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
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II-VI INCORPORATED
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375 Saxonburg Boulevard
Saxonburg, Pennsylvania 16056
Notice of Annual Meeting of Shareholders
TO BE HELD ON NOVEMBER 3, 2017
September 15, 2017
Dear Shareholder:
This year, II-VI will change the format of our annual shareholder event. In the past, we held shareholder-focused presentations in conjunction with our Annual Meetings of Shareholders. This year, our event will consist solely of the formal business portion of the Annual Meeting of Shareholders. This year’s Annual Meeting will be webcast form and physically held in a conference room at the Marriott Pittsburgh North on November 3, 2017 at 3:00 pm. No refreshments will be served.
If you plan to attend the Annual Meeting in person, it is important that you mark the appropriate box on the accompanying proxy card so we can know how many people to accommodate. We encourage you to take advantage of the opportunity we are providing for the first time this year by webcasting our Annual Meeting for your convenience.
We expect the formal business of the Annual Meeting to consist of the election of directors, a non-binding advisory vote on executive compensation, a non-binding advisory vote on the frequency of future shareholder advisory votes on executive compensation, the ratification of the appointment of our independent registered public accounting firm, and any other business that validly arises at the Annual Meeting.
It is important that your shares are represented and voted at the Annual Meeting, whether or not you plan to attend or participate virtually by means of the webcast. To ensure that you will be represented, we ask that you vote your shares as soon as possible.
On behalf of the Board of Directors and management, we would like to express our appreciation for your investment in II-VI Incorporated.
Sincerely,
VINCENT D. MATTERA, JR., PHD
President and Chief Executive Officer
375 Saxonburg Boulevard
Saxonburg, Pennsylvania 16056
Notice of Annual Meeting of Shareholders
TO BE HELD ON NOVEMBER 3, 2017
DATE AND TIME: Friday, November 3, 2017, at 3:00 p.m. local time
PLACE: Via webcast at www.virtualshareholdermeeting.com/IIVI2017. In person at the Pittsburgh Marriott North, 100 Corporate Woods Drive, Cranberry, PA 16066.
VOTING
Shareholders are asked to vote on the following items at the Annual Meeting:
1. | Election of two (2) Class Three directors, both for a three-year term to expire in 2020. |
2. | A non-binding advisory vote to approve compensation paid to our named executive officers in fiscal year 2017, as disclosed in this proxy statement. |
3. | A non-binding advisory vote on the frequency of future non-binding advisory shareholder votes on the Company’s executive compensation. |
4. | Ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2018. |
5. | Any other matters that properly come before the Annual Meeting. |
RECORD DATE
Shareholders of record at the close of business on September 1, 2017, are entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponements of the meeting.
AVAILABILITY OF MATERIALS
We are furnishing proxy materials to shareholders that hold shares through a broker, bank or other nominee (commonly referred to as held in “street name”), via the internet. If you received a Notice of Internet Availability of Proxy Materials (the “Notice”) by mail from your broker, bank or other nominee, you will not receive a printed copy of the proxy materials unless you request one. The Notice instructs you how to access and review all of the important information contained in the proxy materials over the Internet. The Notice also provides instructions for submitting your proxy over the Internet. If you received a Notice and would like to receive a printed copy of our proxy materials, please follow the instructions for requesting materials included in the Notice. Shareholders of record will automatically receive a printed set of proxy materials, including a proxy card.
This Proxy Statement and Proxy Card will first be made available to shareholders on or about September 15, 2017.
By Order of the Board
JO ANNE SCHWENDINGER, Secretary
September 15, 2017
YOUR VOTE IS IMPORTANT. WE URGE YOU TO CAST YOUR VOTE AS INSTRUCTED IN THE NOTICE OR PROXY CARD AS PROMPTLY AS POSSIBLE. IF YOU DID NOT RECEIVE A PAPER PROXY CARD, YOU MAY REQUEST ONE TO VOTE BY MAIL IF YOU PREFER.
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375 Saxonburg Boulevard
Saxonburg, Pennsylvania 16056
Annual Meeting of Shareholders
TO BE HELD ON NOVEMBER 3, 2017
2017 Notice of Meeting and Proxy Statement | 1 |
2 | 2017 Notice of Meeting and Proxy Statement |
How Do I Vote?
2017 Notice of Meeting and Proxy Statement | 3 |
4 | 2017 Notice of Meeting and Proxy Statement |
MATTERS OF BUSINESS, VOTES NEEDED AND
RECOMMENDATIONS OF THE BOARD OF DIRECTORS
For More Information |
Board Recommended | |||
Proposal 1 – Election of Directors | Page 6 | ✓ For Both | ||
Each outstanding share of our Common Stock is entitled to one vote for as many separate nominees as there are directors to be elected. There are two directors nominated for election to Class Three of our Board at the Annual Meeting: Joseph J. Corasanti and William A. Schromm. A nominee will be elected to the Board if the number of votes cast for the nominee at the Annual Meeting by the shareholders entitled to vote in the election exceeds the number of votes cast against such nominee’s election, subject to the Company’s policy described under “Proposal 1 – Election of Directors – Director Conditional Resignation Policy.” Abstentions and broker non-votes have no effect on this matter. The Board recommends that you vote FOR the election of each of the Board’s nominees for director. | Nominees | |||
Proposal 2 – Non-binding advisory vote to approve compensation paid to named executive officers in fiscal year 2017 | Page 59 | ✓ For | ||
The affirmative vote of a majority of the shares entitled to vote that are cast in person or represented by proxy at the Annual Meeting is required to approve on a non-binding advisory basis the compensation of our named executive officers for fiscal year 2017, as disclosed in these proxy materials. Abstentions have the effect of an “AGAINST” vote, and broker non-votes have no effect. Because this is an advisory vote, it will not be binding on the Company or the Board. However, the Compensation Committee will consider the voting results, among other factors, when making future decisions regarding executive compensation. The Board recommends that you vote FOR the resolution approving the Company’s fiscal year 2017 named executive officer compensation, as disclosed in these proxy materials. | ||||
Proposal 3 – Non-binding advisory vote on the frequency of future non-binding advisory votes on the Company’s executive compensation | Page 60 | ✓ One Year | ||
The frequency option that receives the highest number of votes cast is the option that will be deemed approved by the shareholders on an advisory basis. The Board recommends that you vote to conduct future advisory votes on executive compensation every ONE YEAR. |
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Proposal 4 – Ratification of the selection of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2018 | Page 62 | ✓ For | ||
The affirmative vote of a majority of the shares entitled to vote that are cast in person or represented by proxy at the Annual Meeting is required to ratify the appointment of Ernst & Young LLP to audit the Company’s financial statements for fiscal year 2018. Abstentions have the effect of an “AGAINST” vote, and broker non-votes have no effect. The Audit Committee is responsible for appointing the Company’s independent registered public accounting firm. The Audit Committee is not bound by the outcome of this vote but, if the appointment of Ernst & Young LLP is not ratified by shareholders, the Audit Committee will reconsider the appointment. The Board recommends that you vote FOR the ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2018. |
2017 Notice of Meeting and Proxy Statement | 5 |
PROPOSAL 1—ELECTION OF DIRECTORS
The Board is divided into three classes, each consisting of as nearly an equal number of directors as practicable. At present, the Board consists of seven members, with two directors in Classes Two and Three and three directors in Class One. |
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The current term of our Class Three Directors expires at the Annual Meeting. Accordingly, two directors have been nominated for election to Class Three positions, for a term of three years or until such time as their respective successors are elected and qualified, or until his earlier death, resignation or removal. Any Board vacancy may be filled by the remaining directors then in office, and any director so elected will serve for the predecessor’s remaining term, or until his or her earlier death, resignation or removal.
The persons named as proxies for this Annual Meeting were selected by the Board and have advised the Board that, unless authority is withheld, they intend to vote the shares represented by validly submitted proxies as follows:
• | FOR the election of Joseph J. Corasanti, who has served as a director of the Company since 2002; and |
• | FOR the election of William A. Schromm, who has served as a director of the Company since 2015. |
Each of the nominees has consented to serve if elected. However, if either of them is unable or unwilling to serve as a director, the Board may designate a substitute nominee, in which case the persons named as proxies will vote for any such substitute nominee proposed by the Board.
DIRECTOR CONDITIONAL RESIGNATION POLICY
Each incumbent director nominee has submitted an irrevocable conditional resignation in the event the nominee receives a greater number of votes “AGAINST” than votes “FOR” such person’s election. If this occurs, the Corporate Governance and Nominating Committee will make a recommendation to the Board as to whether to accept or reject the resignation previously tendered by such director or if other action should be taken. The Board will act on the tendered resignation, taking into account the Committee’s recommendation, and publicly disclose its decision regarding the tendered resignation, as well as the underlying rationale, within 90 days from the date of the certification of the election results. The incumbent director will remain as a member of the Board during this process.
INFORMATION REGARDING THE COMPANY’S BOARD
The professional and personal experience, qualifications, attributes and skills of each of the director nominees are described below, and reflect the qualities that the Company seeks in its Board members. In addition to the specific examples set forth below, the Board and the Company believe that broad-based business knowledge, commitment to ethical and moral values, personal and professional integrity, sound business judgment and commitment to corporate citizenship demonstrated by the nominees make them exceptional candidates for these positions.
6 | 2017 Notice of Meeting and Proxy Statement |
Name
|
Class
|
Expiration
|
Age
|
Director
|
Position(s)
|
Audit
|
Compensation
|
Corporate
|
Subsidiary
| |||||||||
NON-EMPLOYEE DIRECTORS: |
||||||||||||||||||
Marc Y.E. Pelaez
|
One
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2018
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71
|
2002
|
Lead Independent Director
|
Member
|
Chair
|
Member
| ||||||||||
Howard H. Xia
|
One
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2018
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56
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2011
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Director
|
Member
|
Member
|
Chair
| ||||||||||
Shaker Sadasivam
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Two
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2019
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57
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2016
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Director
|
Member
|
Member
|
|||||||||||
Francis J. Kramer
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Two
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2019
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68
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1989
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Chairman of the Board
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Member
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Joseph J. Corasanti
|
Three
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2017
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53
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2002
|
Director
|
Chair
|
Chair(1)
|
Member
|
Member
| |||||||||
William A. Schromm |
Three | 2017 | 59 | 2015 | Director | Member | Member | |||||||||||
EMPLOYEE DIRECTOR:
|
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Vincent D. Mattera, Jr.
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One
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2018
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61
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2012
|
President and Chief Executive Officer, Director
|
(1) | Mr. Corasanti is currently serving as Chair on an interim basis. |
2017 Notice of Meeting and Proxy Statement | 7 |
CLASS THREE DIRECTORS STANDING FOR ELECTION
Joseph J. Corasanti. Mr. Corasanti presently serves as a member of the Board of Directors and chairperson of the Audit Committee for SRC, Inc., a non-profit research and development company advancing technologies in the areas of defense, environment and intelligence. From 2006 to July 2014, Mr. Corasanti served as President and Chief Executive Officer of CONMED Corporation, a publicly traded medical technology company (NASDAQ: CNMD). From 1999 to 2006, he served as President and Chief Operating Officer of CONMED. From 1998 to 1999, he was Executive Vice President/General Manager of CONMED. Prior to that, he served as General Counsel and Vice President-Legal Affairs for CONMED, from 1993 to 1998. From 1990 to 1993, he was an Associate Attorney with the Los Angeles office of the law firm of Morgan, Wenzel & McNicholas. Mr. Corasanti holds a B.A. degree in Political Science from Hobart College and a J.D. degree from Whittier College School of Law. He served as a director of CONMED from 1994 to 2014. Mr. Corasanti’s past executive positions and his prior public company board experience have provided him with leadership skills and experience in a variety of matters that he contributes to our Board. His experience and skill set, including his legal background and acquisition experience, are valuable to our Board.
William A. Schromm. Mr. Schromm has served in various roles at ON Semiconductor Corporation (NASDAQ: ON), a leading manufacturer of energy-efficient, low-cost, high-volume analog, logic and discrete semiconductors, which was separated from Motorola in 1999. At ON Semiconductor, Mr. Schromm has served as Executive Vice President and Chief Operating Officer since 2014. Prior to that time, he served as Senior Vice President, Operating Systems and Technology from 2012 to 2014, and as Senior Vice President, General Manager, Computing and Consumer Products from 2006 to 2012. Prior to joining ON Semiconductor, he worked for 19 years at Motorola in various roles, including Process Engineer, Product Manager, Operations Manager and Marketing Director. He brings extensive engineering, management and marketing experience to our Board.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR EACH OF THE NOMINEES NAMED ABOVE FOR ELECTION AS A CLASS THREE DIRECTOR.
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8 | 2017 Notice of Meeting and Proxy Statement |
EXISTING CLASS ONE DIRECTORS WHOSE TERMS EXPIRE IN 2018
Marc Y.E. Pelaez. Mr. Pelaez is a Rear Admiral, United States Navy (retired). Rear Admiral Pelaez is currently a private consultant to defense and commercial companies. He was Vice President of Engineering and later Vice President of Business and Technology Development for Newport News Shipbuilding from 1996 until 2001, when it was acquired by Northrop Grumman Corporation. From 1993 to 1996, Rear Admiral Pelaez served as Chief of Naval Research. He served as the Executive Assistant to the Assistant Secretary of the Navy (Research, Development, and Acquisition) from 1990 to 1993. From 1968 to 1990, he held numerous positions, including command assignments, in the United States Navy. He is a graduate of the United States Naval Academy. Rear Admiral Pelaez has a broad background and understanding of technology and technology development, a seasoned knowledge of military procurement practices, and management leadership and consulting skills developed throughout his military and civilian careers.
Howard H. Xia. Dr. Xia currently serves as a consultant to the telecommunications industry. Dr. Xia served as General Manager of Vodafone China Limited, a wholly-owned subsidiary of Vodafone Group Plc, a publicly traded telecommunications company (NASDAQ: VOD), from 2001 to 2014. From 1994 to 2001, he served as a Director-Technology Strategy for Vodafone AirTouch Plc and AirTouch Communications, Inc. He served as a Senior Staff Engineer at Telesis Technology Laboratory from 1992 to 1994 and was a Senior Engineer at PacTel Cellular from 1990 to 1992. Dr. Xia holds a B.S. in Physics from South China Normal University and an M.S. in Physics and Electrical Engineering and a Ph.D. in Electrophysics from Polytechnic School of Engineering of New York University. Dr. Xia’s extensive knowledge of and experience in the telecommunications industry, his knowledge of international business, including with China, and strong leadership skills make him a valuable member of our Board of Directors. In particular, his experience and knowledge of telecommunications in Asia contribute to the Board’s breadth of knowledge in this area.
