets
for our short-term and long-term incentive plans. Our chief executive officer is generally subject to the same financial performance goals as our other executive officers, all of which are ultimately determined and approved by our compensation
committee.
Compensation Structure
Although the final structure may vary from year to year and officer to officer, our compensation committee utilizes three main components for executive officer compensation:
| |
• |
|
Base Salary — fixed pay that takes into account an individual’s duties and responsibilities, experience, expertise, and individual
potential and performance; |
| |
• |
|
Annual Incentive Bonus — variable cash compensation that takes into account our financial performance during a particular year and
individual performance goals; and |
| |
• |
|
Long-Term Incentives — stock-based awards, including performance and time-vest restricted stock units that reflect the performance of our
common stock and align executive officer and stockholder interests. |
Pay Mix. In determining the
allocation each year among base salary, annual incentive bonus, and long-term equity incentive compensation, our compensation committee considers the following factors: our short-term and long-term business objectives, competitive trends within our
industry, and the importance of creating a performance-based environment that ties a significant portion of each executive officer’s compensation to the achievement of performance targets and corporate objectives. When considering a proposed
compensation package for an executive officer, our compensation committee considers the compensation package as a whole, including each element of total compensation. For example, before determining officer compensation for 2015, our compensation
committee reviewed “tally sheets” that listed, for each executive, each element of compensation paid in 2014, including base salary, 2014 incentive bonus, the value of 2014 equity awards, 401(k) matching contributions, and potential
payments under severance arrangements, as well as information regarding equity awards made in prior periods. The compensation committee and management use the tally sheets to assess the overall effect and long-term implications of compensation
decisions, rather than viewing individual decisions in isolation. We have no pre-established policy for allocating between either cash and non-cash or short-term and long-term compensation.
Our compensation committee believes that the particular elements of compensation identified above produce a well-balanced mix of
stock-based compensation, retention value, and at-risk compensation that
22
collectively provide each executive officer with both short-term and long-term performance incentives. Base pay provides the executive officer with a measure of security as to the minimum level
of compensation he or she will receive while the annual and long-term incentive components motivate the executive officer to focus on the business metrics that will produce a high level of company performance over the long term. Our compensation
committee believes that this approach should lead to increases in stockholder value, provide an appropriate reward for our executive officers, and reduce the risk of loss of executive officers to competitors.
While each of the elements of our compensation program is intended to motivate and encourage employees at all levels to drive performance
and achieve superior results for our stockholders, there is a different emphasis on the three primary elements based on an employee’s position and ability to impact our financial results. In general, the percentage of performance-based pay, or
at-risk pay, increases with job responsibility. This is intended to offer an opportunity for gain in the event of successful performance, matched with the prospect of less compensation when performance falls short of established financial and/or
stockholder return targets. The aggregate base pay for our named executive officers comprised approximately 30% of the value of the aggregate compensation opportunities (base salary, target annual incentive bonuses, and long-term equity incentives)
provided to them for 2014. This allocation was consistent with our compensation committee’s overall pay-for-performance philosophy with respect to our executive officers, as defined under “Executive Compensation — Fiscal Year 2014
Summary Compensation Table.”
For 2015, compensation for our named executive officers (other than our chief executive
officer) has been structured so that approximately 70% of compensation consists of equity awards (split as approximately 55% PRUs and approximately 45% time-vest RSUs) and a variable cash incentive bonus program that is performance-based and
dependent on our financial results, with the remaining 30% comprising base salary. For Messrs. Chung, Soder, and Schull, within the portion of compensation representing “performance-based pay” (which includes the annual incentive bonus and
PRU awards), approximately one-half (the annual incentive bonus) is tied to achievement of 2015 incentive goals and approximately one-half (the PRU awards) is tied to achievement of financial goals and total stockholder return over a longer period
of time, although the specific mix for each executive officer varies as described below.
Our chief executive officer’s
compensation for 2015 has been structured so that approximately 75% of compensation consists of equity awards (split as approximately 70% PRUs and approximately 30% time-vest RSUs) and a variable cash incentive bonus that is performance-based and
dependent on our financial results, with the remaining 25% comprising base salary. This results in approximately 60% of our chief executive officer’s compensation constituting “performance-based pay.”
Our compensation committee believes that this mix of short-term and long-term incentives provides sufficient rewards in the short term to
motivate near-term performance, while at the same time providing significant incentives to keep our executives focused on longer-term goals that drive stockholder value. This also mitigates the risk of named executive officers focusing solely on
short-term or long-term goals, and offers retention value as the compensation is received over an extended term. It is also consistent with the practice of our peer group companies.
Total compensation for specific individuals varies based on a number of factors in addition to company and individual performance,
including scope of duties within our global organizational structure, institutional knowledge, position readiness, horizontal parity, and/or level of difficulty in recruiting a replacement executive.
Compensation Levels and Benchmarking. Overall compensation levels for executive officers are determined based on one or more of
the following factors: the individual’s duties and responsibilities within our global company; the individual’s experience and expertise; the compensation levels for the individual’s peers within our company; compensation levels for
similar positions in the PCB industry or in the technology industry more generally; performance of the individual and our company as a whole; and the levels of compensation necessary to recruit new executive officers. For 2014 and 2015, our
compensation committee reviewed the compensation of our officers and compared it with that of both our peer group companies and broader, composite global market survey data provided by our compensation consultant.
23
For 2014, Radford recommended certain refinements to our peer group based upon our
company’s position in our industry and the differing growth rates among the companies in our peer group, as well as to make the peer group more reflective of our business and competitive market for talent. As a result, our compensation
committee revised the revenue and market capitalization elements for our peer group to include (i) companies with revenues between $700 million and $3.0 billion, and (ii) companies with market capitalization between $250 million and $2.5
billion. Radford also recommended taking into account the peer groups used by proxy advisory firms. As a result of these new criteria, for 2014, our compensation committee removed Linear Technology, Microchip Technology and Trimble Navigation
because their market capitalization was significantly above the revised criteria, while Power-One was removed because it was acquired in July 2013. Our compensation committee added six companies from the 2013 peer group used by International
Shareholder Services (“ISS”) that also satisfied our revised peer group criteria. This resulted in a peer group that included the following 19 companies which were used for benchmarking purposes in 2014 (collectively, the “2014 Peer
Group”):
|
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|
|
|
|
|
| • AVX Corporation |
|
• Benchmark Electronics, Inc. |
|
• CTS Corporation |
|
|
|
| • Curtiss-Wright Corporation |
|
• Cypress Semiconductor Corp. |
|
• Esterline Technologies Corporation |
|
|
|
| • Fairchild Semiconductor International, Inc. |
|
• Heico Corporation |
|
• International Rectifier Corporation |
|
|
|
| • Intersil Corporation |
|
• Microsemi Corporation |
|
• Moog Inc. |
|
|
|
| • Multi-Fineline Electronix, Inc. |
|
• OmniVision Technologies, Inc. |
|
• Plexus Corp. |
|
|
|
| • RF Micro Devices, Inc. |
|
• Skyworks Solutions, Inc. |
|
• Teledyne Technologies Incorporated |
|
|
|
| • Viasystems Group, Inc. |
|
|
|
|
24
For 2015, Radford recommended further refinements to our peer group, while keeping criteria
for our peer group consistent with the 2014 criteria and including (i) companies with revenues between $700 million and $3.0 billion, and (ii) companies with market capitalization between $250 million and $2.5 billion. For the fiscal year
ended December 29, 2014, our revenue was $1.3 billion and our market capitalization was approximately $629 million. As a result of this reevaluation, for 2015, our compensation committee added Cubic Corporation, Diodes Incorporated, Fabrinet,
KEMET Corporation, and ON Semiconductor Corporation to our peer group. Our compensation committee also removed Intersil Corporation and Multi-Fineline Electronix, Inc. from our peer group because the annual revenue of both companies fell below our
criteria, and Multi-Fineline Electronix, Inc.’s market capitalization also fell below our criteria. Viasystems Group, Inc. was removed from the peer group because it is in the process of being acquired by our company. This resulted in a peer
group that included the following 21 companies which, along with the broader survey discussed below, were used for benchmarking purposes in 2015 (collectively, the “2015 Peer Group”):
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| • AVX Corporation |
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• Benchmark Electronics, Inc. |
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• CTS Corporation |
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|
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| • Cubic Corporation |
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• Curtiss-Wright Corporation |
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• Cypress Semiconductor Corp. |
|
|
|
| • Diodes Incorporated |
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• Esterline Technologies Corporation |
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• Fabrinet |
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|
|
| • Fairchild Semiconductor International, Inc. |
|
• Heico Corporation |
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• International Rectifier Corporation |
|
|
|
| • KEMET Corporation |
|
• Microsemi Corporation |
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• Moog Inc. |
|
|
|
| • OmniVision Technologies, Inc. |
|
• ON Semiconductor Corporation |
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• Plexus Corp. |
|
|
|
| • RF Micro Devices, Inc. |
|
• Skyworks Solutions, Inc. |
|
• Teledyne Technologies Incorporated |
This peer group is not used for the stock price performance graph included in our Annual Report on Form
10-K for the year ended December 29, 2014. That Form 10-K performance graph compares the cumulative total stockholder return on our common stock against the cumulative total return on the NASDAQ Composite Index and the Dow Jones U.S. Electrical
Components & Equipment Index.
Although peer group data provided relevant benchmarking information for our chief
executive officer and chief financial officer, Radford recommended the use of certain broader technology survey data for both those officers and our other executive officers in order to provide a deeper database based on job and revenue
responsibility and thereby be more reflective of the market for talent for those other executive officers and senior management. More specifically, for 2015, to benchmark compensation for all of our executive officers other than our chief executive
officer and chief financial officer, Radford provided our compensation committee with data from Radford’s 2014 Global Technology Survey. Radford recommended survey data for companies in the semiconductor, computer storage and peripherals, and
communications equipment industries with annual revenues between $700 million and $3.0 billion, in order to align more closely to the criteria used to select our 2015 Peer Group. Compensation for our chief executive and finance officers is
benchmarked against both our peer group and that broader survey data.
As discussed above, our compensation committee now
targets the compensation levels of our executive officers between the 25th and 50th percentile of comparable officers at comparable companies, as derived from both peer group data and broader composite survey data. Our compensation committee may
vary from this target
25
range for various elements of compensation depending on the executive officer’s job performance, skill set, level of responsibilities, prior compensation, and business conditions. The
compensation for our executive officers discussed herein for 2015 falls generally within this targeted range.
Our
compensation committee intends to continue its practice of retaining executive compensation consultants from time to time, as our compensation committee deems appropriate, to advise our compensation committee with respect to its compensation
policies and provide compensation data from comparable companies.
Risk Management Considerations. Our compensation
committee believes that our performance-based bonus and equity programs provide incentives to create long-term stockholder value. Several elements of the programs are also designed to discourage behavior that leads to excessive risk:
| |
• |
|
Our compensation committee believes that operating income, the financial metric primarily used to determine the amount of an executive’s annual
incentive bonus, is a measure that drives long-term stockholder value. Moreover, the committee attempts to set ranges for this metric that encourage success without encouraging excessive risk taking to achieve short-term results.
|
| |
• |
|
The use and equal weighting of both revenue and EBITDA performance metrics in our PRU program limits the ability of an executive to be rewarded for
taking excessive risk on behalf of our company by, for example, seeking revenue-enhancing opportunities at the expense of EBITDA, since performance is required on both metrics to maximize payout under the PRU program. |
| |
• |
|
The measures used to determine vesting of our PRUs are based on rolling three-year performance periods. The committee believes that these three-year
performance periods encourage executives to attain sustained performance over several periods, rather than performance in a single period. |
| |
• |
|
Our time-vest RSUs vest over a three-year period, encouraging executives to look to long-term appreciation in equity values.
|
| |
• |
|
Our management incentive plan provides that executives will receive payments if our company achieves 60% of the target operating income. Similarly, our
PRU program provides that executives will “bank” PRU shares if we achieve 60% of the revenue and EBITDA targets. The committee believes that these thresholds discourage management from taking excessive risk to achieve performance at a
higher percentage of the established target. |
| |
• |
|
Our PRU program uses a modifier based on our company’s total stockholder return (TSR) based on stock price changes over a three-year period (using
for each year’s awards the 6-month trailing average closing price of the beginning of the year compared to the 6-month trailing average closing sales price three years later) relative to the TSR of peer companies selected by our compensation
committee. Our compensation committee believes that the use of a 6-month trailing average closing stock price mitigates the potential risks of basing potential PRU payments on changes in stock prices that may not be reflective of long-term
performance. |
Individual Executive Officer Compensation
Base Salary. Base salaries for our executive officers are set with regard to the level of the position within our company, the
individual’s performance in recent periods, and the executive’s potential for continued development within our global organization. The base salary levels, and any increases or decreases to those levels for each executive officer, are
reviewed and approved each year by our compensation committee. Such adjustments may be based on factors such as the overall performance of our company, new roles and responsibilities assumed by the executive, the performance of the executive
officer’s area of responsibility, the executive officer’s impact on strategic goals, the length of service with our company, or revisions to our compensation philosophy. However, there is no specific weighting applied to any one factor in
setting the level of base salary, and the process ultimately relies on the subjective exercise of our compensation committee’s
26
judgment. Although salaries are generally targeted at the 25th to 50th percentile of our peer group and relevant compensation survey data, our compensation committee may also take into account
historical compensation, internal parity with other executives, potential as a key contributor, and special recruiting situations. We believe that providing base salaries within the market 25th to 50th percentile of our peer group and the broader
market survey provided by our compensation consultants will enable us to remain competitive for qualified executive officers while avoiding paying amounts in excess of what we believe necessary to attract and retain such executive officers.
