DEF 14A
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. )
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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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 |
Synaptics Incorporated
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
October 18, 2011
The Annual Meeting of Stockholders of Synaptics Incorporated, a Delaware corporation, will be
held at 9:00 a.m., local time, on Tuesday, October 18, 2011, at our principal executive offices
located at 3120 Scott Boulevard, Santa Clara, California 95054 for the following purposes:
1. To elect three directors, each to serve for a three-year term expiring in 2014.
2. To provide a non-binding advisory vote on the compensation of our named executive officers
for fiscal 2011 (say-on-pay).
3. To provide a non-binding advisory vote on the frequency of future non-binding advisory
votes on the compensation of our named executive officers (say-on-frequency).
4. To ratify the appointment of KPMG LLP, an independent registered public accounting firm, as
the independent auditor of our company for the fiscal year ending June 30, 2012.
5. To transact such other business as may properly come before the meeting or any adjournment
or postponement thereof.
The foregoing items of business are more fully described in the proxy statement accompanying
this notice.
Only stockholders of record at the close of business on August 26, 2011 are entitled to notice
of and to vote at the meeting or any adjournment or postponement thereof.
All stockholders are cordially invited to attend the meeting and vote in person. To assure
your representation at the meeting, however, you are urged to vote by proxy as soon as possible
over the Internet as instructed in the Notice of Internet Availability of Proxy Materials or, if
you receive paper copies of the proxy materials by mail, you can also vote by telephone or by mail
by following the instructions on the proxy card. You may vote in person at the meeting even if you
have previously returned a proxy.
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Sincerely, |
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Santa Clara, California
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Russell J. Knittel |
September 8, 2011
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Interim President and Chief Executive Officer |
TABLE OF CONTENTS
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i
SYNAPTICS INCORPORATED
3120 Scott Boulevard
Santa Clara, California 95054
PROXY STATEMENT
VOTING AND OTHER MATTERS
General
The accompanying proxy is solicited on behalf of Synaptics Incorporated, a Delaware
corporation, by our Board of Directors for use at our Annual Meeting of Stockholders to be held on
Tuesday, October 18, 2011 at 9:00 a.m., local time, or at any adjournment or postponement thereof,
for the purposes set forth in this proxy statement and in the accompanying meeting notice. The
meeting will be held at our principal executive offices, located at 3120 Scott Boulevard, Santa
Clara, California 95054.
In accordance with rules adopted by the Securities and Exchange Commission, or the SEC, that
allow companies to furnish their proxy materials over the Internet, we are mailing a Notice of
Internet Availability of Proxy Materials instead of a paper copy of our proxy statement and our
2011 Annual Report to most of our stockholders. The Notice of Internet Availability of Proxy
Materials contains instructions on how to access those documents and vote over the Internet. The
Notice of Internet Availability of Proxy Materials also contains instructions on how to request a
paper copy of our proxy materials, including our proxy statement, our 2011 Annual Report, and a
form of proxy card. We believe this process will allow us to provide our stockholders the
information they need in a more timely manner, while reducing the environmental impact and lowering
our costs of printing and delivering the proxy materials.
These proxy solicitation materials were first released on or about September 8, 2011 to all
stockholders entitled to vote at the meeting.
Record Date and Outstanding Shares
Stockholders of record at the close of business on August 26, 2011, which we have set as the
record date, are entitled to notice of and to vote at the meeting. On the record date, there were
32,156,323 outstanding shares of our common stock, par value $0.001 per share, respectively.
Quorum
The presence, in person or by proxy, of the holders of a majority of the total number of
shares of common stock outstanding and entitled to vote constitutes a quorum for the transaction of
business at the meeting. Each stockholder voting at the meeting, either in person or by proxy, may
cast one vote per share of common stock held on all matters to be voted on at the meeting.
Required Votes
Assuming that a quorum is present, the affirmative vote of a majority of the votes cast is
required for the election of the three nominees for three-year terms expiring in 2014 and to ratify
the appointment of KPMG LLP, an
independent registered public accounting firm, as the independent auditor of our company for
the fiscal year ending June 30, 2012. The advisory vote on the compensation of our named executive
officers for fiscal 2011 (say-on-pay) and the advisory vote on the frequency of future
non-binding advisory votes on the compensation of our named executive officers (say-on-frequency)
are non-binding, but our Board of Directors will consider the input of stockholders based on a
majority of votes cast for the say-on-pay proposal and the say-on-frequency proposal alternative
that receives the most votes cast.
1
Our Board of Directors recommends that you vote for the three nominees named herein, one
year on the say-on-frequency proposal, and in favor of each of the other proposals.
Voting of Proxies
When a proxy is properly executed and returned, the shares it represents will be voted at the
meeting as directed. If no specification is indicated, the shares will be voted (1) for the
election of each of the nominees for director set forth in this proxy statement, (2) for the
advisory approval of the compensation of our named executive officers for fiscal 2011, (3) to hold
an advisory vote on the compensation of our named executive officers on an annual basis, (4) for
the proposal to ratify the appointment of KPMG LLP, an independent registered public accounting
firm, as the independent auditor of our company for the fiscal year ending June 30, 2012, and (5)
as the persons specified in the proxy deem advisable on such other matters as may come before the
meeting.
Broker Non-Votes and Abstentions
Brokers, banks, or other nominees that hold shares of common stock in street name for a
beneficial owner of those shares typically have the authority to vote in their discretion if
permitted by the stock exchange or other organization of which they are members. Brokers, banks,
and other nominees are permitted to vote the beneficial owners proxy in their own discretion as to
certain routine proposals when they have not received instructions from the beneficial owner,
such as the ratification of the appointment of KPMG, LLP as the independent auditor of our company
for the fiscal year ending June 30, 2012. If a broker, bank, or other nominee votes such
uninstructed shares for or against a routine proposal, those shares will be counted towards
determining whether or not a quorum is present and are considered entitled to vote on the routine
proposals. However, when a proposal is non-routine, a broker, bank, or other nominee is not
permitted to exercise its voting discretion on that proposal without specific instructions from the
beneficial owner. These non-voted shares are referred to as broker non-votes when the nominee
has voted on other non-routine matters with authorization or voted on routine matters. These
shares will be counted towards determining whether or not a quorum is present, but will not be
counted for purposes of determining the votes received on the non-routine proposals.
Please note that brokers, banks, or other nominees may not use discretionary authority to vote
shares on the election of directors, the say-on-pay proposal, or the say-on-frequency proposal if
they have not received specific instructions from their clients. For your vote to be counted in
the above, you will need to communicate your voting decisions to your broker, bank, or other
nominee before the date of the meeting.
As provided in our bylaws, a majority of the votes cast means that the number of votes cast
for a proposal exceeds the number of votes cast against that proposal. Because abstentions and
broker non-votes do not represent votes cast for or against a proposal, broker non-votes and
abstentions will have no effect on the proposal to elect three directors, the say-on-pay proposal,
the say-on-frequency proposal, or the proposal to ratify the appointment of KPMG LLP as the
independent auditor of our company for the fiscal year ending June 30, 2012, as each such proposal
is determined by reference to the votes actually cast by the shares present or represented by proxy
and entitled to vote.
In accordance with our policy, an incumbent candidate for director who does not receive the
required votes for re-election is expected to tender his or her resignation to our Board of
Directors. Our Board of Directors, or another duly authorized committee of our Board of Directors,
will make a determination as to whether to accept or reject the tendered resignation generally
within 90 days after certification of the election results of the stockholder vote. We will
publicly disclose the decision regarding the tendered resignation and the rationale behind the
decision in a filing of a Current Report on Form 8-K with the SEC.
2
Revocability of Proxies
Any stockholder giving a proxy may revoke the proxy at any time before its use by furnishing
to us either a written notice of revocation or a duly executed proxy bearing a later date, or by
attending the meeting and voting in person. Attendance at the meeting will not cause your
previously granted proxy to be revoked unless you specifically so request.
Election Inspector
Votes cast by proxy or in person at the meeting will be tabulated by the election inspector
appointed for the meeting, who will determine whether a quorum is present. The election inspector
will treat broker non-votes and abstentions as shares that are present and entitled to vote for
purposes of determining the presence of a quorum, and as described in the Broker Non-Votes and
Abstentions section of this proxy statement for purposes of determining the approval of any matter
submitted to the stockholders for a vote.
Solicitation
We will bear the cost of this solicitation. In addition, we may reimburse brokerage firms and
other persons representing beneficial owners of shares for expenses incurred in forwarding
solicitation materials to such beneficial owners. Proxies also may be solicited by certain of our
directors and officers, personally or by telephone or e-mail, without additional compensation.
Annual Report and Other Matters
Our 2011 Annual Report to Stockholders, which was made available to stockholders with or
preceding this proxy statement, 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
materials or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended, or the Exchange Act. The information contained in the
Compensation Committee Report and the Report of the Audit Committee 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.
Through our website, www.synaptics.com, we make available free of charge all of our SEC
filings, including our proxy statements, our annual reports on Form 10-K, our quarterly reports on
Form 10-Q, and our current reports on Form 8-K, as well as Form 3, Form 4, and Form 5 reports of
our directors, officers, and principal stockholders, together with amendments to these reports
filed or furnished pursuant to Sections 13(a), 15(d), or 16 of the Exchange Act. We will also
provide upon written request, without charge to each stockholder of record as of the record date, a
copy of our Annual Report on Form 10-K for the fiscal year ended June 30, 2011 as filed with the
SEC. Any exhibits listed in the Form 10-K report also will be furnished upon request at the actual
expense we incur in furnishing such exhibits. Any such requests should be directed to our
corporate secretary at our executive offices set forth in this proxy statement.
Our fiscal year is the 52- or 53-week period ending on the last Saturday in June. The fiscal
periods presented in this proxy statement were 52-week periods for the years ended June 25, 2011,
June 26, 2010, and June 27, 2009. For ease of presentation, the accompanying disclosures have been
shown as ending on June 30, 2011, 2010, and 2009. The numbers included in this proxy statement
also reflect the retroactive effect of the 3-for-2 stock split effected as a stock dividend to each
stockholder of record on August 15, 2008 and paid on August 29, 2008.
3
PROPOSAL ONE:
ELECTION OF DIRECTORS
Nominees
Our Certificate of Incorporation and bylaws provide that the number of directors shall be
fixed from time to time by resolution of our Board of Directors. Our Board of Directors has fixed
the number of directors at seven. The directors are divided into three classes, with one class
standing for election each year for a three-year term. Our Board of Directors has nominated
Francis F. Lee, Nelson C. Chan, and Richard L. Sanquini for election as class 3 directors for
three-year terms expiring in 2014 or until their successors have been elected and qualified.
Unless otherwise instructed, the proxy holders will vote the proxies received by them for
the nominees named above. Messrs. Lee, Chan, and Sanquini currently are directors of our company.
In the event that any of Messrs. Lee, Chan, or Sanquini are unable or decline to serve as directors
at the time of the meeting, the proxies will be voted for any nominees designated by our current
Board of Directors to fill the vacancies. It is not expected that any of Messrs. Lee, Chan, or
Sanquini will be unable or will decline to serve as directors.
Our Board of Directors recommends a vote for the nominees named herein.
The following table sets forth certain information regarding our directors and the nominees for director:
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Term Expires |
Francis F. Lee |
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Chairman of the Board |
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2011 |
Russell J. Knittel |
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Interim President and Chief Executive Officer, and Director |
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2013 |
Jeffrey D. Buchanan |
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Director |
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2012 |
Nelson C. Chan |
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Director |
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2011 |
Keith B. Geeslin |
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Director |
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Richard L. Sanquini |
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Director |
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2011 |
James L. Whims |
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Director |
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2012 |
Francis F. Lee has been the Chairman of the Board of our company since October 2008 and a
director of our company since December 1998. Mr. Lee served as Chief Executive Officer of our
company from December 1998 until July 2009 and President of our company from December 1998 to July
2008. Mr. Lee was a consultant from August 1998 to November 1998. From May 1995 until July 1998,
Mr. Lee served as General Manager of NSM, a Hong Kong-based joint venture between National
Semiconductor Corporation and S. Megga. Mr. Lee held a variety of executive positions for National
Semiconductor from 1988 until August 1995. These positions included Vice President of
Communication and Computing Group, Vice President of Quality and Reliability, Director of Standard
Logic Business Unit, and various other operations and engineering management positions. Mr. Lee
holds a Bachelor of Science degree, with honors, in Electrical Engineering from the University of
California at Davis. We believe Mr. Lees service for more than 10 years as our Chief Executive
Officer gives him invaluable insights into our business, our culture, our personnel, our
opportunities, and our challenges and provides the requisite qualifications, skills, perspectives,
and experiences that make him well qualified to serve on our Board of Directors.
Russell J. Knittel has served as Interim President and Chief Executive Officer and has been a
director of our company since October 2010. Mr. Knittel served as Executive Vice President of our
company from July 2007 to October 2010 and acting General Manager of our Handheld Division from
July 2010 to October 2010. Mr. Knittel served as Chief Financial Officer, Chief Administrative
Officer, Secretary, and Treasurer of our company from November 2001 until his retirement from those
positions in September 2009. Mr. Knittel served as Senior Vice President of our company from
November 2001 until July 2007. He served as Vice President of Administration and Finance, Chief
Financial Officer, and Secretary of our company from April 2000 through October 2001. Mr. Knittel
is a director of MarineMax, Inc. and OCZ Technology Group, Inc., which are both publicly held
companies. Mr. Knittel also serves as a director of LitePoint Corporation, a privately held
company. Mr. Knittel holds a Bachelor of Arts degree in accounting from California State
University at Fullerton and a Masters of Business Administration from San Jose State University.
We believe Mr. Knittels roles as interim chief executive officer, general manager,
and chief financial officer of a public company, and his public company board service provide
the requisite qualifications, skills, perspectives, and experiences that make him well qualified to
serve on our Board of Directors.
4
Jeffrey D. Buchanan has been a director of our company since September 2005. Mr. Buchanan has
been the Executive Vice President, Chief Financial Officer, and Treasurer of Smith & Wesson Holding
Corporation, a Nasdaq Global Select Market-listed company that is a global provider of products and
services for safety, security, protection and support, since January 2011. Mr. Buchanan also
served on the Board of Directors and as the Chairman of the Audit Committee of Smith & Wesson
Holding Corporation from November 2004 until January 2011. From May 2010 to December 2010, Mr.
Buchanan was a corporate attorney at Ballard Spahr LLP. Mr. Buchanan served as a Senior Managing
Director of CKS Securities, LLC, a registered broker-dealer, from August 2009 until May 2010, and
as a Senior Managing Director of Alare Capital Securities, L.L.C., a registered broker-dealer, from
November 2006 until July 2009. From 2005 to 2006, Mr. Buchanan was principal of Echo Advisors, a
corporate consulting and advisory firm focusing on mergers, acquisitions, and strategic planning.
