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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Electro Scientific Industries, Inc. | NASDAQ:ESIO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 29.99 | 29.99 | 30.01 | 0 | 01:00:00 |
¨
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which the transaction applies:
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(2)
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Aggregate number of securities to which the transaction applies:
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(3)
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Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of the transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Notice of Annual Meeting of Shareholders
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1.
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To elect the six directors named in the proxy statement for a term of one year. Frederick A. Ball, Michael D. Burger, Lynne J. Camp, Laurence E. Cramer, Raymond A. Link and Richard H. Wills are nominees for election for a one-year term.
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2.
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To approve, on an advisory basis, the compensation of our named executive officers.
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3.
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To ratify the Audit Committee’s selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending
March 30, 2019
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4.
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To transact any other business that properly comes before the meeting.
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Name, Age, Principal Occupation, and Other Directorships
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Director
Since
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Nominees
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Frederick A. Ball
, 56, served as Executive Vice President and Chief Administrative Officer of Marketo Inc., a leading marketing automation company from February 2016 through August 2016. Prior to that Mr. Ball served as the Senior Vice President and Chief Financial Officer from May 2011 to March 2016. Prior to joining Marketo, Mr. Ball was the Chief Financial Officer for a number of public and private technology companies including Webfoot Software, Inc., BigBand Networks, Inc., and Borland Software Corporation. Mr. Ball also served as Vice President, Mergers and Acquisitions for KLA-Tencor Corporation, a manufacturer of semiconductor equipment, and prior to that as its Vice President of Finance. Mr. Ball was with PricewaterhouseCoopers LLC for over 10 years. Mr. Ball is a director at Advanced Energy Industries, Inc. and SendGrid and is chair of their audit committees and a member of their nominating and governance committees. Mr. Ball is also on the Board of Directors of Engagio, a private company. Mr. Ball is Chair of the Compensation Committee and a member of the Audit Committee.
Mr. Ball brings to the Board important financial management experience and financial expertise, having served as Chief Financial Officer of several high-technology companies. He also brings significant experience with mergers and acquisitions within the semiconductor equipment industry as well as experience as a result of serving on the board of directors of two public companies.
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2003
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Michael D. Burger
, 60,
was appointed President and CEO of ESI on October 3, 2016. Prior to joining ESI, Mr. Burger was President and Chief Executive Officer of Cascade Microtech since 2010. Prior to joining Cascade Microtech, Mr. Burger served as the President and Chief Executive Officer of Merix Corporation, a printed circuit board manufacturer, from April 2007 to February 2010, and as a member of the Board of Directors of ViaSystems after it acquired Merix. From November 2004 until joining Merix, Mr. Burger served as President of the Components Business of Flextronics Corporation. From 1999 to November 2004, Mr. Burger was employed by ZiLOG, Inc., a supplier of devices for embedded control and communications applications. From May 2002 until November 2004, Mr. Burger served as ZiLOG's President and a member of its board of directors. Mr. Burger holds a B.S. degree in Electrical Engineering from New Mexico State University and a certificate from the Stanford University International Executive Management Program.
Mr. Burger brings to the Board his prior experience with other electronics manufacturers, including former service as a chief executive officer and director.
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2016
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Lynne J. Camp
, 60, is the owner and founder of Lynne Camp, LLC, a consulting and executive coaching services firm she created in 2012. Previously, Ms. Camp was the Vice President of the Performance Instruments business at Tektronix, Inc., an industry-leading test and measurement equipment manufacturing company, from 2006 to 2007, and Danaher Corporation from 2007 to 2011 after it acquired Tektronix. Prior to joining Tektronix/Danaher, Ms. Camp spent 26 years with Hewlett-Packard and Agilent Technologies, where she held several senior positions including Vice President roles of HP/Agilent’s Remarketing Solutions group, Wireless Test Business group, Communications Test Equipment Services group, Multi-Industry Solutions group and Systems Generation and Delivery group. In these roles, Ms. Camp had direct responsibility for research and development, operations, program management, marketing and customer service in geographic areas throughout the world. Ms. Camp holds a Master’s Degree in Engineering Management and a Bachelor’s in Mechanical Engineering, both from Stanford University. Ms. Camp received an Executive Coaching Certification from the Hudson Institute of Santa Barbara, and is on faculty with the Center for Higher Ambition Leadership. Ms. Camp is a member of the Compensation Committee.
Ms. Camp brings to the Board a wide-ranging skillset for setting and executing strategy, developing and aligning teams to deliver superior results, as well as experience in high-tech operations and manufacturing.
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2017
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Laurence E. Cramer,
67, was with Continuum Electro-Optics, a manufacturer of high energy laser systems for medical, industrial and scientific research, until August 2015 where he held the positions of Vice President of R&D, Vice President / General Manager and President. Prior to that, he was President of Laser Diode Inc., a manufacturer of GaAs laser diodes for military and telecom applications. Prior to that he spent 15 years at Spectra-Physics in a range of management roles including, Manager of Marketing and Sales, Strategic Product Group Manger, and President of Spectra-Physics Laser diode systems, developer of advanced diode pumped solid state laser systems. He was a Board Member and past President of the Laser Institute of America, and was a member of the U.S. Department of Commerce Technical Advisory Committee in Electronics from 1988 to 1994. He holds a BA degree in Chemistry and Physics from DePauw University, a PhD in Chemistry from Northwestern University and a Masters Certificate in Six Sigma from Villanova University. Mr. Cramer is a member of the Compensation Committee and the Corporate Governance and Nominating Committee.
Mr. Cramer brings to the Board significant expertise in lasers and laser development.
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2015
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Name, Age, Principal Occupation, and Other Directorships
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Director
Since |
Nominees (continued)
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Raymond A. Link
, 64, served as Executive Vice President and Chief Financial Officer of FEI Company, a leading supplier of scientific and analytical instruments for nanoscale imaging from July 2005 to April 2015. Prior to this, Mr. Link served as Vice President and Chief Financial Officer of TriQuint Semiconductor, Inc. from July 2001 to July 2005. He is also on the Board of Directors of nLight Inc., a manufacturer of semiconductor and fiber lasers primarily for industrial applications, and FormFactor Inc., a manufacturer of probe cards and electrical test and measurement equipment for the semiconductor industry, and was a Director of Cascade Microtech, Inc., a semiconductor equipment manufacturer, from February 2005 through June 24, 2016. Mr. Link received a B.S. degree from the State University of New York at Buffalo and an M.B.A. from the Wharton School at the University of Pennsylvania. He is a licensed Certified Public Accountant and a Fellow with the National Association of Corporate Directors. Mr. Link is Chair of the Audit Committee and a member of the Corporate Governance and Nominating Committee.
Mr. Link brings to the Board important financial management experience and expertise, as well as operations experience with another high-technology public company.
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2015
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Richard H. Wills,
63,
(Chairman), was President and CEO of Tektronix, Inc., a test, measurement, and monitoring company, from 2000 until 2008, and its Chairman from 2001 through 2008. He joined Tektronix in 1979 and served in a range of marketing, product development and management roles, including President of the Measurement Business and President of Regional Operations for both Europe and the Americas. He holds a master's degree in business administration from the University of Oregon and a bachelor's degree in computer systems from Linfield College. Mr. Wills was a director of FEI Company until the company was acquired in 2016 and was Chairman of the Board of General Fusion, a private energy company in Vancouver, Canada until his retirement from the Board in March of 2017. He is currently a Board Member of StanCorp, an insurance provider in Portland Oregon. Mr. Wills has served as the Chairman of the Board of the Company since February 2015. He is Chair of the Corporate Governance and Nominating Committee and a member of the Compensation Committee.
Mr. Wills brings to the Board expertise in strategic planning, corporate governance, marketing and technology, as well as experience serving on the board of other public companies.
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2014
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Director
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Status (1)
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Frederick A. Ball
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Independent
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Michael D. Burger
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Not Independent
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Lynne J. Camp
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Independent
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Laurence E. Cramer
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Independent
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Raymond A. Link
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Independent
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John Medica
(2)
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Independent
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Richard H. Wills
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Independent
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(1)
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The Board’s determination that a director is independent was made on the basis of the standards set forth in the Corporate Governance Guidelines.
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(2)
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John Medica was a member of the Board in fiscal 2018 until his passing on October 13, 2017.