Base Salaries for 2014. Base salary deliberations for 2014 were conducted from December 2013 to February 2014.
In January 2014, Mr. Edman, our chief executive officer, met with our compensation committee to present recommendations
for each of our executive officers (other than himself). In considering these recommendations, the compensation committee reviewed the composite market survey data provided by Radford and peer group data. Mr. Edman recommended that the base
salaries of Messrs. Chung and Soder not be changed as their compensation remained above the median for officers holding similar positions in comparable companies, while the base salary for Mr. Schull be increased slightly as he would remain in
the 25th to 50th percentile of our peer companies. After its review, in February 2014 our compensation committee approved the base salaries recommended by Mr. Edman for our other executive officers.
For 2014, our compensation committee ultimately recommended, and all of our non-employee directors approved, increasing the base salary
for Mr. Edman to $620,000 to reflect the increase in his responsibilities upon becoming our chief executive officer effective January 1, 2014, while also positioning him at slightly below the 25th percentile of CEOs of our 2014 Peer Group.
The 2014 increases in base pay for our executive officers, including Mr. Edman, became effective on March 17, 2014. A summary of base salary increases made for 2014 is outlined below for each of our executive officers:
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| |
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|
Base Salary |
|
| Name |
|
|
|
2013 |
|
|
|
|
2014 |
|
|
|
|
Y/Y Change |
|
| Thomas T. Edman(1) |
|
|
|
$ |
550,000 |
|
|
|
|
$ |
620,000 |
|
|
|
|
|
12.7 |
% |
| Chung Tai Keung, Canice |
|
|
|
$ |
752,000 |
(2) |
|
|
|
$ |
752,000 |
(3) |
|
|
|
|
0 |
% |
| Douglas L. Soder |
|
|
|
$ |
412,000 |
|
|
|
|
$ |
412,000 |
|
|
|
|
|
0 |
% |
| Todd B. Schull(4) |
|
|
|
$ |
350,000 |
|
|
|
|
$ |
370,000 |
|
|
|
|
|
5.7 |
% |
| (1) |
Mr. Edman joined our company and became our President effective January 7, 2013. Mr. Edman was appointed our Chief Executive Officer effective
January 1, 2014. |
| (2) |
Includes housing allowance of approximately $260,000. Also includes an additional component of base salary of approximately $107,000 paid subsequent to 2013 year end,
as is consistent with competitive practices in the region in recognition of the Chinese New Year. |
| (3) |
Includes housing allowance of approximately $260,000. Also includes an additional component of base salary of approximately $107,000 paid subsequent to 2014 year end,
as is consistent with competitive practices in the region in recognition of the Chinese New Year. |
| (4) |
Mr. Schull joined our company as Executive Vice President on February 20, 2013, and became our Chief Financial Officer effective March 2, 2013.
|
Base Salaries for 2015. Base salary deliberations for 2015 were conducted from December 2014 to
February 2015.
In January 2015, Mr. Edman, our chief executive officer, met with our compensation committee to present
recommendations for each of our executive officers (other than himself). In considering these recommendations, the compensation committee reviewed the composite market survey data provided by Radford and peer group data. Mr. Edman recommended
that the base salaries of Mr. Chung not be changed, as his compensation remained above the median for officers holding similar positions in comparable companies, while the base salary
27
for Mr. Schull be increased, as he would remain in the 25th to 50th percentile of our peer companies. Mr. Edman also recommended that the base salary for Mr. Soder be increased
moderately, in accordance with average merit increases for the North American business unit. After its review, in February 2015 our compensation committee approved the base salaries recommended by Mr. Edman for our other executive officers.
For 2015, our compensation committee ultimately recommended, and all of our non-employee directors approved, increasing the
base salary for Mr. Edman to $650,000. Mr. Edman was appointed as our chief executive officer effective January 1, 2014 with a base salary of $620,000. In addition to motivating and retaining our key leadership talent, our
compensation philosophy targets base pay between 25 and 50 percent. Mr. Edman’s base salary was adjusted to reflect our company’s pay philosophy, current market conditions, peer company comparisons, and his overall performance, which
was consistent with our independent compensation consultant’s recommendations. The 2015 increases in base pay for our executive officers, including Mr. Edman, became effective on March 16, 2015. A summary of base salary increases made
for 2015 is outlined below for each of our executive officers:
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| |
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|
|
Base Salary |
|
| Name |
|
|
|
2014 |
|
|
|
|
2015 |
|
|
|
|
Y/Y Change |
|
| Thomas T. Edman |
|
|
|
$ |
620,000 |
|
|
|
|
$ |
650,000 |
|
|
|
|
|
4.8 |
% |
| Chung Tai Keung, Canice |
|
|
|
$ |
752,000 |
(1) |
|
|
|
$ |
752,000 |
(2) |
|
|
|
|
0.0 |
% |
| Douglas L. Soder |
|
|
|
$ |
412,000 |
|
|
|
|
$ |
424,000 |
|
|
|
|
|
2.9 |
% |
| Todd B. Schull |
|
|
|
$ |
370,000 |
|
|
|
|
$ |
400,000 |
|
|
|
|
|
8.1 |
% |
| (1) |
Includes housing allowance of approximately $260,000. Also includes an additional component of base salary of approximately $107,000 paid subsequent to 2014 year end,
as is consistent with competitive practices in the region in recognition of the Chinese New Year. |
| (2) |
Includes housing allowance of approximately $260,000. Also includes an additional component of base salary of approximately $107,000 paid subsequent to 2015 year end,
as is consistent with competitive practices in the region in recognition of the Chinese New Year. |
Annual
Incentive Bonus Plan. In addition to base salaries, our compensation committee believes that annual performance-based cash bonuses play an important role in providing incentives to our executive officers to achieve near-term performance goals.
To support collaboration within our senior management team, our compensation committee rewards all of our executive officers for company-wide performance by tying bonus awards to our operating income. The compensation committee believes operating
income is a good indicator in capturing our success given the market in which we compete and is a measure that management can easily track and communicate to employees throughout the performance period. Each executive officer has a target annual
incentive bonus opportunity, expressed as a percentage of base salary, with the ability to earn above or below that target based on our company’s actual performance. Payments pursuant to our management incentive plan are intended to qualify as
“Performance Awards” under our 2006 Incentive Compensation Plan, referred to as the 2006 Plan, and our TTM Technologies, Inc. 2014 Incentive Compensation Plan, referred to as the 2014 Plan, and thereby constitute performance-based
compensation not subject to the deductibility limitations of Section 162(m).
For 2014, in response to the recommendation
of management, our compensation committee determined that the incentive bonuses for Messrs. Chung and Soder should be based 30% on our global operating income and 60% on the operating income of the business unit for which such executive is primarily
responsible. In addition, 10% of the target bonus for each of such officers, as well as Messrs. Edman and Schull, was based on individual goals proposed by our chief executive officer and approved by our compensation committee. Annual incentive
bonus compensation programs for other management personnel are based on a combination of consolidated company, business unit and/or facility results, as well as individual goals that are established with input from the specific employee and his or
her supervisors. Further, our company must achieve a minimum of 60% of the global operating income target for any payout to be earned under the annual incentive bonus plan. This type of program design motivates business units to work together to
achieve greater returns for our stockholders. In any one year, because we are comprised of a number of different business units, managers in high-performing business units may receive significantly more compensation than managers in business units
that do not perform well.
28
Because such a large percentage of executive officer compensation is performance-based, our
compensation committee invests significant time determining the financial target for our annual cash bonus program. In general, management makes the initial recommendation for the financial target based upon our company’s annual board-approved
budget, as well as the bonus opportunity for each officer, and these recommendations are reviewed and discussed by the committee and its advisors. The major factors used in setting one or more targets for a particular year are the results for the
most recently completed year and the budget for the current year. Other factors taken into account may include general economic and market conditions. Our compensation committee sets the final corporate performance goal during our first quarter,
typically at a level our compensation committee believes is challenging, but reasonable, for management to achieve.
At the
end of each year, our compensation committee determines the level of achievement for the specified financial goal (after making any appropriate adjustments to such goal for the effects of corporate events that were not anticipated in establishing
the performance measure) and awards credit for the achievement of the goal as a percentage of the target bonus. Final determinations as to bonus levels are then based on that percentage. Actual bonuses are generally paid to the executives in the
first quarter of the subsequent year.
In setting annual incentive compensation financial targets and bonus opportunities for
our executive officers, our compensation committee does not consider the effect of past changes in stock price. In addition, incentive compensation decisions are made without regard to length of service. For example, executive officers with longer
service or who are eligible for retirement do not receive greater or lesser awards, or larger or smaller target amounts, in any given year than executives with shorter service.
2014 Annual Incentive Bonuses. For 2014, our compensation committee determined to make the following changes from our 2013
management incentive plan:
| |
• |
|
modify the 2014 global and regional business unit operating income targets to exclude all stock-based compensation expense (rather than just PRU
expense) and all amortization of intangibles; |
| |
• |
|
increase the bonus level percentages for our executive vice presidents as reflected in the following table; |
| |
• |
|
consistent with our treatment of our other executive officers, base 10% of the target bonus for our chief executive officer on the attainment of
individual goals; and |
| |
• |
|
allow the use of ranges rather than specific target percentages for senior officers who participate in the incentive plan but are not executive
officers. |
The 2014 global and regional business unit operating income targets were again based on the
annual budget previously approved by our board of directors, after excluding stock-based compensation expense (including compensation expense attributable to our PRU program), goodwill impairment, building and other significant asset sales, asset
write-downs, plant closure and related layoff costs, acquisition costs, and amortization of intangibles. Upon achievement of the primary, operating income performance target(s), the bonus for each officer is payable pursuant to the formula described
in the following chart, but the actual bonus paid still depends on the officer’s achievement of the secondary, individual performance goals. The secondary, individual performance goals are intended to permit reducing the bonus amount from the
maximum payable by reason of achieving the operating income target(s). Even if the operating income target(s) are fully achieved, our compensation committee will have the discretion to reduce (but not increase) bonuses under the annual incentive
plan. Our compensation committee believes that this dual-level performance framework appropriately emphasizes operating income but also creates incentives for each of our officers to achieve the secondary, individual performance goals established by
our CEO and approved by our committee because the officer’s bonus is based in part on the extent to which his individual goals are achieved.
29
The table below lists the 2014 base salaries and bonus levels for each of our executive
officers during 2014.