Vincent D. Mattera, Jr. Dr. Mattera initially served as a member of the II-VI Board of Directors from 2000-2002. Dr. Mattera joined the company as Vice President in 2004 and served as Executive Vice President from January of 2010 to November of 2013, when he became the Chief Operating Officer. In November of 2014, Dr. Mattera became the President and Chief Operating Officer, and was reappointed to the Board of Directors. In November of 2015, he became the President of II-VI. In September of 2016, Dr. Mattera became the Company’s third President and Chief Executive Officer in 45 years. During his career at II-VI he has assumed successively broader management roles, including as a lead architect of the company’s diversification strategy. He has provided vision, energy and dispatch to the company’s growth initiatives including overseeing the acquisition-related integration activities in the US, Europe, and Asia-especially in China-thereby establishing additional platforms. These have contributed to a new positioning of the company into large and transformative global growth markets while increasing considerably the global reach of the company, deepening the technology and IP portfolio, broadening the product roadmap and customer base, and increasing the potential of II-VI.
Prior to joining II-VI as an executive, Dr. Mattera had a continuous 20 year career in the Optoelectronic Device Division of AT&T Bell Laboratories, Lucent Technologies and Agere Systems during which he led the development and manufacturing of semiconductor laser based materials and devices for optical and data communications networks. Dr. Mattera has 34 years of leadership experience in the compound semiconductor materials and device technology, operations and markets that are core to II-VI’s business and strategy. Dr. Mattera holds a B.S. in chemistry from the University of Rhode Island (1979), and a Ph.D. degree in chemistry from Brown University (1984). He completed the Stanford University Executive Program (1996). His 14 year tenure at II-VI underpins a valuable historical knowledge about the Company’s operational and strategic issues. We believe that Dr. Mattera’s expertise and experience qualifies him to provide the board with continuity and a unique perspective about on the Company.
2017 Notice of Meeting and Proxy Statement | 9 |
CONTINUING DIRECTORS
EXISTING CLASS TWO DIRECTORS WHOSE TERMS EXPIRE IN 2019
Francis J. Kramer. Mr. Kramer joined the Company in 1983 and served as its President from 1985 to 2014, its Chief Executive Officer from 2007, and its Chairman and CEO from 2014 to 2016. He now serves as the Company’s Chairman of the Board of Directors. Mr. Kramer holds a B.S. degree in Industrial Engineering from the University of Pittsburgh and an M.S. degree in Industrial Administration from Purdue University. Mr. Kramer had served as director of Barnes Group Inc., a publicly traded aerospace and industrial manufacturing company (NYSE: B), from 2012 to 2016. Mr. Kramer provides our Board and the Company with guidance on our growth strategy, in particular on the profitable execution of the strategy to achieve sustainable competitive advantage. He contributes considerable business development experience. He also has significant operations experience that is relevant to the Company’s strategy.
Shaker Sadasivam. Dr. Sadasivam is the CEO of Andamijo LLC, a private investment fund focused on start up companies. In 2016, Dr. Sadasivam retired as President and Chief Executive Officer of SunEdison Semiconductor Limited (NASDAQ: SEMI), a leading manufacturer of advanced semiconductors for electronics, a position he had held since December 2013. From 2009 to December 2013, he served as Executive Vice President and President – Semiconductor Materials of SunEdison, Inc. (a predecessor to SunEdison Semiconductor formerly known as MEMC Electronic Materials, Inc.). From 2002 to 2009, Dr. Sadasivam served as Senior Vice President, Research and Development, of SunEdison, Inc. Dr. Sadasivam holds a B.S. and M.S. in Chemical Engineering from the University of Madras and the Indian Institute of Technology, an M.B.A from Olin School of Business and a Ph.D. in Chemical Engineering from Clarkson University. Dr. Sadasivam brings to the Board his extensive experience related to the semiconductor industry and insight into areas including operations, product development and engineering management.
10 | 2017 Notice of Meeting and Proxy Statement |
MEETINGS AND STANDING COMMITTEES OF THE BOARD OF DIRECTORS
The Company’s Board held four (4) regularly scheduled meetings, and two (2) special meetings during fiscal year 2017. Each scheduled quarterly meeting occurred over a two-day period. In fiscal year 2017, each director attended at least 75% of the aggregate of (a) the total number of meetings of the Board and (b) the total number of meetings for the committees of which he or she was a member. The Board and committees of the Board have the authority to hire independent advisors to help fulfill their respective duties.
The Board of Directors has four standing committees: Audit; Compensation; Corporate Governance and Nominating; and Subsidiary. All Committees have written charters that may be found on the Company’s website at www.ii-vi.com/investor/investors.html.
Committee and Members | Primary Committee Functions | Number of Meetings in Fiscal Year 2017 |
||||
Audit: |
||||||
Joseph J. Corasanti (Chair)* Shaker Sadasivam* William A. Schromm Howard H. Xia *Qualifies as a “financial expert,” as defined by the Securities and Exchange Commission |
– Oversees the Company’s discharge of its financial reporting obligations – Monitors the Company’s relationship with its independent public accounting firm – Monitors performance of the Company’s business plan – Reviews the internal accounting methods and procedures – Reviews certain financial strategies – Establishes procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding accounting or auditing matters – Periodically reviews the Company’s risk assessment approach and activities undertaken by management |
4 | ||||
Compensation: | ||||||
Joseph J. Corasanti (Interim Chair) Marc Y.E. Pelaez William A. Schromm |
– Recommends and oversees compensation of the Company’s directors and executive officers – Administers and interprets the Company’s equity and incentive plans – Establishes terms and conditions of equity awards – Further information regarding the functions of the Compensation Committee is provided in the Compensation Discussion and Analysis section on page 22 |
7 | ||||
Corporate Governance and Nominating: | ||||||
Marc Y.E. Pelaez (Chair) Joseph J. Corasanti Shaker Sadasivam Howard H. Xia |
– Develops and implements policies and processes regarding corporate governance matters – Assesses Board membership needs and makes recommendations regarding potential director candidates to the Board of Directors Reviews succession plans for CEO and other senior executives of the Company |
5 | ||||
Subsidiary: | ||||||
Howard H. Xia (Chair) Joseph J. Corasanti Francis J. Kramer Marc Y. E. Pelaez |
– Oversees the activities of the Company’s operating subsidiaries, as directed from time to time by the Board of Directors – Attends selected quarterly meetings of the Company’s operating subsidiaries and reports to the Board on material developments and risks – Focuses on risks related to operations, markets, customers and technology |
4 |
2017 Notice of Meeting and Proxy Statement | 11 |
DIRECTOR INDEPENDENCE AND CORPORATE GOVERNANCE POLICIES
12 | 2017 Notice of Meeting and Proxy Statement |
2017 Notice of Meeting and Proxy Statement | 13 |
14 | 2017 Notice of Meeting and Proxy Statement |
2017 Notice of Meeting and Proxy Statement | 15 |
DIRECTOR COMPENSATION IN FISCAL YEAR 2017
16 | 2017 Notice of Meeting and Proxy Statement |
DIRECTOR COMPENSATION STRUCTURE FOR FISCAL YEAR 2017
DIRECTOR CASH COMPENSATION
Annual Retainer | ||||||||||||
Compensation Item | Member | Chair(1) | Meeting Fee | |||||||||
Full Board Membership |
$ | 50,000 | $ | 90,000 | $ | — | ||||||
Lead Independent Director |
10,000 | — | — | |||||||||
Audit Committee |
10,000 | 20,000 | — | |||||||||
Compensation Committee |
7,500 | 15,000 | — | |||||||||
Governance & Nominating Committee |
5,000 | 10,000 | — | |||||||||
Subsidiary Committee |
— | 5,000 | 1,500 | (2) |
(1) | Retainers paid to Chairs are in lieu of, and not in addition to, retainers otherwise paid to members. |
(2) | Per-day meeting fee. |
DIRECTOR EQUITY PROGRAM
In addition to the cash compensation outlined above, directors receive annual equity awards, typically in August of each fiscal year. In August 2016, each director (other than Mr. Mistler, who retired from the Board in November 2016) received a grant of 9,240 stock options at an exercise price of $21.67 per share and a restricted stock award grant of 3,696 shares of Common Stock. Mr. Mistler received a pro-rata grant of 2,460 stock options at an exercise price of $21.67 and a restricted stock award of 984 shares of Common Stock. Stock options granted to directors generally have the same terms as those granted to our employees, including vesting occurring in four equal annual installments and a term of ten years, but do not automatically vest upon a director’s departure from the Board. The Compensation Committee may recommend and the Board may approve, in its sole discretion that a stock option award will vest upon departure from the Board, with an exercise period not to exceed five years. Restricted stock awards also generally have the same terms as those granted to our employees, including annual vesting of one-third of the award over three years, but do not automatically vest upon a director’s departure from the Board. The Compensation Committee may recommend and the Board may approve, in its sole discretion that a restricted stock award will vest upon a director’s departure from the Board.
DIRECTOR COMPENSATION TABLE FOR FISCAL YEAR 2017
Non-Employee Director | Fees Earned ($)(1) |
Stock Awards ($)(2) |
Option Awards ($)(3) |
Total ($) |
||||||||||||
Joseph J. Corasanti |
$ | 107,250 | $ | 80,092 | $ | 81,246 | $ | 268,588 | ||||||||
Wendy F. DiCicco(4) |
75,000 | 80,092 | 81,246 | 236,338 | ||||||||||||
Thomas E. Mistler(5) |
3,750 | 21,323 | 21,630 | 46,703 | ||||||||||||
Marc Y.E. Pelaez |
109,750 | 80,092 | 81,246 | 271,088 | ||||||||||||
Shaker Sadasivam |
65,750 | 80,092 | 72,739 | 227,088 | ||||||||||||
William A. Schromm |
67,500 | 80,092 | 81,246 | 228,838 | ||||||||||||
Howard H. Xia |
92,500 | 80,092 | 81,246 | 253,838 |
(1) | Amounts reflect fees actually paid during fiscal year 2017. Director fees are usually paid in January of the applicable fiscal year. |
(2) | Represents the aggregate grant date fair value of restricted stock issued to the non-employee directors under the 2012 Omnibus Incentive Plan, computed in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718 (excluding the effect of forfeitures). The grant date fair value of restricted stock was computed based upon the closing price of the Company’s Common Stock on the date of grant, which was $21.67. |
(3) | Represents the aggregate grant date fair value of option awards issued by the Company to the non-employee directors under the 2012 Omnibus Incentive Plan, computed in accordance with FASB ASC Topic 718. The grant date fair value of stock option awards is based on the Black-Scholes option pricing model. The actual value, if any, that a director may realize upon exercise of stock options will depend on the excess of the |
2017 Notice of Meeting and Proxy Statement | 17 |
stock option price over the strike value on the date of exercise. As such, there is no assurance that the value realized by a director will be at or near the value estimated by the Black-Scholes model. Refer to Note 10 to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for fiscal year 2017 filed with the SEC on August 21, 2017, for relevant assumptions used to determine the valuation of option awards, except that any estimate of forfeitures for service-based conditions have been disregarded. |
(4) | Ms. DiCicco resigned from the Board of Directors effective August 18, 2017. |
(5) | Mr. Mistler retired from the Board in November 2016, and his equity awards were pro-rated based on the time he served as a board member during fiscal year 2017. |
DIRECTOR EQUITY AWARDS OUTSTANDING
The following table sets forth the aggregate number of shares of restricted stock and shares of underlying stock options held by the named directors as of June 30, 2017.
Non-Employee Director | Restricted (#) |
Total Option Awards Held (#) |
Exercisable Option Awards (#)(1) |
|||||||||
Joseph J. Corasanti |
13,901 | 103,860 | 75,548 | |||||||||
Wendy F. DiCicco(2) |
13,901 | 121,360 | 121,360 | |||||||||
Thomas E. Mistler |
— | 97,080 | 97,080 | |||||||||
Marc Y.E. Pelaez |
13,901 | 63,740 | 35,428 | |||||||||
Howard H. Xia |
13,901 | 55,840 | 27,528 | |||||||||
William A. Schromm |
8,181 | 18,210 | 1,794 | |||||||||
Shaker Sadasivam |
3,696 | 9,240 | — |
(1) | Includes options exercisable within 60 days of June 30, 2017. |
(2) | Ms. DiCicco’s outstanding equity awards immediately vested effective on the date of her resignation from the Board. |
18 | 2017 Notice of Meeting and Proxy Statement |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
STOCK BENEFICIALLY OWNED BY PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership by any person, including any “group” as defined in Section 13(d) (3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), known to us to be the beneficial owner of more than five percent of the issued and outstanding shares of Common Stock as of August 31, 2017. Unless otherwise indicated, each of the shareholders named in the table has sole voting and investment power with respect to the shares beneficially owned. Ownership information is as reported by the shareholder in their respective filings with the SEC.
Name and Address | Number of Shares of Common Stock |
Percent of Common Stock(1) | ||||||||
BlackRock, Inc.(2) |
6,384,896 | 10.16 | % | |||||||
55 East 52nd Street New York, NY 10055 |
||||||||||
The Vanguard Group(3) |
4,509,101 | 7.17 | % | |||||||
100 Vanguard Blvd |
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Malvern, PA 19355 |
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Carl J. Johnson(4) |
4,008,679 | 6.38 | % | |||||||
90 Elisabeth Way |
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McKinney, TX 75069 |
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Barrow, Hanley, Mewhinney & Strauss, LLC(5) |
3,854,455 | 6.13 | % | |||||||
2200 Ross Avenue, 31st Floor |
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Dallas, TX 75201-2761 |
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Dimensional Fund Advisors LP(6) |
3,441,815 | 5.48 | % | |||||||
Building One |
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6300 Bee Cave Road |
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Austin, TX 78746 |
(1) | As of August 31, 2017. |
(2) | Based solely on a Schedule 13G/A filed with the SEC on January 12, 2017. BlackRock, Inc., reported sole voting power over 6,254,470 shares of Common Stock and sole dispositive power over 6,384,896 shares of Common Stock. As reported in the Schedule 13G/A, certain shares reported by BlackRock, Inc., are owned by various investment companies affiliated with BlackRock, Inc. |
(3) | Based solely on a Schedule 13G/A filed with the SEC on February 10, 2017. The Vanguard Group, Inc., reported sole voting power over 81,984 shares, shared voting power over 8,394 shares of common stock, sole dispositive power over 4,421,329 shares and shared dispositive power over 87,772 shares of Common Stock. |
(4) | Based solely on a Schedule 13D/A filed with the SEC on March 7, 2017. Mr. Johnson reported sole voting power over 1,329,351 shares of Common Stock, shared voting power over 2,679,328 shares of Common Stock, sole dispositive power over 1,329,351 shares of Common Stock and shared dispositive power over 2,679,328 shares of Common Stock. |
(5) | Based solely on a Schedule 13G filed with the SEC on February 9, 2017. Barrow, Hanley, Mewhinney & Strauss, LLC, a registered investment advisor, reported sole voting power over 2,256,795 shares of Common Stock, shared voting power over 1,597,660 shares of Common Stock and sole dispositive power over 3,854,455 shares of Common Stock. |
(6) | Based solely on a Schedule 13G/A filed with the SEC on February 9, 2017. Dimensional Fund Advisors LP reported sole voting power over 3,252,925 shares and sole dispositive power over 3,441,815 shares. |
2017 Notice of Meeting and Proxy Statement | 19 |
STOCK BENEFICIALLY OWNED BY DIRECTORS AND OFFICERS
The following table shows the number of shares of II-VI Common Stock beneficially owned by all directors, our named executive officers (as reflected in the “Summary Compensation Table”), and all of our directors and executive officers as a group, as of August 31, 2017. This includes shares that could have been acquired within 60 days of that date through the exercise of stock options. The number of shares “beneficially owned” is defined by Rule 13d-3 under the Exchange Act. Unless otherwise indicated, each individual and member of the group has sole voting power and sole investment power with respect to shares owned. None of the shares reflected in the table below have been pledged as security.