Mr. Buchanan served in various positions with Three-Five Systems, Inc., an NYSE publicly traded
electronic manufacturing services company, from May 1996 until February 2005, including as
Executive Vice President, Chief Financial Officer, Treasurer, and Secretary. Mr. Buchanan served
from June 1986 until May 1996 as a business lawyer with OConnor, Cavanagh, Anderson, Killingsworth
& Beshears, a professional association, most recently as a senior member of that firm. Mr.
Buchanan was associated with the law firm of Davis Wright Tremaine from 1984 to 1986, and he was a
senior staff person at Deloitte & Touche from 1982 to 1984. Three-Five Systems, Inc. filed a
voluntary petition for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code on September 8,
2005. Mr. Buchanan holds a Bachelor of Science degree in Accounting from Arizona State University,
a Juris Doctor degree in law from the University of Arizona, and a Masters of Law degree in tax
from the University of Florida. We believe Mr. Buchanans legal, accounting, and investment
banking background, his roles as the chief financial officer and treasurer of public companies, and
his public company board service provide the requisite qualifications, skills, perspectives, and
experiences that make him well qualified to serve on our Board of Directors.
Nelson C. Chan has been a director of our company since February 2007. From December 2006
until August 2008, Mr. Chan served as the Chief Executive Officer of Magellan, a leader in the
consumer, survey, GIS, and OEM GPS navigation and positioning markets. From 1992 through 2006, Mr.
Chan served in various senior management positions with SanDisk Corporation, a global leader in
flash memory cards, including most recently as Executive Vice President and General Manager,
Consumer Business. From 1983 to 1992, Mr. Chan held marketing and engineering positions at Chips
and Technologies, Signetics, and Delco Electronics. Mr. Chan is a member of the Board of Directors
of Affymetrix, a Nasdaq Global Select Market-listed company, which develops, manufactures, and
sells products and services for genetic analysis to the life science research and clinical
healthcare markets. Mr. Chan is also a member of the Board of Directors of Coinstar, Inc., a
Nasdaq Global Select Market-listed company, which is a provider of automated retail solutions
offering convenient services that make life easier for consumers and drive incremental traffic and
revenue for retailers. Mr. Chan was a member of the Board of Directors of Silicon Laboratories,
Inc. a Nasdaq Global Select Market-listed company, which is a fabless, analog-intensive
mixed-signal semiconductor company. Mr. Chan also serves on the Boards of Directors of several
private companies. Mr. Chan holds a Bachelor of Science degree in Electrical and Computer
Engineering from the University of California at Santa Barbara and a Masters of Business
Administration degree from Santa Clara University. We believe that Mr. Chans experience as the
Chief Executive Officer of Magellan, his senior management positions with other leading companies,
and his service as a director of multiple companies provide the requisite qualifications, skills,
perspectives, and experiences that make him well qualified to serve on our Board of Directors.
Keith B. Geeslin has been a director of our company since 1986. Mr. Geeslin has been a
General Partner of Francisco Partners, a firm specializing in structured investments in technology
companies undergoing strategic, technological, and operational inflection points, since January
2004. From 2001 until October 2003, Mr. Geeslin served as Managing General Partner of the Sprout
Group, a venture capital firm, with which he became associated in 1984. In addition, Mr. Geeslin
served as a general or limited partner in a series of investment funds associated with the Sprout
Group, a division of DLJ Capital Corporation, which is a subsidiary of Credit Suisse (USA), Inc.
Mr. Geeslin is a member of the Board of Directors of Blue Coat Systems, Inc., a public company that
provides hardware and software products to secure and accelerate delivery of business applications
over wide area networks and the Internet, and CommVault Systems, Inc., a public company that
provides data management software applications. Mr. Geeslin formerly served on the Board of
Directors of Hypercom Corp., a public company that designs, manufactures, and sells electronic
payment solutions. Mr. Geeslin holds a Bachelor of Science degree in
Electrical
Engineering and a Masters of Science degree in Engineering and Economic Systems from Stanford
University and a Masters of Arts degree in Philosophy, Politics, and Economics from Oxford
University. We believe Mr. Geeslins long career at leading private equity and venture capital
firms with a focus on investments in high-technology companies, his service on multiple boards of
directors, and his engineering background provide the requisite qualifications, skills,
perspectives, and experiences that make him well qualified to serve on our Board of Directors.
5
Richard L. Sanquini has been a director of our company since 1994. Mr. Sanquini is a
consultant in the semiconductor industry and is the former Chairman of the Board of PortalPlayer,
Inc., a public company that developed the silicon and operating system firmware for the Apple iPod,
and was acquired by NVIDIA Corporation in January 2007. Mr. Sanquini retired from National
Semiconductor in 1999, after a 20-year tenure, where he managed key business units, including
microprocessors and microcontrollers, served as Chief Technology Officer, managed business
development and intellectual property protection, and was Chairman of the Board for two China joint
ventures. Prior to National Semiconductor, he served as President and Chief Executive Officer of
Information Storage Devices, and in various executive positions at RCA. Mr. Sanquini is the
Chairman of the Board of Directors of Pixelworks Inc., a public company, and on the Boards of
Directors of four private companies. Mr. Sanquini formerly served on the Board of Directors of
ZiLOG, Inc., a public company, which is a fabless semiconductor supplier of microprocessor and
microcontroller semiconductor devices, or micrologic products. Mr. Sanquini holds a Bachelor of
Science degree in Electrical Engineering from the Milwaukee School of Engineering, Wisconsin. We
believe that Mr. Sanquinis long career and executive positions with numerous high-technology
companies, his engineering background, his knowledge and experience in the semiconductor industry,
and his service on numerous boards of directors provide the requisite qualifications, skills,
perspectives, and experiences that make him well qualified to serve on our Board of Directors.
James L. Whims has been a director of our company since October 2007. Mr. Whims has been a
Partner at Alsop Louie Partners, a venture capital firm focused on identifying promising
entrepreneurs, since February 2010. From 1996, Mr. Whims was a Managing Director of TechFund
Capital I, L.P., TechFund Capital II, L.P., and since 2001, TechFund Capital Europe, venture
capital firms concentrating on high-technology enterprises. Since 1997, Mr. Whims has been a
director of THQ, Inc., a leading independent developer and publisher of interactive entertainment
software, which is listed on the Nasdaq Global Select Market. Mr. Whims also serves on the Boards
of Directors of numerous private companies, including Ruckus Media, Kidlandia, Phizzle, and
Waveconnex. Mr. Whims was Executive Vice President of Sony Computer Entertainment of America from
1994 to 1996, where he was responsible for the North American launch of the PlayStation, and
Executive Vice President of The Software Toolworks Inc. from 1990 to 1994. Mr. Whims co-founded
Worlds of Wonder, an American toy company that distributed products including Teddy Ruxpin, Lazer
Tag, and the United States launch of Nintendo, where he also served as an executive from 1985 to
1988. Mr. Whims holds a Bachelor of Arts degree in Economics and Communications from Northwestern
University and a Masters of Business Administration degree in Finance and Marketing from the
University of Arizona. We believe Mr. Whims senior executive positions with major companies, his
experience as an investor in high-technology companies, his service as a director of multiple
companies, and his expertise in e-communications and marketing provide the requisite
qualifications, skills, perspectives, and experiences that make him well qualified to serve on our
Board of Directors.
Election of Nominees
The election of Messrs. Lee, Chan, and Sanquini as class 3 directors for three-year terms
expiring in 2014 or until their successors have been elected and qualified will require the
affirmative vote of a majority of the votes cast, assuming that a quorum is present at the meeting.
CORPORATE GOVERNANCE
Director Independence
Our Board of Directors has determined, after considering all the relevant facts and
circumstances, that Messrs. Buchanan, Chan, Geeslin, Sanquini, and Whims are independent directors,
as independence is defined by the listing standards of Nasdaq and by the SEC, because they have
no relationship with us that would interfere with their exercise of independent judgment. Messrs.
Lee and Knittel are not independent directors of our company because of their past or current
positions as executive officers of our company. There are no family relationships among any of our
directors or officers.
6
Committee Charters, Corporate Governance, and Code of Ethics
Our Board of Directors has adopted charters for the Audit, Compensation, and Nominations and
Corporate Governance Committees describing the authority and responsibilities delegated to each
committee by our Board of Directors. Our Board of Directors has also adopted Corporate Governance
Guidelines, a Code of Conduct, and a Code of Ethics for the CEO and Senior Financial Officers. We
post on our website at www.synaptics.com, the charters of our Audit, Compensation, and Nominations
and Corporate Governance Committees; our Corporate Governance Guidelines, Code of Conduct, and Code
of Ethics for the CEO and Senior Financial Officers, and any amendments or waivers thereto; and any
other corporate governance materials specified by SEC or Nasdaq regulations. These documents are
also available in print to any stockholder requesting a copy in writing from our corporate
secretary at our executive offices set forth in this proxy statement.
Executive Sessions
We regularly schedule executive sessions of our Board of Directors at which non-management
directors meet without the presence or participation of management. The Chairman of our Board of
Directors presides at such executive sessions. We also schedule meetings of the independent
directors, which are presided by the Lead Director.
Board Committees
Our bylaws authorize our Board of Directors to appoint, from among its members, one or more
committees, each consisting of one or more directors. Our Board of Directors has established three
standing committees: an Audit Committee, a Compensation Committee, and a Nominations and Corporate
Governance Committee. The members of our Audit Committee, Compensation Committee, and Nominations
and Corporate Governance Committee consist entirely of independent directors.
The Audit Committee
The purposes of the Audit Committee are to oversee the financial and reporting processes of
our company and the audits of the financial statements of our company and to provide assistance to
our Board of Directors with respect to the oversight of the integrity of the financial statements
of our company, our companys compliance with legal and regulatory matters, the independent
auditors qualifications and independence, and the performance of our companys independent
auditor. The primary responsibilities of the Audit Committee are set forth in its charter and
include various matters with respect to the oversight of our companys accounting and financial
reporting process and audits of the financial statements of our company on behalf of our Board of
Directors. The Audit Committee also selects the independent auditor to conduct the annual audit of
the financial statements of our company; reviews the proposed scope of such audit; reviews
accounting and financial controls of our company with the independent auditor and our financial
accounting staff; and reviews and approves any transactions between us and our directors, officers,
and their affiliates.
The Audit Committee currently consists of Messrs. Buchanan, Chan, and Whims, each of whom is
an independent director of our company under Nasdaq listing standards as well as under rules
adopted by the SEC pursuant to the Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley. Our Board of
Directors has determined that Mr. Buchanan (whose background is detailed above) qualifies as an
audit committee financial expert in accordance with applicable rules and regulations of the SEC.
Mr. Buchanan serves as the Chairman of the Audit Committee.
The Compensation Committee
The purposes of the Compensation Committee include determining, or recommending to our Board
of Directors for determination, the compensation of the Chief Executive Officer and other executive
officers of our company and discharging the responsibilities of our Board of Directors relating to
compensation programs of our company. The Compensation Committee currently consists of Messrs.
Geeslin, Sanquini, and Whims, each of whom is an independent director of our company under Nasdaq
listing standards as well as under rules adopted by the SEC pursuant to Sarbanes-Oxley. Mr.
Sanquini serves as the Chairman of the Compensation Committee.
7
The Nominations and Corporate Governance Committee
The purposes of the Nominations and Corporate Governance Committee include the selection or
recommendation to our Board of Directors of nominees to stand for election as directors at each
election of directors, the oversight of the selection and composition of committees of our Board of
Directors, the oversight of the evaluations of our Board of Directors and management, and the
development and recommendation to our Board of Directors of a set of corporate governance
principles applicable to our company. The Nominations and Corporate Governance Committee currently
consists of Messrs. Chan, Geeslin, and Sanquini, each of whom is an independent director of our
company under Nasdaq listing standards as well as under rules adopted by the SEC pursuant to
Sarbanes-Oxley. Mr. Chan serves as the Chairman of the Nominations and Corporate Governance
Committee.
The Nominations 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
companys corporate secretary at our executive offices set forth in this proxy statement. The
Nominations 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.
Risk Assessment of Compensation Policies and Practices
We have assessed the compensation policies and practices with respect to our employees,
including our executive officers, and have concluded that they do not create risks that are
reasonably likely to have a material adverse effect on our company.
Boards Role in Risk Oversight
Risk is inherent in every business. As is the case in virtually all businesses, we face a
number of risks, including operational, economic, financial, legal, regulatory, and competitive
risks. Our management is responsible for the day-to-day management of the risks we face. Our
Board of Directors, as a whole and through its committees, has responsibility for the oversight of
risk management.
In its oversight role, our Board of Directors involvement in our business strategy and
strategic plans plays a key role in its oversight of risk management, its assessment of
managements risk appetite, and its determination of the appropriate level of enterprise risk. Our
Board of Directors receives updates at least quarterly from senior management and periodically from
outside advisors regarding the various risks we face, including operational, economic, financial,
legal, regulatory, and competitive risks. Our Board of Directors also reviews the various risks we
identify in our filings with the SEC as well as risks relating to various specific developments,
such as acquisitions, stock repurchases, debt and equity placements, and product introductions.
Our Board committees assist our Board of Directors in fulfilling its oversight role in certain
areas of risks. Pursuant to its charter, the Audit Committee oversees the financial and reporting
processes of our company and the audit of the financial statements of our company and provides
assistance to our Board of Directors with respect to the oversight and integrity of the financial
statements of our company, our companys compliance with legal and regulatory matters, the
independent auditors qualification and independence, and the performance of our independent
auditor. The Compensation Committee considers the risks that our compensation policies and
practices may have in attracting, retaining, and motivating valued employees and endeavors to
assure that it is not reasonably likely that our compensation plans and policies would have a
material adverse effect on our company. Our Nominations and Corporate Governance Committee
oversees governance related risks, such as board independence, conflicts of interests, and
management succession planning.
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Board Diversity
We seek diversity in experience, viewpoint, education, skill, and other individual qualities
and attributes to be represented on our Board of Directors. We believe directors should have
various qualifications, including individual character and integrity; business experience and
leadership ability; strategic planning skills, ability, and experience; requisite knowledge of our
industry and finance, accounting, and legal matters; communications and interpersonal skills; and
the ability and willingness to devote time to our company. We also believe the skill sets,
backgrounds, and qualifications of our directors, taken as a whole, should provide a
significant mix of diversity in personal and professional experience, background, viewpoints,
perspectives, knowledge, and abilities. Nominees are not to be discriminated against on the basis
of race, religion, national origin, sex, sexual orientation, disability, or any other basis
prescribed by law. The assessment of directors is made in the context of the perceived needs of
our Board of Directors from time to time.
All of our directors have held high-level positions in business or professional service firms
and have experience in dealing with complex issues. We believe that all of our directors are
individuals of high character and integrity, are able to work well with others, and have committed
to devote sufficient time to the business and affairs of our company. In addition to these
attributes, the description of each directors background sets forth above indicates the specific
experience, qualifications, and skills necessary to conclude that each individual should continue
to serve as a director of our company.