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| |
|
2014
Base
Salary |
|
|
Annual Incentive Bonus Levels as % of Base Salary |
|
| Name |
|
|
60%
of Target(1) |
|
|
80%
of Target |
|
|
100%
of Target |
|
|
120%
of Target(2) |
|
| Thomas T. Edman |
|
$ |
620,000 |
|
|
|
30 |
% |
|
|
50 |
% |
|
|
100 |
% |
|
|
230 |
% |
| Chung Tai Keung, Canice |
|
$ |
752,000 |
(3) |
|
|
21.25 |
% |
|
|
35 |
% |
|
|
70 |
% |
|
|
150 |
% |
| Douglas L. Soder |
|
$ |
412,000 |
|
|
|
21.25 |
% |
|
|
35 |
% |
|
|
70 |
% |
|
|
150 |
% |
| Todd B. Schull |
|
$ |
370,000 |
|
|
|
21.25 |
% |
|
|
35 |
% |
|
|
70 |
% |
|
|
150 |
% |
| (1) |
Represents the percentage of 2014 base salary that the executive received since we achieved at least 60% of the operating income target(s) established by our board of
directors. Bonuses would not have been earned if operating income was less than 60% of the target(s). |
| (2) |
Represents maximum potential bonus payout. |
| (3) |
Includes housing allowance of approximately $260,000. Also includes an additional component of base salary of approximately $107,000 paid subsequent to 2014 year end,
as is consistent with competitive practices in the region in recognition of the Chinese New Year. |
In February
2015, our compensation committee reviewed our 2014 performance relative to the 2014 operating income goals and certified performance at 74.6% of the global operating income target, 78.5% of the North America Business Unit target, and 73.8% of the
Asia Pacific Business Unit target. The compensation committee also reviewed and assessed the attainment of the individual goals that had been established for Messrs. Edman, Chung, Soder and Schull. We use particular performance goals to insure that
other important areas of our business are measured and emphasized, which may include but are not limited to customer satisfaction, market positioning and growth, structural and organizational improvements, as well as critical projects and
assignments. Performance goals do not payout unless our company achieves its threshold financial performance metrics. As a result, our compensation committee authorized the payment of 2014 incentive bonuses as follows:
|
|
|
|
|
|
|
| Name |
|
|
|
2014 Incentive Bonus |
|
| Thomas T. Edman |
|
|
|
$ |
274,277 |
|
| Chung Tai Keung, Canice |
|
|
|
$ |
228,107 |
|
| Douglas L. Soder |
|
|
|
$ |
135,037 |
|
| Todd B. Schull |
|
|
|
$ |
115,286 |
|
2015 Annual Incentive Bonuses. For 2015, our compensation committee determined to make the
following changes from our 2014 management incentive plan:
| |
• |
|
add operating cash flow as a percentage of global revenue as a component of the overall bonus calculation (while reducing the percentage allocated to
global operating income to accommodate the inclusion of the operating cash flow as percentage of global revenue component) in order to incentivize cash management performance at the corporate level; and |
| |
• |
|
add operating cash flow as a percentage of the regional business unit revenue for the presidents of each of our business units (while reducing the
percentage allocated to regional business unit operating income to accommodate the inclusion of the regional measurement of operating cash flow) in order to incentivize cash management performance at the business unit level.
|
Our compensation committee determined to include operating cash flow as a bonus measurement because it
provides an important emphasis on properly balancing profitability with the overall balance sheet performance of our company. This measurement will constitute approximately 20% of our overall financial goals used to calculate a bonus payout if
achieved. The 2015 global and regional business unit operating income and operating cash flow as a percentage of revenue targets were again based on the annual budget previously approved by our board of directors, after excluding stock-based
compensation expense (including compensation expense
30
attributable to our PRU program), goodwill impairment, building and other significant asset sales, asset write-downs, plant closure and related layoff costs, acquisition costs, and amortization
of intangibles. Upon achievement of the primary, operating income and operating cash flow as a percentage of revenue performance target(s), the bonus for each officer will become payable pursuant to the formula described in the following chart, but
the actual bonus paid will still depend on the officer’s achievement of the secondary, individual performance goals as discussed above.
The table below lists the 2015 base salaries and bonus levels for each of our current executive officers.
|
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|
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|
|
|
|
|
|
|
|
| |
|
2015
Base
Salary |
|
|
Annual Incentive Bonus Levels as % of Base Salary |
|
| Name |
|
|
60%
of Target(1) |
|
|
80%
of Target |
|
|
100%
of Target |
|
|
120%
of Target(2) |
|
| Thomas T. Edman |
|
$ |
650,000 |
|
|
|
30 |
% |
|
|
50 |
% |
|
|
100 |
% |
|
|
230 |
% |
| Chung Tai Keung, Canice |
|
$ |
752,000 |
(3) |
|
|
25 |
% |
|
|
37.5 |
% |
|
|
75 |
% |
|
|
160 |
% |
| Douglas L. Soder |
|
$ |
424,000 |
|
|
|
25 |
% |
|
|
37.5 |
% |
|
|
75 |
% |
|
|
160 |
% |
| Todd B. Schull |
|
$ |
400,000 |
|
|
|
25 |
% |
|
|
37.5 |
% |
|
|
75 |
% |
|
|
160 |
% |
| (1) |
Represents the percentage of 2015 base salary that the executive will receive if we achieve 60% of the operating income target(s) established by our board of directors.
Bonuses will not be earned if operating income is less than 60% of the target(s). |
| (2) |
Represents maximum potential bonus payout. |
| (3) |
Includes housing allowance of approximately $260,000. Also includes an additional component of base salary of approximately $107,000 paid subsequent to 2015 year end,
as is consistent with competitive practices in the region in recognition of the Chinese New Year. |
Equity
Awards. We believe that providing a significant portion of our executive officers’ total compensation package in equity awards aligns the incentives of our executives with the interests of our stockholders and with our long-term success. By
compensating our executives with our equity, executives receive a stake in our company’s financial future, and the gains realized in the long term depend on the executives’ ability to drive our financial performance. Equity incentive
awards are also a useful vehicle for attracting and retaining executive talent in a competitive market.
Our compensation
committee develops its equity award determinations based on its judgment as to whether the total compensation packages provided to our executive officers, including prior equity awards and the level of vested and unvested equity awards then held by
each participating officer, are sufficient to retain, motivate, and adequately reward the executive officers. This judgment is based in part on information provided by benchmarking studies. In addition, our compensation committee considers the
accounting costs that will be reflected in our financial statements when establishing the forms of equity to be granted and the size of the grants, as well as the potential dilution associated with the equity awards.
We currently grant equity awards through our 2014 Plan, which was adopted by our board of directors and approved by our stockholders and
permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, and other stock-based awards to our officers, directors, employees, and consultants.
We continued to use our equity compensation program judiciously in 2014. Our year-to-date gross burn rate
(calculated using ISS’s methodology for calculating burn rate, as a percentage of our total outstanding shares) as of December 2014 was 2.0%, which approximates the 25th percentile of our peer companies. As of December 2014, our three-year average burn rate was 2.0%, which is positioned
between the 25th and 50th percentiles of our peer companies. We believe that these percentages
demonstrate our commitment to careful and efficient use of the shares that stockholders have approved for issuance under our 2006 Plan and our 2014 Plan.
Since 2010, we have used two forms of equity for long-term equity incentive compensation for our executive officers: time-vest restricted stock units (“RSUs”) and performance RSUs
(“PRUs”).
31
Restricted Stock Units. RSUs represent the right to receive one share of our
common stock for each RSU upon the settlement date, which is the date on which certain conditions, such as continued employment with us for a pre-determined length of time, are satisfied. RSU awards reflect both increases and decreases in stock
prices from the grant-date market prices and thus tie compensation more closely to changes in stockholder value at all levels compared to options, whose intrinsic value changes only when the market price of shares is above the exercise price. RSUs
also have retention value even during periods in which our trading price does not appreciate, which supports continuity in the senior management team. In addition, RSUs allow our compensation committee to deliver equivalent value with use of fewer
authorized shares.
Shares of our stock are issued to RSU holders as the awards vest. The vesting schedule for RSUs granted to
our executive officers and other employees provides that each award vests in three equal annual installments, aimed at strengthening retention with our company. In 2014, we granted time-vest RSUs for an aggregate of 777,128 shares of our common
stock to a total of 354 employees, of which time-vest RSUs for an aggregate of 147,028 shares were issued to Messrs. Edman, Chung, Soder and Schull.
Performance RSUs. In order to strengthen pay-for-performance, our compensation committee approved a long-term incentive program (referred to as the PRU Program) for our executive officers
and certain other members of our senior management team. Under this program, PRUs are awarded to eligible officers. PRU awards are intended to reward officers to the extent we achieve specific pre-established financial performance goals and provide
a long-term return to our stockholders relative to a broader market index. Implementation of this program represented an important step by our compensation committee to drive a pay-for-performance culture with a component explicitly linked to total
stockholder return.
Under the PRU Program, a target number of PRUs is awarded at the beginning of each three-year performance
period. The number of shares of our common stock released at the end of the performance period will range from zero to 2.4 times the target number depending on performance during the period. The performance metrics of the PRU Program are
(a) annual financial targets, which for 2013, 2014 and 2015 are based on revenue and EBITDA, each of which is equally weighted, and (b) an overall “modifier” based on our company’s total stockholder return (referred to as
TSR) over a three-year performance period relative to, for 2013 and 2014, a TSR Peer Group of 17 peer companies selected by our compensation committee and, for 2015, a TSR Peer Group of 18 peer companies selected by our compensation committee, each
as further described below. Payouts under the PRU Program are based on rolling three-year performance periods, and the annual financial metrics for future years may be different from those selected for 2013, 2014 and 2015.
Each PRU will be equal in value to one share of our common stock. Recipients of PRU awards generally must remain employed by us on a
continuous basis through the end of the relevant performance period in order to receive any amount of the PRUs covered by that award, except that recipients may be entitled to a pro-rata amount of PRUs in the case of the recipient’s death,
disability or “retirement” (voluntary termination by an employee who is at least 62 and has at least five years of continuous service).
The key financial metrics of revenue and EBITDA are equally weighted under our PRU Program. The metric of EBITDA is generally intended to focus our executives on tangible growth and cost reduction
opportunities. Our compensation committee believes that this is a key metric that both drives and demonstrates improved financial performance within our company. Similar to our calculation of the operating income metric used in our annual incentive
bonus program, EBITDA excludes stock-based compensation expense, goodwill impairment, building and other significant asset sales, asset write-downs, plant closure and related layoff costs, acquisition costs, amortization of intangibles, and loss on
extinguishment of debt. It is also a complementary metric to the revenue metric used under the PRU Program. The combination of the two performance metrics limits the ability of an executive to be rewarded for taking excessive risk on behalf of our
company by, for example, seeking revenue-enhancing opportunities at the expense of EBITDA, since performance is required on both metrics to maximize payout under the PRU Program. The performance targets established by our compensation committee are
used for compensation and budgeting purposes and should not be understood to be management’s expectations or guidance relating to future financial performance.
32
The TSR modifier is intended to ensure that there are no payouts or limited payouts under
the PRU Program if our stock performance is significantly below the median TSR of our TSR Peer Group for the three-year performance period. If the annual financial goals (currently revenue and EBITDA) are met and if there is strong relative TSR
performance over the three-year performance period, the PRU Program will provide substantial rewards to participants with respect to that performance period. However, even if revenue and EBITDA goals are achieved in each of the three years, there
will be no payout if our stock performance is below that of the 20th percentile TSR of our TSR Peer Group.
Under the PRU
Program, annual financial goals are set in the first quarter of each year, and performance is reviewed after the end of that year. For 2014 and 2015, the annual financial goals remain revenue and EBITDA, each of which is equally weighted. The
percentage to be applied to each participant’s target award ranges from zero to 160%, based upon the extent to which the two annual performance goals are achieved. If we do not achieve a 60% threshold level of revenue or EBITDA performance for
the year, the amount earned for that performance element of one-third of the award is zero. If we achieve the 60% threshold for both the targeted levels of revenue and EBITDA performance for the year, a percentage (ranging on a sliding scale from
40% to 160%) will be applied to one-third of the participant’s PRU award to determine the number of units earned during that year. If we achieve 120% or more of the target level of revenue or EBITDA, the amount earned for that performance
element of the award will be 160% of one-third of the initial PRU award. For example, if a named executive officer received a target award of 234,000 PRUs, we use revenue and EBITDA as our annual financial goals for each of the three years in the
performance period and we achieve (i) 130% of the revenue target and 60% of the EBITDA target in the first year, (ii) 100% of each of the revenue and EBITDA targets in the second year, and (iii) 120% of the revenue target and 55% of
the EBITDA target in the third year, the participant would earn (and “bank,” pending application of the TSR modifier) 218,400 PRUs ((160% x 39,000) + (40% x 39,000) + (100% x 39,000) + (100% x 39,000) + (160% x 39,000) + (0 x 39,000)).
At the end of the three-year performance period, the total units earned, if any, are adjusted by applying a modifier based on
our company’s TSR based on stock price changes (using for each year’s awards the 6-month trailing average closing price at the beginning of the year compared to the 6-month trailing average closing price three years later), assuming
reinvestment of dividends, relative to the TSR of our TSR Peer Group (a TSR Peer Group of 17 peer companies for PRUs granted in 2013 and 2014, and a TSR Peer Group of 18 peer companies for PRUs granted in 2015, each as further described below) for
the three-year period. If our TSR is in the bottom 20th percentile of the applicable TSR Peer Group, the modifier will be zero, and no shares will be released with respect to that three-year performance period. If our TSR is at or above the 80th
percentile of the applicable TSR Peer Group for the period, the maximum modifier of 150% will apply, and the number of shares released will equal 150% of the number of units earned during the period with respect to annual financial metric
performance. If our TSR is between the 20th and 50th percentile, the modifier will range on a sliding scale between .70 and 1.0. If our TSR is between the 50th and 80th percentile, the modifier will range on a sliding scale between 1.0 and 1.5.
For example, if a participant was credited with 218,400 PRUs at the end of the performance period and our TSR for that
three-year period was at the 80th percentile of the applicable group of comparable companies, a total of 327,600 shares of our common stock would be released to the participant for that period (218,400 x 150% = 327,600).
