def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Oclaro, Inc.
(Name of Registrant as Specified In Its Charter)
n/a
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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(4) Date Filed:
OCLARO,
INC.
2584 Junction Avenue
San Jose, California 95134
Notice of Annual Meeting of
Stockholders
To Be Held on October 21,
2009
To the Stockholders of Oclaro, Inc.:
The annual meeting of stockholders of Oclaro, Inc., a Delaware
corporation (Oclaro, we, us
or our), will be held on Wednesday, October 21,
2009, at 2 p.m., local time, at our corporate headquarters,
2584 Junction Avenue, San Jose, California, for the purpose
of considering and voting upon the following matters:
1. To elect two Class II directors for the ensuing
three years.
2. To approve a one-time stock option exchange program for
employees (excluding directors, named executive officers and
certain other designated employees).
3. Provided that Oclaro has not effected a reverse stock
split before October 21, 2009, to extend the authorization
of our board of directors to effect a reverse stock split from
April 27, 2010 to December 31, 2010.
4. To ratify the selection of Grant Thornton LLP as our
independent registered public accounting firm for the current
fiscal year.
The stockholders will also act on such other business as may
properly come before the annual meeting, including any
postponements or adjournments thereof. Our board of directors
has no knowledge of any other business to be transacted at the
annual meeting.
We are enclosing a copy of our Annual Report to Stockholders on
Form 10-K
for the fiscal year ended June 27, 2009 with the proxy
statement that accompanies this notice of meeting. The Annual
Report contains consolidated financial statements and other
information of interest to you. Holders of record of our common
stock at the close of business on September 1, 2009 are
entitled to receive this notice and to vote at the annual
meeting or any adjournment thereof.
We encourage you to attend the annual meeting in person.
However, in order to make sure that you are represented at the
annual meeting, we urge you to vote your shares over the
Internet or by telephone as provided in the instructions set
forth on the proxy card, or complete, sign and return the
enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope.
By order of the Board of Directors,
Alain Couder
President, Chief Executive Officer and Director
September 4, 2009
YOUR VOTE IS IMPORTANT
WHETHER OR NOT YOU ARE ABLE TO ATTEND THE ANNUAL MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD
AND RETURN IT IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE. NO
POSTAGE NEED BE AFFIXED IF THE PROXY CARD IS MAILED IN THE
UNITED STATES. YOU MAY ALSO SUBMIT A PROXY BY CALLING THE
TOLL-FREE NUMBER LISTED ON THE PROXY CARD OR ACCESSING THE
INTERNET AS INSTRUCTED ON THE PROXY CARD. SUCH ACTION WILL NOT
LIMIT YOUR RIGHT TO VOTE IN PERSON AT THE ANNUAL MEETING.
TABLE OF CONTENTS
OCLARO,
INC.
2584 Junction Avenue
San Jose, California 95134
Proxy Statement
For the Annual Meeting of Stockholders
To Be Held on October 21, 2009
This proxy statement is furnished to you in connection with the
solicitation of proxies by our board of directors for the 2009
annual meeting of stockholders to be held on Wednesday,
October 21, 2009 at 1 p.m., local time, at our
corporate headquarters, 2584 Junction Avenue, San Jose,
California, including any postponements or adjournments thereof.
The notice of the annual meeting, this proxy statement, our
Annual Report to Stockholders on
Form 10-K
for the fiscal year ended June 27, 2009 (which we sometimes
refer to as fiscal 2009), which includes our audited financial
statements for fiscal 2009, and the enclosed proxy card are
first being mailed to stockholders on or about September 4,
2009.
Important
Notice Regarding the Availability of Proxy Materials for the
2009 Annual
Meeting of Stockholders to be Held on October 21,
2009:
This proxy statement and the 2009 Annual Report to
Stockholders on
Form 10-K
are available for viewing, printing and downloading at
http://www.oclaro.com.
You can find our Annual Report to Stockholders on
Form 10-K
for the year ended June 27, 2009, on the Internet at our
website at www.oclaro.com or through the Securities and
Exchange Commissions electronic data system, called EDGAR,
at www.sec.gov. You may also obtain a copy of our Annual
Report to Stockholders on
Form 10-K
for the fiscal year ended June 27, 2009, as filed with the
Securities and Exchange Commission, which we sometimes refer to
herein as the Commission, without charge upon written request to
Oclaro, Inc., 2584 Junction Avenue, San Jose, California,
95134, Attn: Stock Administrator. We will provide the annual
report without exhibits unless you specify in writing that you
require copies of the exhibits.
Certain documents referenced in this proxy statement are
available on our website at www.oclaro.com. We are not
including the information contained on our website, or any
information that may be accessed by links on our website, as
part of, or incorporating it by reference into, this proxy
statement.
Voting of
Proxies
All shares held by stockholders who are entitled to vote and who
are represented at the annual meeting by properly submitted
proxies received prior to or at the annual meeting will be voted
in accordance with the instructions indicated on the proxy card,
unless such proxy is properly revoked prior to the vote being
taken on the matter submitted to the stockholders at the annual
meeting.
You may deliver your proxy to vote your shares in one of the
following ways or you may vote in person at the annual meeting.
You may submit your proxy to vote by mail. You
may vote by completing and signing the proxy card that
accompanies this proxy statement and promptly mailing it in the
enclosed postage-prepaid envelope. You do not need to put a
stamp on the enclosed envelope if you mail it in the United
States. The shares you own will be voted according to the
instructions on the proxy card you submit.
You may submit your proxy to vote over the
Internet. If you have Internet access, you may
submit your proxy to vote your shares from any location in the
world by following the Vote By Internet instructions
set forth on the enclosed proxy card.
1
You may submit your proxy to vote by
telephone. You may submit your proxy to vote your
shares by telephone by following the Vote By Phone
instructions set forth on the enclosed proxy card.
You may vote in person. If you attend the
annual meeting of stockholders, you may vote by delivering your
completed proxy card in person or you may vote by completing a
ballot. Ballots will be available at the annual meeting.
A proxy may be revoked and your vote changed before it is
used to cast a vote. You can change your vote and
revoke your proxy at anytime before the vote is taken at the
annual meeting of stockholders by doing any one of the following:
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filing with our corporate secretary, at or before the taking of
the vote, a written notice of revocation bearing a later date
than the proxy;
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duly executing a later dated proxy relating to the same shares
and delivering it to our corporate secretary before the taking
of the vote;
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accessing the Internet and following the instructions for voting
by Internet that appear on the enclosed proxy card;
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following the instructions that appear on the enclosed proxy
card for voting by telephone; or
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attending the annual meeting of stockholders and voting in
person. Attendance at the annual meeting, if a stockholder does
not vote, will not be sufficient to revoke a proxy.
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Any written notice of revocation or subsequent proxy should be
sent to us at the following address: Oclaro, Inc., 2584 Junction
Avenue, San Jose, California 95134, Attention: Corporate
Secretary.
If a proxy card does not specify how the proxy is to be voted
with respect to (i) the election of two Class II
directors for a three year term, the shares will be voted
FOR the election of the two nominated Class II
directors; (ii) the approval of a one-time stock option
exchange program for certain of our employees, the shares will
be voted FOR the approval of such program;
(iii) the extension of authorization of our board of
directors to effect a reverse stock split from April 27,
2010 to December 31, 2010, the shares will be voted
FOR such extension of authorization; and
(iv) the ratification of the selection of Grant Thornton
LLP as our independent registered public accounting firm for the
current fiscal year, the shares will be voted FOR
the ratification of the selection of Grant Thornton LLP as our
independent registered public accounting firm for the current
fiscal year;
Our board of directors does not know of any other matters that
may come before the annual meeting of stockholders. If any other
matter properly comes before the annual meeting, the persons
named in the proxy card that accompanies this proxy statement
will exercise their judgment in deciding how to vote, or
otherwise act, at the annual meeting with respect to that matter
or proposal.
Stockholders
Entitled to Vote
Our board of directors has fixed September 1, 2009 as the
record date for the determination of stockholders entitled to
vote at the annual meeting. Only holders of record of our common
stock at the close of business on the record date are entitled
to notice of and to vote at the annual meeting. On
September 1, 2009, there were 186,839,439 shares of our
common stock outstanding and entitled to vote. Each share of
common stock will have one vote for each matter to be voted upon
at the annual meeting.
Votes
Required
The holders of at least a majority in voting power of the shares
of our common stock issued and outstanding and entitled to vote
at the annual meeting will constitute a quorum for the
transaction of business at the annual meeting. Shares of common
stock present in person or represented by proxy, including
shares which abstain or do not vote with respect to one or more
of the matters presented for stockholder approval, will be
counted for purposes of determining whether a quorum is present
at the annual meeting.
2
If a broker indicates on its proxy that it does not have
discretionary voting authority to vote shares for which it is
the holder of record at the annual meeting, the shares cannot be
voted by the broker, although they will be counted in
determining whether a quorum is present. Accordingly, these
broker non-votes and abstentions would have no
effect on the voting on a matter that requires the affirmative
vote of a certain percentage of votes cast or shares voting on
that matter.
If the shares you own are held in street name, the
bank, brokerage firm or nominee, as the record holder of your
shares, is required to vote your shares in accordance with your
instructions. In order to vote your shares held in street
name, you will need to follow the directions that your
bank, brokerage firm or nominee provides you. If you desire to
vote your shares held in street name at the annual
meeting by proxy, you will need to obtain a proxy card from the
holder of record.
The affirmative vote of the holders of shares representing at
least a plurality of the votes cast by the holders of our common
stock entitled to vote at the annual meeting is required for the
election of the Class I directors. The affirmative vote of
the holders of a majority of the shares present or represented
and voting on the matter at the annual meeting is required to
ratify the option exchange program and the selection of Grant
Thornton LLP as our independent registered public accounting
firm. The affirmative vote of the holders of shares representing
at least a majority of the voting power of our outstanding
shares on the record date for the annual meeting is required to
approve the extension of authorization of the reverse stock
split.
Security
Ownership of Certain Beneficial Owners and Management
The following table shows the number of shares of our common
stock beneficially owned as of July 31, 2009 by each entity
or person who is known to us to own 5% or more of our common
stock, each director, each executive officer listed in the
Fiscal 2009 Summary Compensation Table below, and all directors
and executive officers as a group.
Beneficial ownership is determined in accordance with the rules
of the Commission. Except as indicated by footnote, to our
knowledge, the persons named in the table have sole voting and
investment power with respect to all shares of common stock
shown as beneficially owned by them. Shares of our common stock
issuable pursuant to options to purchase or rights otherwise to
acquire shares of common stock that are exercisable within
60 days of July 31, 2009 are deemed to be beneficially
owned by the person holding such options for the purpose of
computing ownership of such person, but are not treated as
outstanding for the purpose of computing the ownership of any
other person. Applicable percentage of beneficial ownership is
based on 186,164,311 shares of our common stock outstanding
as of July 31, 2009. The information contained in the
following table is not necessarily indicative of beneficial
ownership for any other purpose and the inclusion of any shares
in the table does not constitute an admission of beneficial
ownership of those shares.
3
The address of each of our executive officers and directors is
c/o Oclaro,
Inc., 2584 Junction Avenue, San Jose, California 95134.