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Name
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Fees Earned or
Paid in Cash
($) (1)
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Stock
Awards
($) (2)
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All Other
Compensation
($)
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Total
($)
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||||||||
Frederick A. Ball
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$
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67,500
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$
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129,600
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(3)
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$
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—
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$
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197,100
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Lynne J. Camp
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$
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24,657
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$
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225,120
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(4)
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$
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—
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$
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249,777
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Laurence E. Cramer
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$
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56,500
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$
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129,600
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(3)
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$
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—
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$
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186,100
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Raymond A. Link
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$
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69,000
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$
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129,600
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(3)
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$
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—
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$
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198,600
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John Medica
(5)
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$
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32,473
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$
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129,600
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(3)
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$
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—
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|
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$
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162,073
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Richard H. Wills
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$
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84,313
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$
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129,600
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(3)
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$
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—
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$
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213,913
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(1)
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Reflects total cash compensation paid in fiscal
2018
and includes amounts deferred at the Director's election pursuant to the Company's deferred compensation plan.
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(2)
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Represents the full grant date fair value of the awards granted to each director in the fiscal year ended
March 31, 2018
, computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 “Compensation – Stock Compensation” (ASC Topic 718). Awards are valued at the closing market price of the Company’s common stock on the grant date.
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(3)
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For directors then serving, comprises an annual grant of 12,000 RSUs on
August 10, 2017
, which vests immediately prior to the
2018
Annual Meeting date. This grant represents the total number of unvested RSUs held by each such non-employee director as of
March 31, 2018
.
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(4)
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As part of her appointment to the Board, Lynne J. Camp received an initial grant of 16,000 RSUs on October 2, 2017, which vests on the first four anniversaries of the grant date. This grant represents the total number of unvested RSUs held by Ms. Camp as of
March 31, 2018
.
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(5)
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John Medica passed away on Friday, October 13, 2017 and his estate received a pro-rated vesting of his 2018 stock awards.
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Name of Beneficial Owner
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Amount and Nature of
Beneficial Ownership (1)
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Approximate
Percent of Class
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Frederick A. Ball
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85,390
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(2)
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*
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Lynne J. Camp
|
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—
|
|
|
|
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*
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Laurence E. Cramer
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24,000
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|
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*
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Raymond A. Link
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44,100
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|
|
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*
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Richard H. Wills
|
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80,081
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|
|
|
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*
|
Michael Burger
|
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162,337
|
|
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(3)
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*
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Allen Muhich
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—
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|
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|
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*
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Steve Harris
|
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36,647
|
|
|
|
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*
|
John Williams
|
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17,231
|
|
|
|
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*
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Paul Oldham
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63,925
|
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|
|
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*
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Bing-Fai Wong
|
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7,084
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|
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(4)
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*
|
BlackRock Institutional Trust Company, N.A.
|
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4,148,771
|
|
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(5)
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12.16%
|
400 Howard Street, San Francisco, CA 94105
|
|
|
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|
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|
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The Vanguard Group, Inc.
|
|
2,308,004
|
|
|
(5)
|
|
6.77%
|
Valley Forge, PA 19355
|
|
|
|
|
|
|
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Dimensional Fund Advisors LP
|
|
2,007,624
|
|
|
(5)
|
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5.89%
|
Palisades West, Building One, 6300 Bee Cave Road,
Austin, TX 78746
|
|
|
|
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Renaissance Technologies LLC
|
|
1,748,700
|
|
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(5)
|
|
5.13%
|
600 Route 25A, East Setauket, New York 11733
|
|
|
|
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11 directors and executive officers (as of June 5, 2018) as a group
|
|
520,795
|
|
|
(7)
|
|
1.53%
|
*
|
Less than 5 percent.
|
(1)
|
Shares are held directly with sole investment and voting power unless otherwise indicated.
|
(2)
|
Includes 28,515 shares deferred under the Company’s deferred compensation plan.
|
(3)
|
Includes 75,837 shares deferred under the Company’s deferred compensation plan.
|
(4)
|
Includes 5,507 shares deferred under the Company's deferred compensation plan.
|
(5)
|
Based on the institutional holding report provided by Nasdaq as of
June 5, 2018
, which reflects the most recent Schedule 13D, 13F or 13G (or amendments thereto) filed by such person with the SEC.
|
Name
|
|
Age
|
|
Position
|
|
Michael Burger
|
|
60
|
|
|
President and Chief Executive Officer beginning October 2016
|
Allen Muhich
|
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51
|
|
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Vice President, Chief Financial Officer and Corporate Secretary
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Steve Harris
|
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55
|
|
|
Vice President of Engineering
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John Williams
|
|
49
|
|
|
Vice President of Marketing
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Name
|
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Position
|
Michael Burger
|
|
our President & Chief Executive Officer (“CEO”)
|
Allen Muhich
|
|
our Chief Financial Officer & Corporate Secretary (“CFO”)
(1)
|
Steve Harris
|
|
our Vice President of Engineering
(2)
|
John Williams
|
|
our Vice President of Marketing
(2)
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Paul Oldham
|
|
our former Senior Vice President Administration, Chief Financial Officer, & Corporate Secretary
(3)
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Bing-Fai Wong
|
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our former Vice President of Customer Operations
(4)
|
Who We Are
|
•
|
Restructured our organization to move from a business unit to a functional structure
|
•
|
Refreshed our executive leadership team, including the appointment of a new President and Chief Executive Officer
|
•
|
Shifted leadership of our global sales, service and manufacturing operations to Asia
|
•
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Closed multiple sites for reduced cost, better efficiency and collaboration
|
•
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Improved our ability to develop, manufacture, market and sell our leading families of products
|
•
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Created a “success” model for annual adjusted gross margin and adjusted EBITDA targets
|
•
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Focused our product offerings by discontinuing and divesting lower performing products and businesses that did not contribute to our corporate objectives
|
•
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Achieved higher revenues and lower expenses that enabled us to generate 27% non-GAAP* operating margin, compared to negative 6% in fiscal 2017; and increased orders over the last four fiscal quarters by 249% over the prior four fiscal quarters
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•
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Generated GAAP earnings per diluted share of $3.30, compared to a loss of $1.15 per share in fiscal 2017
|
•
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Exceeded our “success” model for annual adjusted gross margin and adjusted EBITDA targets
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•
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Completed restructuring of key business processes to establish a reduced fixed cost structure
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•
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Achieved record orders for our flexible circuit drilling products based on a strong capacity build cycle and our customer’s investment in new technologies, materials and applications
|
•
|
Received multiple orders for our new Ultrus
TM
semiconductor scribe tool
|
Fiscal 2018 Financial Highlights
|
Fiscal 2018 Operational Highlights
|
Fiscal 2018 Executive Compensation Highlights
|
•
|
Base Salary
- Approved annual base salary increases ranging from 0% to 4%, with the exclusion of our CEO whose base salary remained unchanged from fiscal 2017 at $575,000.
|
•
|
Annual Cash Incentive Awards
- Approved annual cash incentive awards under our fiscal 2018 annual cash incentive plan based on achievement of an aggregate of 449% of target performance levels, which under the plan was capped at 200%
of the executive officers’ target opportunities, including an annual cash incentive award for our CEO in the amount of $1.15 million, equal to 200% of his target annual cash incentive award opportunity.
|
•
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Long-Term Incentive Compensation
- Granted long-term incentive compensation opportunities in the form of performance-based restricted stock unit (“PRSU”) awards that may be settled for shares of our common stock subject to our relative TSR as compared to the Russell 2000 index (the "Index") and time-based restricted stock unit (“RSU”) awards that also may be settled for shares of our common stock, in amounts ranging from target levels of approximately $96,720 to $1,489,085 million, including a PRSU award and an RSU award for our CEO with an aggregate target value of $1,489,085 million.