Board Leadership Structure
We believe that effective board leadership structure can depend on the experience, skills, and
personal interaction between persons in leadership roles as well as the needs of our company at any
point in time. We currently maintain separate roles between the Chief Executive Officer and
Chairman of the Board in recognition of the differences between the two responsibilities. Our
Chief Executive Officer is responsible for setting our strategic direction and for day-to-day
leadership and performance of our company. Our Chairman of the Board provides input to the Chief
Executive Officer, sets the agenda for Board meetings, and presides over meetings of the full Board
of Directors as well as executive sessions of the Board of Directors.
We currently select, on a rotation basis, one of our independent directors to serve as Lead
Director. Mr. Buchanan is currently serving as our Lead Director. In that role, Mr. Buchanan
helps to facilitate communication and interaction between the Board of Directors and management.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 2011, our Compensation Committee consisted of Messrs.
Geeslin, Sanquini, and Whims. None of these individuals had any contractual or other relationships
with us during the fiscal year except as directors.
Board and Committee Meetings
Our Board of Directors held a total of six meetings during the fiscal year ended June 30,
2011. During the fiscal year ended June 30, 2011, the Audit Committee held five meetings; the
Compensation Committee held four meetings; and the Nominations and Corporate Governance Committee
held one meeting. Each of our directors attended at least 75% of the aggregate of (1) the total
number of meetings of our Board of Directors held during fiscal 2011, and (2) the total number of
meetings held by all committees of our Board of Directors on which such person served during fiscal
2011.
Annual Meeting Attendance
We encourage our directors to attend each annual meeting of stockholders. To that end, and to
the extent reasonably practical, we generally schedule a meeting of our Board of Directors on the
same day as our annual meeting of stockholders. All of our directors attended our annual meeting
of stockholders last year.
Communications with Directors
Interested parties may communicate with our Board of Directors or specific members of our
Board of Directors, including our independent directors and the members of our various board
committees, by submitting a letter addressed to the Board of Directors of Synaptics Incorporated,
c/o any specified individual director or directors at our executive offices set forth in this proxy
statement. Any such letters are forwarded to the indicated directors.
9
COMPENSATION DISCUSSION AND ANALYSIS
Overview
Our Board of Directors has appointed a Compensation Committee, consisting exclusively of
independent directors. The Compensation Committee is authorized to determine and approve, or make
recommendations to our Board of Directors with respect to, the compensation of our Chief Executive
Officer and our other executive officers and to grant or recommend the grant of stock-based
compensation to our Chief Executive Officer and other executive officers.
The compensation program for executive officers consists primarily of base salary,
performance-based bonuses, and long-term incentives in the form of stock-based compensation,
including stock options and deferred stock units. Executives also participate in other benefit
plans, including medical and retirement plans, which generally are available to all regular
full-time employees of our company. We consider each element of our compensation collectively with
other elements of compensation when establishing the various forms, elements, and levels of
compensation.
Our philosophy is to compensate our executives at levels that enable us to attract, motivate,
and retain highly qualified executives. We establish annual bonus programs designed to reward
individuals for performance based primarily on our financial results and their achievement of
personal and corporate goals that contribute to our long-term goal of building stockholder value.
Grants of stock-based awards are intended to provide additional incentive to work to maximize
long-term total return to stockholders and to align the interests of our executives with those of
our stockholders. Total compensation levels reflect corporate positions, responsibilities, and
achievement of goals. As a result of our performance-based philosophy to compensation,
compensation levels may vary significantly from year to year and among our various executive
officers with fixed pay components generally set at or below the 50th percentile of
comparable companies and variable pay components generally set at or above the 50th
percentile of comparable companies. We expect the compensation level of our Chief Executive
Officer will be higher than that of our other executive officers, assuming relatively equal
achievement of individual performance goals, since our compensation policies set our base salaries,
annual bonuses, and stock-based award grants after reviewing those of comparable companies, which
generally compensate their chief executive officers at higher levels because of their roles and
their importance to overall company success.
The three most determinative factors in our executive compensation program are compensation
levels at comparable companies, individual performance, and company performance. The most
important component of competitive compensation levels is compensation levels at Northern
California-based high-technology companies, with revenue between $200.0 million and $1.0 billion,
which we consider comparable companies; the most important component of company performance is
operating profit; and the most important component of individual performance is achieving
individual goals that are set at the beginning of each year but vary from year to year and position
by position, but generally include financial and operating performance, product success, timely
product delivery, forecasting accuracy, customer satisfaction, cost reduction, leadership, team
building, and employee retention. The Compensation Committee has discretion in determining
compensation matters.
Base salary levels for executive officers of our company generally are set at the beginning of
each fiscal year, and bonuses are determined at the end of each fiscal year based upon the
performance of our company and our executives.
Philosophy
The goals of our executive compensation program are as follows:
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Role of the Compensation Committee and Chief Executive Officer
The Compensation Committee of our Board of Directors currently determines the compensation of
our Chief Executive Officer and our other executive officers. Annually, our Compensation Committee
evaluates the performance of our Chief Executive Officer and determines the compensation of our
Chief Executive Officer in light of the goals and objectives of our compensation program for that
year. Our Compensation Committee together with our Chief Executive Officer annually assess the
performance of our other executive officers. Based in part on recommendations from our Chief
Executive Officer, our Compensation Committee determines the compensation of our other executive
officers.
At the request of our Compensation Committee, our Chief Executive Officer generally attends a
portion of our Compensation Committee meetings, including meetings at which our compensation
consultants are present. This enables our Compensation Committee to review with our Chief
Executive Officer the corporate and individual goals that our Chief Executive Officer regards as
important to achieve our overall success. Our Compensation Committee also requests our Chief
Executive Officer to assess the performance of and our goals for our other executive officers.
Although the participation of our Chief Executive Officer could influence performance targets and
individual goals, including his own, our Compensation Committee rather than our Chief Executive
Officer makes all determinations regarding individual and corporate goals and targets. Our Chief
Executive Officer does not attend any portion of meetings at which his compensation is discussed.
Compensation Surveys and Compensation Consultants
In determining compensation levels, we regularly review compensation levels in our
geographical area, compensation levels of companies that we deem to be similar to our company
regardless of their location, competitive factors to enable us to attract executives from other
companies, and, most importantly, compensation levels that we deem appropriate to attract,
motivate, and retain our executives, with an emphasis on compensation levels at Northern
California-based high-technology companies. From time to time, we retain the services of
independent compensation consultants to review a wide variety of factors relevant to executive
compensation, trends in executive compensation, and the identification of relevant comparable
companies. Our Compensation Committee makes all determinations regarding the engagement, fees, and
services of our compensation consultants, and our compensation consultants report directly to our
Compensation Committee.
Base Salary
Our philosophy is to pay base salaries at competitive levels that enable us to attract,
motivate, and retain highly qualified executives. Base salaries for executive officers reflect an
executives position, responsibilities, experience, skills, performance, and contributions. In
determining base compensation, we take into account competitive salary levels for similar positions
at comparable companies and salary levels relative to other positions within our company. Our base
salaries reflect our pay-for-performance philosophy that affords executives the opportunity to
receive meaningful incentive compensation based on the performance of our company and our
executives achieving individual goals set from time to time. As a result, our base salaries tend
to be between the 25th and 50th percentiles of those of comparable companies.
Our Compensation Committee independently determines the base salary of our Chief Executive
Officer. The base salaries for our other executives, other than our Chief Executive Officer, are
determined by our Compensation Committee in conjunction with the recommendations of our Chief
Executive Officer. Our Compensation Committees evaluation of the recommendations of our Chief
Executive Officer considers the same factors outlined above.
Annual Bonuses
Annual bonuses are intended to provide incentive compensation to our executives who contribute
substantially to the success of our company. The granting of such bonuses is based upon the
achievement of company performance objectives, including meeting specified levels of operating
profit, and individual performance goals. Our incentive compensation targets for annual bonuses
for our executive officers are approved annually by our Board of Directors. Executive officer
incentive compensation targets are subject to change based on our
Compensation Committees periodic reviews of industry and competitive data, changes in
individual responsibility, and our compensation philosophy.
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The determination of annual bonuses involves a two-step process. First, we establish the
annual target cash incentive compensation pool each fiscal year based on the aggregate cash
incentive targets of all of our executive officers. The actual bonus pool for the year is subject
to the satisfaction of specified operating profit targets and to adjustment based on company
performance relative to the target operating profit approved by our Board of Directors at the
beginning of the year. The adjustment to the pool equals 12.5% of the amount, if any, by which our
actual operating profit for the fiscal year exceeds or falls short of the target operating profit
level.
In step two, the bonus amount, if any, to be received from the available bonus pool by an
executive is determined based on the executives position and responsibility level within our
company. Further, our Compensation Committee exercises discretion in determining each executives
award based upon the available pool, a subjective assessment of the achievement of individual
performance goals, and any other relevant factors. We set target operating profit at levels
designed to penalize disappointing performance and to reward exemplary performance as determined by
our Compensation Committee. Achieving target operating profit levels and individual goals
generally results in annual bonuses at or above the 50th percentile of bonuses for
comparable companies.
Stock-Based Compensation Grants
Our company grants stock-based awards, including stock options and deferred stock units,
periodically to our employees to provide them with additional incentive to work to maximize
long-term total return to stockholders. Grants of stock-based awards are intended to result in
limited rewards if the price of our common stock does not appreciate, but may provide substantial
rewards to executives as our stockholders in general benefit from stock price appreciation. Grants
of stock-based awards are intended to align the interests of our executives with those of our
stockholders and to align compensation with the price performance of our common stock. Annual
stock-based awards are intended to be competitive with those of comparable companies.
Under each stock-based incentive compensation plan, our Board of Directors or a committee
approved by our Board of Directors is specified to act as the plan administrator, and our Board of
Directors has authorized our Compensation Committee to make decisions regarding grants of
stock-based awards to executive officers and employees of and consultants to our company. In
general, stock-based awards are granted to employees at the onset of employment. If, in the
opinion of the plan administrator, the performance of an existing employee merits an increase in
the number of stock-based awards held, however, the plan administrator may elect to issue
additional stock-based awards, such as additional stock options and deferred stock units, to that
employee. The vesting period on grants is designed to encourage holders to continue in the employ
of our company. The vesting schedule for stock options currently is generally 1/48th of the total
shares each month after the grant date, and the vesting schedule for deferred stock units is
generally 1/16th of the total shares each quarter after the date of grant. Stock options granted
to our employees generally are incentive stock options, or qualified options under Section 422 of
the Internal Revenue Code of 1986, as amended, or the Code, subject to calendar year vesting
limitations under Section 422(d) with any balance being nonqualified stock options.
Other Benefits
Our company provides various employee benefit programs to our executive officers, including
medical, dental, vision, life, and disability insurance benefits, a 401(k) retirement savings plan,
and an employee stock purchase plan. These benefits are generally available to all regular
full-time employees of our company.
Deductibility of Executive Compensation
We take into account the tax effect of our compensation. Section 162(m) of the Code, or
Section 162(m), currently limits the deductibility for federal income tax purposes of compensation
in excess of $1.0 million paid to each of any publicly held corporations chief executive officer
and three other most highly compensated executive officers (excluding the chief financial officer).
We may deduct certain types of compensation paid to any of these individuals only to the extent
that such compensation during any fiscal year does not exceed $1.0 million. Qualifying
performance-based compensation is not subject to the deduction limits if certain requirements are
met.
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Accounting Considerations
We account for stock-based employee compensation arrangements in accordance with the
provisions of Financial Accounting Standards Board, or FASB, Accounting Standards Codification, or
ASC, Topic 718 Compensation Stock Compensation. In determining stock-based compensation, we
consider the potential expense of those grants under FASB ASC Topic 718 and the impact on our
earnings per share.
Policies for the Pricing and Timing of Stock-Based Compensation Grants
Generally, we provide for effective dates and set the price of all stock-based awards at the
closing price of our stock on the Nasdaq Global Select Market on the second business day after each
quarterly earnings release. We approve stock-based compensation at regularly scheduled meetings
each year. In the case of new hires, vesting start dates are determined by the date the employee
reports for service.
Fiscal 2011 Incentive Compensation Program
Compensation Consultants
We engaged Compensia, Inc. to assist us in connection with our fiscal 2011 incentive
compensation program. We relied upon the Radford Executive Compensation Survey, a leading
international compensation survey covering more than a thousand high-technology companies, and a
group of peer companies identified by us after consultation with Compensia. We benchmarked our
compensation levels with an emphasis on Northern California-based high-technology companies with
revenue between $200.0 million and $1.0 billion. We believe that this group of companies
represents our primary competition for attracting and retaining our executives. Examples of such
companies included in the Radford Executive Compensation Survey are Atheros Communication, Atmel,
Blue Coat Systems, Cypress Semiconductor, Intermec, Microchip Technology, Quantum, RF Micro
Devices, Silicon Image, Silicon Laboratories, Skyworks Solutions, and TriQuint Semiconductor. The
peer companies identified by us after consultation with Compensia were Atheros Communications,
Atmel, Blue Coat Systems, Cypress Semiconductor, Emulex, InterDigital, Intermec, Netezza, NetGear,
Novatel Wireless, Plantronics, PMC-Sierra, Polycom, Qlogic, Quantum, Riverbed Technology, Sigma
Designs, Silicon Laboratories, STEC, and Zebra Technologies. Compensia provided us with the survey
results and an analysis of our peer companies; determined our position among the peer companies;
developed recommendations and guidelines for the structure of our compensation program; reviewed
the overall compensation package; and advised our Compensation Committee regarding the
appropriateness of our compensation program.
Fiscal 2011 Incentive Compensation Program
As is our practice, we set base salaries for our executive officers at the beginning of the
fiscal year. Base salaries for our named executive officers were increased for fiscal 2011 as set
forth below. The increases reflect performance assessments by our Compensation Committee and
changes in comparable company base salary levels for the year.
Our fiscal 2011 incentive compensation bonus program was broad based with 100% of our
worldwide non-commission-based employees participating. The portion of the incentive compensation
bonus pool of $1.0 million established by our Board of Directors for our continuing named executive
officers represented approximately 1.3% of our fiscal 2011 operating income. The amount of the
bonus pool for fiscal 2011 reflected the aggregate cash incentive targets for all of our executive
officers based on comparable company surveys and reaching a specified operating profit measure.
The bonus amount paid to each executive from the bonus pool was determined based on the executives
position and responsibility level within our company and a subjective assessment by our
Compensation Committee of performance by the executive in satisfying individual goals. We believe
that it was difficult for our executives to achieve their incentive compensation targets because
achieving such target levels required a substantial increase in performance over the prior years
results. Based on both individual performances and the assessment of our companys overall
performance in fiscal 2011, bonuses were awarded to our named executive officers as set forth
below.
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For fiscal 2011, our stock-based incentive compensation grants for executive officers took the
form of grants of stock options as was the case for fiscal 2010 and fiscal 2009. In fiscal 2011,
we granted stock options to certain executive officers and other employees under the program,
including those to our named executive officers
as set forth below. The amount of stock options granted to each executive officer during
fiscal 2011 reflected the executives position within our company, stock option grants by
comparable companies for comparable positions, and the stock options held by the executive. The
vesting schedule for stock option awards was generally 1/48th each month after the grant date. The
vesting schedule is designed to encourage executives to continue in the employ of our company.