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Number
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Percentage
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Beneficial Owner
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of Shares
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of Total
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5% Stockholders
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Pirelli & C. SpA(1)
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10,235,557
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5.50
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%
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Via Gaetano Negri, 10
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Milan, Italy
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Kopp Investment Advisors, LLC(2)
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11,203,814
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6.02
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%
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7701 France Avenue South, Suite 500
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Edina, Minnesota 55435
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Executive Officers and Directors
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Alain Couder(3)
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649,150
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*
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Jerry Turin(4)
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182,866
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*
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Jim Haynes(5)
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350,891
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*
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Kate Rundle(6)
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79,450
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*
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Yves LeMaitre(7)
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97,896
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*
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Lori Holland(8)
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75,420
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*
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Edward Collins(9)
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10,000
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*
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Bernard Couillaud(10)
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10,000
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*
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Giovanni Barbarossa(11)
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821,705
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*
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Greg Dougherty(12)
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45,522
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*
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Joel A. Smith, III(13)
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94,241
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*
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All executive officers and directors as a group (11 persons)
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2,417,141
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1.30
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%
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less than 1% |
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(1) |
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This information is indicated in the Schedule 13G jointly
filed by Pirelli & C. SpA (Pirelli) and by
Pirelli Finance (Luxembourg) SA (Pirelli Finance)
pursuant to the Securities Exchange Act of 1934 (the
Exchange Act) on November 8, 2007, which may
not be current as of July 31, 2009. Each of Pirelli and
Pirelli Finance may be deemed to beneficially own an aggregate
of 10,235,557 shares. Pirelli Finance is a
wholly-owned subsidiary of Pirelli with principal business
offices at 35 boulevard du Prince, L-1724 Luxembourg,
Luxembourg. |
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This information is indicated in Amendment No. 1 to
Schedule 13D jointly filed by Kopp Investment Advisors,
LLC; Kopp Holding Company, LLC (Kopp Holding),
solely as the parent entity of Kopp Investment Advisors, LLC;
and Leroy C. Kopp, as the control person of Kopp Holding,
pursuant to the Exchange Act on June 22, 2009, which may
not be current as of July 31, 2009. Kopp Investment
Advisors, LLC has voting and dispositive power over
11,203,814 shares. |
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Represents 274,463 shares beneficially owned by
Mr. Couder and 374,687 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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Represents 12,761 shares beneficially owned by
Mr. Turin and 170,105 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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Represents 97,408 shares beneficially owned by
Mr. Haynes and 253,483 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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Represents 28,617 shares beneficially owned by
Ms. Rundle and 50,833 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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Represents 42,479 shares beneficially owned by
Mr. LeMaitre and 55,417 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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(8) |
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Represents 30,000 shares beneficially owned by
Ms. Holland and 45,420 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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(9) |
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Represents 5,000 shares beneficially owned by
Mr. Collins and 5,000 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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Represents 5,000 shares beneficially owned by
Mr. Couillaud and 5,000 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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Represents 253,546 shares beneficially owned by
Mr. Barbarossa and 568,159 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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(12) |
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Represents 9,361 shares beneficially owned by
Mr. Dougherty and 36,161 shares issuable pursuant to
options exercisable within 60 days of July 31, 2009. |
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(13) |
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Represents 45,908 shares beneficially owned by
Mr. Smith individually, 434 shares held by his spouse
and 47,899 shares issuable pursuant to options exercisable
within 60 days of July 31, 2009. |
PROPOSAL 1 ELECTION
OF CLASS II DIRECTORS
We have three classes of directors, currently consisting of
three Class I directors, two Class II directors and
two Class III directors. The Class I, Class II
and Class III directors serve until the annual meeting of
stockholders to be held in 2009, 2010, and 2011 respectively, or
until their respective successors are elected and qualified. At
each annual meeting, directors are elected for a full term of
three years to succeed those whose terms are expiring. The terms
of the three classes are staggered in a manner so that only one
class is elected by stockholders annually. Bernard Couillaud and
Greg Dougherty are currently serving as Class II directors.
If Messrs. Couillaud and Dougherty are elected this year,
they will be elected to serve as members of our board of
directors until the 2012 annual meeting of stockholders, or
until their successors are elected and qualified.
The persons named in the enclosed proxy will vote to re-elect
Messrs. Couillaud and Dougherty as Class II directors
unless the proxy is marked otherwise. Based on the
recommendation of the Nominating and Corporate Governance
Committee, our board of directors has nominated
Messrs. Couillaud and Dougherty to serve as Class II
directors. Each of Messrs. Couillaud and Dougherty have
indicated their willingness to serve on our board of directors,
if elected; however, if either of them should be unable to
serve, the person acting under the proxy may vote the proxy for
a substitute nominee designated by our board of directors. Our
board of directors has no reason to believe that
Messrs. Couillaud and Dougherty would be unable to serve if
elected.
For each member of our board of directors there follows
information given by each concerning his or her principal
occupation and business experience for at least the past five
years, the names of other public reporting companies of which he
or she serves as a director and his or her age and length of
service as one of our directors. There are no family
relationships among any of our directors and executive officers.
No director or executive officer is related by blood, marriage
or adoption to any other director or executive officer. Other
than as described in the following sentence, no arrangements or
understandings exist between any director or person nominated
for election as a director and any other person pursuant to
which such person is to be selected as a director or nominee for
election as a director.
Board
Recommendation
Our board
of directors believes that the election of Bernard Couillaud and
Greg Dougherty to serve
as Class II directors is in the best interests of Oclaro
and our stockholders and, therefore, our
board of directors unanimously recommends that the stockholders
vote FOR the nominees.
Class I
Directors Terms Expiring 2011
Edward Collins, 66, has served as a director since May
2008. From 1995 to present, Mr. Collins has served as the
Managing Director and a Partner at ChinaVest Group, a private
equity group investing in China. In addition, from 2007 to
present, Mr. Collins has served as chairman of California
Bank of Commerce and a member of the compensation committee, and
from 1999 to present, he has served as chairman of the audit
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committee of TFC the Taiwan Greater China Fund,
listed on the NYSE. From 1988 to 1994, Mr. Collins was a
partner at the law firm of McCutchen, Doyle, Brown, &
Enersen where he was responsible for the Greater China practice.
He has served as counsel to various investment groups, banks,
and manufacturing companies in Hong Kong and Taiwan, and has
been a member of the State Bars of California and Texas.
Mr. Collins also serves as non-executive Chairman of
Branded Spirits, Ltd., a privately held company that sells wine
and branded spirits in PRC, Hong Kong and Macau.
Lori Holland, 51, has served as a director since
September 2004. Ms. Holland served as a director of Bookham
Technology plc from April 1999 until September 2004. After
serving for over 20 years as CFO for several technology
companies, she retired in 2000 and has since served as a
consultant to various technology firms, including startups. From
November 1999 until December 2000, Ms. Holland was the
Chief Financial Officer of Zaffire, Inc., a telecommunication
company in California. She also served as the CFO of Read-Rite
and NeoMagic. Ms. Holland served as a director and audit
committee member of Credence Systems Corporation, a test
equipment supplier to the semiconductor industry based in
Silicon Valley, from September 2004 until August 2008 when
Credence merged with LTX Corporation. Ms. Holland currently
serves as a director and audit committee and nominating and
corporate governance committee member of LTX-Credence
Corporation. Ms. Holland received a BS in Economics from
California Polytechnic University.
Giovanni Barbarossa, 48, Dr. Barbarossa joined
Avanex Corporation (Avanex) in February 2000 and was
most recently Avanexs President and Chief Executive
Officer and a director of the board of directors of Avanex from
July 2008 to April 2009. During his career at Avanex,
Dr. Barbarossa held many executive-level positions,
including Chief Technology Officer and Sr. Vice President of
Product Development from June 2002 to June 2008, Vice President
of Product Development from August 2001 to May 2001, and Senior
Director of R&D from February 2000 to July 2001. In
addition, he was responsible for Avanexs Active Component
Business Unit. Dr. Barbarossa has an impressive record of
accomplishment in management roles working in some of the
foremost companies in the optical communications industry,
including Agilent Technologies, Lucent Technologies, AT&T,
and British Telecom. Before joining Avanex, Dr. Barbarossa
had management responsibilities for the development of advanced
optical switching platforms in the Optical Networking Division
of Agilent Technologies. In addition, he led the design team of
the Optical Application Specific Integrated Circuits department
at Lucent Technologies. Earlier, he was a Member of the
Technical Staff at AT&T Bell Labs and a research associate
in the Oxide Glasses for Future Networks Group at British
Telecom Labs. Dr. Barbarossa earned his Ph.D. in electrical
engineering from the University of Glasgow, Scotland, and a
bachelors degree in electrical engineering, cum laude,
from the University of Bari, Italy.
Class II
Directors Term Expiring 2009
Bernard Couillaud, 65, currently serves as our Chairman
of our board of directors. He previously served as a director
from May 2008 to April 2009. The majority of
Dr. Couillauds career was spent with the
Santa Clara, California-based laser manufacturer, Coherent,
Inc., where he served as President and Chief Executive Officer
from July 1996 until October 2002. Dr. Couillaud was the
Chairman of Coherents Board of Directors from October 2002
until his retirement in June 2007. From 2000 to 2005,
Dr. Couillaud was the Chairman of the Supervisory Board of
Lambda Physik AG, a German public company. Dr. Couillaud
holds a PhD in Physics and was a full Professor at the
University of Bordeaux and a CNRS Fellow and he is also a member
of the French National Academy of Technology.
Greg Dougherty, 49, has served as a director of Avanex
from April 2005 to April 2009. Mr. Dougherty has served as
director of Picarro, Inc., a company focused on making ultra
sensitive spectroscopy equipment using laser based technology
since October, 2002. He served as Avanexs Interim Chief
Executive Officer from October 2002 to June 2006.
Mr. Dougherty has served on the board of directors of the
Ronald McDonald House at Stanford since January of 2004. He
served as its Vice President from January 2007 through December
2008. From February 2001 to September 2002, Mr. Dougherty
held a number of positions at JDS Uniphase, an optical
technology company, including Chief Operating Officer, Executive
Vice President and Chief Operating Officer of the Amplification
and Transmission Business Group. Mr. Dougherty held a
number of positions at SDL, Inc., an optical technology company,
from March 1997 to February 2001, including Chief
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Operating Officer, Vice President of the Communications Business
Unit and Corporate Marketing and Sales, Vice President of
Communications and Information Products, Vice President of the
Components Group and President of SDL Optics. Prior to joining
SDL, from 1989 to 1997, Mr. Dougherty was the Director of
Product Management and Marketing at Lucent Technologies
Microelectronics in the Optoelectronics Strategic Business Unit.
Mr. Dougherty received a B.Sc. degree in optics from
Rochester University.
Class III
Directors Terms Expiring 2010
Alain Couder, 63, has served as a director and our
President and Chief Executive Officer since August 2007. Prior
to joining Oclaro, Mr. Couder was the President and CEO of
Solid Information Technology Inc., a supplier of database
solutions, from March 2005 to August 2007. From May 2004 to
February 2005, Mr. Couder was a Venture Advisor to
Sofinnova Ventures, Inc., a venture capital company. From April
2003 to March 2004, Mr. Couder was the President and CEO of
Confluent Software, Inc., a software company. From August 2002
to March 2003, Mr. Couder was President and CEO of IP
Dynamics, Inc., a software company. Mr. Couder served as
Chief Operating Officer of Agilent Technologies, Inc., a
measurement and analysis company, from February 2000 to May
2002. Earlier in his career, Mr. Couder worked for
Packard-Bell NEC, Groupe Bull, Hewlett Packard and IBM, each a
computer hardware company. Mr. Couder is a director at
Sanmina-SCI, an electronic manufacturing services firm since
February 2007. Mr. Couder holds a Masters degree in
electrical engineering from the Ecole Superieure
dElectricite in Paris.