Beneficial Ownership of Common Stock |
||||||||
Shares | Percent | |||||||
Joseph J. Corasanti(1)(2) |
135,344 | * | ||||||
Francis J. Kramer(1)(2)(3) |
1,177,645 | 1.9 | % | |||||
Vincent D. Mattera, Jr.(1)(2)(4) |
549,409 | * | ||||||
Marc Y.E. Pelaez(1)(2) |
110,832 | * | ||||||
Shaker Sadasivam(1)(2) |
8,286 | * | ||||||
William A. Schromm(1)(2) |
16,359 | * | ||||||
Howard H. Xia(1)(2)(5) |
66,264 | * | ||||||
Giovanni Barbarossa(1)(2) |
118,766 | * | ||||||
Gary A. Kapusta(1)(2) |
67,454 | * | ||||||
Mary Jane Raymond(1)(2) |
90,754 | * | ||||||
David G. Wagner(1)(2)(6) |
109,971 | * | ||||||
All Executive Officers and Directors as a Group (Twelve persons)(7) |
2,464,796 | 3.8 | % |
* | Less than 1% |
(1) | Includes the following amounts subject to stock options that are exercisable within 60 days of June 30, 2017: 85,318 options exercisable by Mr. Corasanti, 533,178 options exercisable by Mr. Kramer, 297,074 options exercisable by Dr. Mattera, 45,198 options exercisable by Rear Admiral Pelaez, 5,898 options exercisable by Mr. Schromm, 37,298 options exercisable by Dr. Xia, 53,050 options exercisable by Dr. Barbarossa, 36,339 options exercisable by Ms. Raymond, 12,195 options exercisable by Mr. Kapusta, 2,310 options exercisable by Mr. Sadasivam and 60,669 options exercisable by Mr. Wagner. |
(2) | Includes 9,229 shares of restricted stock held by each of Mr. Corasanti, Rear Admiral Pelaez, Dr. Xia and Mr. Schromm, 4,744 shares of restricted stock held by Mr. Sadasivam, 97,024 shares of restricted stock held by Mr. Kramer, 90,022 shares of restricted stock held by Dr. Mattera, 42,488 shares of restricted stock held by Dr. Barbarossa, 35,340 shares of restricted stock held by Ms. Raymond, 52,994 shares of restricted stock held by Gary Kapusta and 19,592 shares held by Mr. Wagner. |
(3) | Includes 285,401 shares held in a Spousal Limited Access Trust as to which Mr. Kramer disclaims beneficial ownership. |
(4) | Includes 21,135 shares held on behalf of Dr. Mattera in the II-VI Incorporated Nonqualified Deferred Compensation Plan. |
(5) | Includes 4,000 shares held in a trust, as to which Mr. Xia disclaims beneficial ownership except to the extent of his pecuniary interest therein. |
(6) | Includes 500 shares held by his father, as to which Mr. Wagner disclaims beneficial ownership. |
(7) | Includes a total of 1,168,527 shares subject to stock options exercisable within 60 days of June 30, 2017, and a total of 390,832 shares of restricted stock held by all executive officers and directors as a group. |
(8) | There were 62,864,134 shares of our common stock outstanding as of August 31, 2017. In accordance with the rules and regulations of the SEC, in computing the percentage ownership for each person listed, any shares which the listed person had the right to acquire within 60 days are deemed outstanding; however, shares which any other person had the right to acquire within 60 days are disregarded in the calculation. Therefore, the denominator used in calculating beneficial ownership among the persons listed may differ for each person. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires the Company’s directors, executive officers and persons who beneficially own more than ten percent of a class of the Company’s registered equity securities to file with the SEC and deliver to the Company initial reports of ownership and reports of changes in ownership of such registered equity securities.
The Company’s directors and executive officers timely filed all reports due under Section 16(a) for the period from July 1, 2016 through June 30, 2017, with the exception of one Form 4 reporting one purchase transaction by Joseph J. Corasanti.
20 | 2017 Notice of Meeting and Proxy Statement |
Set forth below is certain information concerning five of our Named Executive Officers (“NEOs”) discussed herein as of June 30, 2017. This information reflects Mr. Kramer’s retirement as our Chief Executive Officer effective August 31, 2016 and Dr. Mattera’s appointment as our Chief Executive Officer effective September 1, 2016.
Name
|
Age
|
Position
| ||||
Vincent D. Mattera, Jr.
|
|
61
|
|
President and Chief Executive Officer; Director
| ||
Francis J. Kramer
|
|
68
|
|
Retired Chief Executive Officer, effective August 31, 2016
| ||
Mary Jane Raymond
|
|
57
|
|
Chief Financial Officer, Treasurer and Assistant Secretary
| ||
Gary A. Kapusta
|
|
57
|
|
Chief Operating Officer
| ||
Giovanni Barbarossa
|
|
56
|
|
Chief Technology Officer and President II-IV Laser Solutions
| ||
David G. Wagner
|
|
54
|
|
Vice President, Human Resources
|
2017 Notice of Meeting and Proxy Statement | 21 |
FISCAL YEAR 2017 COMPENSATION DISCUSSION AND ANALYSIS
MESSAGE FROM THE COMPENSATION COMMITTEE
The Compensation Committee takes seriously its responsibilities to govern competitive pay practices to achieve competitive results. Shareholder views and feedback are an essential component to the design and refinement of the Company’s compensation program. The Committee directed management to hold discussions with shareholders and report the outcome of these discussions at each of the meetings. The Chair participates in many of these discussions and helps guide the Committee’s analysis of the information gathered to incorporate it into the compensation program decisions.
Shareholder Outreach Program
During 2017, the Company spent about 40 days engaged with new and existing shareholders. During this period we met with shareholders currently holding approximately 62 percent of shares outstanding. The Company continues to meet with many shareholders including those who have sold or reduced their positions at their request.
Senior members of the management team participated directly in all these meetings, and members of the Board as requested by investors. The main topics discussed were (1) the Company strategy, (2) the rationale for acquisitions, (3) the progress on financial results, (4) review of the management team and company culture, (5) compensation goals and philosophy, and (6) request for ongoing feedback. Shareholders as of March 31, 2017 holding 1 percent or more of the shares outstanding (a total of 53% of the shares outstanding) were sent a summary of compensation program changes newly in effect for 2017 and offered a conversation with the Compensation Committee Chairman. One invitation was before the proxy statement was available and a second invitation will be sent after the proxy statement is available. The Company intends to specifically confirm with the five largest shareholders whether they need a conversation.
The Company’s changes to the fiscal year 2017 compensation program were first reported in the 2016 proxy statement. Some of those changes, particularly those changes to the equity program, did not go into effect until 2017 to avoid the accounting penalties and regulatory issues associated with modifying existing equity awards.
The compensation changes for 2017 include:
• | All performance share awards now have a measurement period of three full years, and the interim-period re-measurement was eliminated for fiscal year 2017 grants. Cash-flow-based performance shares moved from a two-year performance period to a three-year performance period beginning in fiscal year 2017. |
• | “Double trigger” change in control vesting replaced “single trigger” vesting for the long term equity award program. The Company previously only had “single trigger” vesting, i.e., vesting upon occurrence of a change in control. “Double trigger” vesting, i.e., requiring both a change in control and an involuntary termination, applies to grants made beginning in fiscal year 2017. |
• | Individual non-financial goals for the NEOs have been eliminated for fiscal year 2017. The Company will measure the short term cash incentive strictly on the basis of financial goals. |
• | The GRIP cash incentive plan is now capped at 200% payout with the entry threshold funding being 30% of the target. The prior boundaries were an entry threshold funding of 20% of the target and a maximum payout of 250%. |
22 | 2017 Notice of Meeting and Proxy Statement |
• | The long term equity incentive plan percentage of Total Direct Compensation (“TDC”) was rebalanced for fiscal year 2017. The new mix of equity is 40% performance shares, 30% restricted shares and 30% stock options effective for grants issued for fiscal year 2017. The prior mix was 30% performance shares, 30% restricted shares and 40% stock options. |
Key Elements of Fiscal Year 2017 Performance Compared to Fiscal Year 2016
2017 Notice of Meeting and Proxy Statement | 23 |
Alignment of Executive Pay and Company Performance
• | The annual cash incentives for NEOs were awarded at approximately 160% of target based on the Company’s performance as compared to the targets set for these programs. The Company’s revenue increased 18% and the diluted earnings per share increased 42%. |
• | Performance shares based on cash flow from operations for the fiscal years 2016 and 2017 earned based on the Company’s achievement of 80.4% of target cash flow. This resulted in an actual award payout of 51% of the target number of shares. |
• | Performance shares based on relative total shareholder return (“TSR”) for the three year period ended June 30, 2017 paid out at the maximum of 200% of target. |
• | The CEO and all other NEOs are in compliance with the requirement to own specified levels of Common Stock. The CEO is required to hold the equivalent of three times his annual base salary in Common Stock, and all other NEOs who have served as executive officers for more than three years are required to hold the equivalent of their annual base salary in Common Stock. Executives of shorter tenure have three years from the time they are appointed as an executive officer to meet this requirement. Additionally, all Executive Officers are required to hold vested equity for at least one year, net of taxes. |
(1) | 2017 CEO TDC reflects a one-time $2.0 million performance share grant to Dr. Mattera in conjunction with his promotion to CEO. |
(2) | The earnings release stock price reflects the Company’s closing stock price on the day of its fiscal year-end earnings release. |
24 | 2017 Notice of Meeting and Proxy Statement |
COMPENSATION PHILOSOPHY AND OBJECTIVES
The Company believes in setting challenging objectives and requires talented and committed people to achieve them. The Company’s executive compensation program is designed to align our executives’ compensation with the interests of our shareholders and to attract, motivate and retain high-quality executive talent.
The Company’s executive compensation philosophy is based on the principle of pay-for-performance, with a substantial portion of TDC being “at-risk” and tied to performance. We target TDC at the median level of pay of our Comparator Group for performance at target. For fiscal year 2017, which ran from July 1, 2016, to June 30, 2017, we used the Comparator Group data available in public filings.
The primary objectives of our fiscal year 2017 executive compensation program were:
• | Shareholder Returns Above Median: Maximize Company performance to enhance TSR. |
• | Stable Leadership: Attract and retain a high caliber of executive talent. |
• | Continuous Improvements in Performance: Ensure that a significant portion of TDC is “at risk,” based on Company and individual performance. |
• | Sustainable Achievement of Results: Encourage a long-term focus by our Executive Officers while recognizing the importance of short-term performance, with goals that are challenging yet attainable and discourage excessive risk taking. |
• | Commitment: Align executive and shareholder interests by requiring Executive Officers to meet minimum share ownership and holdings guidelines and prohibit them from hedging or pledging Company stock. |
2017 Notice of Meeting and Proxy Statement | 25 |
SUMMARY OF PAY ELEMENTS AND MIX OF VARIABLE AND FIXED COMPENSATION
A specific objective of our compensation program is to drive continuous improvement in performance. We believe this is best accomplished by having a majority of TDC be variable and based on performance. TDC includes base salary, cash incentive awards granted under our Bonus Incentive Program (“BIP”) and Goals/Results Incentive Program (“GRIP”), and equity awards in the form of non-qualified stock options (“Stock Options”), restricted stock awards (“RSAs”) and performance stock awards (“PSAs”). Figure A and Figure B below shows that variable compensation makes up approximately 80% and 62% of fiscal year 2017 target TDC of our CEO and NEOs, respectively.
Figure A – 2017 CEO Target Total Compensation Mix
Figure B – 2017 Average Target Total Compensation Mix for Continuing NEOs
PSA and RSA do not balance due to the impact of new hire/promotional grants.
26 | 2017 Notice of Meeting and Proxy Statement |
NEO compensation for fiscal year 2017 included the following elements, as described below. For ease of understanding, the term “non-equity incentive plan compensation” in the Summary Compensation Table and other tables set forth below is referred to as “cash incentives” throughout this narrative:
Element
|
Description
|
2017 Pay Action
|
Primary Metrics Used
| |||
Base Salary |
Market-competitive fixed pay reflective of an NEO’s role, responsibilities and individual performance. |
Increased NEO salaries based on individual performance and evaluation against our Comparator Group. Increases ranged from 5% to 10% of base salary, other than Dr. Mattera’s salary which reflects his promotion to CEO.
|
Comparator Group benchmarking at the 50th percentile | |||
BIP Cash Incentive |
Payable to all NEOs with at least one year of service based on the achievement of corporate wide income goals. This cash incentive payment is based on a targeted Bonus Operating Profit, as pre-determined by the Compensation Committee.
|
During fiscal year 2017, BOP performance for our NEOs was 180% of target. |
Operating profit before reduction for variable compensation paid (“Bonus Operating Profit”) | |||
GRIP Cash Incentive |
Payable to NEOs based on achievement of Company consolidated and/or business unit results. |
Board approved revenue and earnings per share (“EPS”) goals incentivizing growth over the prior fiscal year’s results. Actual payout for fiscal year 2017 was 156% of the target applicable to the Company’s consolidated results.
|
Dr. Barbarossa has dual roles and therefore has a combination of Revenue and EPS metrics | |||
Equity-Based Awards |
Time-based and performance-based awards provide incentive to focus on long-term growth and financial success, to balance short- and long-term performance, and to align executive and shareholder interests.
|
NEO target equity compensation for 2017 consisted of 30% Stock Options, 30% Restricted Stock and 40% PSAs. |
Russell 2000 for relative TSR and Board approved budget for cash flow from operations (PSAs) |
2017 Notice of Meeting and Proxy Statement | 27 |
RECAP OF THE COMPANY’S PERFORMANCE IN FISCAL YEAR 2017
Detailed below are the abbreviated results of the Company’s performance for fiscal year 2017. For a more detailed review of the Company’s financial performance for fiscal year 2017, please see the Company’s Annual Report on Form 10-K for the fiscal year 2017, filed with the SEC on August 21, 2017.