To achieve the maximum payout (240% of the initial PRU award), we must achieve the maximum annual financial goals for each of the three
years in the relevant performance period and our TSR must meet or exceed the 80th percentile of the TSRs of the applicable group of comparable companies for that period. Award values will reflect changes in stock price (both increases and decreases)
over the three-year period because awards are denominated in stock units payable in shares.
Our compensation committee
approved a revision to the TSR modifier applicable to the PRU awards granted beginning in 2013 to provide for a modifier that compares our TSR to the TSR of a group of peer companies (which we refer to as the TSR Peer Group) over the three-year
performance period, instead of the
33
broader S&P 600. Our compensation committee believes that the selected peer group is more appropriate for determining TSR under our PRU Program as it provides a comparison of our
company’s stock price performance against our global competitors and better alignment with shareholder investment choices. For 2014, our compensation committee selected the following companies to comprise the 2014 TSR Peer Group:
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|
|
|
|
| • AT&S Austria Technologie |
|
• Compeq Manufacturing Co., Ltd. |
|
• Flextronics International Ltd. |
| • Kingboard Chemical Holdings Ltd. |
|
• Gold Circuit Electronics Ltd., |
|
• HannStar Board Corporation |
| • Ibiden Co., Ltd. |
|
• Multi-Fineline Electronix, Inc. |
|
• Nanya Technology Corporation |
| • Sanmina Corporation |
|
• Samsung Electro-Mechanics Co., Ltd. |
|
• Tripod Technology Corporation |
| • Unimicron Technology Corp. |
|
• Unitech Printed Circuit Board Corp. |
|
• Viasystems Group, Inc. |
| • WUS Printed Circuit Co., Ltd. |
|
• Zhen Ding Technology Holding Limited |
|
|
For 2015, our compensation committee selected the following companies to comprise the 2015 TSR Peer
Group:
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|
|
|
|
| • AT&S Austria Technologie |
|
• Compeq Manufacturing Co., Ltd. |
|
• Daeduck Gds Co Ltd |
| • Flextronics International Ltd. |
|
• Kingboard Chemical Holdings Ltd. |
|
• Gold Circuit Electronics Ltd., |
| • HannStar Board Corporation |
|
• Ibiden Co., Ltd. |
|
• Multi-Fineline Electronix, Inc. |
| • Nanya Technology Corporation |
|
• Sanmina Corporation |
|
• Samsung Electro-Mechanics Co., Ltd. |
| • SimmTech Co. Ltd. |
|
• Tripod Technology Corporation |
|
• Unimicron Technology Corp. |
| • Unitech Printed Circuit Board Corp. |
|
• WUS Printed Circuit Co., Ltd. |
|
• Zhen Ding Technology Holding Limited |
The TSR Peer Group will be subject to adjustment to account for events such as acquisitions, mergers, and
the like.
Equity Award Mix. Our compensation committee may in the future adjust the mix of equity award types
or approve different awards as part of the overall long-term incentive award. Awards made in connection with a new, extended or expanded employment relationship may involve a different mix of performance and time-vest RSUs, options or other
equity-related awards depending on our compensation committee’s assessment of the total compensation package being offered.
2014 Equity Awards. For 2014, our compensation committee determined to use the same long-term target amounts as 2013 for the presidents of our regional business units, while increasing the
target amount for Mr. Schull so that all of our executive vice presidents received the same equity awards. Our compensation committee determined to increase Mr. Edman’s equity grant to reflect his increased responsibilities and base
34
salary as our chief executive officer, and increased the percentage of his long-term incentive target amount that consists of PRUs to 70% (compared to 55% in 2013) to further link our chief
executive officer’s compensation to performance. In addition, as discussed above, for our 2014 PRU program, the compensation committee determined to include a TSR modifier that will compare our TSR against the TSR of the TSR Peer Group.
The following table sets forth the estimated value of our 2014 equity awards and the number of time-vest RSUs and PRUs
awarded to our executive officers for 2014.
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|
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|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Dollar Value of RSUs |
|
|
Number of RSUs(1) |
|
| Name |
|
Performance |
|
|
Time-Vest(2) |
|
|
Performance |
|
|
Time-Vest(2) |
|
| Thomas T. Edman |
|
$ |
910,000 |
|
|
$ |
390,000 |
|
|
|
100,220 |
|
|
|
42,952 |
|
| Chung Tai Keung, Canice |
|
$ |
385,000 |
|
|
$ |
315,000 |
|
|
|
42,401 |
|
|
|
34,692 |
|
| Douglas L. Soder |
|
$ |
385,000 |
|
|
$ |
315,000 |
|
|
|
42,401 |
|
|
|
34,692 |
|
| Todd B. Schull |
|
$ |
385,000 |
|
|
$ |
315,000 |
|
|
|
42,401 |
|
|
|
34,692 |
|
| (1) |
The number of RSUs awarded to each of our executive officers was calculated using a dollar value per share of $9.08, which was the six-month trailing average closing
price of our common stock as of February 19, 2014, the grant date for those awards. On February 19, 2014, the closing sales price for our common stock was $8.00. |
| (2) |
One-third of the RSUs vest on each of the first three anniversaries of the grant date. |
In February 2015, our compensation committee reviewed our 2014 performance relative to the 2014 revenue and EBITDA
goals and certified performance at approximately 95.7% and 83.8% of those targets, respectively. We ranked below the
20th percentile of S&P 600 TSR performance over the
three-year performance period applicable to the PRU awards granted in 2012. As a result, no shares were paid out under the 2012 PRU awards.
2015 Equity Awards. For 2015, our compensation committee determined to use the same long-term target amounts as 2014 for each our named executive officers. Our compensation committee
balances the mix of time-vest RSUs, which are geared to promote retention, and PRUs, which are geared to grow long-term value with our company, in accordance with the overall philosophy valuing both components of equity compensation, with an
emphasis on driving long-term value. In determining the ratio between PRU and time-vest RSU awards, the compensation committee reviewed and took into consideration compensation practices at other companies, our compensation consultants’
recommendations, and the compensation committee’s desire to insure that a significant portion of equity compensation be tied to our company’s performance against our peers. Additionally, the compensation committee needed to insure that its
equity program was competitive, provided long term retention of critical leadership talent, and best aligned pay practices with the interests of our shareholders. The following table sets forth the estimated value of our 2015 equity awards and the
number of time-vest RSUs and PRUs awarded to our executive officers for 2015.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Dollar Value of RSUs |
|
|
Number of RSUs(1) |
|
| Name |
|
Performance |
|
|
Time-Vest(2) |
|
|
Performance |
|
|
Time-Vest(2) |
|
| Thomas T. Edman |
|
$ |
910,000 |
|
|
$ |
390,000 |
|
|
|
127,451 |
|
|
|
54,622 |
|
| Chung Tai Keung, Canice |
|
$ |
385,000 |
|
|
$ |
315,000 |
|
|
|
53,922 |
|
|
|
44,118 |
|
| Douglas L. Soder |
|
$ |
385,000 |
|
|
$ |
315,000 |
|
|
|
53,922 |
|
|
|
44,118 |
|
| Todd B. Schull |
|
$ |
385,000 |
|
|
$ |
315,000 |
|
|
|
53,922 |
|
|
|
44,118 |
|
| (1) |
The number of RSUs awarded to each of our executive officers was calculated using a dollar value per share of $7.14, which was the six-month trailing average closing
price of our common stock as of February 25, 2015, the grant date for those awards. On February 25, 2015, the closing sales price for our common stock was $8.80. |
| (2) |
One-third of the RSUs vest on each of the first three anniversaries of the grant date. |
The annual financial performance goal or goals for 2016 and future years will be established in the first quarter of each of those
subsequent years, and may or may not be based on our revenue and/or EBITDA in those
35
years. Whether any units credited under our 2013, 2014 and 2015 grants will be paid out in shares at the end of the applicable three-year period will depend on future results and our TSR during
that period, neither of which is determinable until the end of the three-year period.
Other Compensation Elements
Nonqualified Deferred Compensation. In October 2011, we adopted a deferred compensation plan that allows our directors,
executive officers and other eligible employees voluntarily to defer receipt, on a pre-tax basis, of some of the compensation they have earned. This plan allows eligible employees to defer more compensation than they otherwise would be permitted to
defer under our 401(k) savings plan. Our compensation committee approved the deferred compensation plan as a competitive practice to help us attract and retain top talent, and we expect to re-evaluate the plan from time to time. Amounts credited
under the plan are credited with deemed earnings, but we do not provide matching or other employer contributions under this plan. Due to its conservative design, the benefits provided under our deferred compensation plan are not considered a
material element of an executive officer’s overall compensation package. In 2013, Messrs. Edman, Soder, and Schull, elected to participate in our deferred compensation plan for 2014 and deferred a portion of their 2013 incentive bonuses paid in
March 2014. In 2014, Messrs. Soder and Schull elected to participate in our deferred compensation plan for 2015 and deferred a portion of their 2014 incentive bonuses paid in March 2015.
Other Compensation. All of our executive officers are eligible to participate in our employee benefit plans, including
medical, dental, life insurance, and 401(k) plans. These plans are available to all of our employees and do not discriminate in favor of executive officers. It is generally our policy to not extend significant perquisites to executives that are not
broadly available to our other employees. In designing these elements, we seek to provide an overall level of benefits that is competitive with that offered by similarly situated companies in the markets in which we operate based upon our general
understanding of industry practice. These benefits are not considered by our compensation committee in determining the compensation of our executive officers.
Severance Payments and Accelerated Vesting of Equity Awards Upon Termination and/or a Change in Control.
All Employees.
We currently provide for the accelerated vesting of
time-vest RSUs that otherwise would have vested during the one-year period beginning on the date of consummation of any “change in control.” We also provide, in the event of a voluntary termination of employment in connection with
“retirement” (age 62 with at least five years of employment with our company), our termination of a retirement-eligible employee without cause, or termination by reason of death or disability, for the acceleration of vesting of a pro-rated
amount of RSUs based upon the number of months the retired, retirement-eligible, deceased or disabled employee was employed with us during the vesting period. In all other terminations of employment, including termination without cause, all unvested
RSUs will be forfeited. In prior years we provided for the accelerated vesting of a pro-rated amount of RSUs on termination without cause.
Executive Officers and Certain Senior Officers.
Our board has approved
Executive Change in Control Severance Agreements (“Severance Agreements”) for each of our executive officers and two other senior officers. Each severance agreement provides that, subject to our company receiving a general release of
claims from the executive, in the event the executive’s employment is terminated (i) by our company without “Cause” during a “Pending Change in Control” (as such terms are defined in the Severance Agreement) or within
12 months following a “Change in Control” (as defined in the Severance Agreement) or (ii) by the executive for “Good Reason” (as defined in the Severance Agreement) within 12 months following a Change in Control, the
executive will be entitled to receive an amount in cash equal to two times the sum of (a) the executive’s annual base salary and (b) the amount of the executive’s annual target bonus for the year in which the executive was
terminated assuming the achievement of 100% of the performance target levels associated with such annual target bonus. In addition, we provide for accelerated vesting of all RSUs then
36
outstanding in the event of a termination without Cause during a Pending Change in Control or within 12 months following a Change in Control or a termination by the executive for Good Reason
within 12 months of a Change in Control. The change in control severance payments and accelerated vesting of equity awards are intended to provide a level of transition assistance in the event of an involuntary termination of employment and to keep
our executives focused on our business rather than their personal circumstances. Our compensation committee believes these provisions are fair and reasonable based on its understanding of market practices among industry competitors and within the
broader environment of technology companies and similarly sized businesses. We also believe that it is appropriate to require a termination of employment within one year following a change in control before full vesting is accelerated and the cash
severance amounts become payable. We presume that such a termination would likely be due to the change in control and not the employee’s performance. For executives not terminated within one year of a change in control, the executives would
continue to vest in their awards as they contribute to the success of the surviving company.
Calculations of the payments due
to our named executive officers upon certain terminations of employment and/or in connection with a change in control are set forth under “Potential Payments upon Termination or Change in Control.” We believe these severance benefits are
an essential element of our compensation package for executive officers and assist us in recruiting and retaining talented individuals. In addition, we believe that it is more equitable to offer severance benefits based on a standard formula
determined as a multiple of base pay and incentive bonus opportunity because severance often serves as a bridge when employment is involuntarily terminated, and should therefore not be affected by other, longer-term compensation arrangements. As a
result, and consistent with the practice of most of our peer companies, other compensation decisions are not generally based on the existence of these change in control severance protections.