|
•
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Compensation Arrangements with Mr. Muhich
- In connection with his appointment as our Chief Financial Officer and Corporate Secretary on December 5, 2017, approved the following compensation arrangements for Mr. Muhich:
|
◦
|
an annual base salary of $350,000;
|
◦
|
a target annual cash incentive award opportunity equal to 60% of his annual base salary, subject to a maximum cap of 200% of his annual base salary;
|
◦
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a hiring bonus in the amount of $25,000;
|
◦
|
an RSU award that may be settled for 25,000 shares of our common stock, subject to a four-year vesting requirement with 25% of the shares subject to the award vesting on each of the first four anniversaries of the date of grant, contingent upon his remaining continuously employed through each applicable vesting date; and
|
◦
|
an RSU award that may be settled for a target of 25,000 shares of our common stock based on the performance of our common stock relative to the performance of the Russell 2000 over three overlapping performance periods, each beginning on December 5, 2017, with the first performance period ending on December 5, 2018, the second performance period ending on December 5, 2019 and the third performance period ending on December 5, 2020, subject to the lesser of a maximum cap of 200% of the target number of shares or the target number of shares multiplied by 5x grant date fair value.
|
Pay-for-performance Philosophy
|
•
|
First, we provide the opportunity to participate in our annual cash incentive plan, which provides cash payments based two-thirds on short-term financial results and one-third on the achievement of short-term strategic objectives that meet or exceed the objectives set forth each year in our annual operating plan.
|
•
|
In addition, we grant PRSU awards, which at target comprise half of the total quantity of equity awards as a long-term incentive compensation opportunity that rewards executive officers for driving total shareholder return relative to an established stock price index that represents a reliable indicator of the general economy and reflects the unique and diverse nature of our operations.
|
1)
|
Average Executive Officer Pay Mix reflects pro-rated FY18 awards for executive officers hired during 2017.
|
2)
|
Average Executive Officer Pay Mix excludes Paul Oldham and Bing-Fai Wong who ceased to be executive officers during the year and it also excludes Allen Muhich, who became our CFO on December 5, 2017.
|
3)
|
Equity awards of PRSUs and RSUs are presented based on target quantities and grant date fair value.
|
•
|
It directly links the majority of our executive compensation to tangible financial results;
|
•
|
It emphasizes variable, “at risk” compensation; and
|
•
|
It ensures a strong “pay-for-performance” alignment.
|
Executive Compensation Policies and Practices
|
What We Do
|
|
What We Don't Do
|
||
¨
Maintain an Independent Compensation Committee.
|
|
¨
No Executive Defined Benefit Retirement Plans.
|
||
|
The Compensation Committee consists solely of independent directors.
|
|
|
We do not offer pension arrangements or defined benefit retirement plans or arrangements to our executive officers that are different from or in addition to those offered to our other employees.
|
¨
Retain an Independent Compensation Advisor.
|
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|
||
|
The Compensation Committee engaged its own compensation advisor to provide information and analysis with its fiscal 2018 compensation review, and other advice on executive compensation independent of management. This consultant performed no consulting or other services for us in fiscal 2018.
|
|
¨
Minimal Perquisites.
|
|
|
|
|
We only provide perquisites or other personal benefits to our executive officers that are supported by a reasonable business purpose.
|
|
¨
Annual Executive Compensation Review
.
|
|
¨
No Tax Reimbursements on Perquisites.
|
||
|
The Compensation Committee conducts an annual review and approval of our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes and a review of our compensation-related risk profile to ensure that our compensation programs do not encourage excessive or inappropriate risk-taking and that the level of risk that they do encourage is not reasonably likely to have a material adverse effect on us.
|
|
|
We do not provide any tax reimbursement payments (including “gross-ups”) on any perquisites or other personal benefits, other than for standard relocation or temporary housing arrangements.
|
|
|
¨
No Special Welfare or Health Benefits.
|
||
|
|
|
Our executive officers participate in broad-based company-sponsored health and welfare benefits programs on the same basis as our other full-time, salaried employees.
|
|
¨
Compensation At-Risk
.
|
|
|
||
|
Our executive compensation program is designed so that a significant portion of our executive officers’ compensation is “at risk” based on our corporate performance, as well as equity-based, to align the interests of our executive officers and shareholders.
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¨
No Post-Employment Tax Payment Reimbursement.
|
||
|
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We do not provide any tax reimbursement payments (including “gross-ups”) on any severance or change-in-control payments or benefits.
|
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¨
Performance-Based Incentive Award Opportunities.
|
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||
|
Our annual cash incentive awards are subject to achievement of both “top-line” and “bottom-line” financial performance measures, while our long-term performance-based incentive awards are to be earned based on relative total shareholder return over a multi-year period.
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¨
No Hedging of Our Equity Securities.
|
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We prohibit our executive officers, the non-employee members of the Board and other employees from hedging our equity securities.
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¨
Incentive Award Opportunities Capped.
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¨
No Pledging of Our Equity Securities.
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||
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We limit both our annual and long-term performance-based incentive awards to 200% of the target.
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We prohibit our executive officers, the non-employee members of the Board and other employees from pledging our equity securities.
|
¨
Stock Ownership Policy.
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¨
No Dividends or Dividend Equivalents Payable on Unvested Equity Awards.
|
||
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We maintain a stock ownership policy that requires our CEO, other executive officers and the non-employee members of the Board to maintain a minimum ownership level of our common stock.
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We do not pay dividends or dividend equivalents on unvested or unearned RSU awards.
|
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¨
Compensation Recovery (“Clawback”) Policy.
|
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¨
No Stock Option Re-pricing.
|
||
|
In the event the Board determines that an executive officer has engaged in an act of embezzlement, fraud or breach of fiduciary duty that contributed to an obligation to restate our financial statements, the executive officer will be required to repay annual cash incentive awards and/or proceeds from the sale of equity awards within the 12-month period following the first public issuance or filing with the SEC of the financial statements required to be restated.
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Our employee stock plan does not permit options or stock appreciation rights to be repriced to a lower exercise or strike price without the approval of our shareholders.
|
¨
Conduct an Annual Shareholder Advisory Vote on Named Executive Officer Compensation.
|
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We conduct an annual shareholder advisory vote on the compensation of our Named Executive Officers.
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¨
“Double-Trigger” Change-in-Control Arrangements.
|
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|
|
All change-in-control payments and benefits are based on a “double-trigger” arrangement (that is, they require both a change-in-control of the Company plus a qualifying termination of employment before payments and benefits are paid).
|
|
|
|
¨
Use a Pay-for-Performance Philosophy.
|
|
|
|
|
|
A significant portion of executive officers’ compensation is directly linked to corporate performance; we also structure their target total direct compensation opportunities with a significant long-term equity component, thereby making a substantial portion of each executive officer’s target total direct compensation dependent upon our stock price and/or total shareholder return.
|
|
|
|
¨
Succession Planning.
|
|
|
|
|
|
We review the risks associated with our key executive officer positions to ensure adequate succession plans are in place.
|
|
|
|
Shareholder Advisory Vote on Named Executive Officer Compensation
|
Responsiveness to Shareholder Feedback
|
Compensation Practice
|
Issue
|
Our Response
|
Effective Date of Response
|
Type of equity awards granted
|
Excessive use of time-based equity awards
|
Introduced performance-based restricted stock unit awards with a TSR measure for our CEO and other executive officers
|
Fiscal 2017
|
Design of CEO long-term incentive compensation opportunity
|
Desire for greater proportion of performance-based awards
|
At least half of value of all future equity awards granted to our CEO to be performance-based
|
Fiscal 2017
|
Design of annual incentive program
|
|
Eliminated quarterly attainment under annual cash incentive plan; payments will be based solely on annual performance
|
Fiscal 2018
|
Executive Compensation Philosophy and Design Principles
|
•
|
Our performance against the financial and operational objectives approved by the Committee and the Board
|
•
|
The Committee's, along with our CEO’s, assessment of each individual executive officer’s skills, experience and qualifications relative to other similarly-situated executives at the companies in our compensation peer group
|
•
|
The Committee's, along with our CEO’s, assessment of the scope of each executive officer’s role compared to other similarly-situated executives at the companies in our compensation peer group
|
•
|
Our CEO’s assessment of the performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead their function and work as part of a team, all of which reflect our core values
|
•
|
Compensation parity among our executive officers
|
•
|
Our financial performance relative to our peers
|
•
|
The compensation practices of our compensation peer group and the positioning of each executive officer’s compensation in a ranking of peer company compensation levels
|
•
|
Historical and current information regarding each element of compensation for each executive officer
|
•
|
The recommendations provided by our CEO with respect to the compensation of our other executive officers
|
•
|
Performance against the financial and operational objectives established by the Committee and the Board
|
•
|
Each individual executive officer’s skills, experience and qualifications relative to other similarly-situated executives at the companies in our compensation peer group
|
•
|
The scope of each executive officer’s role compared to other similarly-situated executives at the companies in our compensation peer group
|
•
|
The performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead their function and work as part of a team, all of which reflect our core values
|
•
|
Compensation parity among our executive officers
|
•
|
Our financial performance relative to our peers
|
•
|
The compensation practices of our compensation peer group and the positioning of each executive officer’s compensation in a ranking of peer company compensation levels
|
•
|
Historical and current information regarding each element of compensation for each executive officer
|
•
|
Review and analysis of the compensation for our Named Executive Officers
|
•
|
Review and input on the Compensation Discussion and Analysis section of our proxy statement for our 2018 Annual Meeting of Shareholders
|
•
|
Research, and assistance with development of our compensation peer group
|
•
|
Ad hoc support on other compensation-related matters throughout the year
|
•
|
Similar industry and competitive market for talent (primary focus on companies selling technology equipment or components such as lasers, photonics, optical components, semiconductors, particularly where the ultimate end-products serve a broad array of consumer or industrial markets)
|
•
|
Similar revenue size - within a range of ~0.5x to ~2.5x our last four quarters’ revenue (approximately $95 million to approximately $470 million)
|
•
|
Similar market capitalization - within a range of ~0.5x to ~4.0x our market capitalization (approximately $100 million to approximately $730 million).