Each executive forfeits the unvested portion, if any, of the stock options if the executives
service to our company is terminated for any reason, except as may otherwise be determined by our
Board of Directors.
Mr. Knittels individual performance goals for fiscal 2011 were to improve customer
satisfaction, direct our future business growth plan, enhance operating profit, and develop and
build our employee base. Mr. Knittel received a 48.9% increase in base salary in October 2010 to
reflect his changed position from Executive Vice President to Interim President and Chief Executive
Officer, to align his base salary with comparable company base salaries, and to reflect his job
performance. Mr. Knittel received a bonus payout of 100% of his target bonus and options to
purchase 534,400 shares of our common stock. We paid Mr. Knittel a discretionary bonus of $116,667
for fiscal 2011 in recognition of the deferral of his planned retirement to accept the
responsibilities of this interim role for our company and for his outstanding performance during
his tenure in this position. Mr. Knittel also received options to purchase 131,000 shares of our
common stock in connection with his appointment as our Interim President and Chief Executive
Officer in October 2010. Mr. Knittels compensation reflects our agreement with him regarding his
base salary and bonus in connection with his appointment, as well as his role as Interim President
and Chief Executive Officer of our company, the performance of our company in fiscal 2011, and the
satisfactory achievement of his individual performance goals for the year.
Ms. Bayless individual performance goals for fiscal 2011 were to support our business growth
objectives with appropriate processes and controls, monitor and review our corporate and financial
structure, set future financial strategy, and foster an environment of high integrity and ethics
and regulatory compliance. Ms. Bayless received a 2.5% increase in base salary in July 2010 to
align her base salary with comparable company base salaries and to reflect her job performance.
Ms. Bayless received a bonus payout of 100% of her target bonus and options to purchase 37,500
shares of our common stock. Ms. Bayless compensation for fiscal 2011 reflects her role as our
Chief Financial Officer, the performance of our company during fiscal 2011, and the satisfactory
achievement of her individual performance goals for the year.
Mr. Barber joined our company on January 10, 2011, and his individual performance goals for
fiscal 2011 were to improve customer satisfaction; develop and expand strategic relationships to
enhance our ability to offer value-added solutions to our customers and penetrate new markets; and
develop and build our employee base. Mr. Barber received a bonus payout of 100% of his pro-rated
target bonus and options to purchase 110,000 shares of our common stock. Mr. Barbers
compensation for fiscal 2011 reflects his appointment as our Senior Vice President and General
Manager of our Handheld Division, the performance of our company during fiscal 2011, and the
satisfactory achievement of his individual performance goals for the year.
Mr. Longs individual performance goals for fiscal 2011 were to provide leadership and
direction with sales strategies designed to develop and expand strategic relationships with our
existing customers and to penetrate new markets. Mr. Long received a 4.0% increase in base salary
in July 2010 to align his base salary with comparable company base salaries and to reflect his job
performance. Mr. Long received a bonus payout of 100% of his target bonus and options to purchase
37,500 shares of our common stock. In addition, we paid Mr. Long a $40,000 discretionary bonus in
recognition of his leadership of the Handheld Division prior to transitioning these
responsibilities to Mr. Barber, who joined our company in January 2011. The increase in the base
salary, the bonus level, and the stock-based compensation reflect the performance of our company
during fiscal 2011 and the satisfactory achievement of his individual performance goals for the
year.
Mr. Wongs individual performance goals for fiscal 2011 were to drive value engineering and
continuous cost reduction, enhance supply chain capabilities, establish customer-centric product
manufacturing solutions, and enhance operating profit. Mr. Wong received a 7.0% increase in base
salary in July 2010 to align his base salary with comparable company base salaries. Mr. Wong
received a bonus payout of 97.5% of his target bonus and options to purchase 35,000 shares of our
common stock. The increase in the base salary, the bonus level, and the stock-based compensation
reflect the performance of our company during fiscal 2011 and the satisfactory achievement of his
individual performance goals for the year.
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We are a party to a Change of Control and Severance Agreement with Mr. Knittel and a
Separation Agreement and Release with Mr. Tiernan, each of which is described below.
COMPENSATION COMMITTEE REPORT
Our Compensation Committee has reviewed and discussed with management the Compensation
Discussion and Analysis included in this proxy statement and, based on such review and
discussions, the Compensation Committee recommended to our Board of Directors that the
Compensation Discussion and Analysis be included in this proxy statement.
Respectfully submitted,
Richard L. Sanquini, Chairman
Keith B. Geeslin
James L. Whims
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EXECUTIVE COMPENSATION
Summary of Cash and Other Compensation
The following table sets forth, for the fiscal years ended June 30, 2011, 2010, and 2009,
information regarding compensation for services in all capacities to us and our subsidiaries
received by our Chief Executive Officer, our Chief Financial Officer, our three other most highly
compensated executive officers during fiscal 2011 whose aggregate cash compensation exceeded
$100,000, and one individual who served as our Chief Executive Officer during fiscal 2011.
SUMMARY COMPENSATION TABLE
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Pension |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
Value and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
Plan |
|
|
Deferred |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Compensation |
|
|
Compensation |
|
|
Total |
|
Name and Principal Position |
|
Year |
|
|
($)(1) |
|
|
($)(2) |
|
|
($)(3) |
|
|
($)(4) |
|
|
($)(5) |
|
|
Earnings ($)(6) |
|
|
($)(7) |
|
|
($)(8) |
|
Russell J. Knittel(9) |
|
|
2011 |
|
|
$ |
433,445 |
|
|
$ |
116,667 |
|
|
|
|
|
|
$ |
7,475,746 |
|
|
$ |
407,300 |
|
|
|
|
|
|
$ |
4,125 |
|
|
$ |
8,437,283 |
|
Interim President and |
|
|
2010 |
|
|
$ |
319,000 |
|
|
|
|
|
|
|
|
|
|
$ |
1,278,859 |
|
|
$ |
212,321 |
|
|
|
|
|
|
$ |
4,413 |
|
|
$ |
1,814,593 |
|
Chief Executive Officer |
|
|
2009 |
|
|
$ |
307,000 |
|
|
|
|
|
|
|
|
|
|
$ |
1,642,163 |
|
|
$ |
275,800 |
|
|
|
|
|
|
$ |
4,125 |
|
|
$ |
2,229,088 |
|
Kathleen A. Bayless(10) |
|
|
2011 |
|
|
$ |
310,575 |
|
|
|
|
|
|
|
|
|
|
$ |
414,506 |
|
|
$ |
201,875 |
|
|
|
|
|
|
$ |
4,220 |
|
|
$ |
931,176 |
|
Senior Vice President, |
|
|
2010 |
|
|
$ |
303,000 |
|
|
|
|
|
|
|
|
|
|
$ |
543,044 |
|
|
$ |
172,710 |
|
|
|
|
|
|
$ |
6,038 |
|
|
$ |
1,024,792 |
|
Chief Financial Officer, and Treasurer |
|
|
2009 |
|
|
$ |
99,039 |
|
|
|
|
|
|
|
|
|
|
$ |
2,263,725 |
|
|
$ |
60,000 |
|
|
|
|
|
|
$ |
1,875 |
|
|
$ |
2,424,639 |
|
Kevin D. Barber(11) |
|
|
2011 |
|
|
$ |
117,161 |
|
|
$ |
30,000 |
(12) |
|
|
|
|
|
$ |
1,215,885 |
|
|
$ |
67,375 |
|
|
|
|
|
|
$ |
1,531 |
|
|
$ |
1,431,952 |
|
Senior Vice President and General
Manager, Handheld Division |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Long(13) |
|
|
2011 |
|
|
$ |
249,444 |
|
|
$ |
40,000 |
|
|
|
|
|
|
$ |
414,506 |
|
|
$ |
162,150 |
|
|
|
|
|
|
$ |
4,209 |
|
|
$ |
870,309 |
|
Senior Vice President of |
|
|
2010 |
|
|
$ |
239,850 |
|
|
|
|
|
|
|
|
|
|
$ |
475,164 |
|
|
$ |
136,715 |
|
|
|
|
|
|
$ |
4,197 |
|
|
$ |
855,926 |
|
Worldwide Sales |
|
|
2009 |
|
|
$ |
230,410 |
|
|
|
|
|
|
|
|
|
|
$ |
471,527 |
|
|
$ |
127,373 |
|
|
|
|
|
|
$ |
4,032 |
|
|
$ |
833,342 |
|
Alex Wong(14) |
|
|
2011 |
|
|
$ |
246,154 |
|
|
|
|
|
|
|
|
|
|
$ |
440,261 |
|
|
$ |
120,025 |
|
|
|
|
|
|
$ |
18,326 |
(15) |
|
$ |
824,766 |
|
Senior Vice President of |
|
|
2010 |
|
|
$ |
230,050 |
|
|
|
|
|
|
|
|
|
|
$ |
590,243 |
|
|
$ |
131,129 |
|
|
|
|
|
|
$ |
4,217 |
|
|
$ |
955,639 |
|
Worldwide Operations |
|
|
2009 |
|
|
$ |
215,080 |
|
|
|
|
|
|
|
|
|
|
$ |
656,865 |
|
|
$ |
109,893 |
|
|
|
|
|
|
$ |
4,345 |
|
|
$ |
986,183 |
|
Thomas J. Tiernan(16) |
|
|
2011 |
|
|
$ |
127,885 |
|
|
|
|
|
|
$ |
36,733 |
|
|
$ |
2,035,397 |
|
|
|
|
|
|
|
|
|
|
$ |
1,045,578 |
(17) |
|
$ |
3,245,593 |
|
President and Chief |
|
|
2010 |
|
|
$ |
425,000 |
|
|
|
|
|
|
|
|
|
|
$ |
2,951,213 |
|
|
$ |
327,038 |
|
|
|
|
|
|
$ |
4,594 |
|
|
$ |
3,707,845 |
|
Executive Officer |
|
|
2009 |
|
|
$ |
350,000 |
|
|
|
|
|
|
|
|
|
|
$ |
2,526,405 |
|
|
$ |
286,954 |
|
|
|
|
|
|
$ |
4,094 |
|
|
$ |
3,167,453 |
|
|
|
|
(1) |
|
The base salaries set forth in this column reflect salary increases effective as of the first
day of our 2011, 2010, and 2009 fiscal years for each of the named executive officers, except
for Mr. Knittel whose base salary was increased in October 2010 in connection with his
appointment as our Interim President and Chief Executive Officer. |
|
(2) |
|
Except as otherwise indicated, the amounts shown in this column constitute discretionary
bonuses paid for fiscal 2011. No discretionary bonuses were paid for fiscal 2010 or 2009.
See Compensation Discussion and Analysis Fiscal 2011 Incentive Compensation Program for
more information. |
|
(3) |
|
The amounts shown in this column represent the grant date fair value of deferred stock unit
awards as well as any modification charge determined in accordance with FASB ASC Topic 718
Compensation Stock Compensation, excluding the effects of forfeitures. The fiscal 2009
deferred stock unit award amounts for Messrs. Knittel and Tiernan were restated from previous
proxy disclosures to reflect changes in SEC rules, which replaced previously mandated
disclosure of the dollar amount recognized for their specific deferred stock unit awards in
the financial statements in accordance with FASB ASC Topic 718. We determine the grant date
fair value of each deferred stock unit award using the closing price of our common stock on
the date of grant. Each named executive officer forfeits the unvested portion, if any, of the
officers deferred stock units if the officers service to our company is terminated for any
reason, except as may otherwise be determined by the plan committee appointed by our Board of
Directors as the administrator of our 2010 Incentive Compensation Plan, or by our Board of
Directors as the administrator of our 2001 Incentive
Compensation Plan. Under the terms of Mr. Tiernans Separation Agreement and Release, all
of his outstanding deferred stock unit awards were modified to provide for an additional 12
months of vesting subsequent to his resignation date. The modified value was determined by
comparing the values immediately after the modification to values immediately before the
modification, and the increase in value represents the grant date fair value associated with
the modification of the vesting terms of his outstanding deferred stock unit awards on
October 8, 2010. For further information on these awards, see the Grants of Plan-Based
Awards table of this proxy statement. |
16
|
|
|
(4) |
|
The amounts shown in this column reflect the grant date fair value of stock option awards as
well as any modification charge determined in accordance with FASB ASC Topic 718 Compensation
- Stock Compensation, excluding the effects of forfeitures. The fiscal 2009 stock option
award amounts for Messrs. Knittel and Tiernan were restated from previous proxy disclosures to
reflect changes in SEC rules, which replaced previously mandated disclosure of the dollar
amount recognized for their specific stock option awards in the financial statements in
accordance with FASB ASC Topic 718. The assumptions used in determining the grant date fair
value of stock option awards are set forth in the notes to our consolidated financial
statements, which are included in our Annual Report on Form 10-K filed with the SEC for the
fiscal year ended June 30, 2011. Each named executive officer forfeits the unvested portion,
if any, of the officers stock options if the officers service to our company is terminated
for any reason, except as may otherwise be determined by the plan committee appointed by our
Board of Directors as the administrator of our 2010 Incentive Compensation Plan, or by our
Board of Directors as the administrator of our 2001 Incentive Compensation Plan. For Mr.
Knittel, the vesting on any stock option awards will accelerate upon a change of control of
our company. Under the terms of Mr. Tiernans Separation Agreement and Release, all of his
outstanding stock option awards were modified to provide for an additional 12 months of
vesting subsequent to his resignation date. The modified value was determined by comparing
the values immediately after the modification to values immediately before the modification,
and the increase in value represents the grant date fair value associated with the
modification of the vesting terms of his outstanding stock option awards on October 8, 2010.
Accordingly, the amount shown for Mr. Tiernan represents (i) $628,945 for the full grant-date
fair value of his fiscal 2011 stock option awards and (ii) $1,406,452 for the incremental fair
value of his modified stock option awards, computed as of the date of modification in
accordance with FASB ASC Topic 718. For further information on these awards, see the Grants
of Plan-Based Awards table of this proxy statement. |
|
(5) |
|
The amounts shown in this column constitute amounts earned under our fiscal 2011, 2010, and
2009 incentive compensation programs, which include amounts that were calculated, approved,
and paid in fiscal 2012, 2011, and 2010, respectively. See Compensation Discussion and
Analysis Fiscal 2011 Incentive Compensation Program for more information regarding our
fiscal 2011 incentive compensation program. |
|
(6) |
|
We do not maintain any pension or nonqualified deferred compensation programs. |
|
(7) |
|
Except as otherwise indicated, the amounts shown in this column consist of matching
contributions to our companys 401(k) plan. |
|
(8) |
|
The dollar value in this column for each named executive officer represents the sum of all
compensation reflected in the previous columns. |
|
(9) |
|
Mr. Knittel has served as our Interim President and Chief Executive Officer since October
2010. Mr. Knittel served as our Chief Financial Officer, Secretary, and Treasurer from
November 2001 until September 2009 and as Executive Vice President of our company from July
2007 until October 2010. |
|
(10) |
|
Ms. Bayless has served as our Chief Financial Officer and Treasurer since September 2009.