Director and Officer Indemnification Agreement. Effective December 10, 2014, we entered into an amended and restated
indemnification agreement with each of our directors and an indemnification agreement with certain of our corporate officers, including all of our named executive officers. Pursuant to this indemnification agreement, each director or officer party
thereto will be indemnified to the fullest extent permitted by applicable law against all expenses, judgments, penalties, fines, and amounts paid in settlement actually and reasonably incurred by such director or officer, or on such director or
officer’s behalf, arising out of his or her service as a director or officer. The indemnification agreement further provides procedures for the determination of an indemnitee’s right to receive indemnification and the advancement of
expenses.
Prohibitions on Hedging and Pledging of Shares. Among other things, our insider trading policy
prohibits our executive officers from engaging in put, call, derivative or short sale transactions, as well as pledging our securities as collateral for a loan.
Stock Ownership Guidelines. We do not currently maintain stock ownership guidelines for our officers. Pursuant to our Corporate Governance Guidelines, however, our independent directors are
ordinarily expected over time to beneficially own shares of our common stock having a value of at least three times their annual retainer (including shares owned outright, unvested shares, restricted stock units, and stock options).
Clawback Policy. Our compensation committee does not currently have an established clawback policy or practice regarding
the adjustment or recovery of awards or payments if the relevant performance measures upon which they are based are restated or otherwise adjusted in a manner that would reduce the size of an award or payment. However, in compliance with the
implementation of rules under the Dodd-Frank Act, the committee expects that in the future it will establish mechanisms to recover incentive compensation in the event of a financial restatement or similar event.
Approval Process for Equity Grants
Executives and other employees currently receive long-term equity awards pursuant to the terms of our 2014 Plan. Awards may also be granted outside of the 2014 Plan to the extent those grants are
permitted by the Nasdaq rules. Our compensation committee administers the 2014 Plan and establishes the rules for all awards granted
37
thereunder, including grant guidelines, vesting schedules, and other provisions. The compensation committee reviews these rules from time to time and considers, among other things, the interests
of our stockholders, market conditions, information provided by our compensation consultant and legal advisor, performance objectives, and recommendations made by our chief executive officer.
Our compensation committee reviews awards for all employees. The compensation committee has established a process in which our
compensation committee reviews the recommendations of our chief executive officer for executives (other than himself) and other employees, modifies the proposed grants in certain circumstances, and approves the awards effective as of the date of its
approval.
We have no practice of timing grants of stock options or RSUs to coordinate with the release of material non-public
information, and we have not timed the release of material non-public information for the purpose of affecting the value of named executive officer compensation. In addition, our practice of calculating the number of equity awards based on the
six-month trailing average closing price of our common stock mitigates the effects of both our stock price volatility and the impact of grant timing.
Impact of Tax and Accounting
As a general matter, our compensation
committee takes into account the various tax and accounting implications of the compensation vehicles employed by us. However, while structuring compensation programs that result in more favorable tax and financial reporting treatment is a general
principle, our compensation committee balances these goals with other business needs that may be inconsistent with obtaining the most favorable tax and accounting treatment for each component of compensation.
Deductibility. Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) does not permit
publicly traded companies to take income tax deductions for compensation paid to our chief executive officer and certain other executive officers to the extent that compensation exceeds $1 million per officer in any taxable year and does not
otherwise qualify as performance-based compensation. The 2014 Plan is structured so that the compensation deemed paid to an executive officer in connection with annual bonuses under the management incentive plan and PRUs granted under the 2014 Plan
should qualify as performance-based compensation not subject to the $1 million limitation. Our time-vest RSUs are not considered performance-based under the Section 162(m) rules. Accordingly, amounts of compensation related to those time-vest
RSUs held by our executive officers may not be fully deductible (depending on the value of our stock and the amount of other nonperformance-based compensation an officer has during the year in which any portion of the RSU vests).
Our compensation committee will continue to consider steps that might be in our best interests to comply with Section 162(m) of the
Code. However, in establishing the cash and equity incentive compensation programs for our executive officers, our compensation committee believes that the potential deductibility of the compensation payable under those programs should be only one
of a number of relevant factors taken into consideration, and not the sole or primary factor. The compensation committee believes that cash and equity incentive compensation must be maintained at the requisite level to attract and retain the
executive officers essential to our financial success, even if all or part of that compensation may not be deductible by reason of the limitations of Section 162(m) of the Code.
Tax Implications for Officers. Section 409A of the Code imposes additional income taxes on executive officers for
certain types of deferred compensation that do not comply with Section 409A. We attempt in good faith to structure compensation so that it either conforms with the requirements of or qualifies for an exception under Code Section 409A.
Section 280G of the Code imposes an excise tax on payments to executives of severance or change of control compensation that exceed the levels specified in the Section 280G rules. Our executive officers could receive the amounts shown in
the section entitled “Potential Payments Upon Termination or Change in Control” below as severance or change of control payments that could trigger this excise tax. We do not offer our officers as part of their change of control benefits
any gross ups related to this excise tax under Code Section 4999.
38
Accounting Considerations. When determining amounts of long-term incentive
grants to executives and employees, our compensation committee examines the accounting cost associated with the grants. Under Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718, Compensation — Stock
Compensation, grants of stock options and restricted stock units result in an accounting charge for us equal to the grant date fair value of those securities. For time-vest RSUs, the accounting cost is generally equal to the fair market value of the
underlying shares of common stock on the grant date of the award. The cost is then amortized over the requisite service period. For PRUs, the accounting cost is calculated using a Monte Carlo simulation model. Our compensation committee believes
that the many advantages of equity compensation, as discussed above, more than compensate for the non-cash accounting expense associated with them.
COMPENSATION COMMITTEE REPORT
The material
in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference into any filing of the company under the Securities Act of 1933, as amended, or the Securities Exchange
Act of 1934, as amended.
Our compensation committee has reviewed and discussed with management the Compensation
Discussion and Analysis included in this proxy statement. Based on such review and discussion, the compensation committee recommended to our board of directors, and our board of directors approved, that the Compensation Discussion and Analysis be
included in this proxy statement.
James K. Bass, Chairman
Ronald W. Iverson
Robert E. Klatell
Compensation Committee Interlocks and Insider Participation
During 2014, Messrs. Bass, Iverson and Klatell served on our compensation committee, with Mr. Bass appointed Chairman on April 24, 2013. None of these individuals had any contractual or other
relationships with us during such year except as directors. No interlocking relationship exists between any member of our compensation committee and any member of any other company’s board of directors or compensation committee.
39
EXECUTIVE COMPENSATION
Fiscal Year 2014 Summary Compensation Table
The following table sets forth compensation information for our named executive officers.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name and
Principal Position |
|
Year |
|
|
Salary |
|
|
Bonus |
|
|
Stock
Awards(1)
|
|
|
Non-
Equity
Incentive
Plan
Compen-
sation(2) |
|
|
All
Other
Compen-
sation(3) |
|
|
Total |
|
| Thomas T. Edman |
|
|
2014 |
|
|
$ |
603,846 |
|
|
|
— |
|
|
$ |
617,887 |
|
|
$ |
274,277 |
|
|
$ |
10,400 |
|
|
$ |
1,506,410 |
|
| President, Chief Executive
Officer, and Director |
|
|
2013 |
|
|
$ |
528,846 |
|
|
|
— |
|
|
$ |
558,821 |
|
|
$ |
751,729 |
|
|
$ |
226,999 |
|
|
$ |
2,066,395 |
|
| Chung Tai Keung, Canice |
|
|
2014 |
|
|
$ |
488,835 |
(5) |
|
|
— |
|
|
$ |
393,576 |
|
|
$ |
228,107 |
|
|
$ |
295,388 |
|
|
$ |
1,405,906 |
|
| Executive Vice President and |
|
|
2013 |
|
|
$ |
489,051 |
(5) |
|
$ |
159,875 |
(6) |
|
$ |
410,770 |
|
|
$ |
554,510 |
|
|
$ |
291,129 |
|
|
$ |
1,905,335 |
|
| President, Asia Pacific
Business Unit(4) |
|
|
2012 |
|
|
$ |
492,322 |
(5) |
|
$ |
160,248 |
(6) |
|
$ |
490,764 |
|
|
|
— |
|
|
$ |
271,150 |
|
|
$ |
1,414,484 |
|
| Douglas L. Soder |
|
|
2014 |
|
|
$ |
412,000 |
|
|
|
— |
|
|
$ |
393,576 |
|
|
$ |
135,037 |
|
|
$ |
10,400 |
|
|
$ |
951,013 |
|
| Executive Vice President and |
|
|
2013 |
|
|
$ |
409,692 |
|
|
|
— |
|
|
$ |
410,770 |
|
|
$ |
527,214 |
|
|
$ |
10,200 |
|
|
$ |
1,357,876 |
|
| President, North America
Business Unit |
|
|
2012 |
|
|
$ |
399,231 |
|
|
|
— |
|
|
$ |
490,764 |
|
|
|
— |
|
|
$ |
10,000 |
|
|
$ |
899,995 |
|
| Todd B. Schull |
|
|
2014 |
|
|
$ |
365,385 |
|
|
|
— |
|
|
$ |
393,576 |
|
|
$ |
115,286 |
|
|
$ |
10,400 |
|
|
$ |
884,647 |
|
| Executive Vice President, Chief |
|
|
2013 |
|
|
$ |
293,462 |
|
|
|
— |
|
|
$ |
356,805 |
|
|
$ |
320,676 |
|
|
$ |
206,966 |
|
|
$ |
1,177,909 |
|
| Financial Officer, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Treasurer, and Secretary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1) |
The grant date fair value of all stock awards has been calculated in accordance with ASC Topic 718, Compensation — Stock Compensation. In the case of time-based
RSUs, the value is determined by multiplying the number of RSUs granted by the closing price of our common stock on the grant date. In the case of PRUs, the grant date fair value can only be determined for those tranches for which the revenue and
EBITDA targets have been set as of the reporting date. As a result, the grant date fair value of PRUs is calculated using only the first tranche of each award; the second and third tranches are not included because the relevant performance-based
vesting conditions have not been determined as of the initial reporting date of the awards. We use a Monte Carlo simulation model to calculate the grant date fair value of PRUs. For a discussion of valuation assumptions used in determining the grant
date fair value of the awards, see Note 14 to our 2014 consolidated financial statements, included in our annual report on Form 10-K filed with the SEC. |
PRUs have a potential payout of 0% to 240% of the target amount. For the 2014, 2013 and 2012 PRU awards, the values at the respective grant date, assuming the highest level of performance (240%) and
the closing share price on such dates ($8.00, $8.20, and $12.00, respectively), are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Value at 240% Performance |
|
| Name |
|
2014
|
|
|
2013
|
|
|
2012
|
|
| Thomas T. Edman |
|
$ |
1,924,224 |
|
|
$ |
1,070,513 |
|
|
|
— |
|
| Chung Tai Keung, Canice |
|
$ |
814,099 |
|
|
$ |
832,621 |
|
|
$ |
987,350 |
|
| Douglas L. Soder |
|
$ |
814,099 |
|
|
$ |
832,621 |
|
|
$ |
987,350 |
|
| Todd B. Schull |
|
$ |
814,099 |
|
|
$ |
713,676 |
|
|
|
— |
|
For the actual number of PRUs earned for the 2014, 2013 and 2012 performance periods, see the
“Outstanding Equity Awards at Fiscal Year-End” table.