|
Company Scope
|
Electro Scientific Industries
|
Compensation Peer Group
Low
|
Compensation Peer Group
Median
|
Compensation Peer Group
High
|
Revenue (in millions)
|
$161
|
$218
|
$229
|
$293
|
Market Capitalization (in millions)
|
$221
|
$211
|
$478
|
$691
|
Element
|
Form
|
Variability
|
Objective
|
How Established
|
Base Salary
|
Cash
|
Fixed
|
Designed to attract and retain highly talented executives by providing fixed compensation amounts that are competitive in the market
|
Reviewed against compensation peer group for competitiveness and factors set forth in “Governance of Executive Compensation Program - Compensation-Setting Process” above
|
Annual Cash Incentive Awards
|
Cash
|
Performance-Based
|
Designed to motivate our executives to achieve our annual business objectives, provide financial incentives when we meet or exceed these objectives and reward performance
|
Target awards set by measuring total cash compensation opportunity against compensation peer group for competitiveness; performance objectives based on challenging financial and operational goals
|
Performance-Based Restricted Stock Unit Awards
|
Equity
|
Performance-Based - Value Tied to Stock Price
|
Designed to align long-term executive and shareholder interests; provide opportunity based upon the performance of our stock price against the Russell 2000 Index
|
Target value of annual awards set using market data (reviewed against our compensation peer group for competitiveness) and additional factors set forth in “Governance of Executive Compensation Program - Compensation-Setting Process” above
|
Time-Based Restricted Stock Unit Awards
|
Equity
|
Value Tied to Stock Price
|
Align long-term executive and shareholder interests and strengthen retention through multi-year vesting
|
Target value of annual awards set using market data (reviewed against our compensation peer group for competitiveness) and additional factors set forth in “Governance of Executive Compensation Program - Compensation-Setting Process” above
|
Other Benefits
|
Cash
|
Primarily Fixed
|
Provide competitive employee benefits; we do not view this as a significant element of our program
|
Reviewed for competitiveness against our compensation peer group
|
Named Executive Officer
|
Fiscal 2017
Annual Base Salary
|
Fiscal 2018
Annual Base Salary
|
Percentage Adjustment
|
Mr. Burger
|
$575,000
|
$575,000
|
0%
|
Mr. Muhich
(1)
|
N/A
|
$350,000
|
N/A
|
Mr. Harris
|
$285,000
|
$289,000
|
1.4%
|
Mr. Williams
|
$250,000
|
$260,000
|
4.0%
|
Mr. Oldham
(2)
|
$357,000
|
$367,500
|
2.9%
|
(1)
|
Mr. Muhich was appointed as our Chief Financial Officer and Corporate Secretary on December 5, 2017.
|
(2)
|
Mr. Oldham resigned from his positions as our Senior Vice President of Administration, Chief Financial Officer, and Corporate Secretary effective December 4, 2017. The base salary noted above was pro-rated for the period of employment.
|
Named Executive Officer
|
Fiscal 2017 Target Annual Cash Incentive Opportunity
(as a percentage of base salary)
|
Fiscal 2018 Target Annual Cash Incentive Opportunity
(as a percentage of base salary)
|
Mr. Burger
|
100%
|
100%
|
Mr. Muhich
(1)
|
N/A
|
60%
|
Mr. Harris
|
60%
|
60%
|
Mr. Williams
|
60%
|
60%
|
Mr. Oldham
|
70%
|
70%
|
(1)
|
In connection with his appointment as our Chief Financial Officer and Corporate Secretary on December 5, 2017, Mr. Muhich received a target annual cash incentive award opportunity equal to 60% of his annual base salary, prorated for his period of service.
|
Performance Measure
|
Threshold Performance Level (in millions)
|
Target Performance Level (in millions)
|
Maximum Performance Level
|
Revenue
|
$133.0
|
$180.8
|
Uncapped
(1)
|
Adjusted EBITDA
|
>$0.0
|
$17.2
|
Uncapped
(1)
|
Cost Structure
|
$20.0
|
$18.9
|
Accelerated by average of Financial Measures over-achievement
|
(1)
|
While Revenue and Adjusted EBITDA measures are uncapped, the total maximum funding for payout is capped at 200%.
|
Performance Measure
|
Threshold
Performance
Level
(in millions)
|
Target Performance Level
(in millions)
|
Actual Performance Result
(in millions)
|
Percentage Achievement of Target Performance
Funding
Level
|
Weighting
|
Weighted Percentage Funding Level
|
Revenue
|
$133.0
|
$180.8
|
$367.9
|
415%
|
33%
|
138%
|
Adjusted EBITDA
|
>$0.0
|
$17.2
|
$117.8
|
714%
|
33%
|
238%
|
Cost Structure
|
$20.0
|
$18.9
|
$19.6
|
219%
(1)
|
33%
|
73%(1)
|
Total Payout
|
|
100%
|
|
100%
|
449% capped at 200%
|
(1)
|
The funding level for the Cost Structure measure is accelerated by the average achievement of the two financial measures and was calculated by multiplying the 39% Cost Structure achievement by 565%, which is the average of the achievement of the two financial measures, resulting in the funding level of 291%.
|
Named Executive Officer
|
Target Annual Cash Incentive Award Opportunity
|
Weighted Achievement of Target (as a percentage of target annual cash incentive award)
|
Actual
Annual Cash Incentive Award
|
Mr. Burger
|
$575,000
|
200%
|
$1,150,000
|
Mr. Muhich
(1)
|
$67,846
|
200%
|
$135,692
|
Mr. Harris
|
$172,846
|
200%
|
$345,692
|
Mr. Williams
|
$154,615
|
200%
|
$309,231
|
Mr. Oldham
(2)
|
N/A
|
200%
|
-0-
|
1.
|
The annual cash incentive award payment for Mr. Muhich was prorated for his actual employment during fiscal 2018.
|
2.
|
Mr. Oldham resigned from his positions as our Senior Vice President of Administration, Chief Financial Officer, and Corporate Secretary effective December 4, 2017 and accordingly was not eligible to receive payment of an annual incentive award payment
|
Named Executive Officer
|
Performance Stock Unit Awards (PRSU Awards)
(target number of shares)
|
Time-Based Restricted Stock Unit Awards (number of shares)
|
Aggregate Grant Date Fair Value
($)
|
Mr. Burger
|
73,900
|
73,900
|
$1,489,085
|
Mr. Muhich
(1)
|
25,000
|
25,000
|
$1,021,000
|
Mr. Harris
(2)
|
4,800
|
4,800
|
$96,720
|
Mr. Williams
(2)
|
4,800
|
4,800
|
$96,720
|
Mr. Oldham
(3)
|
30,700
|
30,700
|
$618,605
|
(1)
|
In connection with his appointment as our Chief Financial Officer and Corporate Secretary on December 5, 2017, Mr. Muhich received a target PRSU Award for 25,000 shares with performance periods beginning on December 5, 2017 and a Time-Based Restricted Stock Unit Award for 25,000 shares.