Joel A. Smith III, 64, has served as a director of Avanex
from December 1999 to April 2009. Mr. Smith was the Dean of
the Darla Moore School of Business of the University of South
Carolina from October 2000 to December 2007. Previously,
Mr. Smith served as the President of Bank of America East,
a financial institution, from October 1998 to September 2000.
From July 1991 to October 1998, Mr. Smith served as
President of Nations Bank Carolinas, a financial institution.
Mr. Smith serves on the board of directors of First
National Bank of the South. Mr. Smith received a B.A. from
the University of the South in Sewanee, Tennessee.
Non-Director
Executive Officers
Jerry Turin, 47, has served as our Chief Financial
Officer since August 2008. From July 2005 to July 2008,
Mr. Turin served as our Corporate Controller. From April
2008 to July 2008, Mr. Turin served as our Vice President
of Finance. From 1999 to 2002, Mr. Turin served as
Controller of Silicon Spice Inc. (which was acquired by Broadcom
Corporation in October 2000), a developer of gateway and carrier
access chipsets, software and development tools. In addition,
Mr. Turin was the Corporate Controller at Cirrus Logic, a
publicly traded semiconductor company. Prior to his corporate
finance experience, Mr. Turin spent 12 years with
Deloitte & Touche, rising to the position of Senior
Manager of Audit Services. A substantial portion of his time
with Deloitte & Touche was in the firms Silicon
Valley practice. Mr. Turin received his bachelors
degree in Business Administration and Commerce from the
University of Alberta in Alberta, Canada and is a member of the
Canadian Institute of Chartered Accountants and the Institute of
Chartered Accountants of Alberta.
James Haynes, 47, has served as Chief Operating Officer
since March 2005 and as acting Chief Technology Officer since
June 2005. From August 2004 to March 2005, Mr. Haynes was
the Officer VP, U.K. Operations, of Bookham Technology plc.
From June 2003 to August 2004, Mr. Haynes served as
VP Operations and Site Leader, Caswell for Bookham, Inc.
From December 2000 to June 2003, Mr. Haynes served as Chief
Operating Officer of Agility Communications, Inc., a tunable
laser company. From 1998 to December 2000, Mr. Haynes
served as Director of Technology of Nortel Networks Corporation.
Mr. Haynes received his BSc (Hons) in Materials Science and
Technology from Swansea University, England.
Kate Rundle, 52, has served as our Executive Vice
President, General Counsel and Corporate Secretary since
November 2007. Prior to joining Oclaro, from February 2006 to
May 2007, Ms. Rundle was Vice President, General Counsel
and Corporate Secretary of MIPS, Inc., a publicly-traded
semiconductor technology licensing company. Ms. Rundle also
worked at Sun Microsystems from 1997 to 2006, holding a number
of positions including Senior Director responsible for the world
wide legal support of the companys marketing
7
organization. Earlier in her career Ms. Rundle was IP
Counsel for The 3DO Company and worked at the law firm of
Wilson, Sonsini, Goodrich & Rosati. Ms. Rundle
earned her BA, magna cum laude, in political science and
sociology from the University of California, Berkeley and her
J.D. from the University of California, Hastings College of the
Law.
Yves LeMaitre, 45, has served as our Vice President of
Telecommunication Sales and Vice President of Corporate
Marketing. Prior to joining Oclaro, Mr. LeMaitre was with
Avanex, most recently serving as Chief Marketing Officer in
charge of worldwide sales and marketing. Previously,
Mr. LeMaitre was President and Chief Executive Officer of
Lightconnect, a leading supplier of optical MEMS components and
modules. In addition, he worked for Alcatel and its joint
venture with Sprint International in a variety of general
management, senior marketing and engineering positions in the
United States, France, the Netherlands and Italy.
Mr. LeMaitre earned a masters degree in mathematics
and computer science from Nantes University in France. He also
holds an engineering degree from Ecole Nationale Superieure des
Telecommunications (ENST) in Paris.
Scott Parker, 53, was previously with Avanex from
November 2007 to April 2009, most recently serving as
Avanexs Senior Vice President of Sales. Prior to joining
Avanex, Mr. Parker held senior management positions at two
start-up
companies funded by Sequoia Capital. Previously, Mr. Parker
served as Senior Vice President of Sales and Marketing for JDS
Uniphase where he integrated the sales and customer service
teams from numerous acquisitions. He also held sales and general
manager positions at VLSI, National Semiconductor and Intel.
Mr. Parker earned an M.B.A. and bachelors degree in
marketing from the University of Utah.
Richard Smart, 43, was previously with Avanex, most
recently serving as Vice President of Product Management. Before
being appointed to this position, he was the General Manager of
the Advanced Modules & Subsystems Business Unit where
he was responsible for the product development and P&L of
the optical amplifier, tunable dispersion compensator, and
subsystem product lines. Mr. Smart has nearly twenty years
experience in the field of fiber optics having held multiple
marketing and product development roles at Corning Incorporated,
Amoco Corporation and AT&T Bell Laboratories. He earned a
Ph.D. in physics from the University of Southampton, England and
a bachelors degree with first class honors in physics from
the University of Birmingham, England.
Adam Price, 35, has served as our Executive Vice
President and General Manager of Transmission Division since
August 2009. From October 2007 to August 2009, Mr. Price
served as our Director of Product Line Management.
Mr. Prices role grew to take on responsibility for
High End Optics, which included the successful
launch of the tunable product portfolio, working across the
organization to develop the InP Tunable Laser and Modulator
strategies and product definition. This expanded Bookhams
position into the Regional and Long Haul markets versus
traditional competitive technologies. In 2007, Mr. Price
became the Director of Product Line Management for the Terminal
solutions portfolio. This included responsibility for 40Gb/s
product definition and strategy. Prior to joining Bookham, in
1996, Mr. Price joined Wavetek Wandel Golterman Test and
Measurement (now JDSU) undertaking real time embedded DSP
algorithm design for high speed RF applications. In 2000,
Mr. Price joined Nortel Optical Components as Product Line
Manager responsible for the high-speed modulator product line.
In 1996, Mr. Price became a 1st Class honors degree
graduate in Electronics and Communication Engineering with
research study in real-time digital signal processing algorithm
design for acoustic applications. In 1998, Mr. Price earned
his diploma in Marketing for the telecommunications industry
from the Chartered Institute of Marketing.
Director
Compensation
Each of our non-employee directors receives an annual retainer
of $20,000, an additional $3,000 for each in-person meeting of
our board of directors that the director attends and $500 for
each teleconference of our board of directors or committee of
the board that the director attends. The chairman of our board
of directors receives an annual retainer of $80,000. In
addition, the chairman of the audit committee receives an annual
fee of $36,000, the chairman of the compensation committee
receives an annual fee of $16,000 and the chairman of the
nominating and corporate governance committee receives an annual
fee of $16,000. Each member of the compensation committee and
each member of the nominating and corporate governance committee
8
receives an annual fee of $4,000 for serving on such committee
and each member of the audit committee receives an annual fee of
$8,000 for serving on such committee. We currently reimburse
directors for reasonable
out-of-pocket
expenses incurred in attending meetings of our board of
directors and any meetings of its committees.
Pursuant to a resolution adopted by our board of directors, at
our annual meeting of stockholders, each non-employee director
is granted a nonstatutory stock option to acquire
40,000 shares of our common stock under either our Amended
and Restated 2004 Stock Incentive Plan or our 1999 Avanex
Director Option Plan, provided that the director is serving as a
director both immediately before and immediately after the
annual meeting. Options granted to non-employee directors
provide that the shares subject to such option vest on the first
anniversary of the date of grant. These options will vest in
full upon a consummation of a change in control of Oclaro,
provided that the director serves as a director until such date.
In our discretion, we may grant additional equity awards to our
non-employee directors under either our Amended and Restated
2004 Stock Incentive Plan or our 1999 Avanex Director Option
Plan.
On January 27, 2009, Bookham, Inc. (Bookham),
Avanex and Giovanni Barbarossa, then President, Chief Executive
Officer and Director of Avanex, entered into a consulting
agreement. Under the consulting agreement, Mr. Barbarossa
agreed to resign from Avanex upon the closing of the merger
between Bookham and Avanex. Upon Mr. Barbarossas
resignation, all of his outstanding equity awards from Avanex
were accelerated and fully vested, and he received any accrued
base salary and vacation from Avanex. In addition, Bookham
agreed to retain Mr. Barbarossa as a consultant for twelve
months after the closing of the merger on April 27, 2009.
Bookham agreed to pay Mr. Barbarossa $30,000 a month for
such consulting services, which include advice and assistance
regarding integration, strategic and technology related matters,
customer visits and customer relations and other similar
services. Under the consulting agreement, Bookham agreed to pay
Mr. Barbarossa the consulting fees for any remainder of the
twelve-month term in the event that Bookham terminates
Mr. Barbarossa as a consultant for any other reason than
for cause. As the surviving entity of the Bookham-Avanex merger,
Oclaro has succeeded as party to the consulting agreement.
Mr. Barbarossa is currently a director of, and consultant
to, Oclaro.
In connection with his resignation from Avanex, and in
accordance with the terms of his consulting agreement,
Mr. Barbarossa also entered into a separation and release
agreement with Bookham and Avanex on April 28, 2009.
Pursuant to such agreement, Mr. Barbarossa received one
year of his annual base salary with Avanex, which was $360,000,
and a pro-rated portion of his target annual bonus (such target
equal to 60% of his base salary) for the part of Avanexs
fiscal year elapsed at the time of the merger, which was
ultimately $0. Mr. Barbarossa also received certain health
coverage and benefits. Such payments and benefits were in
settlement of a change in control agreement entered into between
Mr. Barbarossa and Avanex on November 28, 2008. In
consideration, Mr. Barbarossa executed a release of all
claims, known and unknown, against Avanex.
The following table sets forth information concerning the
compensation of our directors for fiscal year 2009.