Ms. Bayless served as Senior Vice President of our company since March 2009. |
|
(11) |
|
Mr. Barber has served as our Senior Vice President and General Manager of our Handheld
Division since January 2011. |
|
(12) |
|
This amount is a $30,000 one-time cash sign-on bonus. |
|
(13) |
|
Mr. Long has served as our Senior Vice President of Worldwide Sales since July 2010. Mr.
Long served as Vice President of Worldwide Sales of our company from January 2008 to July
2010. |
|
(14) |
|
Mr. Wong has served as our Senior Vice President of Worldwide Operations since July 2010.
Mr. Wong served as Vice President of Worldwide Operations of our company from September 2006
to July 2010. |
|
(15) |
|
This amount includes a $14,201 payment of the cash value of accrued flexible time off and
$4,125 of matching contributions to our companys 401(k) plan. |
|
(16) |
|
Mr. Tiernan served as our Chief Executive Officer from July 2009 and as our President from
July 2008 until his departure from our company in October 2010. Mr. Tiernan served as Chief
Operating Officer of
our company from July 2008 until July 2009 and as Executive Vice President and General
Manager of our company from July 2007 until July 2008. |
|
(17) |
|
This amount includes severance of $950,000; a $73,078 payment of the cash value of accrued
flexible time off; and $21,031 of premiums for continued health insurance benefits, life
insurance, and disability coverage paid pursuant to the Separation Agreement and Release with
Mr. Tiernan; and $1,469 of matching contributions to our companys 401(k) plan. |
17
Grants of Plan-Based Awards
The following table sets forth certain information with respect to grants of plan-based awards
to our named executive officers in the fiscal year ended June 30, 2011.
GRANTS OF PLAN-BASED AWARDS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other |
|
|
All Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Option |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards: |
|
|
Awards: |
|
|
Exercise |
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts |
|
|
Estimated Future Payouts |
|
|
Number |
|
|
Number of |
|
|
or Base |
|
|
Grant Date |
|
|
|
|
|
|
|
Under Non-Equity |
|
|
Under Equity Incentive |
|
|
of Shares |
|
|
Securities |
|
|
Price of |
|
|
Fair Value of |
|
|
|
|
|
|
|
Incentive Plan Awards |
|
|
Plan Awards |
|
|
of Stock |
|
|
Underlying |
|
|
Option |
|
|
Stock and |
|
|
|
|
|
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
or Units |
|
|
Options |
|
|
Awards |
|
|
Option |
|
Name |
|
Grant Date |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
(#)(1) |
|
|
($/Sh) |
|
|
Awards(2) |
|
Russell J. Knittel |
|
|
05/19/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
524,400 |
|
|
$ |
29.38 |
|
|
$ |
6,054,618 |
|
|
|
|
01/24/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
$ |
27.99 |
|
|
$ |
110,535 |
|
|
|
|
10/13/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
131,100 |
|
|
$ |
25.55 |
|
|
$ |
1,310,594 |
|
Kathleen A. Bayless |
|
|
01/24/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500 |
|
|
$ |
27.99 |
|
|
$ |
414,506 |
|
Kevin D. Barber |
|
|
01/24/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
110,000 |
|
|
$ |
27.99 |
|
|
$ |
1,215,885 |
|
David B. Long |
|
|
01/24/2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500 |
|
|
$ |
27.99 |
|
|
$ |
414,506 |
|
Alex Wong |
|
|
08/02/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000 |
|
|
$ |
31.73 |
|
|
$ |
440,262 |
|
Thomas J. Tiernan |
|
|
08/02/2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000 |
|
|
$ |
31.73 |
|
|
$ |
628,945 |
|
|
|
|
10/08/2010 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
83,282 |
|
|
$ |
21.92 |
|
|
$ |
310,935 |
|
|
|
|
10/08/2010 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
118,750 |
|
|
$ |
34.01 |
|
|
$ |
284,772 |
|
|
|
|
10/08/2010 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
121,874 |
|
|
$ |
25.50 |
|
|
$ |
497,086 |
|
|
|
|
10/08/2010 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,582 |
|
|
$ |
31.73 |
|
|
$ |
43,046 |
|
|
|
|
10/08/2010 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
196,505 |
|
|
$ |
14.59 |
|
|
$ |
95,520 |
|
|
|
|
10/08/2010 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,500 |
|
|
$ |
19.21 |
|
|
$ |
175,093 |
|
|
|
|
10/08/2010 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,409 |
|
|
|
|
|
|
|
|
|
|
$ |
36,733 |
|
|
|
|
(1) |
|
These stock options awards were granted under our 2010 Incentive Compensation Plan or our
2001 Incentive Compensation Plan and generally vest 1/48th of the total shares each month
after the date of grant. Each named executive officer forfeits the unvested portion, if any,
of the officers stock options if the officers service to our company is terminated for any
reason except as may otherwise be determined by the plan committee approved by our Board of
Directors as the administrator of our 2010 Incentive Compensation Plan, or by our Board of
Directors as the administrator of our 2001 Incentive Compensation Plan. For Mr. Knittel, the
vesting on any stock option awards will accelerate upon a change of control of our company. |
|
(2) |
|
The amounts shown in this column represent the grant date fair value for stock option awards
granted to our named executive officers as well as any modification charge during the covered
year calculated in accordance with FASB ASC Topic 718 Compensation Stock Compensation,
excluding the effects of forfeitures. The assumptions used in determining the grant date fair
value of these awards are set forth in the notes to our consolidated financial statements,
which are included in our Annual Report on Form 10-K filed with the SEC for the fiscal year
ended June 30, 2011. |
|
(3) |
|
Under the terms of Mr. Tiernans Separation Agreement and Release, all of his outstanding
equity based compensation awards were modified to provide for an additional 12 months vesting
subsequent to his resignation date. The modified value was determined by comparing the values
immediately after the modification to values immediately before the modification, and the
increase in value represents the grant date fair value associated with the modification of the
vesting terms of his outstanding equity based compensation awards on October 8, 2010. |
18
Outstanding Equity Awards
The following table sets forth information with respect to outstanding equity-based awards
held by our named executive officers as of June 30, 2011.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
Equity Incentive |
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
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|
Number |
|
|
Market |
|
|
Equity Incentive |
|
|
Plan Awards: |
|
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|
Number |
|
|
Number |
|
|
Plan Awards: |
|
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|
|
|
|
|
|
|
of |
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|
Value of |
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|
Plan Awards: |
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Market or |
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of |
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|
of |
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Number of |
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Shares or |
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Shares or |
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|
Number |
|
|
Payout Value |
|
|
|
Securities |
|
|
Securities |
|
|
Securities |
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|
|
|
|
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|
|
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Units of |
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|
Units of |
|
|
of Unearned |
|
|
of Unearned |
|
|
|
Underlying |
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Stock |
|
|
Shares, Units or |
|
|
Shares, Units or |
|
|
|
Unexercised |
|
|
Unexercised |
|
|
Unexcercised |
|
|
Option |
|
|
|
|
|
|
That Have |
|
|
That Have |
|
|
Other Rights |
|
|
Other Rights |
|
|
|
Options |
|
|
Options |
|
|
Unearned |
|
|
Exercise |
|
|
Option |
|
|
Not |
|
|
Not |
|
|
That Have |
|
|
That Have |
|
|
|
(#) |
|
|
(#) |
|
|
Options |
|
|
Price |
|
|
Expiration |
|
|
Vested |
|
|
Vested |
|
|
Not Vested |
|
|
Not Vested |
|
Name |
|
Exercisable |
|
|
Unexercisable |
|
|
(#) |
|
|
($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
(a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
(i) |
|
|
(j) |
|
Russell J. Knittel |
|
|
|
|
|
|
131,100 |
|
|
|
|
|
|
$ |
25.50 |
|
|
|
10/13/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
44,687 |
|
|
|
52,813 |
|
|
|
|
|
|
$ |
25.50 |
|
|
|
08/03/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,061 |
|
|
|
28,439 |
|
|
|
|
|
|
$ |
34.01 |
|
|
|
08/04/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,850 |
|
|
|
502,550 |
|
|
|
|
|
|
$ |
29.38 |
|
|
|
05/19/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
|
|
3,750 |
|
|
|
|
|
|
$ |
27.99 |
|
|
|
01/24/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86,250 |
|
|
|
|
|
|
|
|
|
|
$ |
26.47 |
|
|
|
08/13/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,189 |
|
|
|
|
|
|
|
|
|
|
$ |
14.02 |
|
|
|
07/25/16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,744 |
|
|
|
|
|
|
|
|
|
|
$ |
14.33 |
|
|
|
07/26/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathleen A. Bayless |
|
|
14,166 |
|
|
|
25,834 |
|
|
|
|
|
|
$ |
26.28 |
|
|
|
01/25/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,562 |
|
|
|
98,438 |
|
|
|
|
|
|
$ |
19.40 |
|
|
|
03/02/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,905 |
|
|
|
33,595 |
|
|
|
|
|
|
$ |
27.99 |
|
|
|
01/24/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin D. Barber |
|
|
|
|
|
|
110,000 |
|
|
|
|
|
|
$ |
27.99 |
|
|
|
01/24/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Long |
|
|
12,395 |
|
|
|
22,605 |
|
|
|
|
|
|
$ |
26.28 |
|
|
|
01/25/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,873 |
|
|
|
15,627 |
|
|
|
|
|
|
$ |
24.33 |
|
|
|
01/26/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,905 |
|
|
|
33,595 |
|
|
|
|
|
|
$ |
27.99 |
|
|
|
01/24/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
128,125 |
|
|
|
21,875 |
|
|
|
|
|
|
$ |
26.17 |
|
|
|
01/07/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Wong |
|
|
7,291 |
|
|
|
27,709 |
|
|
|
|
|
|
$ |
31.73 |
|
|
|
08/02/20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,624 |
|
|
|
24,376 |
|
|
|
|
|
|
$ |
25.50 |
|
|
|
08/03/19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,624 |
|
|
|
11,376 |
|
|
|
|
|
|
$ |
34.01 |
|
|
|
08/04/18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,937 |
|
|
|
1,563 |
|
|
|
|
|
|
$ |
26.47 |
|
|
|
08/13/17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas J. Tiernan |
|
|
5,157 |
|
|
|
8,125 |
|
|
|
|
|
|
$ |
21.92 |
|
|
|
01/06/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,250 |
|
|
|
12,500 |
|
|
|
|
|
|
$ |
34.01 |
|
|
|
01/06/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,124 |
|
|
|
18,750 |
|
|
|
|
|
|
$ |
25.50 |
|
|
|
01/06/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,416 |
|
|
|
4,166 |
|
|
|
|
|
|
$ |
31.73 |
|
|
|
01/06/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500 |
|
|
|
|
|
|
|
|
|
|
$ |
19.21 |
|
|
|
01/06/12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
The vesting schedule for stock options currently is generally 1/48th of the total shares each
month after the grant date. The vesting schedule for deferred stock units currently is generally
1/16th of the total shares each quarter after the date of grant.
Option Exercises and Vested Stock
The following table describes, for our named executive officers, the number of shares acquired
on the exercise of options and vesting of stock awards and the value realized on exercise of
options and vesting of stock awards during the fiscal year ended June 30, 2011.
OPTION EXERCISES AND STOCK VESTING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
|
Number of Shares |
|
|
|
|
|
|
Number of Shares |
|
|
|
|
|
|
Acquired on |
|
|
Value Realized |
|
|
Acquired on |
|
|
Value Realized |
|
Name |
|
Exercise(#) |
|
|
on Exercise($) |
|
|
Vesting(#) |
|
|
on Vesting($) |
|
Russell J. Knittel |
|
|
6,976 |
|
|
$ |
123,157 |
|
|
|
468 |
|
|
$ |
14,850 |
|
Kathleen A. Bayless |
|
|
20,000 |
|
|
$ |
228,874 |
|
|
|
|
|
|
|
|
|
Kevin D. Barber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David B. Long |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alex Wong |
|
|
50,970 |
|
|
$ |
549,215 |
|
|
|
1,058 |
|
|
$ |
31,244 |
|
Thomas J. Tiernan |
|
|
326,505 |
|
|
$ |
3,844,941 |
|
|
|
1,877 |
|
|
$ |
54,113 |
|
For option awards, the value realized is computed as the difference between the market price
on the date of exercise and the exercise price multiplied by the number of options exercised. For
stock awards, the value realized is computed as the market price on the later of the date the
restrictions lapse or the delivery date multiplied by the number of shares vested.
Pension Benefits
We do not offer any pension benefits for any of our employees. We maintain a 401(k) plan in
which our employees may participate, and we provide matching funds of 25% of the employees
contribution up to a maximum of $4,125 per employee on a calendar year basis.
Nonqualified Deferred Compensation
We do not provide for any nonqualified deferred compensation for any of our employees.
Employment Agreements
We do not have employment contracts with any of our executive officers or directors. We do
have, however, a Change of Control and Severance Agreement with Mr. Knittel. We offer our
employees a 401(k) match and an employee stock purchase plan, as well as medical, dental, vision,
life, and disability insurance benefits. Our executive officers and other personnel are eligible
to receive incentive bonuses and are eligible to receive stock-based awards under our incentive
compensation plans.
Severance Policy
We maintain a severance policy for certain executive officers designated by our Board of
Directors and who have completed at least one full year of employment with our company. Under the
policy, we will pay base salary and targeted bonus and maintain benefits following a termination of
employment by us without good cause or by the executive officer for good reason for one year in the
case of our Chief Executive Officer and six months in the case of our other designated executive
officers and continue to vest stock options and deferred stock units for one year in the case of
our Chief Executive Officer and six months in the case of our other designated executive officers
unless the stock options or deferred stock units provide otherwise. In the event of death, we will
pay to the estate of the executive the executives base salary and targeted bonus and maintain
benefits for the executives dependents for one year in the case of our Chief Executive Officer and
six months in the case of our other designated executive officers. In the event of disability, we
will pay base salary and targeted bonus for one year in the case of our Chief Executive Officer and
50% of the base salary and targeted bonus in the case of our other designated executive officers.
Messrs. Knittel, Long, and Wong and Ms. Bayless currently are subject to the severance policy.
20
Change of Control and Severance Agreement
We are a party to a Change of Control and Severance Agreement with Mr. Knittel. The agreement
becomes effective upon a change of control of our company as defined in the agreement. Under the
agreement, Mr. Knittel has agreed to remain employed by our company or its successor for a rolling
one-year period after a change of control upon the same terms and conditions that existed
immediately prior to the change of control and to refrain from competing with our company during
the term of employment and while any severance payments are being made. The agreement provides for
the payment by our company, for one year after termination of employment by our company without
good cause or by the executive for good reason, as defined in the agreement, or by the executive
for any reason during the 30-day period following the first anniversary of the change of control,
of compensation equal to the greater of the average of the base salary and bonus for the two years
prior to such termination or the base salary and targeted bonus for the fiscal year in which such
termination occurs. In the case of such termination, the agreement also provides for the
continuation of insurance coverage on the executive and the executives family for one year. In
addition, the agreement provides for the continuation of base salary payments and benefit coverage
for the executives family for a period of 12 months after the death of the executive and for the
payment in the event of disability of a lump sum equal to the greater of the average of the base
salary and bonus for the two fiscal years prior to such termination or the executives base salary
and targeted bonus for the fiscal year in which such termination occurs. The agreement provides
that in the event of a change of control, 50% of unvested stock options and deferred stock units
vest immediately and the remaining 50% of unvested stock options and deferred stock units vest
immediately if the executive is terminated by our company without good cause or by the executive
for good reason. All vested stock options, including those vesting under the terms of the
agreement, will be exercisable during their full term in the event of a change of control.