|
(2)
|
The fiscal 2018 equity awards for Mr. Harris and Mr. Williams were pro-rated for their length of service and to reflect the receipt of their new hire equity awards granted in February 2017.
|
(3)
|
Mr. Oldham resigned from his positions as our Senior Vice President of Administration, Chief Financial Officer, and Corporate Secretary effective December 4, 2017. As a result, Mr. Oldham forfeited the fiscal 2018 equity awards described above.
|
Named Executive Officer
|
Target Number of Shares Subject to First Tranche of Fiscal 2017 PRSU Award
|
TSR of ESI over First Tranche
|
TSR of Russell 200 Index over First Tranche
|
Expected Payment Percentage for First Tranche of Fiscal 2017 PRSU Award
(3)
|
Actual Number of Shares Expected to Be Earned under First Tranche of Fiscal 2017 PRSU Award
(3)
|
Mr. Burger
|
248,565
|
231.6%
|
116.2%
|
150%
|
124,283
|
Mr. Muhich
(1)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Mr. Harris
|
40,000
|
283.1%
|
111.0%
|
150%
|
20,000
|
Mr. Williams
|
40,000
|
283.1%
|
111.0%
|
150%
|
20,000
|
Mr. Oldham
(2)
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
(1)
|
Mr. Muhich joined in December 2017 (fiscal 2018) and therefore, did not receive shares in fiscal 2017.
|
(2)
|
Mr. Oldham resigned from his positions as our Senior Vice President of Administration, Chief Financial Officer, and Corporate Secretary effective December 4, 2017 and accordingly forfeited all unvested awards, including fiscal 2017 PRSU awards.
|
(3)
|
Actual vesting of awards is contingent upon completion of a 3-year service period and the number of awards is impacted by performance through that date. Values presented are expected earnings based on performance to-date.
|
▪
|
A lump sum cash severance payment in the amount of $601,822
|
▪
|
A pro-rated portion of the bonus contemplated under the special retention agreement the Board entered into with him on August 31, 2016 in the amount of $75,000
|
▪
|
A lump sum cash severance payment in the amount of $242,308
|
▪
|
A base salary at seventy-five percent (75%) of his prior base salary
|
▪
|
A pro-rated portion of the FY18 bonus through October 31, 2017 in the amount of $179,308
|
Position
|
Minimum Share Ownership Requirement
|
Chief Executive Officer
|
Three times annual base salary
|
Vice President
|
One times annual base salary
|
Non-Employee Member of Board
|
Three times annual cash retainer
|
Name and Principal Position
|
|
Fiscal
Year (1)
|
|
Salary (2)
|
|
Bonus
|
|
Stock
Awards
(3)
|
|
|
Option
Awards
(4)
|
|
Non-Equity
Incentive Plan
Compensation
(5)
|
|
All Other
Compensation
(6)
|
|
Total
|
||||||||||||||
Michael D. Burger
|
|
2018
|
|
$
|
575,000
|
|
|
—
|
|
|
$
|
1,489,085
|
|
(12)
|
|
—
|
|
|
$
|
1,150,000
|
|
|
$
|
7,298
|
|
|
$
|
3,221,383
|
|
||
President and Chief Executive Officer
|
|
2017
|
|
$
|
287,500
|
|
(7)
|
$
|
287,500
|
|
(9)
|
$
|
2,908,021
|
|
(13)
|
|
—
|
|
|
—
|
|
|
$
|
3,981
|
|
|
$
|
3,487,002
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Allen Muhich
|
|
2018
|
|
$
|
113,077
|
|
(8)
|
$
|
25,000
|
|
(10)
|
$
|
1,021,000
|
|
(14)
|
|
—
|
|
|
$
|
135,692
|
|
|
$
|
2,019
|
|
|
$
|
1,296,788
|
|
|
Vice President, Chief Financial Officer and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Steve Harris
|
|
2018
|
|
$
|
288,077
|
|
|
—
|
|
|
$
|
96,720
|
|
(15)
|
|
—
|
|
|
$
|
345,692
|
|
|
$
|
7,304
|
|
|
$
|
737,793
|
|
||
Vice President of Engineering
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
John Williams
|
|
2018
|
|
$
|
257,692
|
|
|
$
|
—
|
|
|
$
|
96,720
|
|
(15)
|
|
—
|
|
|
$
|
309,231
|
|
|
$
|
6,334
|
|
|
$
|
669,977
|
|
|
Vice President of Marketing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Paul Oldham
|
|
2018
|
|
$
|
246,346
|
|
(8)
|
$
|
275,000
|
|
(11)
|
$
|
618,605
|
|
(16)
|
|
—
|
|
|
—
|
|
|
$
|
607,450
|
|
|
$
|
1,747,401
|
|
||
Former Senior Vice President Administration, Chief Financial Officer and Corporate Secretary
|
|
2017
|
|
$
|
355,923
|
|
|
—
|
|
|
$
|
510,300
|
|
(17)
|
|
—
|
|
|
$
|
104,338
|
|
|
$
|
7,998
|
|
|
$
|
978,559
|
|
||
2016
|
|
$
|
350,000
|
|
|
—
|
|
|
$
|
271,060
|
|
(18)
|
|
$
|
242,760
|
|
|
$
|
78,554
|
|
|
$
|
8,186
|
|
|
$
|
950,560
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Bing-Fai Wong
|
|
2018
|
|
$
|
185,769
|
|
(8)
|
—
|
|
|
—
|
|
|
|
—
|
|
|
$
|
179,308
|
|
|
$
|
246,026
|
|
|
$
|
611,103
|
|
|||
Former Vice President of Customer Operations
|
|
2017
|
|
$
|
278,923
|
|
|
—
|
|
|
$
|
262,440
|
|
(19)
|
|
—
|
|
|
$
|
70,070
|
|
|
$
|
206,902
|
|
|
$
|
818,335
|
|
||
|
2016
|
|
$
|
273,000
|
|
|
—
|
|
|
$
|
140,280
|
|
(18)
|
|
$
|
115,600
|
|
|
$
|
52,519
|
|
|
$
|
8,134
|
|
|
$
|
589,533
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Company’s fiscal year consists of the 52 or 53 weeks ending on the Saturday nearest March 31. Accordingly, references in this table to fiscal
2018
are to the
52
-week period ended
March 31, 2018
; references to fiscal
2017
are to the
52
-week period ended
April 1, 2017
; and references to fiscal
2016
are to the
53
-week period ended
April 2, 2016
.
|
(2)
|
Represents base salary earned in the year, before any deferrals at the executive officer’s election.
|
(3)
|
Represents the aggregate grant date fair value of performance-vested restricted stock units (“PRSUs”) and time-vested restricted stock units (“TRSUs”) computed in accordance with ASC Topic 718. The PRSUs must achieve total shareholder return (TSR) measures in order for the awards to vest, and the grant date fair value of the awards is calculated using a Monte Carlo simulation model. The assumptions made in determining the grant date fair value of the PRSUs under ASC Topic 718 are disclosed in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018. The grant date fair value of the time-vested TRSUs is based on the closing market price of the Company’s common stock on the grant date. The amounts shown are grant date values and do not represent the amounts that may be realized by the executive officer upon vesting, which is subject to the share price at the time of vest and actual vesting.
|
(4)
|
Represents the aggregate grant date fair value of stock appreciation right awards computed in accordance with ASC Topic 718. The fair value of stock appreciation rights is estimated using the Black-Scholes pricing model. The assumptions made in determining the grant date fair value of stock appreciation rights under ASC Topic 718 are disclosed in the Notes to Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended
March 31, 2018
.
|
(5)
|
Represents payments under the Company’s annual cash incentive plan and includes amounts deferred at the executive officer's election pursuant to our deferred compensation plan. The estimated target and maximum amounts for annual incentive awards for fiscal 2018 are reflected in the Fiscal Year 2018 Grants of Plan-Based Awards table. For Mr. Muhich, represents his pro-rated earned bonus beginning from his hire date of December 5, 2017. For Mr. Wong, represents his pro-rated earned bonus through October 31, 2017.
|
(6)
|
All other compensation for fiscal 2018 represents 401(k) retirement plan matching contributions made by the Company. In addition, (i) for Mr. Oldham also includes $601,822 as a separation payment and (ii) for Mr. Wong also includes $242,308 as a separation payment.