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Fees Earned or
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Stock Awards
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Option Awards
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All Other
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Name(1)
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Paid in Cash ($)
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($)(2)
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($)(2)
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Compensation ($)
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Total ($)
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Peter Bordui
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$
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122,000
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$
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18,472
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(3)
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$
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27,040
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(5)
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$
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$
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167,512
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Joe Cook
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$
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65,000
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$
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18,472
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(3)
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$
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27,040
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(5)
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$
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$
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110,512
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Lori Holland
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$
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86,170
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$
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18,472
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(3)
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$
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21,828
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(6)
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$
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$
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126,470
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W. Arthur Porter
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$
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57,000
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$
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18,472
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(3)
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$
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27,040
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(5)
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$
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$
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102,512
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David Simpson
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$
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41,500
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$
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18,472
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(3)
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$
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27,040
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(5)
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$
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$
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87,012
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Edward B. Collins
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$
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50,670
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$
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18,472
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(3)
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$
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3,100
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(7)
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$
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$
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72,242
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Bernard J. Couillaud
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$
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58,418
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$
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18,472
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(3)
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$
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3,100
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(7)
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$
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$
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79,990
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Giovanni Barbarossa
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$
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6,907
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$
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7,467
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(4)
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$
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$
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420,000
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(8)
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$
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434,374
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Greg Dougherty
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$
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11,599
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$
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7,467
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(4)
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$
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$
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$
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19,066
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Joel A. Smith III
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$
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10,258
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$
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7,467
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(4)
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$
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$
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$
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17,725
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9
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(1) |
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Compensation information for Mr. Couder is set forth below
under Compensation Discussion and Analysis. |
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(2) |
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The amounts in these columns reflect the dollar amount computed
for financial statement reporting purposes for fiscal year 2009,
as applicable, in accordance with SFAS No. 123(R),
Share-Based Payment (SFAS 123R), of
equity awards granted under our equity plans, including equity
awards granted in and prior to fiscal year 2009. There can be no
assurance that the SFAS 123R amounts will ever be realized.
The assumptions we used to calculate these amounts are included
in Note 14 to our audited consolidated financial statements
included in our annual report on
Form 10-K
for fiscal year 2009. The options vest as to 100% of the shares
subject to the option on the date of grant. Each option has a
term of 10 years, and generally expires after the recipient
ceases to be a director, except for Messrs. Bordui, Cook,
Porter and Simpson, whose options expire one year following
their resignation as directors, which was effective
April 27, 2009. With respect to Messrs. Collins and
Couillaud, the restricted stock vests as to 33% annually for
three years and with respect to Ms. Holland, the restricted
stock vests as to 50% after one year and 100% after two years,
provided that the director is serving as a director on the
applicable vesting date. With respect to Messrs. Bordui,
Cook, Porter and Simpson, all outstanding restricted stock
awards vested in full upon their resignation as directors, which
was effective April 27, 2009. |
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(3) |
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Consists of the grant date fair value, computed in accordance
with SFAS 123R, of $18,472 of the stock option award
granted on October 22, 2008. |
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(4) |
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Consists of the grant date fair value, computed in accordance
with SFAS 123R, of $7,467 of the stock option award granted
on May 13, 2009. |
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(5) |
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Consists of the annual expense, computed in accordance with
SFAS 123R, of $21,612 related to the restricted stock award
granted on October 23, 2007 and $5,428 related to the
restricted stock award granted on November 1, 2006. |
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(6) |
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Consists of the annual expense, computed in accordance with
SFAS 123R, of $16,400 related to the restricted stock award
granted on October 23, 2007 and $5,428 related to the
restricted stock award granted on November 1, 2006. |
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(7) |
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Consists of the annual expense, computed in accordance with
SFAS 123R, of $3,100 related to the restricted stock award
granted on May 13, 2008. |
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(8) |
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As discussed in further detail above, this amount reflects
severance payments made to Mr. Barbarossa in connection
with the separation and release agreement entered into by and
among Mr. Barbarossa, Avanex and Bookham on April 28,
2009 and consulting fees paid to Mr. Barbarossa pursuant to
the consulting agreement entered into by and among
Mr. Barbarossa, Avanex and Bookham on January 27,
2009. This amount is not related to, nor does it serve as
compensation for, Mr. Barbarossas service as a
director of Oclaro. |
10
Outstanding
Stock Options and Stock Awards held by Directors
The following table summarizes the number of outstanding options
and stock awards held by each of our non-employee directors as
of the end of fiscal year 2009.
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Name
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Stock Awards(1)
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Option Awards(2)
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Peter Bordui
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76,150
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Joe Cook
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77,783
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Lori Holland
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5,000
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85,420
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W. Arthur Porter
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85,420
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David Simpson
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80,620
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Edward B. Collins
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3,350
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45,000
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Bernard J. Couillaud
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3,350
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45,000
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Giovanni Barbarossa
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926,512
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Greg Dougherty
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60,060
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Joel A. Smith III
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71,798
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(1) |
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Stock awards include unvested shares of common stock subject to
such awards. |
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(2) |
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Option awards include vested and unvested shares of common stock
subject to such awards. |
Section 16(a)
Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors,
executive officers and the holders of more than 10% of our
common stock to file with the Commission initial reports of
ownership of our common stock and other equity securities on a
Form 3 and reports of changes in such ownership on a
Form 4 or Form 5. Officers, directors and 10%
stockholders are required by Commission regulations to furnish
us with copies of all Section 16(a) forms they file. Based
solely on our review of copies of reports filed by the reporting
persons furnished to us, or written representations from such
reporting persons, we believe that, during fiscal year 2009,
other than one late Form 4 filing by each of
Ms. Rundle and Messrs. Haynes, Turin and Meldrum
relating to an option grant on August 15, 2008, one late
Form 4 filing by Mr. LeMaitre relating to an option
grant on May 13, 2009 and two late Form 3 filings by
each of Messrs. Parker and Smart, all filings required to
be made by our reporting persons were timely made in accordance
with the requirements of Section 16(a) of the Exchange Act.
COMPENSATION
COMMITTEE REPORT
The information contained under this Compensation
Committee Report shall not be deemed to be
soliciting material or to be filed with
the Commission, nor shall such information be incorporated by
reference into any filings under the Securities Act of 1933, as
amended, or under the Exchange Act, or be subject to the
liabilities of Section 18 of the Exchange Act, except to
the extent that we specifically incorporate this information by
reference into any such filing.
The compensation committee of our board of directors has
reviewed and discussed with management the Compensation
Discussion and Analysis below. Based on this review and
discussion, the compensation committee recommended to our board
of directors that the Compensation Discussion and Analysis be
included in our proxy statement for the 2009 annual meeting of
stockholders.
Submitted by the Compensation Committee of the Board of
Directors:
Greg Dougherty
Lori A. Holland
Edward Collins
11
Executive
Compensation
Compensation
Discussion and Analysis
The compensation committee of our board of directors oversees
our executive compensation program. In this role, the
compensation committee reviews and approves all compensation
decisions relating to our named executive officers (also
referred to as executive officers). Our board of
directors also reviews compensation arrangements with respect to
our Chief Executive Officer.
In accordance with the rules of the Commission, the following
discussion provides certain compensation-related information
with respect to our named executive officers for fiscal 2009,
which consist of Messrs. Couder, Turin, Abely, Haynes, and
LeMaitre and Ms. Rundle. For information as to how the
identities of the named executive officers were determined, see
Fiscal 2009 Summary Compensation Table below.
On July 9, 2008, Mr. Abely resigned as Chief Financial
Officer effective as of July 31, 2008 and as of such date,
was no longer an employee of Oclaro. Mr. Turin was
appointed as Chief Financial Officer of Oclaro upon
Mr. Abelys resignation.
Overview
Our executive compensation program is designed to recognize our
executives contributions to our business and provide
incentives for them to deliver performance that meets or exceeds
our objectives and increases stockholder value.
The following provides a brief overview of the more detailed
disclosures set forth below in this Compensation Discussion and
Analysis:
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The objectives of our compensation program are to:
(i) attract and retain the best executive talent;
(ii) align the financial interests of executives with those
of our stockholders; and (iii) pay for performance.
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Our executive compensation consists primarily of: (i) base
salary; (ii) incentive-based compensation, and
(iii) long-term equity awards.
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In making fiscal year 2009 compensation decisions, the
compensation committee and the board of directors consulted with
third party compensation consultants and benchmarked the
compensation of our executives with a peer group of other
optical component and semiconductor companies with
characteristics similar to Oclaro.
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We encourage a
pay-for-performance
environment by linking short-term incentive-based compensation
to the achievement of overall company performance goals.
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We use equity-based compensation as a means to align the
interests of our executives with those of our stockholders and
to retain key talent.
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We have entered into severance and change of control agreements
with our executives that are designed to encourage executive
retention.
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Objectives
and Philosophy of Our Executive Compensation
Program
The compensation committee establishes our executive
compensation philosophy and oversees our executive compensation
programs. Under the compensation committees supervision
and with its approval, for fiscal year 2009, we implemented
compensation policies, plans and programs intended to achieve
the following objectives:
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attract, retain and motivate the best executive talent;
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align executives incentives with the creation of
stockholder value;
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ensure executive compensation is aligned with our corporate
strategies and business objectives; and
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12
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promote the achievement of key corporate strategic and financial
performance goals by linking short and long-term compensation
incentives to the achievement of measurable corporate and
individual performance goals.
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We believe that the performance of our executives and our
executive team should be the basis for determining the overall
compensation of each of our executives, and the compensation
committee establishes compensation packages that it believes are
competitive with those of other companies in our industry that
compete with us for executive talent. Compensation decisions are
based on, among other things:
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our operating performance;
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the effectiveness of our executive team in managing our company;
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geographic location of the executive; and
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incentivizing executives to maximize stockholder value.
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Base salary is used to recognize experience, skill, knowledge,
long-term potential and responsibility and is an important
element in retaining our named executive officers.
Certain performance objectives, which play an important role in
our cash variable pay and equity compensation programs, are
established by the compensation committee and relate to, among
other things, our overall performance and the achievement of key
company-wide operating objectives, such as sales growth,
operating earnings, cash flow, and earnings per share factors
that, if met, we believe will ultimately and positively affect
stockholder value. As a result, these objectives formed the
basis for rewarding executives through our cash variable pay
plan and equity incentive program.
A portion of our executive compensation consists of stock option
grants that vest over time. We award equity compensation in an
effort to retain our executives and align their long-term
interests with those of our stockholders by allowing the
executives the opportunity to participate in the long-term
success of our company since the value of the award or the
return generated increases only if our share price increases and
they remain employed with us at the time the equity award vests.
We compete with many other companies for executive personnel.
Accordingly, the compensation committee generally targets
overall compensation for executives at the median of
compensation paid to executives at similarly situated companies
in our peer group, as described below. Variations to this
general target may occur as dictated by the experience level of
the individual, geographic location and market factors,
including risk of retention and ability of the executives to
find equivalent positions outside of our industry.
Role
of Executives and Compensation Consultants in Compensation
Decisions
The compensation committee reviews and approves, or recommends
for approval by the board, the compensation of the Chief
Executive Officer and our other executive officers, including
each element of their compensation.
In making compensation decisions, the compensation committee
also surveys available information regarding the executive
compensation paid by similarly sized (revenue, headcount, and
market capitalization) public companies in the optical component
and semiconductor industries, which we refer to as our peer
group. The compensation committee reviews publicly available
compensation data of companies in our peer group as well as
surveys from consultants in the executive compensation field. In
fiscal 2009, the compensation committee reviewed the Executive
Benchmark Compensation & Benefit Survey provided by
Radford Surveys and Consulting, a division of AON Consulting,
Inc., which provides compensation data for similarly sized
companies in the optical component and semi conductor industry.