All unexercisable stock options and unvested deferred stock units held by Mr. Knittel included
in the Outstanding Equity Awards at Fiscal Year-End table of this proxy statement are subject to
the provisions of the Change of Control and Severance Agreement described above.
Potential Payments Upon Termination or Change in Control
The following tables set forth certain information regarding potential payments and other
benefits that would be payable to each of Messrs. Knittel, Long, and Wong and Ms. Bayless upon
termination of employment or a change of control of our company. The tables below assume that the
termination or change of control event took place on June 30, 2011.
Russell J. Knittel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without |
|
|
|
|
|
|
|
|
|
|
|
|
|
Good Cause or with |
|
|
|
|
|
|
|
|
|
|
|
|
|
Good Reason |
|
|
|
|
|
|
|
|
|
Termination without |
|
|
Following a |
|
|
|
|
|
|
|
|
|
Good Cause or with |
|
|
Qualifying Change of |
|
|
|
|
|
|
|
Executive Benefits |
|
Good Reason |
|
|
Control |
|
|
Death |
|
|
Disability |
|
Cash-based Severance |
|
$ |
950,000 |
|
|
$ |
950,000 |
|
|
$ |
950,000 |
|
|
$ |
950,000 |
|
Health and Welfare Benefits |
|
|
14,874 |
|
|
|
14,874 |
|
|
|
14,874 |
|
|
|
|
|
Equity Treatment (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown represent the market value of unvested stock options that would become
fully vested upon termination without good cause or with good reason following a qualifying
change in control or that would continue to vest upon termination without good cause or with
good reason. The market value of our common stock was below the exercise price for all of Mr.
Knittels unvested stock options as of June 30, 2011. |
21
Kathleen A. Bayless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Good |
|
|
|
|
|
|
|
Executive Benefits |
|
Cause or with Good Reason |
|
|
Death |
|
|
Disability |
|
Cash-based Severance |
|
$ |
256,225 |
|
|
$ |
256,225 |
|
|
$ |
256,225 |
|
Health and Welfare Benefits |
|
|
10,516 |
|
|
|
10,516 |
|
|
|
|
|
Equity Treatment (1) |
|
|
158,063 |
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown represent the market value of unvested stock options that would continue to
vest upon termination without good cause or with good reason. |
David B. Long
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Good |
|
|
|
|
|
|
|
Executive Benefits |
|
Cause or with Good Reason |
|
|
Death |
|
|
Disability |
|
Cash-based Severance |
|
$ |
205,800 |
|
|
$ |
205,800 |
|
|
$ |
205,800 |
|
Health and Welfare Benefits |
|
|
10,516 |
|
|
|
10,516 |
|
|
|
|
|
Equity Treatment (1) |
|
|
3,234 |
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown represent the market value of unvested stock options that would continue to
vest upon termination without good cause or with good reason. |
Alex Wong
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination without Good |
|
|
|
|
|
|
|
Executive Benefits |
|
Cause or with Good Reason |
|
|
Death |
|
|
Disability |
|
Cash-based Severance |
|
$ |
184,625 |
|
|
$ |
184,625 |
|
|
$ |
184,625 |
|
Health and Welfare Benefits |
|
|
10,516 |
|
|
|
10,516 |
|
|
|
|
|
Equity Treatment (1) |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The amounts shown represent the market value of unvested stock options that would continue to
vest upon termination without good cause or with good reason. The market value of our common
stock was below the exercise price for all of Mr. Wongs unvested stock options as of June 30,
2011. |
Thomas J. Tiernan
Mr. Tiernan resigned as President and Chief Executive Officer of our company in October 2010.
We are a party to a Separation Agreement and Release with Mr. Tiernan in connection with Mr.
Tiernan leaving our company. Under this agreement, for a period of 12 months, we continue to pay
Mr. Tiernans base salary in effect at the time of his resignation, vest Mr. Tiernans unvested
stock options and deferred stock units, and pay premiums for continued health insurance benefits,
life insurance, and disability coverage to which our employees are entitled, and, in two equal
payments, pay 100% of Mr. Tiernans targeted bonus. In addition, all of Mr. Tiernans vested stock
options, including such stock options that vest during the 12-month period referred to above, are
exercisable during such 12-month period and remain exercisable for a period determined as if Mr.
Tiernan terminated his employment as of October 8, 2011, but not beyond the original term of such
stock option.
22
The following table sets forth certain information regarding payments and other benefits
payable to Mr. Tiernan upon termination of his employment pursuant to the Separation Agreement and
Release.
|
|
|
|
|
Executive Benefits |
|
|
|
|
Cash-based Severance |
|
$ |
950,000 |
|
Health and Welfare Benefits |
|
$ |
21,031 |
|
Other Benefits (1) |
|
$ |
73,078 |
|
Equity Treatment (2) |
|
$ |
2,072,130 |
|
|
|
|
(1) |
|
The amount shown is payment of the cash value of accrued flexible time off. |
|
(2) |
|
The amount shown represents (i) $36,733 for the incremental fair value of his modified
deferred stock unit award, (ii) $628,945 for the full grant-date fair value of his fiscal 2011
stock option awards, and (iii) $1,406,452 for the incremental fair value of his modified stock
option awards, each computed as of October 8, 2010 in accordance with FASB ASC Topic 718. For
further information on these awards, see the Grants of Plan-Based Awards table of this proxy
statement. |
Indemnification Under Our Certificate of Incorporation and Bylaws
Our Certificate of Incorporation provides that no director will be personally liable to our
company or its stockholders for monetary damages for breach of a fiduciary duty as a director,
except to the extent such exemption or limitation of liability is not permitted under the Delaware
General Corporation Law, or the DGCL. The effect of this provision in the Certificate of
Incorporation is to eliminate the rights of our company and its stockholders, either directly or
through stockholders derivative suits brought on behalf of our company, to recover monetary
damages from a director for breach of the fiduciary duty of care as a director except in those
instances described under the DGCL. In addition, we have adopted provisions in our bylaws and
entered into indemnification agreements that require us to indemnify our directors, officers, and
certain other representatives of our company against expenses and certain other liabilities arising
out of their conduct on behalf of our company to the maximum extent and under all circumstances
permitted by law. Indemnification may not apply in certain circumstances to actions arising under
the federal securities laws.
23
Share-Based Compensation Plan Information
The following table sets forth information, as of June 30, 2011, with respect to our common
stock that may be issued from both stockholder approved and unapproved plans upon delivery of
shares for deferred stock units, exercise of outstanding stock options, the weighted average
exercise price of outstanding stock options, and the number of securities available for future
issuance under our various share-based compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Remaining |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Available |
|
|
|
Number of |
|
|
|
|
|
|
|
|
|
|
for Future Issuance |
|
|
|
Securities to |
|
|
Number of |
|
|
|
|
|
|
Under Share-Based |
|
|
|
be Issued |
|
|
Securities to |
|
|
Weighted- |
|
|
Compensation Plans |
|
|
|
Upon |
|
|
be Issued |
|
|
Average |
|
|
(Excluding |
|
|
|
Delivery of |
|
|
Upon |
|
|
Exercise |
|
|
Securities |
|
|
|
Shares for |
|
|
Exercise of |
|
|
Price of |
|
|
Reflected in |
|
|
|
Deferred |
|
|
Outstanding |
|
|
Outstanding |
|
|
Columns |
|
|
|
Stock Units |
|
|
Options |
|
|
Options |
|
|
(a) and (b)) |
|
Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
Share-Based Compensation
Plans Approved
by Stockholders |
|
|
868,025 |
|
|
|
7,835,499 |
|
|
$ |
24.71 |
|
|
|
3,777,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-Based Compensation
Plans Not
Approved by
Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
868,025 |
|
|
|
7,835,499 |
|
|
$ |
24.71 |
|
|
|
3,777,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1996 Stock Option Plan
Our 1996 Stock Option Plan was adopted to provide for the grant of incentive stock options to
our employees, including employee directors, and of nonstatutory stock options to our employees,
directors, and consultants. The purposes of the 1996 Stock Option Plan were to attract and retain
the best available personnel, to provide additional incentives to our employees and consultants,
and to promote the success of our business. The 1996 Stock Option Plan was originally adopted by
our Board of Directors in December 1996 and approved by our stockholders in November 1996. The
1996 Stock Option Plan terminated in December 2006. As of June 30, 2011, options to purchase 4,500
shares of our common stock were outstanding under the 1996 Stock Option Plan and 7,576,146 shares
had been issued upon exercise of outstanding options.
2000 Nonstatutory Stock Option Plan
Our 2000 Nonstatutory Stock Option Plan provides for the grant of nonstatutory stock options
to our employees and consultants. The purposes of the 2000 Nonstatutory Stock Option Plan are to
attract and retain the best available personnel, to provide additional incentives to our employees
and consultants, and to promote the success of our business. The 2000 Nonstatutory Stock Option
Plan was adopted by our Board of Directors in September 2000. The 2000 Nonstatutory Stock Option
Plan provides for the issuance of options to purchase up to 300,000 shares of our common stock.
The 2000 Nonstatutory Stock Option Plan terminated in September 2010. As of June 30, 2011, there
were no options to purchase shares of our common stock outstanding under the 2000 Nonstatutory
Stock Option Plan and 243,624 shares had been issued upon exercise of outstanding options.
24
2001 Incentive Compensation Plan
Our 2001 Incentive Compensation Plan, as amended, is designed to attract, motivate, retain,
and reward our executives, employees, officers, directors, and independent contractors, by
providing such persons with annual and long-term performance incentives to expend their maximum
efforts in the creation of stockholder value. The 2001
Incentive Compensation Plan was adopted by our Board of Directors in March 2001 and approved
by our stockholders in November 2001. Our 2001 Incentive Compensation Plan was replaced by our
2010 Incentive Compensation Plan upon approval by our stockholders in October 2010. As of June 30,
2011, options to purchase 6,661,775 shares of our common stock and 510,476 deferred stock units
were outstanding under the 2001 Incentive Compensation Plan and 8,363,081 shares had been issued
upon exercise of outstanding options and 711,737 net shares had been delivered upon vesting of
deferred stock units.
2001 Employee Stock Purchase Plan
Our 2001 Employee Stock Purchase Plan, as amended, was designed to encourage stock ownership
in our company by our employees, thereby enhancing employee interest in our continued success. The
2001 Employee Stock Purchase Plan was adopted by our Board of Directors in March 2001 and approved
by our stockholders in November 2001. One million shares of our common stock were initially
reserved for issuance under the 2001 Employee Stock Purchase Plan. An annual increase was made
equal to the lesser of 500,000 shares, 1% of all shares of common stock outstanding, or a lesser
amount determined by our Board of Directors. During the year ended June 30, 2011, our Board of
Directors authorized an additional 340,205 shares under the 2001 Employee Stock Purchase Plan. The
2001 Employee Stock Purchase Plan expired in December 2010. As of June 30, 2011, there were no
shares reserved for issuance under the 2001 Employee Stock Purchase Plan. During fiscal 2011,
320,745 shares of common stock were issued and 225,375 shares expired under the 2001 Employee Stock
Purchase Plan.
2010 Incentive Compensation Plan
Our 2010 Incentive Compensation Plan is designed to attract, motivate, retain, and reward our
executives, employees, officers, directors, and consultants by providing such persons with annual
and long-term performance incentives to expend their maximum efforts in the creation of stockholder
value. The 2010 Incentive Compensation Plan was adopted by our Board of Directors in August 2010
and approved by our stockholders in October 2010. Under the 2010 Incentive Compensation Plan, an
aggregate of 3,777,590 shares of our common stock as of the end of fiscal 2011 may be issued
pursuant to the granting of options to acquire common stock, the direct granting of restricted
common stock and deferred stock, the granting of stock appreciation rights, or the granting of
dividend equivalents. As of June 30, 2011, options to purchase 1,353,236 shares of our common
stock and 356,349 deferred stock units were outstanding under the 2010 Incentive Compensation Plan
and no shares had been issued upon exercise of outstanding options and 8,144 net shares had been
delivered upon vesting of deferred stock units.
2010 Employee Stock Purchase Plan
Our 2010 Employee Stock Purchase Plan is designed to provide our employees with an opportunity
to acquire a proprietary interest in our company and thereby align their interests with the
interests of our other stockholders and give them an additional incentive to use their best efforts
for the long-term success of our company. The 2010 Employee Stock Purchase Plan was adopted by our
Board of Directors in August 2010 and approved by our stockholders in October 2010 and we initially
reserved for issuance 650,000 shares of our common stock. Beginning in fiscal 2012 and ending in
fiscal 2019, an annual increase will be made equal to the lesser of 500,000 shares, 1% of all
shares of common stock outstanding, or a lesser amount determined by our Board of Directors.
During the year ended June 30, 2011, our Board of Directors determined it was not necessary to
increase the number of shares available under our 2010 Employee Stock Purchase Plan. The
cumulative shares authorized under the 2010 ESPP will be less than 10% of our shares outstanding
from time to time, unless a greater number of shares is authorized by our stockholders. As of June
30, 2011, there were 573,541 shares reserved for issuance under the 2010 Employee Stock Purchase
Plan. During fiscal 2011, 76,459 shares of common stock were issued under the 2010 Employee Stock
Purchase Plan.
25
401(k) Retirement Savings Plan
In July 1991, we adopted a 401(k) Retirement Savings Plan for which our regular full-time
employees generally are eligible. The 401(k) Retirement Savings Plan is intended to qualify under
Section 401(k) of the Code, so that contributions to the 401(k) Retirement Savings Plan by
employees or by us and the investment earnings on the contributions are not taxable to the
employees until withdrawn. Our contributions are deductible by us when made. Our employees may
elect to reduce their current compensation by an amount equal to the maximum of 30% of total annual
compensation or the annual limit permitted by law and to have those funds contributed to the 401(k)
Retirement Savings Plan. We provide matching funds of 25% of the employees contribution up to a
maximum of $4,125 on a calendar year basis.
26
DIRECTOR COMPENSATION
We pay each non-employee director an annual retainer of $40,000 in cash or stock at the
directors election and pay our Chairman of the Board an additional annual retainer of $67,344. We
also pay our non-employee directors an annual retainer for committee services in cash or stock at
the directors election as follows:
|
|
|
|
|
|
|
|
|
|
|
Committee |
|
|
Committee |
|
|
|
Chairman |
|
|
Member |
|
Audit Committee |
|
$ |
25,000 |
|
|
$ |
10,000 |
|
Compensation Committee |
|
$ |
15,000 |
|
|
$ |
7,500 |
|
Nominations and Corporate Governance Committee |
|
$ |
9,000 |
|
|
$ |
5,000 |
|
Annual retainers for board and committee services are paid in quarterly installments.