FY 2017 | FY 2016 | Increase (Decrease) |
||||||||||
Revenue |
$ | 972 million | $ | 827 million | 18% | |||||||
Gross Margin % |
40.0% | 37.8% | 220 bps | |||||||||
Bonus Operating Profit |
$ | 176 million | $ | 161 million | 9% | |||||||
Diluted EPS |
$ | 1.48/share | $ | 1.04/share | 42% | |||||||
Cash flow from operations |
$ | 119 million | $ | 123 million | (3%) |
The Company pays incentive compensation only after the Compensation Committee has certified the Company’s operating results and approves the compensation award. In certifying the results, the Committee ensures that it is in receipt of the audit of our financial performance by the independent auditors and the report of the Audit Committee with respect to the Company’s audited financial statements.
DETERMINATION OF TDC AT TARGET FOR FISCAL YEAR 2017
Target TDC is set for the NEOs at the median of the Comparator Group, with the advice of our independent advisor, Radford.
Once TDC is determined, the relative proportions of the compensation elements described above are set with two principles in mind:
• | A substantial portion of TDC should be variable (for fiscal year 2017, approximately 72%) |
• | The variable portion should be a mix of equity and cash. |
28 | 2017 Notice of Meeting and Proxy Statement |
The Compensation Committee reviewed the NEOs’ base salaries to ensure recognition of performance and alignment to the market median for similar positions at companies in the Comparator Group. Accordingly, annual merit increases may be made after an assessment to the current market medians, in light of individual performance and after approval by the Compensation Committee and Board.
The increases in base salary noted in the chart below for the NEOs reflect adjustments based on performance to allow their salaries to remain comparable to those of the Comparator Group.
Named Executive Officer | Fiscal Year 2017 Base Salary |
Fiscal Year 2016 Base Salary |
Percentage Increase | ||||||||||||
Vincent D. Mattera, Jr. |
$ | 624,100 | $ | 424,000 | 47 | %(1) | |||||||||
Francis J. Kramer |
686,400 | 686,400 | — | ||||||||||||
Mary Jane Raymond |
363,000 | 330,000 | 10 | % | |||||||||||
Gary A. Kapusta |
383,750 | 350,000 | 10 | % | |||||||||||
Giovanni Barbarossa |
382,500 | 351,200 | 9 | % | |||||||||||
David G. Wagner |
269,600 | 257,000 | 5 | % |
(1) | Percentage increase reflects Dr. Mattera’s appointment to Chief Executive Officer effective September 1, 2017. |
Bonus Incentive Program (“BIP”). The Bonus Incentive Plan is a Company-wide bonus program that has been successfully used by the Company throughout the majority of its history to directly tie the interests of all of our employees who have at least one year of service, regardless of position, to the operating earnings of the Company, a major driver of shareholder value. The Bonus Incentive Plan is evaluated on the metric of Bonus Operating Profit (“BOP”). BOP is the Company’s annual operating profit before reduction for variable employee compensation (both cash and equity). At the beginning of the Company’s fiscal year, the Compensation Committee determines the percentage of final approved budgeted annual operating profit available to be paid under the BIP. This determination is based on total budgeted annual salary of all eligible employees. Actual payouts under the BIP, if any, could deviate from the budgeted payout due to changes in actual operating results as compared to budgeted operating results, and changes in the participant pool. The BIP is paid at 75% of the earned amount the end of each of the first three fiscal quarters based on interim financial performance. The final payment is made after fiscal year end, at which time the balance of the full-year payout is paid.
The bonus operating profit target and performance for fiscal year 2017 compared to fiscal year 2016 is in millions except percentages:
2017 | 2016 | |||||||
Budgeted Bonus Operating Profit | $ | 104.8 | $ | 126.1 | ||||
Actual Bonus Operating Profit Achieved | $ | 175.8 | $ | 160.7 | ||||
Actual BIP Performance % as Compared to Budget(1) | 180% | 144% |
(1) | The 180% performance is a function of the actual BOP and qualified wages delivering a 30.3% payout versus budgeted payout of 16.7%. |
2017 Notice of Meeting and Proxy Statement | 29 |
The related NEO payout under our BIP was:
Named Executive Officer | Fiscal Year 2017 BIP |
Fiscal Year 2016 BIP |
||||||
Vincent D. Mattera, Jr |
$ | 179,660 | $ | 101,856 | ||||
Francis J. Kramer(1) |
38,941 | 164,736 | ||||||
Mary Jane Raymond |
109,989 | 79,200 | ||||||
Gary A. Kapusta(2) |
48,448 | — | ||||||
Giovanni Barbarossa |
115,898 | 84,288 | ||||||
David G. Wagner |
81,689 | 61,680 |
(1) | Mr. Kramer retired effective August 31, 2016, the above BIP payout reflects the amount he earned up to his retirement date. |
(2) | Mr. Kapusta was only eligible to participate for five months during fiscal year 2017. |
Goals/Results Incentive Program (“GRIP”). The purpose of the GRIP cash incentive program is to link pay to the major drivers of increasing shareholder value – growth in revenue and growth in earnings per share. The GRIP for fiscal year 2017 was based solely on financial results in two additive matrices. The matrices were separated to allow strict monitoring of the Company’s investment in opto-electronic devices of approximately $0.40 per share, the first products from which would be VCSELs for use in 3D sensing applications. Because one existing and two acquired divisions participated in these investments, the Company’s goals were to ensure the investment was effective and to ensure the continuation of the existing revenue and earnings streams. The first matrix, Matrix 1, weighted 70%, used revenue and EPS targets of the core businesses, composing approximately 90% of the Company’s revenue and over 100% of the EPS. The second matrix, Matrix 2, weighted 30%, was for the investment businesses including all of their existing revenue and profits.
The revenue and EPS calculation methodology used for the “GRIP Matrices” is applicable to our NEOs. Generally-speaking, the bottom left of this matrix, or the threshold, is normally the prior fiscal year’s results for revenue and EPS unless there is a significant one-time event or an expected market or investment change. At the threshold, payout is 30% of the target amount. Below the threshold, the payout is zero. The middle of the matrix is the current year’s revenue and EPS targets as approved by the Compensation Committee. These targets are designed to motivate achievement of challenging goals and thereby drive TSR. The upper right of the matrix is the achievement maximum, set at 115% of the revenue and EPS targets, at which the payout is 200% of the target amount. The GRIP payout is calculated by interpolation within the matrix, ranging typically from the prior year’s actual goals to 115% of the target on both Revenue and EPS. Revenue and EPS are equally weighted.
(in millions, except per share data) | Matrix 1 | |||||||||||||||||||||||
Metric | Entry | Target | Maximum | Actual Performance |
Approved Adjustments |
Adjusted Performance for GRIP Compensation |
||||||||||||||||||
Revenues |
$ | 761.40 | $ | 798.10 | $ | 917.80 | $ | 890.60 | $ | (5.50 | ) | $ | 885.10 | |||||||||||
Earnings per Share |
$ | 0.95 | $ | 1.13 | $ | 1.30 | $ | 1.73 | $ | 0.07 | $ | 1.80 |
30 | 2017 Notice of Meeting and Proxy Statement |
For Matrix 1 reflected above, the entry point is the combined revenue result from 2016 for the non-investment businesses. For the EPS, however, we anticipated a reduction in the strength of the optical communications cycle. Through the 2017 year, a reduction in strength did affect some of our customers, but through greater penetration and share gain, we were able to overcome those effects but that was not a certainty at the time when budgets were established.
(in millions, except per share data) | Matrix 2 | |||||||||||||||||||||||
Metric | Entry | Target | Maximum | Actual Performance |
Approved Adjustments |
Adjusted Performance for Compensation |
||||||||||||||||||
Revenues |
$ | 85.10 | $ | 98.50 | $ | 113.30 | $ | 81.50 | $ | 10.50 | $ | 92.0 | ||||||||||||
Earnings per Share |
$ | (0.48 | ) | $ | (0.36 | ) | $ | (0.30 | ) | $ | (0.25 | ) | $ | (0.10 | ) | $ | (0.35 | ) |
For Matrix 2 reflected above, the entry point is the result from 2016 for the existing portion of the investment businesses and a full year effect of the continuing businesses from the two acquisitions. The entry point for EPS was the result from 2016 plus the $0.40/share expected investment.
The adjustments in both matrices were recommended by both the Audit Committee and the Compensation Committee and approved by the full Board. These adjustments increased the revenue by $10.5 million on Matrix 2 and reduced the revenue by $5.5 million for Matrix 1 for a 0.5% net effect on revenue with no effect on EPS. These adjustments are detailed below:
1. | $5 million reclassified from revenue to non-operating income on the reported financial statements. |
The budget was set with the expectation that the accounting for the transition services agreement associated with the sale agreement for the RF business, concluded on June 3, 2017, would be recorded in revenue. These transition services were valued at $1.25 million per quarter. When the budget was set, the final terms of the sales were not yet complete. If the final financial statement treatment had been known at the time of the establishment of Matrix 2, Matrix 2 would have been set at $5 million less revenue. The correct accounting treatment was to record this amount in non-operating income and not revenue. There was no effect on the EPS from this change. Rather than change Matrix 2 after the fact and re-communicate it to the employees, the Compensation Committee recommended and the full Board approved the Company providing “matrix credit” for the $5 million on the revenue line.
2. | $5.5 million attributed to Matrix 2 to ensure the appropriate consideration of the role of the investment businesses in the success of Matrix 1, namely that components from Laser Enterprise division were necessary for the sale and delivery of the overachievement of the budget by Photonics segment, with a corresponding reduction in Matrix 1. |
3. | The net $0.03 EPS adjustment was a combination of incremental investments in the Company’s new technology platform and intercompany transfer pricing adjustments between the two matrixes. Neither change favorably impacted GRIP funding. |
The Compensation Committee believes the adjustments noted above serve important long-term business strategy. Vertical integration is a Company strategy and so its Laser Enterprise division sells its key components to a Photonics segment division to support the growth in the optical communications cycle which was, as described earlier in this discussion, not expected to materialize as strong as it actually did during 2017. The provision of these components internally mitigated the opportunity of the Laser Enterprise division to generate external revenue. Laser Enterprise is a component of Matrix 2 and the Matrix 2 was measured on external revenue only. The Compensation Committee and Board determined that the decision to support an internal business as the first priority, in the overall best interest of the Company, unfairly penalized those
2017 Notice of Meeting and Proxy Statement | 31 |
paid on Matrix 2 and estimated, with the assistance of management, that approximately $5.5 million should be credited to Matrix 2, with a corresponding amount deducted from Matrix 1. This decision affected revenue only and had no effect on the EPS. The EPS of these internal sales was already included in the operating result for Matrix 2 via the transfer price.
Total payout to our NEOs under our GRIP was:
Named Executive Officer | Fiscal Year 2017 GRIP |
Fiscal Year 2016 GRIP |
||||||
Vincent D. Mattera, Jr. | $ | 1,101,688 | $ | 1,003,130 | ||||
Francis J. Kramer(1) | 484,061 | 1,604,885 | ||||||
Mary Jane Raymond | 454,514 | 458,649 | ||||||
Gary A. Kapusta | 476,399 | 125,000 | ||||||
Giovanni Barbarossa | 254,376 | 321,037 | ||||||
David G. Wagner | 113,153 | 171,243 |
(1) | Francis J. Kramer retired as Chief Executive Officer, effective August 31, 2016. |
The equity compensation for NEOs consists of (a) non-qualified stock options granted in August 2016, (b) performance shares granted in August 2016 and (c) restricted shares granted in August 2016. These awards are called the “2017 awards” because they were granted at the beginning of Fiscal Year 2017 which commenced on July 1, 2016.
Non-Qualified Stock Options (“Stock Options”). Because financial gain from stock options is only possible if the price of our Common Stock increases during the term of the stock option, we believe grants encourage NEOs and other employees to focus on actions and initiatives that should lead to a longer-term increase in the price of our Common Stock, aligning the interests of our NEOs and other employees who receive them with those of our shareholders. Typically, stock options are granted in August and are 30% of the total targeted equity award to the NEO. The strike price is set on the date of the grant and represents the fair market value of the Company’s Common Stock on that day. The options vest at the rate of 25% per year and expire after 10 years. The options do not have any tangible value if the stock price does not appreciate.
Performance Share Awards (“PSAs”). The Compensation Committee believes that longer term awards tied directly to elements of shareholder return are essential to the sustainable management of the Company. TSR and cash flow from operations influence increases in shareholder value over time and therefore the Company has based its PSAs on those metrics in order to reward both carefully considered strategic actions and excellent management and execution. Typically, PSAs are granted at the beginning of the fiscal year and are 40% of the total targeted equity award to the NEO. PSAs have a 36 month performance period. The value of the PSA actually “earned” is determined as of the date of the expiration of the performance period based on the achievement of the performance conditions.
In August 2016, in conjunction with Dr. Mattera’s promotion to CEO, the Company granted him a one-time promotional award of performance shares with a grant date value of $2.0 million. The award is earned 50% based on achievement of a Fiscal Year 2019 revenue goal and 50% based on the relative total shareholder return of the Company over a three-year performance period (fiscal years 2017, 2018 and 2019).
Restricted Stock Award (“RSAs”). The Compensation Committee uses RSAs to enhance the retention value of our Equity Program and help ensure an acceptable risk taking environment. The value of restricted stock awards is targeted in August at approximately 30% of the total targeted equity award to the NEO. RSAs vest at the rate on one third per year over a three-year period.
32 | 2017 Notice of Meeting and Proxy Statement |
Equity Grants for Fiscal Year 2017 in the Summary Compensation Table
Stock Options were granted with a strike price $21.67, the closing price of the Company’s stock on August 19, 2016, which was the fair market value on the date of grant for all NEOs. The stock options have a ten year term and vest in four equal annual installments. Stock options granted to the NEOs on August 19, 2016, were as follows:
Named Executive Officer | Stock Options Granted |
Grant Date Fair Value(1) |
||||||
Vincent D. Mattera, Jr. |
71,040 shares | $ | 810,575 | |||||
Francis J. Kramer(2) |
9,240 shares | 81,246 | ||||||
Mary Jane Raymond |
24,780 shares | 191,824 | ||||||
Gary A. Kapusta |
24,780 shares | 195,074 | ||||||
Giovanni Barbarossa |
24,720 shares | 191,359 | ||||||
David G. Wagner |
13,380 shares | 105,330 |
(1) | The Company uses the Black-Scholes option pricing model to determine fair value. |
(2) | Options for Mr. Kramer were granted for his role as a non-employee director following his retirement as Chief Executive Officer of the Company on August 31, 2016. See “Director Equity Program” above for additional information on non-employee director equity awards. |
Performance Share Awards (“PSAs”) granted in fiscal year 2017 depends on the achievement of two metrics – cash flow from operations and relative TSR. Mattera also received a special promotional award in connection with his promotion to Chief Executive Officer that depends on achievement of revenue in fiscal year 2019 as well as relative TSR – as described below.