13
In generating this report, Radford used a peer group of
companies in the optical component and semiconductor market with
comparable revenues and organization size, based on the number
of employees and location of operations that compete with us for
executives and other employees. For fiscal 2009, this peer group
consisted of:
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2Wire
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Covad Communications
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MBlox
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Actel
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DSP Group
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Mindspeed Technologies
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Adtran
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Ebara Technologies
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Neustar
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Alpha & Omega Semiconductor
|
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Ixia
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OKI Data Systems
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AMCC
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Finisar Corporation
|
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Philips Lumileds Lighting Company
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ARM
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Harmonic
|
|
PMC-Sierra
|
Asyst Technologies
|
|
IPG Photonics
|
|
Renesas Technology America
|
Atheros Communications
|
|
JDS Uniphase Corporation
|
|
Tessera Technologies
|
Avanex Corporation
|
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Kyocera International
|
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Trident Microsystems
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Calix
|
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Lattice Semiconductor
|
|
|
In addition to the above named peers, we selected ARM Holdings
plc, Spirent Communications plc, Filtronic plc, Renishaw plc,
Telent plc, and Dialight plc for United Kingdom executive
compensation for Mr. Haynes.
For fiscal 2009 we relied on the Radford Survey data on the
above named peer group of companies rather than detailed review
and analysis of proxy data. Because of this change in
benchmarking methodology as compared to fiscal 2008, we
increased the size of the peer group in order to ensure
sufficient data points for all executive positions and all
elements of compensation.
With the assistance of Radford, our Executive Vice President of
Human Resources provided our compensation committee with
analysis of the competitiveness of our total compensation and
rewards program for our executives, including base pay, variable
pay and long-term incentives against those in our peer group.
The Radford report included information on equity practices,
such as the rate at which options are awarded, the percentage of
shares utilized in equity programs in relation to the total
shares outstanding, and forms of equity and allocation of
awards. The report also included information on industry
compensation trends, including allocation between short-term and
long-term incentives in total executive compensation.
As an initial step in setting executive compensation, the
compensation committee determines the median for cash
compensation (salary plus variable pay) of the executives in the
peer group of companies. The compensation committee, when making
a final determination on the targets for short-term
compensation, then either increases or decreases that amount for
each executive position based on some or all of the following
factors: geography, market, experience level, individual
performance, criticality, prior employment compensation, current
compensation, tenure, seniority, scope of responsibilities,
availability of similar talent, strength of succession plans and
the individuals short-term to long-term compensation
ratio.
Components
of Our Executive Compensation Program
During fiscal 2009, the primary elements of our executive
compensation program were:
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base salary;
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incentive-based cash compensation;
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equity awards; and
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severance and change in control benefits.
|
This mix of compensation components allows us to provide an
overall executive compensation package that directly addresses
our goals of retention, alignment of executive and stockholder
interests and linking pay with performance.
14
In addition, each executive received benefits and other
compensation made available to all of our employees including
various geographically specific benefit plans made available to
our employees in such locations, such as pension or retirement
plans, private medical coverage, and group life insurance.
We do not have any formal or informal policy or target for
allocating compensation between long-term and short-term
compensation, between cash and non-cash compensation or among
the different forms of non-cash compensation. Instead, the
compensation committee, after reviewing information provided by
the Compensation & Benefit Survey provided by Radford,
determines independently what it believes to be the appropriate
level and mix of the various compensation components in line
with this market data.
Base
Salary
Oclaro pays each of its executives a base salary in cash on
either a bi-weekly or monthly basis. Base salary is used to
reward the experience, skills, performance, knowledge, long-term
potential and responsibilities of our executives and is an
important element in retaining these individuals.
In establishing base salary, the compensation committee reviews
and considers information regarding the base salary paid by
comparable companies in our peer group by position, and based on
data provided by Radford. In addition to considering this market
data, the compensation committee also takes into account other
factors when determining base salary, such as the seniority and
tenure of the individual, the level of the individuals
responsibility, the ability to replace the individual, the base
salary of the individual at his or her prior employment, if
applicable, and the number of well-qualified candidates to
assume the individuals role. In keeping with our
compensation philosophy of attracting and retaining individuals
of high quality on our management team, executive base salaries
have been targeted at the median of the range of salaries for
executives in similar positions at comparable companies in our
peer group. For some or all of the reasons enumerated above
including their extensive level of expertise and experience,
Mr. Abely and Ms. Rundle were paid base salaries above
the median.
Base salaries are reviewed annually by our compensation
committee, and, in certain cases, the compensation committee
adjusts an executive officers base salary to realign
salaries with the peer group median after taking into account
individual responsibilities, performance, experience, and
current compensation.
For example, in July 2008, the compensation committee reviewed
all executive officers base salaries as part of our annual
performance review. The committee recommended adjustments to the
base salary of Mr. Turin and Mr. Haynes after
reviewing peer group data showing that the base salary component
for such named executive officers was below the median of the
peer group in terms of competitive pay packages for the
executive positions held by these individuals.
Mr. Turins base salary increased from $220,000 to
$260,000 effective August 1, 2008. On July 21, 2008,
the compensation committee approved an increase in
Mr. Haynes base salary, measured in
U.S. dollars, from $350,000 to $360,000, effective
August 1, 2008. Mr. Haynes salary is paid in
British pounds. Measured at the end of fiscal 2009 with the
dollar-pound exchange rate then in effect, which has fluctuated
since Mr. Haynes salary increase was approved,
Mr. Haynes base salary increased from $276,000
(£172,500) to $284,000 (£177,500).
For the last quarter of fiscal 2009, each of our named executive
officers elected to take a 10% reduction of their base salaries
for the period April 1, 2009 to June 30, 2009. This
temporary measure was designed to help improve our overall
compensation expense and cash balance for the last quarter of
the fiscal year and ended as of July 1, 2009.
Incentive-Based
Compensation
Incentive-Based
Cash Variable Pay
In July 2008 and January 2009, we established incentive-based
cash variable pay plans for our executives. These cash variable
pay plans are an important component of the executive
compensation program as they (1) reward performance and
therefore instill a
pay-for-performance
philosophy and (2) support and reinforce the achievement of
specific company strategic, operational and financial goals and
objectives, and creation of stockholder value.
15
In establishing these cash variable pay plans, the compensation
committee reviewed market data for 2008 that showed we were
below our peer group in terms of total target cash compensation.
The target variable pay opportunities (expressed as a percentage
of base salary) set for each named executive officer for fiscal
2009 are targeted at the median of the peer group for the
executive position held by the individual. The compensation
committee during fiscal 2009 established two incentive-based
variable pay plans. The first variable pay plan was adopted in
July 2008, and established and measured awards based on
performance metrics for the first half of fiscal 2009. The
second variable pay plan was adopted in January 2009, and
established and measured awards based on performance metrics for
the second half of fiscal 2009. The committee decided to
establish these plans and the metrics twice a year so as to have
better visibility over the important financial metrics and
measurable corporate goals in a rapidly changing economy and
industry.
Amounts payable under the incentive-based variable pay plans
were calculated based on established eligible target variable
pay, or the eligible variable pay levels, of between 40% and 50%
of annual base compensation for all participants in the variable
pay plans, other than Mr. Couder. With respect to
Mr. Couder, the board of directors established an eligible
target variable pay level of 100% of his annual base
compensation for fiscal 2009.
The compensation committee worked with the Chief Executive
Officer to develop a set of measurable corporate goals for the
incentive-based variable pay plans in order to tie the executive
officers performance to achievement of the internal
operating plans approved by the board of directors. The
target levels set forth in the incentive-based
variable pay plans, as further described below, are challenging,
while the stretch goals, as also described below,
which lead to increased compensation, required increasingly
demanding levels of performance. At the time they were set, all
of the targets and objectives were substantially uncertain to be
achieved.
For the first half of fiscal 2009, the compensation committee
established trigger, target and
stretch goals weighted (i) fifty percent on the
achievement of a specified level of non-GAAP operating income
for the second quarter of fiscal 2009, ending December 27,
2008 and (ii) fifty percent on the achievement of a
specified level of revenue for the first two quarters of fiscal
2009. The compensation committee selected these goals as they
are important measures of progress toward the companys
operating goals, including achieving profitability. Under the
plan both trigger levels must be achieved in order
for payouts to be earned. This double-trigger mechanism ensures
that the executive officers focus on achieving both metrics
during the measurement period.
For the second half of fiscal 2009, the compensation committee
established trigger, target and
stretch goals weighted (i) fifty percent on the
achievement of a specified level of adjusted EBITDA for the
fourth quarter of fiscal 2009, ending June 27, 2009, and
(ii) fifty percent on the achievement of specified Bookham
stand-alone revenue goals for the third and fourth quarters of
fiscal 2009. In the event of a successful merger between Oclaro
(then Bookham) and Avanex before the end of the last quarter of
fiscal, 2009, the first metric would be disregarded given the
complex nature of such calculation post-merger. In this case,
the trigger, target and
stretch goals would be 100% weighted to the
achievement of goal (ii) above. The compensation committee
selected these goals as they are important measures of progress
toward the companys operating goals, including achieving
profitability.
If the designated trigger goals in the applicable
periods were achieved, the executives were entitled to receive
an amount equal to 25% of their eligible annual variable pay
level, and if designated target goals identified for
the period were met, participants would receive an amount equal
to 50% of their eligible annual variable pay level. No variable
pay would be payable under the incentive-based variable pay
plans if trigger goals for both financial metrics in
the applicable variable pay plan were not met; any variable pay
between the trigger and target goals was
calculated linearly. If the stretch goals identified
in the variable pay plans were achieved, participants were
entitled to receive an amount equal to 75% of their eligible
annual variable pay level. Any variable pay between the
target goals and stretch goals was
calculated linearly. Payments under the variable pay plans, if
any, were made only after the audit committee certified that the
financial metrics set forth in the variable pay plans were
satisfied. The goals were set such that target
performance should be attained approximately 70% of the time,
with some payout (i.e., trigger achievement or
above)
16
occurring about 90% of the time. In determining whether a
performance metric was satisfied, the metric was calculated
after accounting for the cost of the variable pay.
The target variable pay due upon achievement of the
target goal under the incentive-based variable pay
plan for the first half of fiscal 2009 was at the median
variable pay level for our executives counterparts at
companies in our peer group identified in Radfords report.
The target variable pay due upon achievement of the
target goal under the incentive-based variable pay
plan for the second half of fiscal 2009 was also at the median
variable pay level for our executives counterparts at
companies in our peer group identified in Radfords report.
For the first half of fiscal 2009, the non-GAAP operating income
trigger goal of negative $2.0 million was
surpassed but the target goal of $0.1 million
was not reached. Neither the revenue trigger goal of
$130 million nor the target goal of
$136 million was met and, therefore, the named executive
officers did not achieve both goals under the double
trigger plan.
On January 22, 2009, the compensation committee, after
taking into account: (i) the satisfaction of the non-GAAP
operating income metric, (ii) the significant investment of
time and efforts made by the management team to the achievement
of our strategic goals during the six-month period ended
December 27, 2008, (iii) the execution of the
definitive agreement in connection with the strategic
transaction with Avanex Corporation, (iv) overall
compensation levels of management and (v) the overall
corporate performance and implementation of our business model,
determined that the participants in the variable pay plan, which
include each of our named executive officers, should receive
payment within the levels contemplated under the plan. The
compensation committee determined that the amount of the cash
payment would equal the mean of the trigger and
target goals set forth in the variable pay plan. The
compensation committee granted this discretionary bonus for the
reasons described above, as well as to provide the executive
officers with incentive to remain with the company during the
important transaction with Avanex.