|
(7)
|
Represents the pro-rated annual salary earned by Mr. Burger in fiscal 2017.
|
(8)
|
Represents the pro-rated annual salary earned in fiscal 2018.
|
(9)
|
Represents inducement bonus to join the Company equal to $287,500, the prorated bonus he would have received under the annual cash incentive plan at 100%.
|
(10)
|
Represents inducement bonus to join the Company.
|
(11)
|
Represents a retention bonus of $200,000 for continued employment with the company through August 31, 2017, plus a retention bonus of $300,000 for continued employment through August 31, 2018 prorated for service through December 2017 (in the amount of $75,000), both as contemplated under the additional special retention agreement our Board entered into with Mr. Oldham on August 31, 2016.
|
(12)
|
Represents the aggregate grant date fair value of fiscal 2018 grants of TRSU awards of $620,021 and grants of PRSU awards of $869,064.
|
(13)
|
Represents the aggregate grant date fair value of fiscal 2017 grants of TRSU awards of $1,284,892 and grants of PRSU awards of $1,623,129.
|
(14)
|
Represents the aggregate grant date fair value of fiscal 2018 grants of TRSU awards of $510,500 and grants of PRSU awards of $510,500.
|
(15)
|
Represents the aggregate grant date fair value of fiscal 2018 grants of TRSU awards of $40,272 and grants of PRSU awards of $56,448.
|
(16)
|
Represents the aggregate grant date fair value of fiscal 2018 grants of TRSU awards of $257,573 and grants of PRSU awards of $361,032. All awards were unvested and therefore were forfeited when Mr. Oldham resigned in December 2017.
|
(17)
|
Represents the aggregate grant date fair value of fiscal 2017 grants of TRSU awards of $248,850 and grants of market-based PRSU awards of $261,450. All of the PRSU awards and three fourths of the TRSU awards were unvested and therefore were forfeited when Mr. Oldham resigned in December 2017.
|
(18)
|
Represents the aggregate grant date fair value of TRSU awards. No PRSU awards were granted in fiscal 2016. Half of the TRSU awards were unvested and therefore were forfeited when Mr. Oldham resigned in December 2017 and when Mr. Wong's employment terminated in December 2017.
|
(19)
|
Represents the aggregate grant date fair value of fiscal 2017 grants of TRSU awards of $127,980 and grants of PRSU awards of $134,460. All of the PRSU awards and three fourths of the TRSU awards were unvested and therefore were forfeited when Mr. Wong's employment terminated in December 2017.
|
Name
|
|
Grant
Date
|
|
Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)
|
|
Estimated Future Payouts
Under Equity Incentive Plan
Awards (2)
|
|
All Other
Stock Awards: Number of Shares of Stock or Units
(#) (3)
|
|
|
Grant Date Fair Value of Stock Awards
($) (4)
|
||||||||||||||||||
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
||||||||||||||||||||
Michael Burger
|
|
—
|
|
|
$
|
1,955
|
|
|
$
|
575,000
|
|
|
$
|
1,150,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,900
|
|
|
|
$
|
620,021
|
|
|||||
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
73,900
|
|
|
147,800
|
|
|
—
|
|
|
|
$
|
869,064
|
|
||||
Allen Muhich
|
|
—
|
|
|
$
|
231
|
|
|
$
|
67,846
|
|
|
$
|
135,692
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
12/5/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
|
$
|
510,500
|
|
||||
|
12/5/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25,000
|
|
|
50,000
|
|
|
|
|
|
$
|
510,500
|
|
|||||
Steve Harris
|
|
—
|
|
|
$
|
588
|
|
|
$
|
172,846
|
|
|
$
|
345,692
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,800
|
|
|
|
$
|
40,272
|
|
||||
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,800
|
|
|
9,600
|
|
|
—
|
|
|
|
$
|
56,448
|
|
||||
John Williams
|
|
—
|
|
|
$
|
526
|
|
|
$
|
154,615
|
|
|
$
|
309,230
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,800
|
|
|
|
$
|
40,272
|
|
|||||
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,800
|
|
|
9,600
|
|
|
—
|
|
|
|
$
|
56,448
|
|
||||
Paul Oldham (5)
|
|
—
|
|
|
$
|
586
|
|
|
$
|
172,442
|
|
|
$
|
344,884
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,700
|
|
|
|
$
|
257,573
|
|
||||
|
5/11/17
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30,700
|
|
|
61,400
|
|
|
—
|
|
|
|
$
|
361,032
|
|
||||
Bing-Fai Wong (6)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
(1)
|
Represents the incentive for fiscal
2018
under the Company’s annual executive officer bonus plan and estimated payouts at threshold, target and maximum levels of performance. The actual amount earned by each executive officer for fiscal
2018
is set forth in the Summary Compensation Table under “Non-Equity Incentive Plan Compensation.” See “
Compensation Discussion & Analysis-Executive Compensation-Annual Cash Incentive Compensation
.”
|
(2)
|
Represents market-based PRSUs, which are earned annually on the first three anniversaries of the date of grant with vesting occurring on the third anniversary of the date of grant, subject to employment criteria. Vesting occurs through achievement of TSR measures. See “
Compensation Discussion & Analysis-Executive Compensation-Long-Term Incentive Compensation
.” Payouts of PRSUs may range from $0 to the applicable maximum as set forth above. Therefore, we have omitted the “Threshold” column.
|
(3)
|
Represents TRSUs which vest 25% on the first four anniversaries of the date of grant, subject to employment criteria. See “
Compensation Discussion & Analysis-Executive Compensation-Long-Term Incentive Compensation
.”
|
(4)
|
Represents the aggregate grant date fair value of TRSUs and PRSUs computed in accordance with ASC Topic 718. All awards except PRSUs are valued at the closing market price of the Company’s common stock on the grant date. The PRSUs must achieve total shareholder return (TSR) measures in order for the awards to vest, and the grant date fair value of the awards is calculated using a Monte Carlo simulation model.
|
(5)
|
Because his employment terminated prior to the end of fiscal 2018 and prior to the vesting date of his grants, Mr. Oldham did not receive any benefits pursuant to the awards presented in the table above. For a description of amounts received by Mr. Oldham in connection with the termination of his employment, see "Compensation Discussion and Analysis -- Post-Employment Compensation Arrangements."
|
(6)
|
As Mr. Wong's termination with the Company was already planned as of May 11, 2017, no incentive awards were issued to him.
|
|
|
|
|
Stock Awards
|
||||||||||||||
Name
|
|
Grant Date
|
|
Number of Shares or Units of Stock That Have Not Vested
(#)(1)
|
|
Market Value of Shares or Units of Stock That Have Not Vested
($)(2)
|
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#)(3)
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)(2)
|
||||||||
Michael Burger
|
|
10/3/2016
|
|
172,083
|
|
|
|
$
|
3,326,364
|
|
|
497,130
|
|
|
|
$
|
9,609,523
|
|
|
|
5/11/2017
|
|
73,900
|
|
|
|
$
|
1,428,487
|
|
|
147,800
|
|
|
|
$
|
2,856,974
|
|
Allen Muhich
|
|
12/5/2017
|
|
25,000
|
|
|
|
$
|
483,250
|
|
|
25,000
|
|
|
|
$
|
483,250
|
|
Steve Harris
|
|
2/10/2017
|
|
15,000
|
|
|
|
$
|
289,950
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2/27/2017
|
|
—
|
|
|
|
—
|
|
|
80,000
|
|
|
|
$
|
1,546,400
|
|
|
|
|
5/11/2017
|
|
4,800
|
|
|
|
$
|
92,784
|
|
|
9,600
|
|
|
|
$
|
185,568
|
|
John Williams
|
|
2/27/2017
|
|
15,000
|
|
|
|
$
|
289,950
|
|
|
80,000
|
|
|
|
$
|
1,546,400
|
|
|
|
2/27/2017
|
|
20,000
|
|
(4)
|
|
$
|
386,600
|
|
|
—
|
|
|
|
$
|
—
|
|
|
|
5/11/2017
|
|
4,800
|
|
|
|
$
|
92,784
|
|
|
9,600
|
|
|
|
$
|
185,568
|
|
Paul Oldham
|
(5)
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
||
Bing-Fai Wong
|
(5)
|
—
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
(1)
|
TRSU grants that vest 25% on each of the first four anniversaries of the date of grant, subject to employment criteria.