| (2) |
Amounts represent bonuses paid based on company performance criteria for each year shown. These bonuses were earned in such fiscal year, but not paid until the next
fiscal year. |
| (3) |
For Messrs. Edman, Soder, and Schull, the amounts represent matching contributions by us to our 401(k) plan. The amount in 2014 for Mr. Chung represents (i) a
housing allowance of $263,160 and (ii) contributions by us in the amount of $32,228 to the Mandatory Provident Fund, a saving program for the retirement of residents in Hong Kong. |
40
| (4) |
The cash amounts paid to Mr. Chung in 2014 were paid in HKD and converted to U.S. Dollars using an exchange rate of 0.1290 HKD per U.S. Dollar. The cash amounts
paid to Mr. Chung in 2013 and 2012 were paid in HKD and converted to U.S. Dollars using an exchange rate of 0.1289 HKD per U.S. Dollar. |
| (5) |
The base salary amounts for 2014, 2013, and 2012 for Mr. Chung include a component paid subsequent to each such fiscal year, as is consistent with competitive
practices in the region in recognition of Chinese New Year, in the amount of $107,428, $107,345, and $104,162, respectively. |
| (6) |
Represents a retention bonus for each respective reporting year. |
Fiscal Year 2014 Grants of Plan-Based Awards
The following table provides
information on awards granted under our annual management incentive plan for 2014 and awards of PRUs and awards of time-based RSUs granted as part of 2014 long-term incentive compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Type of
Award |
|
Grant
Date |
|
|
Estimated Future Payouts
Under
Non-Equity Incentive Plan
Awards(1) |
|
|
Estimated Future Payouts
Under
Equity Incentive Plan
Awards(2) |
|
|
All Other
Stock
Awards:
Number
of Shares
of
Stock
or Units(3) |
|
|
Fair
Value of
Stock
Awards
($/Sh) |
|
|
Grant-
Date
Fair
Value of
Stock
Awards(4) |
|
| |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
|
|
| Thomas T. Edman |
|
Incentive
Bonus |
|
|
— |
|
|
$ |
186,000 |
|
|
$ |
620,000 |
|
|
$ |
1,426,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
PRU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
28,062 |
|
|
|
100,220 |
|
|
|
240,528 |
|
|
|
— |
|
|
$ |
8.21 |
|
|
$ |
274,271 |
|
|
|
RSU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
42,952 |
|
|
$ |
8.00 |
|
|
$ |
343,616 |
|
| Chung Tai Keung, Canice |
|
Incentive
Bonus |
|
|
— |
|
|
$ |
159,800 |
|
|
$ |
526,400 |
|
|
$ |
1,128,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
PRU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,872 |
|
|
|
42,401 |
|
|
|
101,762 |
|
|
|
— |
|
|
$ |
8.21 |
|
|
$ |
116,040 |
|
|
|
RSU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,692 |
|
|
$ |
8.00 |
|
|
$ |
277,536 |
|
| Douglas L. Soder |
|
Incentive
Bonus |
|
|
— |
|
|
$ |
87,550 |
|
|
$ |
288,400 |
|
|
$ |
618,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
PRU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,872 |
|
|
|
42,401 |
|
|
|
101,762 |
|
|
|
— |
|
|
$ |
8.21 |
|
|
$ |
116,040 |
|
|
|
RSU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,692 |
|
|
$ |
8.00 |
|
|
$ |
277,536 |
|
| Todd B. Schull |
|
Incentive
Bonus |
|
|
— |
|
|
$ |
78,625 |
|
|
$ |
259,000 |
|
|
$ |
555,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
PRU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11,872 |
|
|
|
42,401 |
|
|
|
101,762 |
|
|
|
— |
|
|
$ |
8.21 |
|
|
$ |
116,040 |
|
|
|
RSU |
|
|
2/19/2014 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,692 |
|
|
$ |
8.00 |
|
|
$ |
277,536 |
|
| (1) |
Amounts represent the range of possible cash payouts for 2014 awards under our management incentive bonus plan. |
| (2) |
Amounts represent the range of shares that may be released at the end of the three-year performance period applicable to the PRU award assuming achievement of threshold
performance. If our revenue and EBITDA performance is below threshold for each year during the performance period or if our TSR for the period is in the bottom 20th percentile of the TSR Peer Group, no shares will be released at the end of the
period. See the discussion of PRU awards under “Compensation Discussion and Analysis — Equity Awards.” |
| (3) |
The RSU awards vest one-third on each of the first, second and third anniversaries of the date of grant. |
| (4) |
See footnote (1) to the Fiscal Year 2014 Summary Compensation Table for a description of the method used to determine the grant date fair value of stock awards.
|
41
Outstanding Equity Awards at Fiscal Year-End 2014
The following table sets forth the outstanding equity awards held by our named executive officers as of December 29, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Stock Awards |
|
| |
|
Option Awards |
|
|
Number of
Shares or
Units of Stock
that Have
Not
Vested |
|
|
Market
Value of
Shares or
Units of
Stock
that
Have Not
Vested(1) |
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares, Units
or
Other
Rights that
Have Not
Vested |
|
|
Equity
Incentive
Plan
Awards:
Market
Value
of
Unearned
Shares, Units
or Other
Rights that
Have Not
Vested(1) |
|
| |
|
Number of Securities
Underlying Unexercised
Options |
|
|
Option
Exercise
Price |
|
|
Option
Expiration
Date |
|
|
|
|
|
| Name |
|
Exercisable |
|
|
Unexercisable |
|
|
|
|
|
|
|
| Thomas T. Edman |
|
|
4,000 |
|
|
|
— |
|
|
$ |
6.70 |
|
|
|
8/25/2015 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
4,000 |
|
|
|
— |
|
|
$ |
13.55 |
|
|
|
6/22/2016 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
28,391 |
(2) |
|
$ |
214,352 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
42,952 |
(3) |
|
$ |
324,288 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53,085 |
(8) |
|
$ |
400,792 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
95,101 |
(9) |
|
$ |
718,013 |
|
| Chung Tai Keung, Canice |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,350 |
(4) |
|
$ |
70,593 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,076 |
(5) |
|
$ |
174,224 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,692 |
(3) |
|
$ |
261,925 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,265 |
(7) |
|
$ |
228,501 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41,290 |
(8) |
|
$ |
311,740 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
40,235 |
(9) |
|
$ |
303,774 |
|
| Douglas L. Soder |
|
|
30,000 |
|
|
|
— |
|
|
$ |
11.71 |
|
|
|
11/1/2016 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
1,666 |
|
|
|
— |
|
|
$ |
5.78 |
|
|
|
2/12/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
1,666 |
|
|
|
— |
|
|
$ |
7.85 |
|
|
|
5/7/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
3,333 |
|
|
|
— |
|
|
$ |
10.97 |
|
|
|
8/5/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
3,333 |
|
|
|
— |
|
|
$ |
11.35 |
|
|
|
11/5/2019 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
9,350 |
(4) |
|
$ |
70,593 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
23,076 |
(5) |
|
$ |
174,224 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,692 |
(3) |
|
$ |
261,925 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,265 |
(7) |
|
$ |
228,501 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
41,290 |
(8) |
|
$ |
311,740 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
40,235 |
(9) |
|
$ |
303,774 |
|
| Todd B. Schull |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
19,544 |
(6) |
|
$ |
147,557 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
34,692 |
(3) |
|
$ |
261,925 |
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
35,392 |
(8) |
|
$ |
267,210 |
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
40,235 |
(9) |
|
$ |
303,774 |
|
| (1) |
Based on the closing price of our common stock on December 29, 2014. |
| (2) |
Such RSUs vest 50% on January 7, 2015 and 50% on January 7, 2016. |
| (3) |
Such RSUs vest one-third on each of February 19, 2015, 2016, and 2017. |
| (4) |
Such RSUs vest on March 1, 2015. |
| (5) |
Such RSUs vest 50% on February 28, 2015 and 50% on February 28, 2016. |
| (6) |
Such RSUs vest 50% on February 20, 2015 and 50% on February 20, 2016. |
| (7) |
Represents the number of PRUs granted in fiscal 2012, adjusted for actual achievement during 2012, 2013 and 2014 on the annual metrics of revenue and
EBITDA (each of which is equally weighted) with respect to the first one-third portion of the award attributable to 2012 performance, the second one-third portion of the award attributable to 2013 performance and the remaining one-third portion of
the award attributable to 2014 performance. For 2012, performance on the annual revenue metric was 91.5% of target and performance on the annual EBITDA metric was 71.3% of target, resulting in a blended multiplier of 72.1% for the 2012 performance
period. For 2013, performance on the annual revenue metric was 103.3% of target and performance on the annual EBITDA metric was 102.1% of target, resulting in a blended multiplier of
|
42
| |
108.1% for the 2013 performance period. For 2014, performance on the annual revenue metric was 95.7% of target and performance on the annual EBITDA metric was 83.8% of target, resulting in a
blended multiplier of 84.7% for the 2014 performance period. The blended multiplier of 72.1% for the 2012 performance period applies to the first one-third of the PRUs; the blended multiplier of 108.1% for the 2013 performance period applies to the
second one-third of the PRUs; and the blended multiplier of 84.7% for the 2014 performance period applies to the remaining one-third of the PRUs. Total PRUs credited at the conclusion of 2014 are adjusted by our performance on TSR as compared to the
S&P 600, which determines the number of shares, if any, released at the end of the three-year performance period. Our TSR performance over such three-year performance period was in the bottom 20th percentile. As a result, final payout under the
2012 PRU awards was zero. |
| (8) |
Represents the number of PRUs granted in fiscal 2013, adjusted for actual achievement during 2013 and 2014 on the annual metrics of revenue and EBITDA (each of which is
equally weighted) with respect to the first one-third portion of the award attributable to 2013 performance and the second one-third portion of the award attributable to 2014 performance. For 2013, performance on the annual revenue metric was 103.3%
of target and performance on the annual EBITDA metric was 102.1% of target, resulting in a blended multiplier of 108.1% for the 2013 performance period. For 2014, performance on the annual revenue metric was 95.7% of target and performance on the
annual EBITDA metric was 83.8% of target, resulting in a blended multiplier of 84.7% for the 2014 performance period. The blended multiplier of 108.1% for the 2013 performance period applies to the first one-third of the PRUs. The blended multiplier
of 84.7% for the 2014 performance period applies to the second one-third of the PRUs. The remaining units are reported at target and will be adjusted based on actual revenue and EBITDA performance during the 2015 performance period. Total PRUs
credited at the conclusion of 2015 will be adjusted by our performance on TSR as compared to the TSR Peer Group, which will determine the number of shares, if any, released at the end of the three-year performance period. |
| (9) |
Represents the number of PRUs granted in fiscal 2014, adjusted for actual achievement during 2014 on the annual metrics of revenue and EBITDA (each of which is equally
weighted) with respect to the first one-third portion of the award attributable to 2014 performance. The blended multiplier of 84.7% for the 2014 performance period (as discussed in footnote 8) applies to the first one-third of the PRUs granted for
2014; and the remaining units are reported at target and will be adjusted based on actual revenue and EBITDA performance during the applicable 2015 and 2016 performance periods. Total PRUs credited at the conclusion of 2016 will be adjusted by our
performance on TSR as compared to the TSR Peer Group, which will determine the number of shares, if any, released at the end of the three-year performance period. |
Option Exercises and Stock Vested in Fiscal Year 2014
The following table
sets forth information concerning the value realized by each of our named executive officers upon the vesting of stock awards during 2014. There were no stock option exercises by our named executive officers during 2014.
|
|
|
|
|
|
|
|
|
| |
|
Stock Awards |
|
| Name |
|
Number of Shares
Acquired on Vesting |
|
|
Value Realized
on Vesting(1) |
|
| Thomas T. Edman |
|
|
14,196 |
|
|
$ |
119,530 |
|
| Chung Tai Keung, Canice |
|
|
47,246 |
|
|
$ |
388,926 |
|
| Douglas L. Soder |
|
|
47,246 |
|
|
$ |
388,926 |
|
| Todd B. Schull |
|
|
9,772 |
|
|
$ |
77,590 |
|
| (1) |
The value realized equals the fair market value of our common stock on the date of vesting multiplied by the number of shares released on vest date.
|
2014 Nonqualified Deferred Compensation Table
Under our nonqualified deferred compensation plan, our directors are permitted to defer 5% to 100% of any director fees received in a particular plan year, while our named executive officers are permitted
to defer up to
43
100% of annual incentive bonuses received in a particular plan year. Interest on contributions is based on the valuation funds selected by our compensation committee and subsequently chosen by
the participant. Funds held under the plan are paid out six months following the separation of any participant from service with our company. The payout term will be in the form selected by the individual participant, unless the participant’s
separation from service with our company is prior to retirement (which is considered under the plan to be on or after attainment of age 62 with at least five years of continuous service with our company). If separation occurs prior to retirement or
the participant’s account balance is under $25,000, the payout will be made in the form of a lump sum.
The following
table sets forth information concerning our named executive officers’ contributions, earnings, and balances under our nonqualified deferred compensation plan for the fiscal year 2014. We do not contribute to the deferred compensation plan, and
in fiscal year 2014, there were no withdrawals by or distributions to the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
| Name |
|
Executive
Contributions in
Last Fiscal
Year(1) |
|
|
Aggregate
Earnings in
Last Fiscal
Year(2) |
|
|
Aggregate Balance
at Last Fiscal Year
End(3) |
|
| Thomas T. Edman |
|
$ |
375,865 |
|
|
$ |
15,690 |
|
|
$ |
391,555 |
|
| Chung Tai Keung, Canice |
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Douglas L. Soder |
|
$ |
263,607 |
|
|
$ |
19,573 |
|
|
$ |
283,180 |
|
| Todd B. Schull |
|
$ |
240,507 |
|
|
$ |
27,852 |
|
|
$ |
268,359 |
|
| (1) |
Reflects amounts that have been reported as Non-Equity Incentive Plan Compensation in the Fiscal Year 2014 Summary Compensation Table. |
| (2) |
We do not provide above-market or preferential earnings on contributions to our nonqualified deferred compensation plan, so these amounts were not reported in the
Fiscal Year 2014 Summary Compensation Table. |
| (3) |
None of these amounts were previously reported as compensation to the applicable named executive officer, as all amounts were earned in fiscal year 2014 and were
reported in the Fiscal Year 2014 Summary Compensation Table as noted above. |
Potential Payments upon Termination or Change in
Control
We have entered into Executive Change in Control Severance Agreements (each, a “Severance Agreement”)
with Messrs. Edman, Chung, Soder, and Schull. Each Severance Agreement provides that, in the event the executive’s employment is terminated by (1) our company without cause during a pending change in control or within 12 months following a
change in control, or (2) by the executive for good reason within 12 months following a change in control, the executive will be entitled to receive an amount in cash equal to two times the sum of (a) the executive’s annual base
salary and (b) the amount of the executive’s annual target bonus for the fiscal year during which the executive is terminated assuming the achievement of 100% of the performance target levels associated with such annual target bonus. In
addition, the unvested portions of all of such executive’s time-vest RSUs then outstanding would immediately vest, in full, as of the date of termination. The Severance Agreements also provide for a twelve-month non-solicitation covenant and
customary confidentiality obligations.