For the second half of fiscal 2009, the merger between Bookham
and Avanex was closed on April 27, 2009. As a result, the
second-half variable pay program was based on the cumulative
revenue (Bookham stand-alone) for the 6 months ended June,
2009. For this period, the cumulative stand alone revenue
trigger of $92 million was exceeded, but not
the target goal of $100 million, and therefore,
the named executive officers did receive payment at 72% (of the
50%) under the plan for this six-month period.
Until his promotion on April 27, 2009, Mr. LeMaitre
was serving as the Vice President of world-wide sales for our
Telecom Division and Vice President of Marketing Communications.
In his sales role, Mr. LeMaitre participated in the Bookham
Sales Incentive Plan. Mr. LeMaitres participation in
this quota-based plan was at a target level of 50% of 80% of his
annual base salary. In his Marketing Communications role, the
remaining 20% of Mr. LeMaitres annual base salary was
eligible for the incentive-based cash variable pay plan for our
executives at a target rate of 40%. Upon the close of the merger
with Avanex, Mr. LeMaitre was promoted to Executive Vice
President and Division Manager of our Advanced Photonics
Solutions Division. In this role, 100% of
Mr. LeMaitres annual base salary is eligible for the
incentive-based cash variable pay plan at a target rate of 40%.
Equity
Incentive Awards
Long-term
Equity Awards
Our equity award program is the primary vehicle for offering
long-term performance and retention incentives to our
executives. We believe that time-based options provide our
executives with a strong link to our long-term performance as
increases in stock price increase the value of the underlying
option grants. As a result, the long-term, time-based equity
awards create an ownership culture and align the interests of
our executives and our stockholders around a common goal of
increasing our stock price. In addition, the vesting feature of
our equity grants provides an incentive to our executives to
remain in our employ during the vesting period.
We routinely grant eligible employees equity awards at the time
of hire and also provide equity grants to key contributing
employees annually. All equity based grants are made by the
compensation committee, or a
17
sub-committee
of the compensation committee. The time-based options vest as to
25% of the shares subject to the option on the first anniversary
of the date of grant and 1/48 of the shares subject to the
option monthly thereafter over the remaining 36 months. The
exercise price of all stock options is set at the closing price
of our common stock on the NASDAQ Global Market on the date of
grant. In accordance with our Stock Option Grant Policy, all
new-hire option awards are granted on the 10th day of the
month following the first date of employment. Annual equity
awards to ongoing employees, if any, are granted on the
15th of August each year, subject to exceptions in certain
limited instances. Any special grants (non-new hire or annual)
made by the compensation committee are effective on the date of
approval by the committee.
On April 21, 2009, our board of directors, upon the
recommendation of the compensation committee, approved
amendments to each of the then outstanding restricted stock
agreements for our executives. Restricted stock now vests as to
25% of the shares subject to such restricted stock agreements on
the first anniversary date of the grant and then quarterly
thereafter over the remaining 36 months. Prior to the
adoption of these amendments, the shares subject to each such
restricted stock agreement vested as to 25% on the one-year
anniversary of the grant date and an additional 2.083% at the
end of each month following the first anniversary of the grant
date until the fourth anniversary of the grant date. The
amendments further provide that the shares subject to such
restricted stock agreements shall now vest on a quarterly basis
on the tenth day of the second month of each fiscal quarter.
None of the amendments, however, revise the final vesting date
for any of the restricted stock agreements that were so amended.
In determining the size of equity grants to our executives in
fiscal 2009, our compensation committee considered comparative
share ownership of executives in our peer group identified
above, Radford survey data, our company-level performance, the
applicable executives performance, the amount of equity
previously awarded to the executive, the vesting of such awards,
the retention value of those awards and the recommendations of
management. The compensation committee reviews all components of
the executives compensation when determining equity awards
to ensure that an executives total compensation conforms
to our overall philosophy and objectives. For fiscal 2009, the
compensation committee awarded equity to our executives that
were near the median for equity awards granted to comparable
executives in the peer group and those identified in the Radford
survey.
All grants of options and restricted stock to our executives are
made by the compensation committee in accordance with our Stock
Option Grant Policy. In fiscal 2009, the compensation committee
granted our executives time-based options only. The committee
chose to grant options rather than restricted stock to each
named executive officer based on the recommendations of Radford.
Given the general economic conditions and the depressed value of
our stock, the use of our restricted shares provide little
retention value given current stock price and constraints on the
number of shares available in our pool. Instead, time-based
stock options create both upside potential if our stock price
increases as well as retention value. While many companies in
our peer group continued to grant a mix of options and
restricted stock, in order to minimize shareholder dilution and
maximize retention, we chose to grant only option awards for
fiscal 2009 to our named executive officers.
In fiscal 2009, our named executive officers received grants of
stock options as part of the annual granting process as well as
a special retention grant on May 13, 2009. This special
grant was done to ensure that the executives of the newly merged
company had adequate long-term retention incentive. Grants
received earlier in the year as part of the normal annual
granting process were dramatically underwater and had little or
no retention value and as a result, the total equity
compensation for each executive for fiscal 2009 was
substantially below the peer group median.
Benefits
and Other Compensation
We maintain broad-based benefits that are provided to all
employees, including health and medical insurance, life and
disability insurance and a 401(k) plan or, for executives and
employees residing outside the U.S., a similar retirement plan.
All executives are eligible to participate in all of our
employee benefit plans, in each case on the same basis as other
employees depending on their geographic location. We provided a
car
18
allowance to Mr. Haynes for fiscal 2009, but for fiscal
2010, this car allowance will be eliminated and consolidated
into Mr. Haynes annual base salary.
Severance
and
Change-of-Control
Benefits
Each of the named executive officers has entered into an
Executive Severance and Retention Agreement. The Executive
Severance and Retention Agreement provides, under certain
circumstances, for payments upon termination of employment
following a change of control of the company or termination
without cause or for good reason, each
as defined in the Executive Severance and Retention Agreement.
Change of control payments of salary and accrued variable pay
made under the agreement are subject to a double
trigger, meaning that both a change of control and a
termination are required. In other words, the change of control
does not itself trigger benefits; rather, benefits are paid only
if the employment of the executive is terminated during a
specified period after the change of control. We believe a
double trigger benefit maximizes stockholder value
because it prevents an unintended windfall to executives in the
event of a friendly change of control, while still providing
them appropriate incentives to cooperate in negotiating any
change of control in which they believe they may lose their
jobs. We have provided more detailed information about these
benefits, along with estimates of their value under various
circumstances, under the caption Potential Payments Upon
Termination or Change of Control below. Acceleration of
equity awards is subject to a single trigger, meaning only the
change of control is required to trigger the acceleration of
vesting of equity awards.
We believe providing these benefits helps us compete for and
retain executive talent. After reviewing the practices of
companies represented in the peer group, we believe that our
severance and change of control benefits are generally
comparable with severance packages offered to executives by the
companies in the peer group.
Tax
and Accounting Considerations
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code), generally disallows a tax
deduction for compensation in excess of $1.0 million paid
to our chief executive officer and our other officers whose
compensation is required to be disclosed to our stockholders
under the Exchange Act by reason of being among our four most
highly compensated officers. Qualifying performance-based
compensation is not subject to the deduction limitation if
specified requirements are met. We periodically review the
potential consequences of Section 162(m) and we generally
intend to structure the performance-based portion of our
executive compensation, where feasible, to comply with
exemptions in Section 162(m) so that the compensation
remains tax deductible to us. However, the compensation
committee may, in its judgment, authorize compensation payments
that do not comply with the exemptions in Section 162(m)
when it believes that such payments are appropriate to attract
and retain executive talent as was done this year with the
discretionary bonuses awarded to our executive officers.
SFAS 123R requires us to recognize in our statement of
operations all share-based payments to employees, including
grants of stock options and restricted stock to executives,
based on their fair values. The application of SFAS 123R
involves significant amounts of judgment in the determination of
inputs into the Black-Scholes-Merton valuation model that we use
to determine the fair value of share-based awards. These inputs
are based upon highly subjective assumptions as to the
volatility of the underlying stock, risk free interest rates and
the expected life of the options. Judgment is also required in
estimating the number of share-based awards that are expected to
be forfeited. As required under accounting principles generally
accepted in the U.S., we review our valuation assumptions at
each grant date, and, as a result, our valuation assumptions
used to value stock-based awards granted in future periods may
vary from the valuation assumptions we have used previously. For
incentive-based grants we also must apply judgment in
determining the periods when, and if, the related performance
targets become probable of being met.
Overall
Analysis
We operate in a highly competitive industry. One of our
principal goals is to achieve profitability by reducing expenses
and increasing revenues. While we did not achieve all of our
financial goals in fiscal year
19
2009, significant progress was made. We believe that our
executives directly contributed to this progress. We also
believe it is vital to retain and motivate our executive
officers if we are to achieve our business and financial goals.
For these reasons, the Board awarded discretionary bonuses this
year. The total compensation packages paid to our named
executive officers are intended to compensate them for services
rendered and to retain them over the long-term. We use
equity-based and incentive-based compensation to align the
interests of our executives with those of the stockholders and
to provide a further retention incentive. Finally, our
short-term incentives support our pay for performance philosophy
by linking the payment of cash variable pay to the achievement
of overall company performance goals. Thus, we believe that our
compensation program is designed to successfully achieve our
objectives.
During fiscal 2010, we intend to continue monitoring the
appropriate level of compensation of our executives through the
use of third-party compensation consultants, review of the data
provided by Radford surveys and continued comparison to the
compensation practices of our peer group.
Summary
Compensation Table
The following table sets forth certain information concerning
the compensation for fiscal years 2009, 2008 and 2007 for each
individual who served as our principal executive officer
(Mr. Couder) and our principal financial officer
(Mr. Abely and Mr. Turin) during fiscal year 2009 and
our three other most highly compensated executive officers
(Messrs. Haynes and LeMaitre and Ms. Rundle) who
received annual compensation in excess of $100,000 during fiscal
year 2009, collectively, our named executive
officers.