Cash Flow from Operation Awards
These awards (the “2017 Cash Flow Performance Awards”) will be earned based on the achievement of specific consolidated cash flow metrics established for the thirty-six month period ending June 30, 2019. The 2017 Cash Flow Performance Awards will be earned as follows:
Performance vs. Target | Payout vs. Target | |
0.00% to 74.99% |
0% | |
75.00% to 99.99% |
50.00% to 99.99% | |
100% |
100% | |
100.01% to 139.99% |
100.01% to 199.99% | |
140% or Greater |
200% |
The number of PSAs earned is determined by the Compensation Committee and is based upon performance compared to the target for the full performance period.
2017 Notice of Meeting and Proxy Statement | 33 |
Relative Total Shareholder Return Awards
These awards, which include 50% of the promotional award to Dr. Mattera (the “2017 TSR Performance Awards”), focus on achieving certain levels of relative shareholder return compared to the Russell 2000 index. The Compensation Committee believes that TSR is one important reflection of Company performance, and recognizes that our shareholders invest in the Company with the expectation that we will deliver a level of performance that creates value. As such, the 2017 TSR Performance Awards will be earned based on the achievement of cumulative TSR for the thirty-six month period ending June 30, 2019, compared to returns on the Russell 2000 index, as follows:
Cumulative Total Shareholder Return | Payout vs. Target | |
Below the Russell 2000 50th percentile by more than 40 percentage points | 0% | |
Between 0 and 40 percentage points below the Russell 2000 50th percentile and an absolute positive cumulative Total Shareholder Return | 50.00% to 99.99% | |
Equal to the Russell 2000 50th percentile | 100% | |
Between 0 and 40 percentage points above the Russell 2000 50th percentile | 100.01% to 199.99%(1) | |
More than 40 percentage points above the Russell 2000 50th percentile | 200%(1) |
(1) | If there is an absolute negative cumulative TSR for the performance period and cumulative TSR is above Market 50th Percentile, the percentage of the Target Award earned shall be capped at 100.00% |
2019 Revenue Awards (for the CEO only)
This award, representing 50% of the promotional award for Dr. Mattera, is designed to encourage the CEO to focus on revenue growth for the Company, based on fiscal year 2019 revenue goals. The award will be earned as follows:
Performance vs. Target | Payout vs. Target* | |
0.00% to 80.50% |
0% | |
80.50% to 99.99% |
50.00% to 99.99% | |
100% |
100% | |
100.01% to 141.00% |
100.01% to 199.99% | |
141.00% or Greater |
200% |
* | Results between threshold and target or target and maximum will be interpolated on a straight line basis. |
Target award amounts for PSAs granted on August 19, 2016 for fiscal year 2017 for the NEOs are as follows:
Named Executive Officer | Target Relative TSR-Based Awards |
Revenue Based Award |
Target Cash Flow-Based Awards |
Aggregate Fair Value at Target Payout |
Aggregate Fair Value at Maximum Payout |
|||||||||||||||
Vincent D. Mattera, Jr(1) |
65,095 shares | 46,147 shares | 25,264 shares | $ | 2,958,085 | $ | 5,916,170 | |||||||||||||
Francis J. Kramer(2) |
— | — | — | — | — | |||||||||||||||
Mary Jane Raymond |
6,600 shares | — | 8,800 shares | 333,718 | 667,436 | |||||||||||||||
Gary A Kapusta |
6,612 shares | — | 6,612 shares | 286,564 | 573,128 | |||||||||||||||
Giovanni Barbarossa |
6,588 shares | — | 8,784 shares | 333,111 | 666,222 | |||||||||||||||
David G. Wagner |
3,576 shares | — | 4,768 shares | 180,814 | 361,628 |
(1) | Dr. Mattera received a one-time, promotional award of performance shares with a grant date fair value of $2.0 million. The award will be earned 50% based on achievement of a fiscal year 2019 revenue goal and 50% based on the relative total shareholder return of the Company |
(2) | Mr. Kramer did not receive a PSA grant as he retired as Chief Executive Officer effective on August 31, 2016. |
34 | 2017 Notice of Meeting and Proxy Statement |
Cash from Operations and TSR Performance Share Awards Earned in Fiscal Year 2017
At June 30, 2017, each of the Company’s NEOs had a PSA granted in August 2015 under the 2012 Omnibus Incentive Plan (the “2015 PSAs”) and for which the 24-month performance period ended on June 30, 2017 (the “2015 Performance Period”). The 2015 PSAs are earned based on consolidated cash flow from operations. During the 2015 Performance Period, the Company achieved cash flow from operations as summarized in the table below. At performance of 80.4%, (a function of the actual result compared to the target), the payout falls between 50% to 100%, specifically at 51%.
At June 30, 2017, each of the Company’s NEOs had a TSR award granted in August 2014 under the 2012 Omnibus Incentive Plan (the “2014 TSR Awards”) and for which the 36-month performance period ended on June 30, 2017 (the 2014 Performance Period”). The 2014 TSR Awards were earned based on total shareholder return, the Company’s stock outperformed the Russell 2000 50th percentile by 115%, the payout falls more than 40% above the Russell 2000 resulting in a payout of 200%.
Targets | Actual Results |
Performance Against Target |
Payout Percentage of Target |
|||||||||||||
Consolidated Cash Flow from Operations |
$ | 300 million | $ | 242 million | 80 | % | 51 | % |
The Company’s target and actual shares earned under the 2015 and 2014 PSAs were as follows:
Named Executive Officer | TSR Based Awards Target |
Payout % Based on Russell 2000 Performance |
TSR Based Awards Earned |
Cash Flow Based Awards Target |
Overall % of Cash Flow- Based Award Target |
Cash Flow- Based Awards Earned |
Total Awards Earned |
|||||||||||||||||
Vincent D. Mattera, Jr. |
10,727 shares | 200% | 21,454 shares | 10,800 shares | 51% | 5,508 shares | 26,962 Shares | |||||||||||||||||
Francis J. Kramer |
17,034 shares | 200% | 34,068 shares | 10,497 shares | 51% | 5,353 shares | 39,421 Shares | |||||||||||||||||
Mary Jane Raymond |
4,354 shares | 200% | 8,708 shares | 5,695 shares | 51% | 2,904 shares | 11,612 Shares | |||||||||||||||||
Gary A. Kapusta(1) |
— | — | — | — | — | — | — | |||||||||||||||||
Giovanni Barbarossa |
7,634 shares | 200% | 15,268 shares | 5,880 shares | 51% | 2,999 shares | 18,267 Shares | |||||||||||||||||
David G. Wagner |
3,500 shares | 200% | 7,000 shares | 2,360 shares | 51% | 1,204 shares | 8,204 Shares |
(1) | Mr. Kapusta joined the Company in February 2016, as such he did not receive a grant of a 2015 or 2016 PSA |
The number of PSAs earned is determined by the Compensation Committee and is based upon performance against target for the full performance period.
Restricted Stock Awards were granted with a fair market value of $21.67, the closing price of the Company’s stock on August 19, 2016, which was the fair market value on the date of grant for all NEOs. The restricted stock awards vest at the rate of one third per year over a three year period. Restricted stock awards granted to the NEOs on August 19, 2016, were as follows:
Named Executive Officer | Restricted Stock Granted |
Grant Date Fair Value(1) |
||||||
Vincent D. Mattera, Jr. |
28,416 shares | $ | 615,775 | |||||
Francis J. Kramer(2) |
3,696 shares | 80,092 | ||||||
Mary Jane Raymond |
9,912 shares | 214,793 | ||||||
Gary A. Kapusta |
9,915 shares | 214,858 | ||||||
Giovanni Barbarossa |
9,888 shares | 214,273 | ||||||
David G. Wagner |
5,367 shares | 116,303 |
(1) | Grant date fair value is calculated by the number of shares granted multiplied by the stock price on the date of grant of $21.67. |
(2) | The restricted stock award for Mr. Kramer was granted for his role as a non-employee director following his retirement as Chief Executive Officer on August 31, 2016. See “Director Equity Program” above for additional information on non-employee director equity awards. |
2017 Notice of Meeting and Proxy Statement | 35 |
PROCESS FOR SETTING COMPENSATION FOR FISCAL YEAR 2017
Fiscal Year 2017 Comparator Group
Brooks Automation, Inc. | Franklin Electric Co., Inc. | Powell Industries Inc. | ||
Cabot Microelectronics Corporation. | HEICO Corporation | Rofin-Sinar Technologies, Inc. | ||
Cognex Corporation | IPG Photonics | Rogers Corporation | ||
Coherent Inc. | Kulicke and Soffa Industries, Inc. | Semtech Corporation | ||
Diodes Incorporated | MKS Instruments, Inc. | Silicon Laboratories, Inc. | ||
Entegris, Inc. | Microsemi Corporation | |||
Finisar Corporation | Newport Corporation |
36 | 2017 Notice of Meeting and Proxy Statement |
THE COMPENSATION COMMITTEE’S PROCESSES
The Compensation Committee has established a number of processes to assist it in ensuring that the Company’s executive compensation program is achieving its desired objectives. Among those are:
• | Meetings. The Compensation Committee meets at least quarterly, or more often as needed. For fiscal year 2017, the Committee met seven times. Agendas are established in advance of the meetings and under the direction of the Compensation Committee Chair. |
• | Independent Compensation Advisor: The Compensation Committee engages an independent compensation advisor to assist the Committee in setting executive compensation, and selects an advisor only after evaluating all factors relevant to that advisor’s qualifications and independence from Company management. The Committee’s independent advisor for fiscal year 2017 was Radford. |
• | Assessment of Company Performance. The Compensation Committee uses objective measures of Company and Comparator Group performance in establishing total compensation targets. These include TSR, earnings growth, revenue growth, operating profit and cash flow from operations. |
• | Assessment of Shareholder Feedback. The Compensation Committee, in particular the Chair of the Committee, directs and often participates in the collection of the shareholder feedback. Conversations are focused on listening to feedback in general, and asking specific questions about the elements of the Company’s compensation program, and the key criteria the investor uses to evaluate pay and performance alignment. |
• | Assessment of Individual Performance. Individual performance has a strong impact on the compensation of all employees, including our NEOs. During the course of the year, the Compensation Committee meets with the CEO and the Vice President, Human Resources, to review recommendations on changes, if any, in the compensation of each NEO other than the CEO, based on individual performance. With respect to the CEO, the Compensation Committee meets with the Vice President, Human Resources, to review Comparator Group market data and CEO performance so that the Compensation Committee can recommend TDC targets to the full Board. |
• | Target Pay Philosophy. The Compensation Committee considers relevant market pay practices when setting executive compensation. Its goal is to balance market alignment with the Company’s performance and ability to recruit, motivate and retain high caliber talent. Based on the Compensation Committee’s judgment, current market practices, compensation data from the Comparator Group, compensation data from the independent compensation advisor and each employee’s contributions to the Company, the Compensation Committee makes a recommendation to the full Board regarding targeted TDC and actual payouts at year-end for each of our NEOs. |
2017 Notice of Meeting and Proxy Statement | 37 |
The Compensation Committee’s and full Board’s timeline for compensation-setting actions is:
2H Fiscal Year 1 | Fiscal Year 2 | 1H Fiscal Year 3 | ||||||||||||||||||||||||||||||||||||||||||||||||
Committee Activity / Calendar Year | J | F | M | A | M | J | J | A | S | O | N | D | J | F | M | A | M | J | J | A | S | O | N | D | ||||||||||||||||||||||||||
Select Independent Compensation Advisor for Fiscal Year 2 / Fiscal Year 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Establish Comparator Group for Fiscal Year 2 / Fiscal Year 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Gather Market Data/Practices from Comparator Group for Fiscal Year 2 / Fiscal Year 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Set NEO Target Total Direct Compensation and set Goals for Fiscal Year 2 / Fiscal Year 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Assess Performance and recommend Compensation for Fiscal Year 1 / Fiscal Year 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Board approves performance and compensation for Fiscal Year 1 / Fiscal Year 2 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Review Effectiveness of Prior Year’s Program for Fiscal Year 3 / Fiscal Year 4 |
38 | 2017 Notice of Meeting and Proxy Statement |
COMPENSATION DECISIONS FOR FISCAL YEAR 2018
2017 Notice of Meeting and Proxy Statement | 39 |
40 | 2017 Notice of Meeting and Proxy Statement |
2017 Notice of Meeting and Proxy Statement | 41 |
42 | 2017 Notice of Meeting and Proxy Statement |
The Compensation Committee has:
(1) | reviewed and discussed the Compensation Discussion and Analysis included in this Proxy Statement with management; and |
(2) | based on the review and discussions referred to in paragraph (1) above, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement. |
The foregoing report of the Compensation Committee shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates it by reference in such filing.
Compensation Committee
Joseph J. Corasanti, Interim Chair
Marc Y.E. Pelaez
William A. Schromm
2017 Notice of Meeting and Proxy Statement | 43 |
The following table summarizes the compensation of the named executive officers for the fiscal years 2017, 2016 and 2015 discussed in this proxy document. Dr. Mattera became Chief Executive Officer on September 1, 2016 upon the retirement of Mr. Kramer who retained his Chairman of the Board role. All footnote references and explanatory statements relate to fiscal year 2017 unless otherwise noted.