In addition, non-employee directors are eligible to receive annual grants of stock options and
deferred stock units under our 2010 Incentive Compensation Plan, with each non-employee director
eligible to receive an annual grant of 3,000 deferred stock units and an annual grant of stock
options to purchase 6,000 shares of our common stock. Newly elected non-employee directors receive
an initial stock option grant to purchase 25,000 shares of our common stock. We reimburse
non-employee directors for expenses incurred to attend Board of Directors and committee meetings.
Changes in Director Compensation in Fiscal 2011
For fiscal 2011, our Board of Directors evaluated the annual compensation arrangements for our
directors, which have not been adjusted since fiscal 2007. We engaged Compensia to assist us in
connection with this evaluation. Compensia provided our Compensation Committee with a market
analysis of director compensation; developed recommendations regarding director compensation;
reviewed the overall director compensation package and; advised our Compensation Committee
regarding the appropriateness of our director compensation arrangements. After consulting with
Compensia, our Compensation Committee recommended and our Board of Directors approved the following
changes to our director compensation arrangements, which became effective beginning in the second
quarter of fiscal 2011:
|
|
|
eliminated all Board and committee meeting fees; |
|
|
|
increased the annual retainer for non-employee directors to $40,000 and
established an additional annual retainer for our Chairman of the Board, each
payable in quarterly installments; |
|
|
|
increased the annual committee retainer fees, in part to reflect the elimination
of committee meeting fees, and in recognition of the time commitment and
responsibilities assumed in these positions; |
|
|
|
revised the annual equity grants to non-employee directors by reducing the size
of the annual stock option grant from 28,125 stock options (or an equivalent annual
grant of stock options and deferred stock units) for our Chairman of the Board and
18,750 stock options (or an equivalent annual grant of stock options and deferred
stock units) for our other non-employee directors to 3,000 deferred stock units and
6,000 stock options for all of our non-employee directors; |
|
|
|
reduced the initial stock option grant to newly elected non-employee directors
from 75,000 stock options (or an equivalent annual grant of stock options and
deferred stock units) to 25,000 stock options; and |
|
|
|
revised the vesting schedule for deferred stock unit and stock option awards. |
Our Board of Directors believes that increasing our non-employee directors annual retainers
and eliminating meeting fees compensates each non-employee director for his role and service to our
company, rather than for his or her attendance or effort at individual meetings. Directors with
added responsibility are recognized with higher cash compensation as noted above. The changes in
our director compensation arrangements have increased the cash component of director compensation
while substantially decreasing the equity component of director compensation.
27
The following table sets forth the compensation paid by us to our non-employee directors for
the fiscal year ended June 30, 2011. Employee directors do not receive any additional compensation
for service on our Board of Directors.
DIRECTOR COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
|
|
Fees Earned |
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
Deferred |
|
|
|
|
|
|
|
|
|
or Paid in |
|
|
Stock |
|
|
Option |
|
|
Incentive Plan |
|
|
Compensation |
|
|
All Other |
|
|
|
|
|
|
Cash |
|
|
Awards |
|
|
Awards |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
Total |
|
Name |
|
($) |
|
|
($)(1) |
|
|
($)(2) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Francis F. Lee |
|
$ |
95,008 |
|
|
$ |
80,220 |
|
|
$ |
61,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
236,971 |
|
Jeffrey D. Buchanan |
|
$ |
71,750 |
|
|
$ |
80,220 |
|
|
$ |
61,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
213,713 |
|
Nelson C. Chan |
|
$ |
63,250 |
|
|
$ |
42,165 |
|
|
$ |
34,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
140,165 |
|
Keith B. Geeslin |
|
$ |
53,375 |
|
|
$ |
62,977 |
|
|
$ |
49,741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
166,093 |
|
Richard L. Sanquini |
|
$ |
10,000 |
|
|
$ |
62,977 |
|
|
$ |
49,741 |
|
|
|
|
|
|
|
|
|
|
$ |
60,000 |
(3) |
|
$ |
182,718 |
|
James L. Whims |
|
$ |
65,125 |
|
|
$ |
80,220 |
|
|
$ |
61,743 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
207,088 |
|
|
|
|
(1) |
|
Each Board member forfeits the unvested portion, if any, of the Board members deferred stock
units if the Board members service to our company is terminated for any reason, except as may
otherwise be determined by the plan committee appointed by our Board of Directors as the
administrator of our 2010 Incentive Compensation Plan. As of June 30, 2011, each of the
non-employee directors had the following number of stock awards outstanding: Mr. Lee (3,000);
Mr. Buchanan (3,000); Mr. Chan (1,500); Mr. Geeslin (2,250); Mr. Sanquini (2,250); and Mr.
Whims (3,000). |
|
(2) |
|
The amounts shown in this column reflect the grant date fair value of stock option awards
determined in accordance with FASB ASC Topic 718 Compensation Stock Compensation,
excluding the effects of forfeitures. The assumptions used in determining grant date fair
value of our awards are set forth in the notes to our consolidated financial statements, which
are included in our Annual Report on Form 10-K filed with the SEC for the fiscal year ended
June 30, 2011. Each Board member forfeits the unvested portion, if any, of the Board members
stock options if the Board members service to our company is terminated for any reason,
except as may otherwise be determined by the plan committee appointed by our Board of
Directors as the administrator of our 2010 Incentive Compensation Plan. For further
information on these awards, see the Grants of Plan-Based Awards table in the Executive
Compensation section of this proxy statement. There were no forfeitures of stock options by
our directors in fiscal 2011. As of June 30, 2011, each of our non-employee directors had the
following number of option awards outstanding: Mr. Lee (933,722); Mr. Buchanan (96,625); Mr.
Chan (96,750); Mr. Geeslin (102,937); Mr. Sanquini (73,543); and Mr. Whims (118,500). |
|
(3) |
|
Represents the value of our common stock paid to Mr. Sanquini as his annual retainer for
Board and committee services as Mr. Sanquini elected to receive his annual retainer in shares
of our common stock. |
Stock option awards to continuing non-employee directors generally vest monthly over the
period from the grant date through the subsequent annual stockholders meeting. New non-employee
director stock option awards vest 1/4th of the total shares on the first anniversary of the grant
date and 1/48th of the total shares each month thereafter. Deferred stock unit awards to
continuing non-employee directors generally vest quarterly over the period from the grant date
through the subsequent annual stockholders meeting.
28
REPORT OF THE AUDIT COMMITTEE
The Board of Directors has appointed an Audit Committee consisting of three directors. The
current members of the Audit Committee are Jeffrey D. Buchanan, Nelson C. Chan, and James L. Whims.
Each of the committee members is independent of our company and management, as that term is
defined under applicable Nasdaq listing standards and SEC rules.
The primary responsibility of the committee is to assist the Board of Directors in fulfilling
its responsibility to oversee managements conduct of our companys financial reporting process,
including overseeing the financial reports and other financial information provided by our company
to governmental or regulatory bodies (such as the SEC), the public, and other users thereof; our
companys systems of internal accounting and financial controls; and the annual independent audit
of our companys financial statements.
Management has the primary responsibility for the financial statements and the reporting
process, including the systems of internal controls. The independent auditor is responsible for
auditing the financial statements and expressing an opinion on the conformity of those audited
financial statements with U.S. generally accepted accounting principles.
In fulfilling its oversight responsibilities, the committee reviewed and discussed the audited
financial statements with management and the independent auditor. The committee discussed with the
independent auditor the matters required to be discussed by Statement of Auditing Standards No.
114. This included a discussion of the auditors judgments as to the quality, not just the
acceptability, of our companys accounting principles and such other matters as are required to be
discussed with the committee under generally accepted auditing standards. In addition, the
committee received from the independent auditor written disclosures and the letter required by
applicable requirements of the Public Company Accounting Oversight Board regarding the independent
auditors communications with the committee concerning independence. The committee also discussed
with the independent auditor the auditors independence from management and our company, including
the matters covered by the written disclosures and letter provided by the independent auditor, and
considered the compatibility of non-audit services with auditor independence.
The committee discussed with the independent auditor the overall scope and plans for its
audits. The committee met with the independent auditor, with and without management present, to
discuss the results of its audit, its consideration of our companys internal controls, and the
overall quality of the financial reporting. The committee held five meetings with management of
our company, all of which were attended by our independent auditor, with respect to the companys
financial statements and audit or quarterly review procedures.
Based on the reviews and discussions referred to above, the committee recommended to the Board
of Directors, and the Board of Directors approved that the audited financial statements be included
in our companys Annual Report on Form 10-K for the year ended June 30, 2011 for filing with the
SEC. The committee also has appointed our companys independent auditor.
The report has been furnished by the Audit Committee of the Board of Directors.
Jeffrey D. Buchanan, Chairman
Nelson C. Chan
James L. Whims
29
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors, officers, and persons that own more
than 10% of a registered class of our companys equity 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 our company with copies of all Section 16(a) forms they
file.
Based solely upon our review of the copies of such forms received by us during the fiscal year
ended June 30, 2011, and written representations that no other reports were required, we believe
that each person who, at any time during such fiscal 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 such fiscal year, except that we did not receive written representations from the following
former officers: Gopal K. Garg and Joseph D. Montalbo.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS,
DIRECTORS, AND OFFICERS
The following table sets forth certain information regarding the beneficial ownership of our
common stock on August 26, 2011 by (1) each director; (2) the named executive officers listed in
the Summary Compensation Table under the section entitled Executive Compensation; (3) all
directors and executive officers as a group; and (4) each person or entity known by us to
beneficially own or to exercise voting or dispositive control over more than 5% of our common
stock.
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Shares Beneficially Owned |
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Name of Beneficial Owner |
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Number (1) |
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Percent (2) |
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Directors and Named Executive Officers: |
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Russell J. Knittel (3) |
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547,326 |
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1.7 |
% |
Kathleen A Bayless (4) |
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151,499 |
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* |
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Kevin D. Barber |
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* |
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Jeffrey D. Buchanan (5) |
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81,782 |
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* |
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Nelson C. Chan (6) |
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75,546 |
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* |
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Keith B. Geeslin (7) |
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164,264 |
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* |
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Francis F. Lee (8) |
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987,915 |
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3.0 |
% |
David B. Long (9) |
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187,963 |
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* |
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Richard L. Sanquini (10) |
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62,669 |
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* |
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James L. Whims (11) |
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114,907 |
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* |
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Alex Wong (12) |
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94,919 |
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* |
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Thomas J. Tiernan (13) |
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282,586 |
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* |
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All directors and executive officers as a group (13 persons) (14) |
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2,688,251 |
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7.8 |
% |
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5% Stockholders: |
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T. Rowe Price Associates, Inc. (15) |
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4,520,672 |
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14.1 |
% |
FMR LLC (16) |
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3,292,096 |
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10.2 |
% |
Hussman Strategic Growth Fund, an investment portfolio of
Hussman Investment Trust (17) |
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3,135,000 |
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9.7 |
% |
BlackRock, Inc. (18) |
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2,575,787 |
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8.0 |
% |
Fisher Investments (19) |
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1,773,878 |
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5.5 |
% |
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* |
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Less than 1%. |
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(1) |
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Except as otherwise indicated, each person named in the table has sole voting and investment
power with respect to all common stock beneficially owned, subject to applicable community
property laws. Except as otherwise indicated, each person may be reached at 3120 Scott
Boulevard, Santa Clara, California 95054. The numbers and percentages shown include the
shares of common stock actually owned as of August 26, 2011 and the shares of common stock
that the identified person or group had the right to acquire within 60 days of such date. |
30
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(2) |
|
The percentages shown are calculated based on 32,156,323 shares of common stock outstanding
on August 26, 2011. In calculating the percentage of ownership, all shares of common stock
that the identified person or group had the right to acquire within 60 days of August 26, 2011
upon the exercise of options are deemed to be outstanding for the purpose of computing the
percentage of the shares of common stock
owned by that person or group, but are not deemed to be outstanding for the purpose of
computing the percentage of the shares of common stock owned by any other person. |
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(3) |
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Includes 539,311 shares issuable upon exercise of vested stock options. |
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(4) |
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Includes 149,841 shares issuable upon exercise of vested stock options. |
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(5) |
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Includes 81,782 shares issuable upon exercise of vested stock options. |
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(6) |
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Includes 73,984 shares issuable upon exercise of vested stock options. |
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(7) |
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Includes 84,578 shares issuable upon exercise of vested stock options. |
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(8) |
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Includes 4,000 shares held by Mr. Lee as custodian for his child, 59,487 shares held by
Francis F. Lee and Evelyn C. Lee as Co-Trustees of the Lee 1999 Living Trust, 42,422 shares
held by Evelyn C. Lee, Trustee of the Evelyn Lee 2002 Irrevocable Trust, 42,422 shares held by
Francis F. Lee, Trustee of the Francis Lee 2002 Irrevocable Trust, and 839,578 shares issuable
upon exercise of vested stock options. |
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(9) |
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Includes 187,963 shares issuable upon exercise of vested stock options. |
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(10) |
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Includes 7,473 shares held by Richard L. Sanquini as trustee of the Sanquini 2002 Living
Trust, and 55,184 shares issuable upon exercise of vested stock options. |
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(11) |
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Includes 103,657 shares issuable upon exercise of vested stock options. |
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(12) |
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Includes 87,684 shares issuable upon exercise of vested stock options. |
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(13) |
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Includes 275,988 shares issuable upon exercise of vested stock options. On October 8, 2010,
Mr. Tiernan left his position as President and Chief Executive Officer of our company. Under
the terms of Mr. Tiernans Separation Agreement and Release, we continue to vest Mr. Tiernans
unvested stock options and deferred stock units for a period of one year after October 8,
2010. |
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(14) |
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Includes 2,416,334 shares issuable upon exercise of vested stock options. |
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(15) |
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The information is as reported on Amendment No. 2 to Schedule 13G/A as filed February 10,
2011. The address of T. Rowe Price Associates, Inc. and T. Rowe Price Science & Technology
Fund, Inc. is 100 E. Pratt Street, Baltimore, MD 21202. T. Rowe Price Associates, Inc. has
sole power to direct the disposition of 4,520,672 shares and sole power to vote 438,940
shares. T. Rowe Price Science & Technology Fund, Inc. does not have sole power to direct the
disposition of any shares and has the sole power to vote 1,778,757 shares. |
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(16) |
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The information is as reported on Amendment No. 12 to Schedule 13G/A as filed August 10,
2011. The address of FMR LLC is 82 Devonshire Street, Boston, MA 02109. Fidelity Management
& Research Company, a wholly owned subsidiary of FMR LLC (Fidelity) serves as an investment
adviser to various funds with sole power to direct the disposition of 3,000,264 shares.