|
(2)
|
Based on closing stock price on
March 30, 2018
, the trading day closest to
March 31, 2018
of
$19.33
.
|
(3)
|
PRSU grants that may be earned annually on the first three anniversaries of the date of grant with vesting occurring on the third anniversary of the date of grant, subject to employment criteria. PRSUs are measured based on a relative total shareholder return ("TSR") measure and are described in more detail in “
Compensation Discussion & Analysis-Executive Compensation-Long-Term Incentive Compensation
.” PRSUs are shown at an estimated level of achievement; all are at maximum except the December 5, 2017 grant to Mr. Muhich which is at target.
|
(4)
|
TRSU grants that vest 50% on each of the first and second anniversaries of the grant date, subject to employment criteria.
|
(5)
|
As Mr. Oldham's and Mr Wong's terminations with the Company had already occurred at least 90 days prior to the end of fiscal 2018, neither had unvested TRSUs or unexercised options or SARs at the end of fiscal 2018.
|
|
|
Option Awards
|
|
Stock Awards
|
|||||||||||
Name
|
|
Number of Shares Acquired on Exercise
(#)
|
|
Value Realized
on Exercise
($)
|
|
Number of Shares Acquired on Vesting
(#)
|
|
Value Realized
($) (1)
|
|||||||
Michael Burger
|
|
—
|
|
|
—
|
|
|
|
57,362
|
|
(2)
|
|
$
|
836,912
|
|
Allen Muhich
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
—
|
|
Steve Harris
|
|
—
|
|
|
—
|
|
|
|
5,000
|
|
|
|
$
|
86,800
|
|
John Williams
|
|
—
|
|
|
—
|
|
|
|
25,000
|
|
|
|
$
|
444,250
|
|
Paul Oldham
|
|
212,286
|
|
|
3,067,130
|
|
|
|
28,938
|
|
|
|
$
|
240,569
|
|
Bing-Fai Wong
|
|
20,312
|
|
|
184,562
|
|
|
|
14,882
|
|
|
|
$
|
123,721
|
|
(1)
|
The value realized on vesting was calculated by multiplying the number of shares acquired upon the vesting of stock awards by the closing price of the Company’s common stock per share on the vesting date.
|
(2)
|
Mr. Burger elected to defer all of his vested shares pursuant to our deferred compensation plan.
|
Name
|
|
Executive
Contributions
in Fiscal Year 2018
|
|
Registrant
Contributions
in Fiscal Year 2018
|
|
Aggregate
Earnings in Fiscal Year 2018
|
|
Aggregate
Withdrawals/Distributions
|
|
Aggregate
Balance at
3/31/18
|
||||||||||
($)
|
|
($)
|
|
($)
|
|
($)
|
|
($)
|
||||||||||||
Michael Burger
|
|
$
|
836,912
|
|
|
—
|
|
|
$
|
271,896
|
|
|
|
—
|
|
|
$
|
1,108,808
|
|
|
Allen Muhich
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|||
Steve Harris
|
|
$
|
7,781
|
|
|
—
|
|
|
$
|
(214
|
)
|
|
|
—
|
|
|
$
|
7,567
|
|
|
John Williams
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|||
Paul Oldham
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
|||
Bing-Fai Wong
|
|
$
|
9,288
|
|
|
—
|
|
|
$
|
147,476
|
|
|
|
84,581
|
|
(2)
|
$
|
642,347
|
|
(1)
|
•
|
Any merger or other reorganization of the Company where the holders of the outstanding voting securities immediately prior to the merger or reorganization do not continue to hold at least 50% of voting securities after the merger or reorganization;
|
•
|
The sale of substantially all of the assets or the liquidation or dissolution of the Company;
|
•
|
The nomination and election in a two-year period of a majority of directors by persons other than the incumbent directors, unless each new director elected during the two-year period was nominated or elected by two-thirds of the incumbent directors then in office and voting; and
|
•
|
The acquisition by any person of 50% or more of the Company’s outstanding voting securities.
|
|
|
Compensation
|
|
Benefits and
Perquisites
|
|
Total
|
||||||||||||||
Name
|
|
Base Salary
|
|
Cash
Bonus Plan
|
|
Restricted
Stock Units
Unvested/
Accelerated
|
|
Post-termination
Health Benefits
|
|
|||||||||||
1. Change in control – no employment termination and replacement award issued or original award continues vesting
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Michael Burger (1)
|
|
$
|
—
|
|
|
$
|
575,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
575,000
|
|
Allen Muhich (2)
|
|
$
|
—
|
|
|
$
|
210,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
210,000
|
|
Steve Harris (2)
|
|
$
|
—
|
|
|
$
|
173,400
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
173,400
|
|
John Williams (2)
|
|
$
|
—
|
|
|
$
|
156,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
156,000
|
|
2. Change in control – involuntary termination without cause or termination with good reason
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Michael Burger (1)
|
|
$
|
1,150,000
|
|
|
$
|
575,000
|
|
|
$
|
13,170,903
|
|
|
$
|
22,933
|
|
|
$
|
14,918,836
|
|
Allen Muhich (2)
|
|
$
|
350,000
|
|
|
$
|
210,000
|
|
|
$
|
966,500
|
|
|
$
|
22,933
|
|
|
$
|
1,549,433
|
|
Steve Harris (2)
|
|
$
|
289,000
|
|
|
$
|
173,400
|
|
|
$
|
1,893,026
|
|
|
$
|
22,933
|
|
|
$
|
2,378,359
|
|
John Williams (2)
|
|
$
|
260,000
|
|
|
$
|
156,000
|
|
|
$
|
2,279,626
|
|
|
$
|
22,933
|
|
|
$
|
2,718,559
|
|
3. No change in control – involuntary termination without cause or termination with good reason
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Michael Burger (1)
|
|
$
|
862,500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
862,500
|
|
Allen Muhich (2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Steve Harris (2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
John Williams (2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Michael Burger
|
a.
|
Base Salary: Upon involuntary termination without cause or termination for good reason by the executive officer within 12 months of a change in control, payment of two times the annual base salary at the rate in effect immediately prior to the termination. Upon involuntary termination without cause or termination for good reason by the executive officer regardless of whether a change in control has occurred, a lump sum payment equal to 1.5 times the annual salary then in effect is due and payable within 15 days following the end of a 30-day release execution period.
|
b.
|
Cash Bonus: Upon a change in control while executive officer is employed, lump sum payment of one times the greater of the target bonus or the performance against bonus criteria is due within 30 days of a change in control. Upon involuntary termination without cause or termination for good reason by the executive officer within 12 months of a change in control, payment of the annual target cash bonus is due and payable within 15 days following the end of a 30-day release execution period from the date of termination. Amounts in the table are based on target amounts.
|
c.
|
Equity-based Awards: Amounts in the table are based on the closing stock price on
March 30, 2018
of
$19.33
and the number of restricted stock units for which vesting is accelerated.
|
i.
|
Restricted Stock Unit Awards
|
1.
|
Upon a change in control with no termination, all awards will continue to vest per the original terms unless the Board elects to accelerate vesting.
|
2.
|
Upon involuntary termination without cause or termination by the executive officer for good reason within 12 months following a change in control, all awards will immediately vest. Performance-based restricted stock units will be immediately adjusted based upon deemed attainment of target performance or actual performance, if greater, and will immediately vest. Deemed attainment of 100% was used for calculations in this table.
|
3.
|
Upon involuntary termination without cause or termination by the executive officer for good reason, if no change in control has occurred, awards will be cancelled to the extent they are unvested at termination. Upon retirement in accordance with the Company’s retirement policy and if no change in control has occurred, all awards will immediately vest by a pro rata percentage. Retirement provisions are not used for calculation in this table.
|
d.
|
Other Benefits: Upon involuntary termination without cause or termination for good reason by the executive officer within 12 months of a change in control, up to 12 months of COBRA premiums for health and dental insurance for himself and his covered dependents will be reimbursed to the executive officer.
|
e.
|
Double trigger: All change in control agreements contain a "double trigger" provision that provides payments and benefits only in the event that: (i) ESI is involved in a change in control transaction; and (ii) the executive officer's employment is terminated (or constructively terminated) in connection with the change in control.
|
(2)
|
Executive Officers with Change in Control Agreements
|
a.