Name and Principal Position | Year | Salary ($) |
Stock Awards ($)(2)(3) |
Option Awards ($)(4) |
Non-Equity Incentive Plan Compensation ($)(5) |
All Other Compensation ($)(6) |
Total ($) |
|||||||||||||||||||||
Vincent D. Mattera, Jr.(1) |
2017 | $ | 592,939 | $ | 3,573,860 | $ | 810,575 | $ | 1,281,348 | $ | 142,520 | $ | 6,401,242 | |||||||||||||||
President and Chief Executive Officer |
2016 | 424,000 | 772,775 | 513,614 | 1,104,986 | 39,578 | 2,854,953 | |||||||||||||||||||||
2015 | 412,000 | 766,304 | 299,876 | 534,044 | 36,185 | 2,048,409 | ||||||||||||||||||||||
Francis J. Kramer |
2017 | $ | 142,120 | $ | 80,092 | $ | 81,246 | $ | 523,002 | $ | 155,250 | $ | 981,710 | |||||||||||||||
Chief Executive Officer, (Retired August 31, 2016) |
2016 | 686,400 | 1,287,718 | 856,052 | 1,769,621 | 45,668 | 4,645,459 | |||||||||||||||||||||
2015 | 666,400 | 1,682,197 | 659,908 | 1,136,585 | 46,775 | 4,191,865 | ||||||||||||||||||||||
Mary Jane Raymond |
2017 | $ | 363,000 | $ | 548,511 | $ | 191,824 | $ | 564,503 | $ | 38,131 | $ | 1,705,969 | |||||||||||||||
Chief Financial Officer and Treasurer |
2016 | 330,000 | 407,524 | 270,811 | 537,849 | 39,350 | 1,585,534 | |||||||||||||||||||||
2015 | 300,000 | 310,746 | — | 479,696 | 4,628 | 1,095,070 | ||||||||||||||||||||||
Gary A. Kapusta |
2017 | $ | 383,750 | $ | 501,422 | $ | 195,074 | $ | 524,847 | $ | 6,767 | $ | 1,611,860 | |||||||||||||||
Chief Operating Officer |
2016 | 145,833 | 820,000 | 223,411 | 125,000 | 20,314 | 1,334,558 | |||||||||||||||||||||
Giovanni Barbarossa |
2017 | $ | 382,500 | $ | 547,384 | $ | 191,359 | $ | 370,274 | $ | 38,572 | $ | 1,530,089 | |||||||||||||||
Chief Technology Officer |
2016 | 351,200 | 420,885 | 279,731 | 405,325 | 37,557 | 1,494,698 | |||||||||||||||||||||
2015 | 319,300 | 545,596 | 213,557 | 390,412 | 35,401 | 1,504,266 | ||||||||||||||||||||||
David G. Wagner |
2017 | $ | 269,600 | $ | 297,117 | $ | 105,330 | $ | 194,842 | $ | 36,928 | $ | 903,817 | |||||||||||||||
Vice President Human Resources |
(1) | Dr. Mattera was promoted to Chief Executive Officer effective September 1, 2016. In conjunction with his promotion he received a one-time promotional award of performance shares with a grant date fair value of $2.0 million. The award will be earned 50% based on achievement of a Fiscal Year 2019 revenue goal and 50% based on a relative shareholder return of the Company over the three year period. |
(2) | Represents the aggregate grant date fair value of restricted stock and performance shares issued by the Company during the fiscal years presented, computed in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures). The assumptions used by the Company in calculating these amounts are incorporated herein by reference to Note 10 to the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2017. For restricted stock, the grant date fair value was computed based upon the closing price of the Company’s Common Stock on the date of grant multiplied by the number of shares awarded. The grant date fair value of the restricted stock awards reported in this column for fiscal year 2017 was as follows: Dr. Mattera, $615,775; Mr. Kramer, $80,092, Ms. Raymond, $214,793; Mr. Kapusta, $214,858; Dr. Barbarossa, $214,273 and Mr. Wagner, $116,303. Mr. Kramer retired as Chief Executive Officer on August 31, 2016 and did not receive a performance share award. Mr. Kramer was granted a restricted stock award for his role as a non-employee director following his retirement as Chief Executive Officer. See “Director Equity Program” above for additional information on non-employee director equity awards. |
(3) | The grant date fair value of the performance share awards included in this column was calculated based upon the estimate of aggregate compensation expense to be recognized over the service period. For the performance share awards earned based on a relative TSR performance, this was calculated based on a Monte Carlo simulation fair value as of the grant date of $29.24. For the performance share awards earned based on cash flow or revenue performance this was calculated based upon the number of shares projected to be earned multiplied by the stock price at the date the performance shares were awarded, based on a probable outcome at the date of grant of target. The grant date fair value of the performance share awards included in this column was calculated based on the probable outcome of the performance conditions, as determined at the grant date (which was target). The grant date fair value of the performance share awards reported in this column for fiscal year 2017 (measured at target) were as follows: Dr. Mattera, $2,958,085; Ms. Raymond, $333,718; Mr. Kapusta, $286,564; Dr. Barbarossa, $333,111 and Mr. Wagner, 180,814. If these awards were to be paid out at the maximum (200%) payout, would be as follows: Dr. Mattera, $5,916,170; Ms. Raymond, $667,436; Mr. Kapusta, $573,128; Dr. Barbarossa, $666,222 and Mr. Wagner, $361,629. |
(4) | Represents the aggregate grant date fair value of stock option awards issued by the Company during the fiscal years presented, computed in accordance with FASB ASC Topic 718. Refer to Note 10 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for the fiscal year ended June 30, 2017 for the relevant weighted-average assumptions underlying the valuation of the option awards, except that any estimate of forfeitures for service-based conditions have been disregarded. The grant date fair value of stock option awards is based on the Black-Scholes option pricing model. The actual value a named executive officer may realize upon exercise of stock options, if any, will depend on the excess of the price of the underlying stock on the date of exercise over the grant date fair market value. As such, there is no assurance that the value realized by a named executive officer will be at or near the value estimated by the Black-Scholes model. Mr. Kramer was granted a option award for his role as a non-employee director following his retirement as Chief Executive Officer. See “Director Equity Program” above for additional information on non-employee director equity awards. |
44 | 2017 Notice of Meeting and Proxy Statement |
(5) | Amounts reflect the cash awards earned by our NEOs under the BIP and the GRIP, which are discussed in further detail in the “Compensation Discussion and Analysis” section of this Proxy Statement. The cash awards earned by Dr. Mattera, Mr. Kramer, Ms. Raymond, Mr. Kapusta, Dr. Barbarossa and Mr. Wagner under the BIP for fiscal year 2017 were $179,660, $38,941, $109,989, $48,448, $115,898, and $81,689, respectively. The cash awards earned by Dr. Mattera, Mr. Kramer, Ms. Raymond, Mr. Kapusta, Dr. Barbarossa and Mr. Wagner under the GRIP for fiscal year 2017 were $1,101,688, $484,061, $454,514, $476,399, $254,376 and $113,153, respectively. |
(6) | Amounts reflect premiums paid for life and disability insurance and the Company’s contributions under the Company’s Profit Sharing Plan, which is qualified under Section 401(a) of the Code. Profit sharing contributions made by the Company on behalf of Dr. Mattera, Ms. Raymond, Dr. Barbarossa and Mr. Wagner were $26,250, $26,000, $26,000, and $26,000, respectively. 401(k) matching contributions made by the Company on behalf of Dr. Mattera, Ms. Raymond, Mr. Kapusta, Dr. Barbarossa and Mr. Wagner for fiscal year 2017 were $8,750, $8,700, $3,198, $9,000 and $9,000, respectively. Dr. Mattera’s other income includes an annual Company contribution in the amount of $100,000 contributed to his account under the Company’s Deferred Compensation Plan. Other Income for Mr. Kramer includes $155,250 of Board of Director fees he received subsequent to his retirement as Chief Executive Officer on August 31, 2016. |
2017 Notice of Meeting and Proxy Statement | 45 |
GRANTS OF PLAN-BASED AWARDS FISCAL YEAR 2017
The following table sets forth each annual non-equity cash incentive award and long-term equity-based award granted by the Company to the NEOs in fiscal year 2017.
Estimated Future Payouts |
Estimated Future Payouts |
All Stock
|
All Other of Options
|
Exercise of
|
Grant Fair of and
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Name
|
Grant
|
Threshold
|
Target
|
Maximum
|
Threshold
|
Target
|
Maximum
|
||||||||||||||||||||||||||||||||||||||||||||||||
Vincent D. Mattera, Jr. |
— | $ | — | $ | 99,021 | $ | 148,532 | — | — | — | — | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
— | $ | — | $ | 707,117 | $ | 1,414,234 | — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | 22,106 | 44,212 | 88,424 | — | — | $ | — | $ | 958,074 | ||||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | 46,147 | 92,294 | 184,588 | — | — | $ | — | $ | 2,000,011 | ||||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | — | — | — | — | 71,040 | $ | 21.67 | $ | 810,575 | ||||||||||||||||||||||||||||||||||||||||||
|
8/20/2016
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28,416
|
|
|
—
|
|
$
|
—
|
|
$
|
615,775
|
| |||||||||||||||||||||||
Francis J. Kramer |
— | $ | — | $ | 38,941 | $ | 58,412 | — | — | — | — | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
— | $ | — | $ | 484,061 | $ | 484,061 | — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | — | — | — | — | 9,240 | $ | 21.67 | $ | 81,246 | ||||||||||||||||||||||||||||||||||||||||||
|
8/20/2016
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,696
|
|
|
—
|
|
$
|
—
|
|
$
|
80,092
|
| |||||||||||||||||||||||
Mary Jane Raymond |
— | $ | — | $ | 60,621 | $ | 90,932 | — | — | — | — | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
— | $ | — | $ | 291,729 | $ | 583,458 | — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | 7,700 | 15,400 | 30,800 | — | — | $ | — | $ | 333,718 | ||||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | — | — | — | — | 24,780 | $ | 21.67 | $ | 191,824 | ||||||||||||||||||||||||||||||||||||||||||
|
8/20/2016
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,912
|
|
|
—
|
|
$
|
—
|
|
$
|
214,793
|
| |||||||||||||||||||||||
Gary Kapusta |
— | $ | — | $ | 26,724 | $ | 40,086 | — | — | — | — | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
— | $ | — | $ | 305,776 | $ | 611,552 | — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | 6,612 | 13,224 | 26,448 | — | — | $ | $ | 286,564 | |||||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | — | — | — | — | 24,780 | $ | 21.67 | $ | 195,074 | ||||||||||||||||||||||||||||||||||||||||||
|
8/20/2016
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,915
|
|
|
—
|
|
$
|
—
|
|
$
|
214,858
|
| |||||||||||||||||||||||
Giovanni Barbarossa |
— | $ | — | $ | 63,878 | $ | 95,817 | — | — | — | — | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
— | $ | — | $ | 192,272 | $ | 384,544 | — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | 7,686 | 15,372 | 30,744 | — | — | $ | — | $ | 333,111 | ||||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | — | — | — | — | 24,720 | $ | 21.67 | $ | 191,359 | ||||||||||||||||||||||||||||||||||||||||||
|
8/20/2016
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,888
|
|
|
—
|
|
$
|
—
|
|
$
|
214,273
|
| |||||||||||||||||||||||
David G. Wagner |
— | $ | — | $ | 45,023 | $ | 67,535 | — | — | — | — | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||||||||
— | $ | — | $ | 72,627 | $ | 145,254 | — | — | — | — | — | $ | — | $ | — | ||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | 4,172 | 8,344 | 16,688 | — | — | $ | — | $ | 180,814 | ||||||||||||||||||||||||||||||||||||||||||
8/20/2016 | $ | — | — | — | — | — | — | — | 13,380 | $ | 21.67 | $ | 105,330 | ||||||||||||||||||||||||||||||||||||||||||
|
8/20/2016
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,367
|
|
|
—
|
|
$
|
—
|
|
$
|
116,303
|
|
(1) | These columns show the range of potential payouts for awards made to our NEOs in fiscal year 2017 under the GRIP and the BIP assuming the target or maximum goals are satisfied with respect to the applicable performance measures underlying such awards. The business measurements and performance goals underlying these awards are described in the “Compensation Discussion and Analysis” section of this Proxy Statement. The aggregate amounts actually paid to our named executive officers under these plans for fiscal year 2017 are set forth in the Summary Compensation Table in the column titled “Non-Equity Incentive Plan Compensation” and additional details regarding the specific pay-outs under each of the various plans are provided in the footnotes thereto. |
(2) | These columns show the range of pay-outs of performance share awards granted to our NEOs in fiscal year 2017 under the 2012 Omnibus Incentive Plan if threshold, target or maximum goals are achieved. See “Equity Incentives – Performance Share Awards” on page 32 for additional information regarding our performance share awards. Dr. Mattera received a special one-time performance share award when he assumed the role of Chief Executive Officer. |
(3) | This column shows the number of shares underlying the restricted stock awards granted to our named executive officers in fiscal year 2017 under the 2012 Omnibus Incentive Plan. These awards are subject to our three-year even distribution vesting schedules. |
(4) | This column shows the number of shares underlying the stock options granted to our named executive officers in fiscal year 2017 under the 2012 Omnibus Incentive Plan. Options vest over a four-year period, with 25% vesting to occur on each of the first, second, third, and fourth anniversaries of the grant date. |
(5) | This column shows the exercise price for the stock options granted to our named executive officers in fiscal year 2017, which is equal to the closing market price of our Common Stock on the grant date. |
(6) | This column shows the full grant date fair value of the stock and option awards reported in this table, which were computed in accordance with FASB ASC Topic 718. Generally, the full grant date fair value of an award is the amount the Company would expense in its financial statements over the award’s vesting period as determined at the grant date. For the performance share awards earned based on relative TSR performance, the grant date fair value is based on a Monte Carlo simulation fair value as of the grant date of $29.24 per share. For the performance share awards earned based on cash flow performance or 2019 revenue, the grant date fair value is based on a value of $21.67 per share, which was |
46 | 2017 Notice of Meeting and Proxy Statement |
the closing price of our Common Stock on the grant date, multiplied by the number of shares underlying the award at the target level, which was the probable outcome for the award determined as of the grant date. The restricted stock awards’ grant date fair value is based on a value of $21.67 per share, which was the closing price of our Common Stock on the grant date, multiplied by the number of shares underlying the award. Refer to Note 10 to the Company’s Consolidated Financial Statements included in the Annual Report on Form 10-K for fiscal year 2017 for the relevant weighted-average assumptions underlying the valuation of the option awards, except that any estimate of forfeitures for service-based conditions have been disregarded. |
2017 Notice of Meeting and Proxy Statement | 47 |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
This table summarizes the long-term equity-based awards held by our NEOs outstanding as of June 30, 2017.
Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) |
Number of Securities Underlying Unexercised Options (#) Unexercisable(1) |
Option Exercise Price ($) |
Option Expiration Date |
Number of That |
Market That |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | ||||||||||||||||||||||||||||||||
Vincent D. Mattera, Jr. |
— | — | 223,201 | $ | 7,655,794 | |||||||||||||||||||||||||||||||||||
75,446 | $ | 2,587,798 | — | — | ||||||||||||||||||||||||||||||||||||
8,000 | — | $ | 18.35 | 5/3/2018 | — | — | — | — | ||||||||||||||||||||||||||||||||
9,450 | — | $ | 23.50 | 8/16/2018 | — | — | — | — | ||||||||||||||||||||||||||||||||
15,800 | — | $ | 12.08 | 8/15/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||
29,000 | — | $ | 13.17 | 2/10/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||
18,100 | — | $ | 16.86 | 8/21/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||
69,600 | — | $ | 17.53 | 8/20/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||
38,040 | 9,510 | $ | 18.93 | 8/18/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
24,786 | 16,524 | $ | 19.37 | 8/17/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||
17,156 | 25,734 | $ | 13.99 | 8/16/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
11,516 | 46,064 | $ | 17.84 | 8/15/2025 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 71,040 | $ | 21.67 | 8/20/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||
Francis J. Kramer |
— | — | 13,996 | 480,063 | ||||||||||||||||||||||||||||||||||||
95,976 | $ | 3,291,977 | — | — | ||||||||||||||||||||||||||||||||||||
41,850 | — | $ | 23.50 | 8/16/2018 | — | — | — | — | ||||||||||||||||||||||||||||||||
68,200 | — | $ | 12.08 | 8/15/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||
61,380 | — | $ | 16.86 | 8/21/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||
108,070 | — | $ | 17.53 | 8/20/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||
66,944 | 16,736 | $ | 18.93 | 8/18/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
54,522 | 36,348 | $ | 19.37 | 8/17/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||
37,736 | 56,604 | $ | 13.99 | 8/16/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
19,194 | 76,776 | $ | 17.84 | 8/15/2025 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 9,240 | $ | 21.67 | 8/20/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||
Mary Jane Raymond |
— | — | 33,390 | $ | 1,145,277 | |||||||||||||||||||||||||||||||||||
31,492 | $ | 1,080,176 | — | — | ||||||||||||||||||||||||||||||||||||
18,000 | 12,000 | $ | 14.99 | 3/20/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
6,072 | 24,288 | $ | 17.84 | 8/15/2025 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 24,780 | $ | 21.67 | 8/20/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||
Gary A. Kapusta |
— | — | 19,836 | $ | 680,375 | |||||||||||||||||||||||||||||||||||
49,915 | $ | 1,712,085 | — | — | ||||||||||||||||||||||||||||||||||||
6,000 | 24,000 | $ | 20.50 | 2/1/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 24,780 | $ | 21.67 | 8/20/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||
Giovanni Barbarossa |
— | — | 33,720 | $ | 1,156,596 | |||||||||||||||||||||||||||||||||||
39,928 | $ | 1,369,530 | — | — | ||||||||||||||||||||||||||||||||||||
5,600 | 1,400 | $ | 16.45 | 11/2/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
7,806 | 5,204 | $ | 19.37 | 8/17/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||
12,212 | 18,318 | $ | 13.99 | 8/16/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
6,272 | 25,088 | $ | 17.84 | 8/15/2025 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 24,720 | $ | 21.67 | 8/20/2026 | — | — | — | — | ||||||||||||||||||||||||||||||||
David G. Wagner |
— | — | 16,640 | $ | 570,752 | |||||||||||||||||||||||||||||||||||
18,477 | $ | 633,761 | — | — | ||||||||||||||||||||||||||||||||||||
13,334 | — | $ | 12.80 | 11/10/2018 | — | — | — | — | ||||||||||||||||||||||||||||||||
6,400 | — | $ | 12.08 | 8/15/2019 | — | — | — | — | ||||||||||||||||||||||||||||||||
3,900 | — | $ | 16.86 | 8/21/2020 | — | — | — | — | ||||||||||||||||||||||||||||||||
8,300 | — | $ | 17.53 | 8/20/2021 | — | — | — | — | ||||||||||||||||||||||||||||||||
5,880 | 1,470 | $ | 18.93 | 8/18/2022 | — | — | — | — | ||||||||||||||||||||||||||||||||
6,792 | 4,528 | $ | 19.37 | 8/17/2023 | — | — | — | — | ||||||||||||||||||||||||||||||||
5,600 | 8,400 | $ | 13.99 | 8/16/2024 | — | — | — | — | ||||||||||||||||||||||||||||||||
2,514 | 10,056 | $ | 17.84 | 8/15/2025 | — | — | — | — | ||||||||||||||||||||||||||||||||
— | 13,380 | $ | 21.67 | 8/20/2026 | — | — | — | — |
48 | 2017 Notice of Meeting and Proxy Statement |
(1) | This column shows the number of shares underlying stock options that were outstanding as of June 30, 2017. Generally, awards granted in fiscal year 2017 and later vest over a four year period, with 25% vesting occurring on each of the first, second, third, and fourth anniversaries of the grant date. Prior to 2017, awards granted vested over a five year period with 20% vesting occurring on each of the first, second, third, fourth and fifth anniversaries of the grant. |
(2) | This column shows the number of restricted shares outstanding as of June 30, 2017. These awards are subject to our standard vesting schedule and will vest as set forth in the following table: |
Name | Shares Vesting in |
Shares Vesting in |
Shares Vesting in |
Shares Vesting in |
Shares Vesting in |
Shares Vesting |
Total Unvested Shares | ||||||||||||||||||||||||||||
Vincent D. Mattera, Jr |
9,472 | 26,400 | 9,472 | 20,630 | — | 9,472 | 75,446 | ||||||||||||||||||||||||||||
Francis J. Kramer |
1,232 | 57,900 | 1,232 | 34,380 | — | 1,232 | 95,976 | ||||||||||||||||||||||||||||
Mary Jane Raymond |
3,304 | 10,700 | 3,304 | 10,880 | — | 3,304 | 31,492 | ||||||||||||||||||||||||||||
Gary A. Kapusta |
3,305 | — | 3,305 | — | 40,000 | 3,305 | 49,915 | ||||||||||||||||||||||||||||
Giovanni Barbarossa |
3,296 | 18,800 | 3,296 | 11,240 | — | 3,296 | 39,928 | ||||||||||||||||||||||||||||
David G. Wagner |
1,789 | 8,600 | 1,789 | 4,510 | — | 1,789 | 18,477 |
(3) | These values are based on the closing market price of the Company’s Common Stock on June 30, 2017, of $34.30 per share. |
(4) | This column shows the number of unvested performance shares outstanding as of June 30, 2017, and consists of shares underlying the 2016 Performance Share Awards at target, as well as TSR Awards granted in 2015 and 2016 at maximum. These awards are subject to both two-year and three-year cliff-vesting schedules and will vest as set forth in the following table: |
Name | 2015 TSR Shares Vesting |
2016 PSA Shares Vesting |
2016 TSR Shares Vesting |
Total Unvested Shares | ||||||||||||||||
Vincent D. Mattera, Jr |
21,600 | 71,411 | 130,190 | 223,201 | ||||||||||||||||
Francis J. Kramer |
13,996 | — | — | 13,996 | ||||||||||||||||
Mary Jane Raymond |
11,390 | 8,800 | 13,200 | 33,390 | ||||||||||||||||
Gary A. Kapusta |
— | 6,612 | 13,224 | 19,836 | ||||||||||||||||
Giovanni Barbarossa |
11,760 | 8,784 | 13,176 | 33,720 | ||||||||||||||||
David G. Wagner |
4,720 | 4,768 | 7,152 | 16,640 |
2017 Notice of Meeting and Proxy Statement | 49 |
OPTION EXERCISES AND STOCK VESTED
IN FISCAL YEAR 2017
The following table provides information related to (1) stock options exercised by our NEOs in fiscal year 2017, including the number of shares acquired upon exercise and the value realized and (2) the number of shares acquired upon the vesting of restricted stock awards and performance share awards in fiscal year 2017 and the value realized, before payment of any applicable withholding tax and broker commissions.
Option Awards | Stock Awards | |||||||||||||||||||
Number of (#) |
Value Realized on Exercise ($)(1) |
Number of Shares Acquired Upon Vesting (#)(2) |
Value Realized Upon Vesting ($)(3) | |||||||||||||||||
Vincent D. Mattera, Jr |
7,000 | $ | 176,160 | 20,628 | $ | 546,965 | ||||||||||||||
Francis J. Kramer |
35,200 | 788,455 | 47,388 | 1,271,815 | ||||||||||||||||
Mary Jane Raymond |
— | — | 19,962 | 633,139 | ||||||||||||||||
Gary A. Kapusta |
— | — | — | — | ||||||||||||||||
Giovanni Barbarossa |
— | — | 10,702 | 253,801 | ||||||||||||||||
David G. Wagner |
6,666 | 158,303 | 5,790 | 146,437 |
(1) | The value realized upon exercise of these option awards represents the difference between the market price of the underlying stock at exercise and the exercise price of the option, multiplied by the number of shares underlying the options exercised. |
(2) | Includes 12,228 shares, 26,888 shares, 4,962 shares, 8,702 shares and 3,990 shares acquired by Dr. Mattera, Mr. Kramer, Ms. Raymond, Dr. Barbarossa, and Mr. Wagner respectively, upon the vesting of the 2014 Performance Awards. Includes 15,000 shares acquired by Ms. Raymond upon the vesting of the 2014 Restricted Share Awards she received as part of her employment with the Company. Includes 8,400 shares, 20,500 shares, 2,000 shares and 1,800 acquired by Dr. Mattera, Mr. Kramer, Dr. Barbarossa and Mr. Wagner upon the vesting of the June 2014 Restricted Share Awards. |
(3) | The value realized upon vesting of the 2014 Performance Awards represents the closing stock price of $21.34 per share on August 12, 2016 (the closing stock price on the day prior to the vest date), multiplied by the number of shares acquired upon vesting. The value realized upon vesting of Ms. Raymond’s 15,000 shares of her initial grant upon employment with the Company represents the closing stock price of $35.15 per share on March 20, 2017 (the closing stock price on the day prior to the vest date), multiplied by the number of shares acquired upon vesting. The value realized upon the 2014 restricted share awards represents the closing stock price of $21.34 per share on August 12, 2016 (the closing stock price on the day prior to the vest date), multiplied by the number of share acquired upon vesting. |
50 | 2017 Notice of Meeting and Proxy Statement |
NON-QUALIFIED DEFERRED COMPENSATION
FISCAL YEAR 2017
This table provides information regarding executive contributions to, and aggregate earnings under, the Deferred Compensation Plan for our NEOs as of and for the fiscal year ended 2017.
Name | Executive Contributions FY2017 ($)(3) |
Registrant Contributions FY2017(1) |
Aggregate Earnings (Loss) in FY2017 ($)(2) |
Aggregate Withdrawals/ Distributions ($)(4) |
Aggregate Balance at June 30, 2017 ($) |
|||||||||||||||
Vincent D. Mattera, Jr |
$ | — | $ | 100,000 | $ | 370,796 | $ | — | $ | 1,389,996 | ||||||||||
Francis J. Kramer |
691,997 | — | 3,270,886 | 8,487,902 | 889,960 | |||||||||||||||
Mary Jane Raymond |
— | — | — | — | — | |||||||||||||||
Gary Kapusta |
— | — | — | — | — | |||||||||||||||
Giovanni Barbarossa |
— | — | — | — | — | |||||||||||||||
David G. Wagner |
19,027 | — | 50,837 | — | 337,606 |
(1) | As part of Dr. Mattera’s appointment as Chief Executive Officer he receives an annual Company contribution in the amount of $100,000 to his account under the Company’s Deferred Compensation Plan. |
(2) | Aggregate earnings include all changes in value based on performance of deemed investments elected by the NEO under the Deferred Compensation Plan. The Deferred Compensation Plan is administered by a third party and provides for deemed investment options similar to the investment options available under the Profit Sharing Plan, with the exception that amounts under the Deferred Compensation Plan may be invested in the Company’s Common Stock. Amounts that are deferred into the Company’s Common Stock must remain invested in the Company’s Common Stock and must be paid out in shares of Company’s Common Stock upon a qualifying distribution event. |
(3) | All amounts shown in this column were reported in the Summary Compensation Table for previous fiscal years, other than earnings and other than the difference between the actual value of performance share awards at payout and the fair value of performance share awards as reported for the year in which such awards were granted. |
(4) | Mr. Kramer, on his retirement as an employee received a partial distribution during fiscal year 2017 of his non-qualified Deferred Compensation Plan balance. |
The Deferred Compensation Plan was established to provide retirement savings benefits for NEOs and certain other employees beyond what is available through the II-VI Incorporated Employees’ Profit Sharing Plan, which is subject to IRS limitations on annual contributions and compensation. Under the Deferred Compensation Plan, as it is currently implemented by the Company, eligible participants can elect to defer up to 100% of certain performance-based cash incentive compensation and certain equity awards into an account that will be credited with earnings at the same rate as one or more deemed investments chosen by the participant. The Company may make matching contributions and discretionary contributions to the Deferred Compensation Plan, but did not make any such contributions in fiscal year 2017. A participant’s right to receive benefits under the Deferred Compensation Plan is an unfunded, unsecured right, no greater than the claim of a general creditor of the Company. Any assets that the Company sets aside to pay benefits under the Deferred Compensation Plan are the property of the Company and subject to claims of the Company’s creditors in case of the Company’s insolvency. Participants are eligible to receive distributions from the Deferred Compensation Plan upon a separation from service (as defined in the Deferred Compensation Plan) and may also receive in-service distributions in certain scenarios, and may elect to receive payments in a lump sum or in annual installments over a specified term of years.
2017 Notice of Meeting and Proxy Statement | 51 |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about our Common Stock subject to our equity compensation plans that were in effect as of June 30, 2017.
As of June 30, 2017 | Number of (a) |
Weighted-average (b) |
Number of securities (c) | ||||||||||||
Equity compensation plans approved by security holders | 4,458,625 | (1) | $ | 18.15 | (2) | 1,643,734 | |||||||||
Equity compensation plans not approved by security holders | — | — | — | ||||||||||||
Total | 4,458,625 | $ | 18.15 | 1,643,734 |
(1) | Represents outstanding awards pursuant to the 2012 Omnibus Incentive Plan and includes both vested and unvested options, as well as 377,710 outstanding performance share awards at target level of performance. Amount does not include 811,833 shares underlying the restricted stock awards. |
(2) | Does not take into account outstanding performance share awards. |
52 | 2017 Notice of Meeting and Proxy Statement |
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL AND EMPLOYMENT TERMINATION
EQUITY AWARDS
Treatment of equity awards upon a change in control of the Company depends on when the awards were granted and whether the awards are assumed or replaced by the buyer in the transaction. Awards vest upon closing of the transaction if the awards were granted before fiscal year 2017 or, for awards granted beginning with fiscal year 2017, if the awards are not assumed or replaced by the buyer. For awards granted beginning with fiscal 2017, if the awards are assumed or replaced by the buyer, they do not vest upon closing of the transaction, but will vest if the employee is terminated by the buyer without cause or by the executive with good reason within two years after the closing – which is often referred to as “double trigger” vesting.
Stock options accelerate and vest in their entirety in the event of death or disability, and continue to vest as set forth in the applicable award upon retirement, as defined in the agreement. Performance share awards are prorated in the event of death, disability or retirement, based on the months employed during the performance period, and remain subject to actual performance results. Restricted stock awards accelerate and vest in their entirety in the event of death, disability or retirement from the Company, provided that an on-going consulting agreement and/or Board member relationship does not exist. If an on-going consulting agreement and/or Board member relationship does exist, the restricted stock award continues to vest as set forth in the applicable award. In all other circumstances, the awards terminate upon termination of service.
The following table sets forth for each of the NEOs the dollar amount that such NEO would have been entitled to receive as a result of the acceleration of vesting of unvested stock options, performance shares and restricted stock caused by (i) a change in control of the Company (and a subsequent termination without cause or with good reason, if applicable) and (ii) the death, disability or retirement of the NEO, assuming the triggering event occurred on June 30, 2017. The values shown are calculated based on the closing price of the Company’s Common Stock on June 30, 2017 of $34.30 per share and, for stock options, are calculated based on the difference between the exercise price of the unvested options and $34.30. These benefits are in addition to benefits available generally to salaried employees, such as accrued vacation pay. Due to the number of factors that affect the nature and amount of any benefits provided upon the events discussed below, such as the timing during the year of any such event and the Company’s stock price, any actual amounts paid or distributed may be different.