Fiscal
2009 Summary Compensation Table
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Non-Equity
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Stock
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Option
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Incentive Plan
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All Other
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Bonus
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Awards
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Awards
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year(1)
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Salary ($)
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($)(3)
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($)(2)
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($)(2)
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($)
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($)
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($)
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Alain Couder
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2009
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$
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487,500
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$
|
187,500
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$
|
135,469
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|
$
|
326,849
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$
|
161,958
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(10)
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$
|
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$
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1,299,276
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President and Chief
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2008
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$
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432,692
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|
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$
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660,688
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|
|
$
|
199,234
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|
$
|
127,004
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|
|
$
|
|
|
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$
|
1,419,618
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Executive Officer(4)
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2007
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$
|
|
|
|
$
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|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Jerry Turin
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|
|
2009
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$
|
253,500
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|
|
$
|
39,000
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|
|
$
|
10,161
|
|
|
$
|
136,790
|
|
|
$
|
33,687
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(10)
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|
$
|
|
|
|
$
|
473,138
|
|
Chief Financial Officer(5)
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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Steve Abely
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2009
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$
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32,692
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|
|
$
|
|
|
|
$
|
13,870
|
|
|
$
|
74,651
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|
|
$
|
|
|
|
$
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36,121
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(12)
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$
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157,334
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|
Former Chief Financial
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2008
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$
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330,846
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|
|
$
|
|
|
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$
|
616,563
|
|
|
$
|
210,617
|
|
|
$
|
59,500
|
|
|
$
|
21,840
|
|
|
$
|
1,239,366
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|
Officer(6)
|
|
|
2007
|
|
|
$
|
326,661
|
|
|
$
|
|
|
|
$
|
153,760
|
|
|
$
|
194,394
|
|
|
$
|
|
|
|
$
|
21,840
|
|
|
$
|
696,655
|
|
Jim Haynes
|
|
|
2009
|
|
|
$
|
283,231
|
(9)
|
|
$
|
49,051
|
|
|
$
|
94,070
|
|
|
$
|
165,199
|
|
|
$
|
47,048
|
(9)(10)
|
|
$
|
42,454
|
(9)(13)
|
|
$
|
681,053
|
|
Chief Operating Officer
|
|
|
2008
|
|
|
$
|
327,632
|
(9)
|
|
$
|
|
|
|
$
|
407,156
|
|
|
$
|
116,740
|
|
|
$
|
78,587
|
(9)
|
|
$
|
49,828
|
(9)
|
|
$
|
979,943
|
|
|
|
|
2007
|
|
|
$
|
317,226
|
(9)
|
|
$
|
|
|
|
$
|
77,006
|
|
|
$
|
188,002
|
|
|
$
|
|
(9)
|
|
$
|
48,428
|
(9)
|
|
$
|
630,662
|
|
Kate Rundle
|
|
|
2009
|
|
|
$
|
292,500
|
|
|
$
|
45,000
|
|
|
$
|
12,000
|
|
|
$
|
42,404
|
|
|
$
|
38,870
|
(10)
|
|
$
|
|
|
|
$
|
430,774
|
|
Executive V.P. and
|
|
|
2008
|
|
|
$
|
173,077
|
|
|
$
|
|
|
|
$
|
55,082
|
|
|
$
|
8,764
|
|
|
$
|
9,781
|
|
|
$
|
|
|
|
$
|
246,704
|
|
General Counsel(7)
|
|
|
2007
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Yves LeMaitre
|
|
|
2009
|
|
|
$
|
243,750
|
|
|
$
|
7,500
|
|
|
$
|
9,225
|
|
|
$
|
34,758
|
|
|
$
|
80,000
|
(11)
|
|
$
|
|
|
|
$
|
375,233
|
|
Executive V.P. and Division Manager(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The years in this column refer to the fiscal years ended
June 27, 2009, June 30, 2007 and June 28, 2008. |
|
(2) |
|
The amounts in this column for 2009 reflect the dollar amount
computed for financial statement reporting purposes for fiscal
year 2009, in accordance with SFAS 123R, of equity awards
granted under our equity plans, including equity awards granted
in and prior to fiscal year 2009. There can be no assurance that
the SFAS 123R amounts will ever be realized. The
assumptions we used to calculate these amounts are included in
Note 14 to our audited consolidated financial statements
included in our Annual Report on
Form 10-K
for fiscal year 2009. The options vest as to 25% of the shares
subject to the option on the first anniversary of the date of
grant and 1/48 of the shares subject to the option monthly
thereafter over the remaining 36 months. Each option has a
term of ten years, and generally expires shortly following the
termination of the executives employment. The restricted
stock awards initially vested either in full upon our
achievement of targeted adjusted EBITDA at fiscal year-end 2008
or one-half as to 25% on the one-year anniversary of the grant
date and an additional 2.083% at the end of each month following
the first anniversary of the grant date until the fourth
anniversary of the grant date and one-half as to 50% if we |
20
|
|
|
|
|
generate non-GAAP earnings before interest, taxes, depreciation
and amortization (excluding restructuring charges, one-time
items and the non-cash compensation expense from stock
compensation) that are cumulatively greater than zero for two
successive quarters and 50% if we generate non-GAAP earnings
before interest, taxes, depreciation and amortization (excluding
restructuring charges, one-time items and the non-cash
compensation expense from stock compensation) that are
cumulatively greater than 8% of revenues for two successive
quarters. On April 21, 2009, the Board, upon the
recommendation of the Compensation Committee, approved
amendments to each of the then outstanding restricted stock
agreements. Prior to the adoption of these amendments, the
shares subject to each such restricted stock agreement vested as
to 25% on the one-year anniversary of the grant date and an
additional 2.083% at the end of each month following the first
anniversary of the grant date until the fourth anniversary of
the grant date. The amendments provide that the shares subject
to such restricted stock agreements shall now vest on a
quarterly basis on the tenth day of the second month of each
fiscal quarter. None of the amendments, however, revise the
final vesting date for any of the restricted stock agreements
that were so amended. |
|
(3) |
|
The amounts in this column for 2009 represent the discretionary
amounts awarded by the compensation committee under the
incentive-based cash variable pay plan, as further described
above under Compensation Discussion and Analysis. |
|
(4) |
|
Mr. Couder was appointed our President and Chief Executive
Officer effective as of August 13, 2007. |
|
(5) |
|
Mr. Turin was appointed our Chief Financial Officer
effective as of August 1, 2008. Mr. Turin previously
served as our Corporate Controller since July 2005 and also as
Vice President of Finance since April 2008. |
|
(6) |
|
Mr. Abely served as our as our Chief Financial Officer
until his resignation, which was effective as of July 31,
2008. |
|
(7) |
|
Ms. Rundle was appointed our Executive Vice President,
General Counsel and Corporate Secretary effective
November 21, 2007. |
|
(8) |
|
Mr. LeMaitre was appointed our Executive Vice President and
Division Manager effective as of April 27, 2009.
Mr. LeMaitre previously served as our Vice President of
Telecommunication Sales and Vice President of Corporate
Marketing since February 2008. |
|
(9) |
|
Converted from U.K. pounds sterling to U.S. dollars using the
noon buying rate of exchange of U.S. dollars to U.K. pounds
sterling of $1.64 on June 26, 2009, $1.98 on August 1,
2008 and $2.03 on September 7, 2007, respectively. |
|
(10) |
|
For fiscal 2009, consists of payments in connection with our
incentive-based cash variable pay plan related to the second six
months of fiscal 2009, which were paid on August 7, 2009,
as further discussed above under Compensation Discussion
and Analysis. |
|
(11) |
|
For Mr. LeMaitre, consists of payment of $12,957 in
connection with our incentive-based bonus plan related to the
second six months of fiscal 2009, which was paid on
August 7, 2009, and $67,043 in payments in connection with
Mr. LeMaitres fiscal 2009 sales incentive plan, as
further discussed above under Compensation Discussion and
Analysis. |
|
(12) |
|
Consists of payment of $1,820 in car allowance and payment of
$34,301 in accrued vacation, which was paid upon
Mr. Abelys resignation from the company on
July 31, 2008. |
|
(13) |
|
Consists of $14,735 in car allowance, $25,455 pension
contribution and $2,264 private medical allowance for fiscal
2009. |
For more information about discretionary and non-discretionary
payouts under the incentive-based cash variable pay plans for
fiscal 2009, see the discussion under Compensation
Discussion and Analysis above. For more information about
the items included under the All Other Compensation
column for fiscal 2009, see footnotes nine, 12 and 13 to the
Fiscal 2009 Summary Compensation Table above. In terms of the
stock awards and option awards for which disclosure is provided
in the Fiscal 2009 Summary Compensation Table above, the options
vest as to 25% of the shares subject to the option on the first
anniversary of the date of grant and
1/48
of the shares subject to the option monthly thereafter over the
remaining 36 months. Each option has a term of ten years,
and generally expires shortly following the termination of the
executives employment. The restricted stock awards
initially vested either in full upon our achievement of targeted
adjusted EBITDA
21
at fiscal year end 2008 or one-half as to 25% on the one-year
anniversary of the grant date and an additional 2.083% at the
end of each month following the first anniversary of the grant
date until the fourth anniversary of the grant date and one-half
as to 50% if we generate non-GAAP earnings before interest,
taxes, depreciation and amortization (excluding restructuring
charges, one-time items and the non-cash compensation expense
from stock compensation) that are cumulatively greater than zero
for two successive quarters and 50% if we generate non-GAAP
earnings before interest, taxes, depreciation and amortization
(excluding restructuring charges, one-time items and the
non-cash compensation expense from stock compensation) that are
cumulatively greater than 8% of revenues for two successive
quarters. On April 21, 2009, the board of directors, upon
the recommendation of the compensation committee, approved
amendments to each of the then outstanding restricted stock
agreements. Prior to the adoption of these amendments, the
shares subject to each such restricted stock agreement vested as
to 25% on the one-year anniversary of the grant date and an
additional 2.083% at the end of each month following the first
anniversary of the grant date until the fourth anniversary of
the grant date. The amendments provide that the shares subject
to such restricted stock agreements shall now vest on a
quarterly basis on the tenth day of the second month of each
fiscal quarter. None of the amendments, however, revise the
final vesting date for any of the restricted stock agreements
that were so amended.