|
Base Salary: Upon involuntary termination without cause or termination for good reason by the executive officer within 24 months of a change in control payment equal to 12 months of executive officer's base salary at the rate in effect immediately prior to the termination with one-half payable in six monthly installments and the balance paid in a lump sum six months after the date of termination.
|
b.
|
Cash Bonus: Upon a change in control while executive officer is employed, lump sum payment of one times the greater of the target bonus or the performance against bonus criteria is due within 30 days of a change in control. Upon involuntary termination without cause or termination for good reason by the executive officer within 24 months of a change in control, payment of one times the annual target cash bonus is due six months after termination. Amounts in the table are based on target amounts.
|
c.
|
Equity-based Awards: Amounts in the table are based on the closing stock price on
March 30, 2018
of
$19.33
and the number of restricted stock units for which vesting is accelerated.
|
i.
|
Restricted Stock Unit Awards
|
1.
|
Upon a change in control with no termination, all awards will continue to vest per the original terms unless the Board elects to accelerate vesting.
|
2.
|
Upon involuntary termination without cause or termination by the executive officer for good reason within 24 months following a change in control, all awards will immediately vest. Performance-based restricted stock units will be immediately adjusted based upon deemed attainment of target performance or actual performance, if greater, and will immediately vest. Deemed attainment of 100% was used for calculations in this table.
|
3.
|
Upon involuntary termination without cause or termination by the executive officer for good reason, if no change in control has occurred, awards will be cancelled to the extent they are unvested at termination. Upon retirement in accordance with the Company’s retirement policy and if no change in control has occurred, all awards will immediately vest by a pro rata percentage. Retirement provisions are not used for calculation in this table.
|
d.
|
Other Benefits: Upon involuntary termination without cause or termination for good reason by the executive officer within 24 months of a change in control up to 12 months of COBRA premiums for health and dental insurance for the executive officer and his covered dependents will be reimbursed to the executive officer.
|
e.
|
Double trigger: All change in control agreements contain a "double trigger" provision that provides payments and benefits only in the event that: (i) ESI is involved in a change in control transaction; and (ii) the executive officer's employment is terminated (or constructively terminated) in connection with the change in control.
|
Executive Officer
|
|
Death or Disability (1)
|
|
||
Michael Burger
|
|
$
|
1,050,327
|
|
|
Allen Muhich
|
|
$
|
46,729
|
|
|
Steve Harris
|
|
$
|
83,001
|
|
|
John Williams
|
|
$
|
112,393
|
|
|
•
|
The median of the annual total compensation of all employees of our company (other than our CEO), was $62,559; and
|
•
|
The annual total compensation of our CEO, as reported in the Summary Compensation Table presented elsewhere in this Proxy Statement, was $3,221,383
|
Plan Category
|
|
Number of
Securities to be
Issued upon Exercise
of Outstanding
Options, Warrants
and Rights
|
|
Weighted-average
Exercise Price of
Outstanding
Options, Warrants and Rights
|
|
Number of Securities
Remaining Available for
Future Issuance under
Equity Compensation
Plans (excluding
securities reflected in
column (a))
|
||||||
|
|
(a)
|
|
(b)
|
|
(c)
|
||||||
Equity compensation plans approved by security holders
|
|
1,606,815
|
|
(1)(2)
|
|
$
|
8.13
|
|
|
5,160,408
|
|
(3)
|
Equity compensation plans not approved by security holders
|
|
57,431
|
|
(4)
|
|
$
|
5.60
|
|
|
—
|
|
|
Total
|
|
1,664,246
|
|
|
|
$
|
8.04
|
|
|
5,160,408
|
|
|
(1)
|
Consists of TRSU and PRSU grants, options and stock appreciation rights outstanding under the 2004 Stock Incentive Plan.
|
(2)
|
Includes 1,569,865 TRSUs and PRSUs which will vest only if specific performance or service measures are met, assuming payout of PRSUs at target.
|
(3)
|
Includes 999,091 shares available for issuance under the 1990 Employee Stock Purchase Plan.
|
(4)
|
Consists of October 3, 2017 TRSU grants made to Michael Burger apart from the 2004 Stock Incentive Plan, which vest over four years.
|
|
|
2018
|
|
2017
|
||||
Audit Fees (1)
|
|
$
|
1,148,000
|
|
|
$
|
964,425
|
|
Tax Fees (2)
|
|
—
|
|
|
—
|
|
||
Totals
|
|
$
|
1,148,000
|
|
|
$
|
964,425
|
|
(1)
|
Audit Fees represent fees for professional services performed in connection with the audit of the Company’s financial statements, including reviews of interim financial statements included in Form 10-Q and registration statements, and the audit of the Company’s internal control over financial reporting.
|
(2)
|
Tax Fees represent fees billed for tax compliance, tax advice and tax planning.
|
|
Fiscal year ended
|
||||||
(In thousands, except per share data)
|
Mar 31, 2018
|
|
Apr 1, 2017
|
||||
Gross profit per GAAP
|
$
|
160,830
|
|
|
$
|
61,466
|
|
Purchase accounting
|
977
|
|
|
1,133
|
|
||
Equity compensation
|
277
|
|
|
503
|
|
||
Charges for other asset and inventory impairment
|
13,554
|
|
|
2,642
|
|
||
Charges from VAT audit
|
1,298
|
|
|
—
|
|
||
Charges for impairment of intangibles
|
—
|
|
|
2,349
|
|
||
Non-GAAP gross profit
|
$
|
176,936
|
|
|
$
|
68,093
|
|
|
|
|
|
||||
Operating expenses per GAAP
|
$
|
84,970
|
|
|
$
|
99,163
|
|
Purchase accounting
|
(566
|
)
|
|
(1,077
|
)
|
||
Equity compensation
|
(4,336
|
)
|
|
(5,934
|
)
|
||
Impairment of assets
|
—
|
|
|
(46
|
)
|
||
Acquisition and integration costs
|
—
|
|
|
(366
|
)
|
||
Restructuring costs
|
(3,935
|
)
|
|
(6,986
|
)
|
||
Impairment of goodwill
|
—
|
|
|
(7,445
|
)
|
||
Non-GAAP operating expenses
|
$
|
76,133
|
|
|
$
|
77,309
|
|
|
|
|
|
||||
Operating income (loss) per GAAP
|
$
|
75,860
|
|
|
$
|
(37,697
|
)
|
Non-GAAP adjustments to gross profit
|
16,106
|
|
|
6,627
|
|
||
Non-GAAP adjustments to operating expenses
|
8,837
|
|
|
21,854
|
|
||
Non-GAAP operating income (loss)
|
$
|
100,803
|
|
|
$
|
(9,216
|
)
|
|
|
|
|
||||
Non-operating (expense) income, net per GAAP
|
$
|
93
|
|
|
$
|
265
|
|
Expense (income), on charges from VAT audit, Gain on asset sale, net of other non-operating expense (income)
|
(351
|
)
|
|
—
|
|
||
Acquisition-related adjustments
|
—
|
|
|
(190
|
)
|
||
Non-GAAP non-operating income (expense)
|
$
|
(258
|
)
|
|
$
|
75
|
|
Non-GAAP income (expense) before income taxes
|
$
|
100,545
|
|
|
$
|
(9,141
|
)
|
|
|
|
|
||||
Net income (loss) per GAAP
|
$
|
116,223
|
|
|
$
|
(37,409
|
)
|
Non-GAAP adjustments to gross profit
|
16,106
|
|
|
6,627
|
|
||
Non-GAAP adjustments to operating expenses
|
8,837
|
|
|
21,854
|
|
||
Non-GAAP adjustments to non-operating income (expense)
|
(351
|
)
|
|
(190
|
)
|
||
Income tax effect of other non-GAAP adjustments
(a)
|
(41,967
|
)
|
|
(252
|
)
|
||
Non-GAAP net income (loss)
|
$
|
98,848
|
|
|
$
|
(9,370
|
)
|
Basic Non-GAAP net income (loss) per share
|
$
|
2.91
|
|
|
$
|
(0.29
|
)
|
Diluted Non-GAAP net income (loss) per share
|
$
|
2.78
|
|
|
$
|
(0.29
|
)
|
(a)
|
The income tax effect of other non-GAAP adjustments in the fourth quarter of 2018 and fiscal 2018 was primarily due to release of tax valuation allowance.
|
1 Year Electro Scientific Industries, Inc. Chart |
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