Further, we provide in the event of a termination “without cause” (as such
term is defined in the form of RSU Award Agreement) for the acceleration of vesting of a number of RSUs equal to the product obtained by multiplying the number of unvested RSUs that would vest in the 12 month period commencing on the date of grant,
or if later occurring, the most recent anniversary of the date of grant, by a fraction, the numerator of which is the number of whole months since the date of grant, or if later occurring, the most recent anniversary of the date of grant, and the
denominator of which is 12 months, rounded down to the nearest whole share.
The following tables set forth certain
information regarding potential payments and other benefits that would be payable to each of our named executive officers upon a change in control of our company and/or upon a termination of our named executive officer’s employment. The tables
below assume that the termination or change in control event took place on December 29, 2014.
44
Thomas T. Edman:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Executive Benefits(1) |
|
Termination
Without Cause |
|
|
Change in
Control (No
Termination)(2) |
|
|
Termination
Without
Cause
Pending a
Change in
Control(2) |
|
|
Termination Without
Cause or for Good
Reason, each
Within 12
Months
Following a Change in
Control(2) |
|
| Accelerated RSUs(3) |
|
$ |
98,248 |
|
|
$ |
215,281 |
|
|
$ |
538,640 |
|
|
$ |
538,640 |
|
| Accelerated PRUs(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
1,167,351 |
|
| Severance(5) |
|
|
— |
|
|
|
— |
|
|
$ |
2,480,000 |
|
|
$ |
2,480,000 |
|
Chung Tai Keung, Canice:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Executive Benefits(1) |
|
Termination
Without Cause |
|
|
Change in
Control (No
Termination)(2) |
|
|
Termination
Without
Cause
Pending a
Change in
Control(2) |
|
|
Termination Without
Cause or for Good
Reason, each
Within 12
Months
Following a Change in
Control(2) |
|
| Accelerated RSUs(3) |
|
$ |
125,534 |
|
|
$ |
245,013 |
|
|
$ |
506,741 |
|
|
$ |
506,741 |
|
| Accelerated PRUs(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
898,390 |
|
| Severance(5) |
|
|
— |
|
|
|
— |
|
|
$ |
2,341,800 |
|
|
$ |
2,341,800 |
|
Douglas L. Soder:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Executive Benefits(1) |
|
Termination
Without Cause |
|
|
Change in
Control (No
Termination)(2) |
|
|
Termination
Without
Cause
Pending a
Change in
Control(2) |
|
|
Termination Without
Cause or for Good
Reason, each
Within 12
Months
Following a
Change in Control(2) |
|
| Accelerated RSUs(3) |
|
$ |
125,534 |
|
|
$ |
245,013 |
|
|
$ |
506,741 |
|
|
$ |
506,741 |
|
| Accelerated PRUs(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
898,390 |
|
| Severance(5) |
|
|
— |
|
|
|
— |
|
|
$ |
1,400,800 |
|
|
$ |
1,400,800 |
|
Todd B. Schull:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Executive Benefits(1) |
|
Termination
Without Cause |
|
|
Change in
Control (No
Termination)(2) |
|
|
Termination
Without
Cause
Pending a
Change in
Control(2) |
|
|
Termination Without
Cause or for Good
Reason, each
Within 12
Months
Following a
Change in Control(2) |
|
| Accelerated RSUs(3) |
|
$ |
61,480 |
|
|
$ |
161,087 |
|
|
$ |
409,482 |
|
|
$ |
409,482 |
|
| Accelerated PRUs(4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
593,921 |
|
| Severance(5) |
|
|
— |
|
|
|
— |
|
|
$ |
1,258,000 |
|
|
$ |
1,258,000 |
|
| (1) |
Amounts represented in the table do not include stock option awards, restricted stock units or performance-based restricted units that are fully vested, earned salary,
and accrued vacation, as those items are earned and due to the named executive officer regardless of such termination or change in control events. It also does not include amounts payable under life insurance coverage, our accidental death and
dismemberment coverage, or our business travel accident coverage, which are programs available to all of our full-time employees. The amounts listed assume that the termination or change in control event took place on December 29, 2014.
|
| (2) |
Assumes that the RSUs and PRUs are assumed by the acquiring entity in connection with the change in control. |
| (3) |
The amount listed for accelerated RSUs is based on the closing price of our common stock on December 29, 2014. |
| (4) |
The amount listed for accelerated PRUs is based on the closing price of our common stock on December 29, 2014. For Messrs. Chung and Soder, the amount listed
includes the 2012 PRU award. |
| (5) |
The amount listed is calculated with the formula described above using an annual target bonus of 100% of base salary for Mr. Edman and 70% of base
salary for each of Messrs. Chung, Soder, and Schull, for fiscal |
45
| |
year 2014, which represents the percentage of base salary payable as a bonus upon achievement of 100% of the performance target levels associated with such annual target bonus, as set forth in
the Severance Agreements. Pursuant to the Severance Agreements, this amount is payable to the executive in a lump sum on the 61st day following the date of termination. |
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information with respect to our common stock that may be issued upon the exercise of stock options,
warrants, and rights under our 2000 Equity Compensation Plan, our 2006 Incentive Compensation Plan, and our TTM Technologies, Inc. 2014 Incentive Compensation Plan as of December 29, 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
| Plan Category |
|
(a)
Number of
Securities to be
Issued Upon
Exercise
of
Outstanding
Options, Warrants,
and Rights(1) |
|
|
(b)
Weighted Average
Exercise Price
of
Outstanding
Options, Warrants,
and Rights(2) |
|
|
(c)
Number of Securities
Remaining Available
for Future Issuance
Under
Equity
Compensation Plans
(Excluding
Securities
Reflected in Column
(a)) |
|
| Equity Compensation Plans Approved by Stockholders |
|
|
2,760,134 |
|
|
$ |
11.54 |
|
|
|
5,586,740 |
|
| Equity Compensation Plans Not Approved by Stockholders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total |
|
|
2,760,134 |
|
|
$ |
11.54 |
|
|
|
5,586,740 |
|
| (1) |
Includes 2,249,426 RSUs and PRUs. |
| (2) |
The weighted average exercise price does not take into account the 2,249,426 RSUs and PRUs. |
46
PROPOSAL TWO —
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(a) Previous independent
registered public accounting firm
As previously disclosed in our SEC filings, on February 27, 2014, our audit
committee determined to dismiss PricewaterhouseCoopers LLP, which had been serving as our independent registered public accounting firm. The decision was approved by the audit committee of our board of directors. PricewaterhouseCoopers LLP was
notified of the decision on February 28, 2014.
During the fiscal years ended December 31, 2012 and
December 30, 2013 and the subsequent interim period through and including February 27, 2014, there were no (i) disagreements between us and PricewaterhouseCoopers LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PricewaterhouseCoopers LLP, would have caused PricewaterhouseCoopers LLP to make reference thereto in their reports on the financial
statements for such years or (ii) “reportable events” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
The reports of PricewaterhouseCoopers LLP on our consolidated financial statements as of and for the two fiscal years ended December 31, 2012 and December 30, 2013 contained no adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles.
We
requested PricewaterhouseCoopers LLP to furnish a letter addressed to the SEC stating whether PricewaterhouseCoopers LLP agreed with the statements made in this section (a) by us. A copy of this letter, dated March 4, 2014 was filed as
Exhibit 16 to our Current Report on Form 8-K, filed with the SEC on March 4, 2014.
(b) Current independent registered
public accounting firm
On February 27, 2014, our audit committee selected KPMG LLP to audit our financial statements
for the fiscal year ending December 29, 2014. The decision was approved by the audit committee of our board of directors and ratified by our stockholders at last year’s annual meeting.
During the fiscal years ended December 31, 2012 and December 30, 2013 and the subsequent interim period through and including
February 27, 2014, we did not consult with KPMG LLP regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on our
financial statements, and no written report or oral advice was provided that KPMG LLP concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that
was either the subject of a “disagreement” as that term is defined in Item 304(a)(1)(iv) of Regulation S-K or a “reportable event” as that term is defined in Item 304(a)(1)(v) of Regulation S-K.
We have appointed KPMG LLP to serve as our independent registered public accounting firm for the fiscal year ending December 28,
2015 and recommend that stockholders vote in favor of the ratification of such appointment. In the event of a negative vote on such ratification, our board of directors will reconsider its selection. We anticipate that representatives of KPMG LLP
will attend the annual meeting, will have the opportunity to make a statement if they desire, and will be available to respond to appropriate questions.
47
Audit Fees
The following is a summary of fees, all of which were approved by our audit committee, for audit and other professional services performed by KPMG LLP during the fiscal year ended December 29, 2014
and by PricewaterhouseCoopers LLP during the fiscal year ended December 30, 2013:
|
|
|
|
|
|
|
|
|
| |
|
2014 |
|
|
2013 |
|
| Audit fees |
|
$ |
2,173,000 |
|
|
$ |
2,431,600 |
|
| Audit-related fees |
|
|
— |
|
|
$ |
12,900 |
|
| Tax fees |
|
$ |
81,000 |
|
|
$ |
380,700 |
|
| All other fees |
|
$ |
2,550 |
|
|
$ |
43,200 |
|
|
|
|
|
|
|
|
|
|
| Total |
|
$ |
2,256,550 |
|
|
$ |
2,868,400 |
|
“Audit fees” includes fees paid to KPMG LLP or PricewaterhouseCoopers LLP for the audits of our
annual financial statements and of internal control over financial reporting included in the Form 10-K, selected statutory audits, and reviews of financial statements included in Form 10-Q.
“Audit-related fees” includes fees paid to PricewaterhouseCoopers LLP for services performed related to customer rebate audits.
“Tax fees” includes fees paid to KPMG LLP or PricewaterhouseCoopers LLP for services performed related to
compliance with foreign tax regulations and assistance provided with respect to the review and audit of tax matters by government agencies and tax authorities.
“All other fees” includes fees paid to KPMG LLP in fiscal 2014 for the usage of accounting research software and fees paid to PricewaterhouseCoopers LLP in fiscal 2013 for certain information
technology consulting and other tax advice, tax consultation, and tax planning services outside the scope of tax compliance and preparation.
Pre-Approval Policy for Independent Registered Public Accounting Firm’s Fees
In 2003, our audit committee adopted a formal policy concerning pre-approval of all services to be provided by our independent registered
public accounting firm. The policy requires that all proposed services to be provided by our independent registered public accounting firm must be pre-approved by our audit committee before any services are performed. This policy includes all audit,
audit-related, tax, and other services that our independent registered public accounting firm may provide to our company. In evaluating whether to engage our independent registered public accounting firm for non-audit services, our audit committee
considers whether the performance of services other than audit services is compatible with maintaining the independence of our independent registered public accounting firm. All of the services provided by KPMG LLP and PricewaterhouseCoopers LLP
described in the table above were approved by our audit committee pursuant to our audit committee’s pre-approval policies.
Our board of directors recommends a vote “for” the ratification of KPMG LLP as our independent registered public accounting
firm for the fiscal year ending December 28, 2015.
In the event of a negative stockholder vote on the ratification
of KPMG LLP as our independent registered public accounting firm, our audit committee will reconsider its selection.
48
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Our board of directors has appointed an audit committee consisting of three independent directors. All members of our
audit committee are able to read and understand fundamental financial statements, including our balance sheet, statement of operations, statement of comprehensive income, and statement of cash flows. Most members of our audit committee have past
employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background which results in each individual’s financial sophistication, including being or having been a chief
executive officer, chief financial officer, or other senior officer with financial oversight responsibility. Our board of directors has determined that Messrs. Franklin, Mayer, and Zakheim are independent directors, as defined by Nasdaq Marketplace
Rule 5605(a)(2), and that Mr. Franklin qualifies as an “audit committee financial expert.”