Members of the family of Edward C. Johnson 3d, Chairman of FMR LLC, control FMR LLC and
therefore have dispositive power over the above shares. Neither FMR LLC nor Edward C. Johnson
3d has the sole power to vote or direct the voting of the shares owned directly by the
Fidelity Funds, which power resides with the Funds Boards of Trustees. Pyramis Global
Advisors LLC, an indirect wholly owned subsidiary of FMR LLC and an investment advisor
(PGALLC), serves as an investment advisor with sole power to direct the disposition of
29,800 shares and sole power to vote 29,800 shares. Edward C. Johnson 3d and FMR LLC control
PGALLC, and therefore have sole dispositive power over the above shares held by PGALLC. FIL
Limited (FIL) and various foreign-based subsidiaries provide investment advisory and
management services. FIL is the beneficial owner of 262,032 shares. The address of FIL is
Pembroke Hall, 42 Crow Lane, Hamiton, Bermuda. Partnerships controlled predominately by
members of the family of Edward C. Johnson 3d, or trusts for their benefit, control FIL. The
shares owned by FIL are reflected above as beneficially owned by FMR LLC and FIL on a joint
basis, but FMR LLC and FIL are separate and independent corporate entities
and their boards are generally composed of different individuals and are of the view that
they are not acting as a group. |
31
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(17) |
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The information is as reported on Amendment No. 1 to Schedule 13G as filed March 10, 2011.
The address of Hussman Strategic Growth Fund, an investment portfolio of Hussman Investment
Trust and Hussman Econometrics Advisors, Inc. is c/o Ultimus Fund Solutions, LLC, 225 Pictoria
Drive, Suite 450, Cincinnati, OH 45246. Hussman Strategic Growth Fund has shared power to
direct the disposition of 3,135,000 shares and shared power to vote 3,135,000 shares. Hussman
Econometrics Advisors, Inc. has shared power to direct the disposition of 3,135,000 shares and
shared power to vote 3,135,000 shares. |
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(18) |
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The information is as reported on Amendment No. 1 to Schedule 13G as filed February 8, 2011.
The address of BlackRock, Inc. is 40 East 52nd Street, New York, NY 10022. BlackRock, Inc.
has sole power to direct the disposition of 2,575,787 shares and sole power to vote 2,575,787
shares. |
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(19) |
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The information is as reported Schedule 13G as filed February 14, 2011. The address of
Fisher Investments is 13100 Skyline Blvd., Woodside, CA 94062. Fisher Investments has sole
power to direct the disposition of 1,773,878 shares and sole power to vote 1,773,878 shares. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Unless delegated to the Compensation Committee by our Board of Directors, the Audit Committee
charter requires the Audit Committee to review and approve all related party transactions and to
review and make recommendations to the full Board of Directors, or approve, any contracts or other
transactions with current or former executive officers of our company, including consulting
arrangements, employment agreements, change-in-control agreements, termination arrangements, and
loans to employees made or guaranteed by our company.
Our company has entered into indemnification agreements with each of our directors and
executive officers. These agreements require us to indemnify such individuals, to the fullest
extent permitted by Delaware law, for certain liabilities to which they may become subject as a
result of their affiliation with our company.
PROPOSAL TWO:
ADVISORY VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY)
Background
The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the
Dodd-Frank Act, enables our stockholders to vote to approve, on an advisory (non-binding) basis,
the compensation of our named executive officers as disclosed in this proxy statement in accordance
with the SECs rules.
Summary
We are asking our stockholders to provide advisory approval of the compensation of our named
executive officers (which consist of our Chief Executive Officer, our Chief Financial Officer, our
three other most highly compensated executive officers, and one individual who served as our Chief
Executive Officer during our last completed fiscal year), as such compensation is described in the
Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation,
and the accompanying narrative disclosure set forth in this proxy statement, beginning on page 10.
Our executive compensation program is designed to enable us to attract, motivate, and retain highly
qualified executives. This program links cash incentive compensation to the achievement of
pre-established personal goals and corporate financial performance objectives and provides
long-term stock-based incentive compensation that focuses our executives efforts on building
stockholder value by aligning their interests with those of our stockholders. The following is a
summary of some of the key points of our executive compensation program. We urge our stockholders
to review the Compensation Discussion and Analysis included in this proxy statement and the
executive-related compensation tables for more information.
32
Base Salaries. We target base salaries at competitive levels required to attract, motivate,
and retain highly qualified individuals reflecting our pay-for-performance philosophy that affords
executives the opportunity to receive meaningful incentive compensation based on the performance of
our company and our executives achieving individual goals set from time to time.
We maintain a performance-based incentive compensation program. Annual bonuses are intended
to provide incentive compensation to individuals who contribute substantially to the success of our
company based upon the achievement of company performance objectives, including meeting specified
levels of operating profit, and individual performance goals that contribute to our long-term goal
of building stockholder value. Our performance-based incentive compensation program results in a
substantial portion of our executives potential total cash compensation being at risk. In
practice, we have paid incentive compensation in each of the last three fiscal years.
Our stock-based compensation program is designed to align the interests of our management and
the interests of our stockholders. Our company grants stock-based awards, including stock options
and deferred stock units, periodically to our employees to provide them with additional incentive
to work to maximize long-term total return to stockholders. Grants of stock-based awards are
designed to result in limited rewards if the price of our common stock does not appreciate, but may
provide substantial rewards to executives as our stockholders in general benefit from stock price
appreciation. Grants of stock-based awards are intended to enable our executives to acquire or
increase their proprietary interest in our company in order to align their interests with those of
our stockholders and to align compensation with the price performance of our common stock by
providing our executives with long-term performance incentives to focus their best efforts in the
enhancement of stockholders value. Historically, our stock-based compensation has been through the
grant of stock options and deferred stock units. We generally set vesting levels for stock options
and deferred stock units over multiple year periods to encourage executive retention.
Independent Compensation Consultant. The Compensation Committee retains and works closely
with Compensia, a leading independent executive compensation firm, in the design and implementation
of its annual executive compensation program. Compensia provides no other services to our company.
Board Recommendation
Our Board of Directors believes that the information provided above and within the Executive
Compensation section of this proxy statement demonstrates that our executive compensation program
is designed appropriately and is working to ensure that managements interests are aligned with our
stockholders interests to support long-term value creation.
The following resolution is submitted for a stockholder vote at the annual meeting:
RESOLVED, that the stockholders of the Company approve, on an advisory basis, the compensation
of the Companys named executive officers, as disclosed in the Compensation Discussion and
Analysis, compensation tables, and narrative discussion set forth in this proxy statement.
The say-on-pay vote is advisory, and therefore not binding on our company, our Compensation
Committee, or our Board of Directors. Although non-binding, the vote will provide information to
our Compensation Committee and our Board of Directors regarding investor sentiment about our
executive compensation philosophy, policies, and practices, which our Compensation Committee and
our Board of Directors will be able to consider when determining executive compensation for the
years to come.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR ADOPTION OF THE
RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AS DESCRIBED IN THE
COMPENSATION DISCUSSION AND ANALYSIS SECTION AND THE RELATED TABULAR AND NARRATIVE DISCLOSURE SET
FORTH IN THIS PROXY STATEMENT.
33
PROPOSAL THREE:
ADVISORY VOTE ON DETERMINING THE FREQUENCY OF SAY-ON-PAY
Background
The Dodd-Frank Act enables our stockholders to indicate how frequently they believe we should
seek an advisory vote on the compensation of our named executive officers. Stockholders have the
option of recommending a frequency vote every year, every two years, or every three years or
abstaining from making a recommendation.
Summary and Board Recommendation
Our Board of Directors has considered the advantages and disadvantages of the frequency of the
say-on-pay vote. Based on its analysis, our Board of Directors believes that an annual advisory
vote of on executive compensation would be the most meaningful for our Board of Directors and our
Compensation Committee and best serve the interests of our company and its stockholders. Our Board
of Directors believes an annual advisory vote will provide the most timely feedback on executive
compensation arrangements, plans, programs, and policies as executive compensation disclosures are
made annually.
Stockholders should recognize, however, it may not be appropriate or feasible to change
compensation programs already in place for the year in which the vote occurs since the advisory
vote on executive compensation will take place after the beginning of the compensation year.
Stockholders also should recognize that their recommendation may be modified in the future if an
annual frequency vote becomes burdensome or otherwise proves to be less helpful than originally
expected.
We will consider stockholders to have expressed a preference for the frequency that receives
the largest number of favorable votes. Our Board of Directors also may from time to time decide
that it is in the best interests of our company and its stockholders to hold the frequency vote
more or less frequently than the non-binding option preferred by our stockholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE ONE YEAR ON THE
PROPOSAL TO DETERMINE THE FREQUENCY OF SAY-ON-PAY.
PROPOSAL FOUR:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
Our Audit Committee has appointed KPMG LLP, an independent registered public accounting firm,
to audit the consolidated financial statements of our company for the fiscal year ending June 30,
2012 and recommends a vote for the ratification of such appointment. In the event of a negative
vote on such ratification, the Audit Committee will reconsider its selection. We anticipate that
representatives of KPMG LLP will be present at the meeting, will have the opportunity to make a
statement if they desire, and will be available to respond to appropriate questions.
The Audit Committee has considered whether the provision of non-audit services by KPMG LLP is
compatible with maintaining KPMG LLPs independence.
34
Fees
The aggregate fees billed to our company by KPMG LLP, for the fiscal years ended June 30, 2011
and 2010, are as follows:
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2011 |
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2010 |
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Audit Fees |
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$ |
767,500 |
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$ |
770,800 |
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Audit-Related Fees (1) |
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34,000 |
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20,000 |
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Tax Fees (2) |
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66,400 |
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73,558 |
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All Other Fees |
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Total fees |
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$ |
867,900 |
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$ |
864,358 |
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(1) |
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The fees in fiscal 2011 were for services associated with filing registration statements to
register shares for three of our equity-based employee benefit plans and statutory audits of
certain of our subsidiaries located outside the United States. The fees in fiscal 2010 were
for services associated with statutory audits of certain of our subsidiaries located outside
the United States. |
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(2) |
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Consists solely of fees for tax preparation and compliance. |
Audit Committee Pre-Approval Policies
The charter of our Audit Committee provides that the duties and responsibilities of our Audit
Committee include the pre-approval of all audit, audit-related, tax, and other services permitted
by law or applicable SEC regulations (including fee and cost ranges) to be performed by our
independent auditor. Any pre-approved services that will involve fees or costs exceeding
pre-approved levels will also require specific pre-approval by the Audit Committee. Unless
otherwise specified by the Audit Committee in pre-approving a service, the pre-approval will be
effective for the 12-month period following pre-approval. The Audit Committee will not approve any
non-audit services prohibited by applicable SEC regulations or any services in connection with a
transaction initially recommended by the independent auditor, the purpose of which may be tax
avoidance and the tax treatment of which may not be supported by the Code and related regulations.
To the extent deemed appropriate, the Audit Committee may delegate pre-approval authority to
the Chairman of the Audit Committee or any one or more other members of the Audit Committee
provided that any member of the Audit Committee who has exercised any such delegation must report
any such pre-approval decision to the Audit Committee at its next scheduled meeting. The Audit
Committee will not delegate to management the pre-approval of services to be performed by the
independent auditor.
Our Audit Committee requires that our independent auditor, in conjunction with our Chief
Financial Officer, be responsible for seeking pre-approval for providing services to us and that
any request for pre-approval must inform the Audit Committee about each service to be provided and
must provide detail as to the particular service to be provided.
All of the services provided by KPMG LLP described above under the captions Audit-Related
Fees and Tax Fees were approved by our Audit Committee pursuant to our Audit Committees
pre-approval policies.
Ratification by Stockholders of the Appointment of Independent Auditor
Ratification of the appointment of KPMG LLP to audit the consolidated financial statements of
our company for the fiscal year ending June 30, 2012 will require the affirmative vote of a
majority of the votes cast, assuming that a quorum is present at the meeting.
35
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented by stockholders at the annual meeting
of stockholders for the fiscal year ending June 30, 2012 must be received by us at our executive
offices set forth in this proxy statement no later than May 12, 2012 in order to be included in the
proxy statement and form of proxy relating to such meeting, or no earlier than June 20, 2012 and no
later than July 20, 2012, in order to be considered
at such meeting. These time limits also apply in determining whether notice is timely for
purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority.
OTHER MATTERS
We know of no other matters to be submitted to the meeting. If any other matters properly
come before the meeting, it is the intention of the persons named in the enclosed proxy card to
vote the shares they represent as our Board of Directors may recommend.
Dated: September 8, 2011
36
PROXY CARD
SYNAPTICS INCORPORATED
3120 SCOTT BLVD.
SANTA CLARA, CALIFORNIA 95054
2011 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of SYNAPTICS INCORPORATED, a
Delaware corporation (the Company), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement of the Company, each dated September 8, 2011, and hereby appoints Russell J. Knittel and Kathleen A. Bayless, and each
of them, as lawful proxies and attorneys-in-fact, with full power to each of substitution, for, on behalf, and in
the name of the undersigned, to represent the undersigned at the 2011 Annual Meeting of Stockholders of the Company, to be held
on Tuesday, October 18, 2011, at 9:00 a.m., local time, at the Companys principal executive offices located at 3120 Scott Boulevard,
Santa Clara, California 95054, and at any adjournment
or postponement thereof, and to vote all shares of the Companys common stock that the undersigned would be entitled to
vote if then and there personally present, on the matters set forth on the reverse side.
A majority of such proxies or substitutes as shall be present and
shall act at the meeting or any adjournment or postponement thereof (or if only one shall be present and act, then that
one) shall have and may exercise all of the powers of said proxies hereunder.
(Continued and to be signed on the reverse side.)
ANNUAL MEETING OF STOCKHOLDERS OF
SYNAPTICS INCORPORATED
October 18, 2011
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at http://investor.shareholder.com/synaptics/annuals.cfm
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
¯
Please detach along perforated line and mail in the envelope provided.¯
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF DIRECTORS, FOR PROPOSAL 2, 1 YEAR ON PROPOSAL 3, AND FOR PROPOSAL 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x |
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1. Election of Directors:
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The Board of Directors recommends you vote FOR the following proposal: |
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NOMINEES: |
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FOR THE NOMINEES
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Francis F. Lee Nelson C. Chan Richard L. Sanquini
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Proposal to provide a non-binding advisory vote on the compensation of the
Companys named executive officers for fiscal 2011 (say-on-pay). |
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WITHHOLD
AUTHORITY FOR THE NOMINEES
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The Board of Directors recommends you vote 1 YEAR on the following proposal: |
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1 year |
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FOR ALL EXCEPT
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Proposal to provide a non-binding advisory vote on the frequency of
future non-binding advisory votes on the compensation of the Companys named executive officers (say-on-frequency). |
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The Board of Directors recommends you vote FOR the following proposal: |
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Proposal to ratify the appointment of KPMG LLP, an independent regis- tered
public accounting firm, as the Companys independent auditor for the fiscal year ending June 30, 2012. |
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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: = |
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and upon such matters which may properly come before the meeting or any adjournment or postponement thereof.
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TO INCLUDE ANY COMMENTS, USE THE COMMENTS BOX ON THE REVERSE SIDE OF THIS CARD.
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Please check the box at right if you will attend the annual meeting. |
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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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Date:
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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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