Named Executive Officer
|
Acceleration ($)
|
Acceleration Upon Death or Disability
| ||||||||
Vincent D. Mattera, Jr
|
|
12,814,570
|
|
|
5,158,776
|
(1)
| ||||
Mary Jane Raymond
|
|
3,169,924
|
|
|
2,024,647
|
| ||||
Gary A. Kapusta
|
|
3,036,631
|
|
|
2,356,256
|
| ||||
Giovanni Barbarossa
|
|
3,726,013
|
|
|
2,569,417
|
| ||||
David G. Wagner
|
|
1,799,825
|
|
|
1,267,522
|
|
(1) | For Dr. Mattera’s promotional performance share awards, his termination without cause or with good reason not in connection with a change in control is treated the same as retirement, resulting in pro rata vesting subject to actual performance results. |
2017 Notice of Meeting and Proxy Statement | 53 |
EMPLOYMENT AGREEMENTS – NAMED EXECUTIVE OFFICERS
The following is an overview of the employment agreements the Company has entered into with its NEOs, as in effect on June 30, 2017, along with common definitions and terms applicable to all the employment agreements noted below.
Named Executive Officer
|
Employment Date
| |
Vincent D. Mattera, Jr
|
August 1, 2016
| |
Mary Jane Raymond
|
March 20, 2014
| |
Gary A. Kapusta
|
February 1, 2016
| |
Giovanni Barbarossa
|
October 3, 2012
| |
David G Wagner
|
November 10, 2008
|
54 | 2017 Notice of Meeting and Proxy Statement |
2017 Notice of Meeting and Proxy Statement | 55 |
The following table summarizes the estimated severance payments that Dr. Mattera would have been entitled to receive assuming that a termination of his employment had occurred as of June 30, 2017, under any of the circumstances described below.
Payments
|
Termination For Death
|
Termination
|
Termination Without
|
Termination Without Cause or for
|
||||||||||||
Cash Severance
|
$
|
—
|
|
$
|
—
|
|
$
|
2,899,545
|
|
$
|
3,337,130
|
| ||||
Health Benefits
|
|
—
|
|
|
—
|
|
|
29,101
|
|
|
29,101
|
| ||||
Post-termination Benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40,000
|
| ||||
|
|
|
|
|
|
|
|
|||||||||
$
|
—
|
|
$
|
—
|
|
$
|
2,928,646
|
|
$
|
3,406,231
|
|
56 | 2017 Notice of Meeting and Proxy Statement |
The following tables summarize the estimated severance payments that Ms. Raymond, Mr. Kapusta, Dr. Barbarossa and Mr. Wagner would have been entitled to receive assuming that a termination of their employment occurred as of June 30, 2017 under any of the circumstances described below.
MARY JANE RAYMOND
Payments
|
Termination For Death or Disability
|
Termination
|
Termination (No Change of Control)
|
Termination
|
||||||||||||
Cash Severance
|
$
|
—
|
|
$
|
—
|
|
$
|
90,750
|
|
$
|
496,500
|
| ||||
Health Benefits
|
|
—
|
|
|
—
|
|
|
2,253
|
|
|
13,516
|
| ||||
Post-termination benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000
|
| ||||
|
|
|
|
|
|
|
|
|||||||||
$
|
—
|
|
$
|
—
|
|
$
|
93,003
|
|
$
|
511,016
|
|
GARY A. KAPUSTA
Payments
|
Termination For Death or Disability
|
Termination
|
Termination
|
Termination or for Good Reason
|
||||||||||||
Cash Severance
|
$
|
—
|
|
$
|
—
|
|
$
|
63,958
|
|
$
|
191,875
|
| ||||
Health Benefits
|
|
—
|
|
|
—
|
|
|
3,374
|
|
|
30,362
|
| ||||
Post-termination benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000
|
| ||||
|
|
|
|
|
|
|
|
|||||||||
$
|
—
|
|
$
|
—
|
|
$
|
67,332
|
|
$
|
223,237
|
|
GIOVANNI BARBAROSSA
Payments
|
Termination
|
Termination
|
Termination
|
Termination Without or for Good Reason
|
||||||||||||
Cash Severance
|
$
|
—
|
|
$
|
—
|
|
$
|
127,500
|
|
$
|
681,500
|
| ||||
Health Benefits(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||
Post-termination benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000
|
| ||||
|
|
|
|
|
|
|
|
|||||||||
$
|
—
|
|
$
|
—
|
|
$
|
127,500
|
|
$
|
682,500
|
|
(1) | Dr. Barbarossa did not participate in the Company’s health benefits programs as of June 30, 2017. |
2017 Notice of Meeting and Proxy Statement | 57 |
DAVID G. WAGNER
Payments
|
Termination
|
Termination
|
Termination
|
Termination or for Good Reason
|
||||||||||||
Cash Severance
|
$
|
—
|
|
$
|
—
|
|
$
|
179,733
|
|
$
|
485,840
|
| ||||
Health Benefits
|
|
—
|
|
|
—
|
|
|
4,069
|
|
|
9,155
|
| ||||
Post-termination benefits
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,000
|
| ||||
|
|
|
|
|
|
|
|
|||||||||
$
|
—
|
|
$
|
—
|
|
$
|
183,802
|
|
$
|
495,995
|
|
58 | 2017 Notice of Meeting and Proxy Statement |
NON-BINDING ADVISORY VOTE TO APPROVE THE COMPANY’S 2017 NAMED EXECUTIVE OFFICER COMPENSATION, AS DISCLOSED IN THIS PROXY STATEMENT (PROPOSAL 2)
In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934, as amended, we are asking our shareholders to approve, on a non-binding advisory basis, the compensation of our NEOs for fiscal year 2017, as disclosed in this Proxy Statement. This “Say on Pay” vote is not intended to address any specific item of compensation, but rather the overall compensation paid to our NEOs in fiscal year 2017, as disclosed in this Proxy Statement. At the Company’s 2011 Annual Meeting of Shareholders, shareholders voted to hold an annual advisory vote to approve executive compensation. |
![]() |
As described in the “Compensation Discussion and Analysis” section of this Proxy Statement, we believe that our executive compensation program is designed to support the Company’s long-term success by achieving the following objectives:
• | Tying executive pay to Company and individual performance |
• | Supporting our annual and long-term business strategies |
• | Attracting and retaining talented senior executives |
• | Mitigating risk |
• | Aligning executives’ interests with those of our shareholders |
We urge shareholders to read the Compensation Discussion and Analysis, as well as the Summary Compensation Table, and the related compensation tables and narratives of this Proxy Statement. This information provides detailed information regarding our executive compensation program, policies and processes, as well as the compensation paid to our NEOs. As has been our practice, the Company will continue responding to investor questions during various meetings occurring throughout the year.
The Board requests that shareholders vote to approve the following advisory resolution at the Annual Meeting:
RESOLVED, that the shareholders of II-VI Incorporated (the “Company”) approve, on an advisory basis, the compensation of the Company’s Named Executive Officers as described and disclosed in the Compensation Discussion and Analysis, the compensation tables and any related material contained in the Proxy Statement for the Company’s 2017 Annual Meeting of Shareholders.
Because this vote is advisory, it will not be binding upon the Board or the Compensation Committee. However, the Compensation Committee will take the outcome of the vote into account when considering future executive compensation arrangements.
The Board unanimously recommends a vote FOR the resolution approving, on a non-binding advisory basis, the Company’s 2017 named executive officer compensation as disclosed in this Proxy Statement.
|
2017 Notice of Meeting and Proxy Statement | 59 |
NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF FUTURE NON-BINDING ADVISORY SHAREHOLDER VOTES ON THE COMPANY’S EXECUTIVE COMPENSATION (PROPOSAL 3)
In accordance with the Dodd-Frank Act, we are asking shareholders to vote on whether future advisory votes on our Named Executive Officers’ compensation should occur every year, every two years, or every three years. Shareholders also may, if they wish, abstain from casting a vote on this proposal. The choice that receives the highest number of affirmative votes will be deemed the recommendation of the shareholders if no frequency receives the affirmative vote of a majority of the shares entitled to vote that are cast in person or represented by proxy at the Annual Meeting. We are required to hold a non-binding advisory vote such as is presented in this proposal at least once every six years. We most recently held such a vote at the Annual Meeting of Shareholders in 2011. |
![]() |
After careful consideration, the Board of Directors believes that submitting the non-binding advisory vote on executive compensation on an annual basis is appropriate for the Company and its shareholders at this time. We view the non-binding advisory vote on the compensation of our Named Executive Officers as an additional, but not the only, opportunity for our shareholders to communicate with us regarding their views on our executive compensation programs.
This advisory vote on the frequency of future advisory votes on the Company’s executive compensation is non-binding on the Board of Directors. Notwithstanding the Board’s recommendation and the outcome of the shareholder vote, the Board may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with shareholders and the adoption of material changes to our compensation programs. Shareholders will be able to specify one of four choices for this proposal on the proxy card: one year, two years, three years or abstain. Shareholders are not voting to approve or disapprove the Board’s recommendation.
The Board of Directors of the Company unanimously recommends a vote to conduct future advisory votes on the Company’s executive compensation every ONE YEAR.
|
60 | 2017 Notice of Meeting and Proxy Statement |
2017 Notice of Meeting and Proxy Statement | 61 |
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM (PROPOSAL 4)
Ernst & Young LLP (“EY”) has served as the Company’s independent registered public accountants since fiscal year 2008. For fiscal year 2017, EY rendered professional services in connection with the audit of our financial statements, including review of quarterly reports and other filings with the SEC. EY is knowledgeable about our operations and accounting practices, and well qualified to act as our independent registered public accounting firm for fiscal year 2017, and the Audit Committee has selected it as such. |
![]() |
The Company incurred the following fees and expenses for services performed by its Independent Registered Public Accounting Firm during fiscal years 2017 and 2016:
2017
|
2016
|
|||||||
Audit Fees(1) |
$ | 2,025,000 | $ | 1,794,000 | ||||
Audit-Related Fees |
— | — | ||||||
|
|
|
|
|||||
Tax Fees(2) |
— | 48,000 | ||||||
|
|
|
|
|||||
All Other Fees |
— | — | ||||||
|
|
|
|
|||||
Total Fees |
$ | 2,025,000 | $ | 1,842,000 |
(1) | Includes fees and expenses associated with the annual audit, including the audit of the effectiveness of the Company’s internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, and audit fees for the Company’s statutory audit requirements. |
(2) | Includes fees and expenses associated with income tax compliance of ANADIGIC’s short-period income tax return. |
The Audit Committee pre-approves the retention of the independent registered public accounting firm and the independent registered public accounting firm fees for all audit and non-audit services provided by the independent registered public accounting firm, and determines whether the provision of non-audit services is compatible with maintaining the independence of the independent registered public accounting firm.
A representative of EY is expected to be present at the Annual Meeting to respond to appropriate questions and will have the opportunity to make a statement.
The Board unanimously recommends a vote FOR the ratification of the Audit Committee’s selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2018.
|
62 | 2017 Notice of Meeting and Proxy Statement |
2017 Notice of Meeting and Proxy Statement | 63 |
64 | 2017 Notice of Meeting and Proxy Statement |
II-VI INCORPORATED 375 SAXONBURG BOULEVARD SAXONBURG, PA 16056-9499 |
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/IIVI2017
You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E32446-P96969 | KEEP THIS PORTION FOR YOUR RECORDS | |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | DETACH AND RETURN THIS PORTION ONLY |
II-VI INCORPORATED |
||||||||||||||||||||||||||
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS NUMBERED 1, 2 AND 4 AND “1 YEAR” ON PROPOSAL NUMBER 3. | ||||||||||||||||||||||||||
Vote on Directors
|
||||||||||||||||||||||||||
1. |
Election of two Class Three Directors nominated by the Board of Directors for a three-year term to expire at the annual meeting of shareholders in 2020. | |||||||||||||||||||||||||
Nominees:
|
For
|
Against
|
Abstain
|
|||||||||||||||||||||||
1a. Joseph J. Corasanti |
☐ | ☐ | ☐ | |||||||||||||||||||||||
1b. William A. Schromm |
☐ |
☐ |
☐ |
|||||||||||||||||||||||
Vote on Other Proposals |
For | Against | Abstain | |||||||||||||||||||||||
2. |
Non-binding advisory vote to approve the compensation of the Company’s named executive officers for fiscal year 2017; |
☐ |
☐ |
☐ |
||||||||||||||||||||||
1 Year |
2 Years |
3 Years |
Abstain |
|||||||||||||||||||||||
3. |
Non-binding advisory vote on the frequency of future shareholder non-binding advisory votes on the Company’s executive compensation; and |
☐ |
☐ |
☐ |
☐ |
|||||||||||||||||||||
For |
Aganist |
Abstain |
||||||||||||||||||||||||
4. |
Ratification of the Audit Committee’s selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2018. |
☐ |
☐ |
☐ |
||||||||||||||||||||||
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. |
Mark the box to the right if you plan to attend the Annual Meeting. |
☐ |
☐ |
|||||||||||||||||||||||
PLEASE MARK, SIGN, DATE AND RETURN IMMEDIATELY. |
Yes | No | ||||||||||||||||||||||||
Important: Shareholders sign here exactly as name appears hereon.
|
||||||||||||||||||||||||||
|
||||||||||||||||||||||||||
Signature [PLEASE SIGN WITHIN BOX] |
Date |
Signature (Joint Owners) |
Date |
Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting to be held on November 3, 2017: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com.
Please date, sign and mail your Proxy card back as soon as possible!
|
E32447-P96969
P | ||||
R | ||||
O | ||||
X | ||||
Y | ||||
II-VI INCORPORATED Annual Meeting of Shareholders |
||||
November 3, 2017 |
||||
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY |
||||
The undersigned hereby appoints Vincent D. Mattera, Jr. and Marc Y. E. Pelaez or either of them, with power of substitution to each, as proxies to represent and to vote as designated on the reverse all of the shares of Common Stock held of record at the close of business on September 1, 2017 by the undersigned at the annual meeting of shareholders of II-VI Incorporated to be held online at www.virtualshareholdermeeting.com/IIVI2017, and at Marriott Pittsburgh North, 100 Cranberry Woods Drive, Cranberry Township, Pennsylvania 16066, on November 3, 2017 at 3:00 p.m. local time, and at any adjournment thereof. |
||||
This proxy will be voted by the proxies as directed, or if no direction is indicated herein, the proxies shall vote in the election of the two Class Three Directors (Proposal Number 1) FOR ALL the nominees listed, FOR Proposal Number 2, 1 YEAR on Proposal Number 3 and FOR Proposal Number 4. |
||||
(PLEASE SIGN ON REVERSE SIDE AND RETURN PROMPTLY)
|