The primary
responsibility of our audit committee is to assist our board of directors in fulfilling its responsibility to oversee management’s conduct of our financial reporting process, including overseeing the financial reports and other financial
information provided by us to governmental or regulatory bodies (such as the SEC), the public, and other users thereof; our systems of internal accounting and financial controls; and the annual independent audit of our consolidated financial
statements.
Management has the responsibility for our consolidated financial statements and the reporting process, including
the systems of internal controls. Our independent registered public accounting firm engaged to conduct the audit of our 2014 financial statements, KPMG LLP, was responsible for auditing our consolidated financial statements and expressing an opinion
on the conformity of those audited consolidated financial statements with generally accepted accounting principles.
In
fulfilling its oversight responsibilities, our audit committee reviewed our consolidated audited financial statements with management and the independent registered public accounting firm. Our audit committee discussed with the independent
registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees. This included a discussion of the independent registered public accounting firm’s judgments as
to the quality, not just the acceptability, of our accounting principles and such other matters as are required to be discussed with our audit committee under generally accepted auditing standards. In addition, our audit committee received from the
independent registered public accounting firm written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s independence.
Our audit committee also discussed with the independent registered public accounting firm their independence from management and our company, including the matters covered by the written disclosures and letter provided by the independent registered
public accounting firm. Our audit committee has concluded that KPMG LLP is independent from our company and management.
Our
audit committee discussed with the independent registered public accounting firm the overall scope and plans for its audits. Our audit committee met with the independent registered public accounting firm, with and without management present, to
discuss the results of its audit, the internal controls of our company, and the overall quality of our financial reporting. Our audit committee held five meetings during the fiscal year ended December 29, 2014.
Based on the reviews and discussions referred to above, our audit committee recommended to our board of directors, and our board of
directors approved, that our audited consolidated financial statements be included in the Annual Report on Form 10-K for the fiscal year ended December 29, 2014 for filing with the SEC.
Our board of directors has adopted a written charter for our audit committee that reflects, among other things, requirements of the
Sarbanes-Oxley Act of 2002, rules adopted by the SEC, and rules of Nasdaq.
This report has been furnished by our audit
committee to our board of directors.
Philip G. Franklin, Chairman
John G. Mayer
Dov S. Zakheim
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Except as set forth below, during the fiscal year ended December 29, 2014, there were no transactions or series of similar
transactions to which we were or are a party that involved an amount exceeding $120,000 and in which any of our directors, executive officers, nominees for director, holders of more than 5% of any class of our voting securities, or any member of the
immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.
Certain affiliates
of our Asia Pacific operating segment engage in transactions with our company, as described below.
Supply Arrangements
with Affiliates of Related Parties
Our Asia Pacific operating segment from time to time purchases laminate and prepreg
from Suzhou Shengyi Sci Tech Co., Ltd. (“SSST”) and Shengyi Technology Co., Ltd. (“Sytech”). Approximately 15.8% of Sytech is owned indirectly by Top Mix Investments Limited, a company controlled by Mr. Tang Hsiang Chien,
the father of our director, Mr. Tang Chung Yen, Tom. SSST is 75% owned by Sytech and 25% owned indirectly by Top Mix Investments Limited. We had total purchases from SSST and Sytech of $23.9 million in 2014.
Our Asia Pacific operating segment also from time to time purchases laminate and prepreg from Hitachi Chemical Electronic Materials (Hong
Kong) Limited (formerly known as Mica-Ava (Far East) Industrial Limited) (referred to as Hitachi (HK)) and Hitachi Chemical Electronic Materials (Guangzhou) Limited (formerly known as Mica-AVA (Guangzhou) Material Company Ltd. ) (referred to as
Hitachi (GZ)), former subsidiaries of Meadville engaged in the laminate business. Prior to November 18, 2011, Top Mix Investments Limited indirectly owned approximately 93.7% of each of Hitachi (HK) and Hitachi (GZ). Following completion of the
disposal of a major portion of its holdings in Hitachi (HK) and Hitachi (GZ) to Hitachi Chemical Co., Ltd on November 18, 2011, Top Mix Investments Limited indirectly owns 25% of each of Hitachi (HK) and Hitachi (GZ). Purchases of laminate and
prepreg by our Asia Pacific operating segment from Hitachi (HK) and Hitachi (GZ) are made on a spot basis from time to time. Total sales from Hitachi (HK) and Hitachi (GZ) to our Asia Pacific operating segment amounted to $23.5 million in 2014.
On June 17, 2013, we completed the sale of our 70.2% controlling equity interest in Dongguan Shengyi Electronics Ltd.
(“SYE”) to its non-controlling partner, Sytech, for 702.0 million Chinese RMB or approximately $114.5 million. We continue to sell PCBs to SYE. Sales to SYE for the fiscal year ended December 29, 2014 were approximately $24.1
million. Additionally, purchases from SYE for the year ended December 29, 2014 were approximately $1.7 million. SYE will continue to be a related party, as Su Sih (BVI) Limited, one of our significant shareholders, holds an equity interest in
the parent company of SYE.
ELECTRONIC AVAILABILITY OF PROXY STATEMENT AND 2014 ANNUAL REPORT
As permitted by SEC rules, we are making this proxy statement and our annual report on Form 10-K for 2014 available to
stockholders electronically via the Internet on our website at www.ttmtech.com/stockholdersmeeting. On or about April 2, 2015, we began mailing to our stockholders a notice containing instructions on how to access this proxy statement
and our annual report and how to vote online. If you received that notice, you will not receive a printed copy of the proxy materials unless you request it by following the instructions for requesting such materials contained on the notice or set
forth in the following paragraph.
If you received a paper copy of this proxy statement by mail and you wish to receive a
notice of availability of next year’s proxy statement either in paper form or electronically via e-mail, you can elect to receive a paper notice of availability by mail or an e-mail that will provide a link to these documents on our website. By
opting to receive the notice of availability and accessing your proxy materials online, you will save our company the cost of printing and mailing documents to you, reduce the amount of mail you receive, speed your ability to access the proxy
materials and our annual report, and help preserve environmental resources. We encourage you
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to sign up for electronic proxy and annual report access or a paper notice of availability for future annual meetings. Stockholders may elect to receive electronic access or a paper notice by
registering electronically on our website at www.ttmtech.com/stockholdersmeeting. If you received electronic or paper notice of availability of these proxy materials and wish to receive paper delivery of a full set of future proxy materials,
you may do so at the same location.
Our annual report on Form 10-K for 2014, available on our website at
www.ttmtech.com, contains financial and other information about our company, but is not incorporated into this proxy statement and is not to be considered a part of these proxy soliciting materials or subject to Regulations 14A or 14C or to
the liabilities of Section 18 of the Exchange Act. The information contained in the “Compensation Committee Report” and “Report of the Audit Committee of the Board of Directors” shall not be deemed “filed” with the
SEC or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the Exchange Act. If a stockholder received a paper copy of our annual report and does not wish to access our annual report through our website but rather requires
an additional paper copy of our annual report on form 10-K, we will provide one, without charge, on the written request of any such stockholder addressed to our corporate secretary at 1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626.
STOCKHOLDER PROPOSALS FOR OUR 2016 ANNUAL MEETING
If any stockholder intends to present a proposal to be considered for inclusion in our proxy material for the 2016 annual meeting of
stockholders, the proposal must comply with the requirements of Rule 14a-8 of Regulation 14A of the Exchange Act and must be submitted in writing by notice delivered to our corporate secretary at 1665 Scenic Avenue, Suite 250, Costa Mesa, California
92626. Any such proposal must be received at least 120 days before the anniversary of the prior year’s proxy statement (by December 4, 2015), unless the date of our 2015 annual meeting is changed by more than 30 days from May 14,
2015, in which case, the proposal must be received a reasonable time before we begin to print and mail our proxy materials.
In addition, our bylaws establish certain requirements for proposals a stockholder wishes to make from the floor of the 2016 annual
meeting of stockholders. If the proposal is for a matter other than the nomination of a director for election at the meeting, the proposal must be written and delivered to our corporate secretary at the address set forth above not less than 90 days
(by February 14, 2016) nor more than 120 days (January 15, 2016) prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or
after such anniversary date, notice by the stockholder must be so delivered not earlier than 120 days prior to such annual meeting and not later than the later of (a) 90 days prior to such annual meeting or (b) five days following the day
on which public announcement of the date of such meeting is first made by our company. Our bylaws provide that a stockholder’s notice of a proposal of business must set forth certain information relating to the proposed business desired to be
brought before the meeting and the proposal itself, and information relating to the stockholder making the proposal.
If the
proposal is for the nomination of a director for election at the meeting, the nomination must be delivered to our corporate secretary at the address listed above not less than 90 days (by February 14, 2016) and not more than 120 days (January
15, 2016) prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the 2015 annual meeting is more than 30 days before or after such anniversary date, notice by the stockholder
must be so delivered not earlier than 120 days prior to such annual meeting and not later than the later of (a) 90 days prior to such annual meeting or (b) five days following the day on which we make the first public announcement of the
date of such meeting. However, in the event that the number of directors to be elected to our board of directors at an annual meeting of stockholders is increased and there is no public announcement by us naming the nominees for the additional
directorships at least 100 days prior to the first anniversary of the date of the preceding year’s annual meeting, the stockholder’s notice will also be considered timely, but only with respect to nominees for the additional directorships,
if it is delivered to our corporate secretary at the address listed above not later than five days following the day on which we first make a public announcement of additional directorships. Our bylaws set forth specific information that must be
provided to our corporate secretary in connection with the nomination of a director for election at the annual meeting.
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OTHER MATTERS
As of the date of this proxy statement, we know of no matter that will be presented for consideration at the annual meeting other than
the election of directors and the ratification of our independent registered public accounting firm. If, however, any other matter should properly come before the annual meeting for action by stockholders, the persons named as proxy holders will
vote in accordance with the recommendation of the board of directors or, in the absence of such a recommendation, in accordance with the best judgment of the proxy holder.
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By Order of the Board of Directors |
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Todd B. Schull, Secretary |
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ELECTRONIC ACCESS TO FUTURE DOCUMENTS
If you would like to receive future shareholder communications over the Internet exclusively and no longer receive any material by mail please visit http://www.amstock.com. Click on Shareholder Account Access to
enroll. Please enter your account number and tax identification number to log in, then select Receive Company Mailings via E-Mail and provide your e-mail address.
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TTM TECHNOLOGIES, INC.
1665 Scenic Avenue, Suite 250
Costa Mesa, CA 92626
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
As an alternative to completing this form, you may enter your vote instruction by Internet
at WWW.VOTEPROXY.COM and follow the simple instructions. Use the Company Number and Account Number shown on your proxy card.
The
undersigned hereby appoints Thomas T. Edman and Todd B. Schull as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all the shares of Common Stock of TTM Technologies, Inc. held of record by the
undersigned on March 16, 2015, at the Annual Meeting of Stockholders to be held at the Company’s corporate offices located at 1665 Scenic Avenue, Suite 250, Costa Mesa, California 92626 at 1:30 p.m., local time on May 14, 2015, or any
adjournment or postponement thereof.
(Continued and to be signed on the reverse side)
ANNUAL MEETING OF STOCKHOLDERS OF
TTM TECHNOLOGIES, INC.
May 14, 2015
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PROXY VOTING INSTRUCTIONS
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| INTERNET - Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your
smartphone. Have your proxy card available when you access the web page. |
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| Vote online until 11:59 PM EDT the day before the meeting. |
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COMPANY NUMBER |
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| MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible. |
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ACCOUNT
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| IN PERSON - You may vote your shares in person by attending the
Annual Meeting. |
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| GO GREEN - e-Consent makes it easy to go paperless.
With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. |
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| NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS: The Notice of Meeting, Proxy
Statement, and Annual Report are available at http://www.ttmtech.com/stockholdersmeeting
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Please detach along perforated line and mail in the envelope provided IF you are not voting via the Internet. i |
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| ¢ 20330000000000000000 9 |
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| THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” THE ELECTION OF THE DIRECTOR NOMINEES AND “FOR”
PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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FOR |
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AGAINST |
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| 1. To elect Ronald W. Iverson, Robert E. Klatell, and John G. Mayer as class III
directors. |
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The ratification of the appointment of KPMG LLP as independent registered public accounting firm for the fiscal year ending December 28, 2015. |
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NOMINEES: |
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FOR ALL NOMINEES |
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O Ronald W. Iverson
O Robert E. Klatell
O John G. Mayer |
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WITHHOLD AUTHORITY
FOR ALL NOMINEES |
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THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS INDICATED, WILL BE VOTED “FOR” THE ELECTION OF THE DIRECTOR NOMINEES AND “FOR” PROPOSAL
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FOR ALL EXCEPT
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark
“FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: l |
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| To change the address on your account, please check the box at right and indicate your new address in the
address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. |
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| Signature of Stockholder |
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Date: |
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Signature of Stockholder |
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Note:
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Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
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