Fiscal
2009 Grants of Plan-Based Awards Table
The following table sets forth information regarding each grant
of an award made to a named executive officer during fiscal year
2009 under any plan, contract, authorization or arrangement
pursuant to which cash, securities, similar instruments or other
property may be received.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Awards:
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
|
Estimated Future Payouts
|
|
|
Awards:
|
|
|
Number of
|
|
|
Base Price
|
|
|
Fair Value
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Under Equity Incentive
|
|
|
Number of
|
|
|
Securities
|
|
|
of Option
|
|
|
of Stock
|
|
|
|
Grant
|
|
|
Plan Awards
|
|
|
Plan Awards
|
|
|
Shares
|
|
|
Underlying
|
|
|
Awards
|
|
|
and Option
|
|
Name(7)
|
|
Date
|
|
|
Threshold ($)
|
|
|
Target ($)
|
|
|
Maximum ($)
|
|
|
Threshold (#)
|
|
|
Target (#)
|
|
|
Maximum (#)
|
|
|
or Units
|
|
|
Options (#)
|
|
|
($/Sh)
|
|
|
Awards(1)
|
|
|
Alain Couder
|
|
|
6/29/2008
|
(2)
|
|
$
|
125,000
|
|
|
$
|
250,000
|
|
|
$
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
12/28/2008
|
(3)
|
|
$
|
125,000
|
|
|
$
|
250,000
|
|
|
$
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
8/15/2008
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
470,000
|
(6)
|
|
$
|
1.78
|
|
|
$
|
479,870
|
|
|
|
|
5/13/2009
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
(6)
|
|
$
|
0.62
|
|
|
$
|
134,400
|
|
Jerry Turin
|
|
|
6/29/2008
|
(2)
|
|
$
|
26,000
|
|
|
$
|
52,000
|
|
|
$
|
78,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
12/28/2008
|
(3)
|
|
$
|
26,000
|
|
|
$
|
52,000
|
|
|
$
|
78,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
8/15/2008
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
(6)
|
|
$
|
1.78
|
|
|
$
|
122,520
|
|
|
|
|
5/13/2009
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(6)
|
|
$
|
0.62
|
|
|
$
|
35,840
|
|
Jim Haynes
|
|
|
6/29/2008
|
(2)
|
|
$
|
36,312
|
|
|
$
|
72,623
|
|
|
$
|
108,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
12/28/2008
|
(3)
|
|
$
|
36,312
|
|
|
$
|
72,623
|
|
|
$
|
108,935
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
8/15/2008
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
(6)
|
|
$
|
1.78
|
|
|
$
|
122,520
|
|
|
|
|
5/13/2009
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(6)
|
|
$
|
0.62
|
|
|
$
|
44,800
|
|
Kate Rundle
|
|
|
6/29/2008
|
(2)
|
|
$
|
30,000
|
|
|
$
|
60,000
|
|
|
$
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
12/28/2008
|
(3)
|
|
$
|
30,000
|
|
|
$
|
60,000
|
|
|
$
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
8/15/2008
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
(6)
|
|
$
|
1.78
|
|
|
$
|
122,520
|
|
|
|
|
5/13/2009
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(6)
|
|
$
|
0.62
|
|
|
$
|
31,360
|
|
Yves LeMaitre
|
|
|
6/29/2008
|
(2)
|
|
$
|
5,000
|
|
|
$
|
10,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
6/29/2008
|
(4)
|
|
$
|
50,000
|
|
|
$
|
100,000
|
|
|
$
|
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
12/28/2008
|
(3)
|
|
$
|
5,000
|
|
|
$
|
10,000
|
|
|
$
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
8/15/2008
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(6)
|
|
$
|
1.78
|
|
|
$
|
81,680
|
|
|
|
|
5/13/2009
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(6)
|
|
$
|
0.62
|
|
|
$
|
31,360
|
|
|
|
|
(1) |
|
The amounts in this column reflect the total grant date fair
value of the respective stock options computed in accordance
with SFAS 123R. |
|
(2) |
|
For the first half of fiscal 2009, the compensation committee
established trigger, target and
stretch goals weighted (i) fifty percent on the
achievement of a specified level of non-GAAP operating income
for the second quarter of fiscal 2009, ending December 27,
2008 and (ii) fifty percent on the achievement of a
specified level of revenue for the first two quarters of fiscal
2009. For more information, see the discussion above under
Compensation Discussion and Analysis. |
|
(3) |
|
For the second half of fiscal 2009, the second-half variable pay
program was based on the cumulative revenue (Bookham
stand-alone) for the six months ended June 2009. For more
information, see the discussion above under Compensation
Discussion and Analysis. |
22
|
|
|
(4) |
|
In his sales role, Mr. LeMaitre participated in the Bookham
Sales Incentive Plan. Mr. LeMaitres participation in
this quota-based plan was at a target level of 50% of 80% of his
annual base salary. For more information, see the discussion
above under Compensation Discussion and Analysis. |
|
(5) |
|
Not applicable. Mr. LeMaitres fiscal 2009 sales
incentive plan did not have a maximum payment amount. |
|
(6) |
|
The options vest as to 25% of the shares subject to the option
on the first anniversary of the date of grant and
1/48th of
the shares subject to the option monthly thereafter over the
remaining 36 months. |
|
(7) |
|
Mr. Abely did not receive any grants of plan-based awards
in fiscal 2009, and is therefore not included in this table. |
Outstanding
Equity Awards at Fiscal 2009 Year-End
The following table sets forth information concerning stock
options that have not been exercised and unvested restricted
stock awards for each of the named executive officers as of
June 27, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Shares or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
Shares or Units
|
|
|
Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
of Stock That
|
|
|
Stock That
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Have Not Vested
|
|
|
Have Not
|
|
Name(5)
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
Vested ($)(1)
|
|
|
Alain Couder
|
|
|
217,708
|
(2)
|
|
|
257,292
|
|
|
$
|
2.89
|
|
|
|
8/13/2017
|
|
|
|
109,375
|
(4)
|
|
$
|
57,969
|
|
|
|
|
|
|
|
|
470,000
|
(2)
|
|
$
|
1.78
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
300,000
|
(2)
|
|
$
|
0.62
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
$
|
|
|
Jerry Turin
|
|
|
120,625
|
(2)
|
|
|
9,375
|
|
|
$
|
4.91
|
|
|
|
11/11/2015
|
|
|
|
|
|
|
$
|
|
|
|
|
|
7,500
|
(2)
|
|
|
7,500
|
|
|
$
|
2.01
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
$
|
|
|
|
|
|
4,000
|
(2)
|
|
|
8,000
|
|
|
$
|
1.75
|
|
|
|
1/28/2018
|
|
|
|
2,833
|
(4)
|
|
$
|
1,501
|
|
|
|
|
|
|
|
|
120,000
|
(2)
|
|
$
|
1.78
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
80,000
|
(2)
|
|
$
|
0.62
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
$
|
|
|
Jim Haynes
|
|
|
15,000
|
(2)
|
|
|
|
|
|
$
|
13.10
|
(3)
|
|
|
8/7/2013
|
|
|
|
|
|
|
$
|
|
|
|
|
|
7,500
|
(2)
|
|
|
|
|
|
$
|
22.14
|
(3)
|
|
|
9/25/2013
|
|
|
|
|
|
|
$
|
|
|
|
|
|
5,000
|
(2)
|
|
|
|
|
|
$
|
9.58
|
(3)
|
|
|
6/2/2014
|
|
|
|
|
|
|
$
|
|
|
|
|
|
10,500
|
(2)
|
|
|
3,500
|
|
|
$
|
6.73
|
|
|
|
9/22/2014
|
|
|
|
|
|
|
$
|
|
|
|
|
|
111,979
|
(2)
|
|
|
13,021
|
|
|
$
|
4.91
|
|
|
|
11/11/2015
|
|
|
|
9,115
|
(4)
|
|
$
|
4,831
|
|
|
|
|
12,500
|
(2)
|
|
|
12,500
|
|
|
$
|
2.01
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
$
|
|
|
|
|
|
36,503
|
(2)
|
|
|
73,004
|
|
|
$
|
1.75
|
|
|
|
1/28/2018
|
|
|
|
28,092
|
(4)
|
|
$
|
14,889
|
|
|
|
|
|
|
|
|
120,000
|
(2)
|
|
$
|
1.78
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
100,000
|
(2)
|
|
$
|
0.62
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
$
|
|
|
Kate Rundle
|
|
|
15,833
|
(2)
|
|
|
24,167
|
|
|
$
|
2.40
|
|
|
|
11/26/2017
|
|
|
|
13,333
|
(4)
|
|
$
|
7,066
|
|
|
|
|
|
|
|
|
120,000
|
(2)
|
|
$
|
1.78
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
70,000
|
(2)
|
|
$
|
0.62
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
$
|
|
|
Yves LeMaitre
|
|
|
28,125
|
(2)
|
|
|
61,875
|
|
|
$
|
1.23
|
|
|
|
3/10/2018
|
|
|
|
21,875
|
(4)
|
|
$
|
11,594
|
|
|
|
|
|
|
|
|
80,000
|
(2)
|
|
$
|
1.78
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
70,000
|
(2)
|
|
$
|
0.62
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Calculated by multiplying the number of unvested shares by
$0.53, the closing price per share of our common stock on the
NASDAQ Global Market on June 26, 2009. |
|
(2) |
|
The options vest as to 25% of the shares subject to the option
on the first anniversary of the date of grant and
1/48th of
the shares subject to the option monthly thereafter over the
remaining 36 months. |
|
(3) |
|
Converted from U.K. pounds sterling to U.S. dollars using the
noon buying rate of exchange of U.S. dollars to U.K. pounds
sterling of $1.64 on June 26, 2009. |
|
(4) |
|
On April 21, 2009, our board of directors, upon the
recommendation of the compensation committee, approved
amendments to each of these restricted stock agreements. Prior
to the adoption of these amendments, the shares subject to each
such restricted stock agreement vested as to 25% on the one-year
anniversary of the grant date and an additional 2.083% at the
end of each month following the first anniversary of the grant
date until the fourth anniversary of the grant date. The
amendments provide that |
23
|
|
|
|
|
the shares subject to such restricted stock agreements shall now
vest on a quarterly basis on the tenth day of the second month
of each fiscal quarter. None of the amendments, however, revise
the final vesting date for any of the restricted stock
agreements that were so amended. |
|
(5) |
|
Mr. Abely had no outstanding equity awards as of
June 27, 2009, and is therefore not included in this table. |
Fiscal
2009 Option Exercises and Stock Vested Table
The following table sets forth information regarding options
exercised by the named executive officers and vesting of
restricted stock held by the named executive officers during the
fiscal year ended June 27, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Shares
|
|
|
Value Realized
|
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
Acquired on
|
|
|
on Vesting
|
|
Name
|
|
Exercise (#)
|
|
|
on Exercise ($)
|
|
|
Vesting (#)(1)
|
|
|
($)(2)
|
|
|
Alain Couder
|
|
|
|
|
|
$
|
|
|
|
|
265,265
|
|
|
$
|
475,742
|
|
Jerry Turin
|
|
|
|
|
|
$
|
|
|
|
|
5,167
|
|
|
$
|
8,333
|
|
Steve Abely
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
Jim Haynes
|
|
|
|
|
|
$
|
|
|
|
|
89,171
|
|
|
$
|
142,812
|
|
Kate Rundle
|
|
|
|
|
|
$
|
|
|
|
|
26,667
|
|
|
$
|
42,213
|
|
Yves LeMaitre
|
|
|
|
|
|
$
|
|
|
|
|
38,125
|
|
|
$
|
61,581
|
|
|
|
|
(1) |
|
Reflects restricted stock awards that vested in fiscal 2009. |
|
(2) |
|
Amounts shown represent the number of shares of restricted stock
that vested on dates during fiscal year 2009 multiplied by the
closing price of our common stock as quoted on the NASDAQ Global
Market on each corresponding vesting date. |
Potential
Payments Upon Termination or Change of Control
The table below shows the benefits potentially payable to each
of our named executive officers if he or she were terminated or
a change of control occurred. These amounts are calculated on
the assumption that the employment termination or change of
control took place on June 27, 2009. The closing price per
share of our common stock on the NASDAQ Global Market on
June 26, 2009 was $0.53.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
Base
|
|
|
Target
|
|
|
Accelerated
|
|
|
Vesting of
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Vesting of
|
|
|
Restricted
|
|
|
Benefits
|
|
|
Total
|
|
Name(4)
|
|
($)
|
|
|
($)
|
|
|
Options(1)
|
|
|
Stock
|
|
|
($)(2)
|
|
|
($)
|
|
|
Alain Couder
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without Cause
|
|
$
|
541,667
|
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
40,834
|
|
|
$
|
832,501
|
|
Change of Control
|
|
$
|
541,667
|
|
|
$
|
250,000
|
|
|
$
|
|
|
|
$
|
57,969
|
|
|
$
|
|
|
|
$
|
849,635
|
|
Jerry Turin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without Cause
|
|
$
|
195,000
|
|
|
$
|
52,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
29,769
|
|
|
$
|
276,769
|
|
Change of Control
|
|
$
|
195,000
|
|
|
$
|
52,000
|
|
|
$
|
|
|
|
$
|
1,501
|
|
|
$
|
|
|
|
$
|
248,501
|
|
Jim Haynes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without Cause
|
|
$
|
266,285
|
(3)
|
|
$
|
72,623
|
(3)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
6,927
|
(3)
|
|
$
|
345,836
|
|
Change of Control
|
|
$
|
266,285
|
(3)
|
|
$
|
72,623
|
(3)
|
|
$
|
|
|
|
$
|
19,720
|
|
|
$
|
|
|
|
$
|
358,628
|
|
Kate Rundle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without Cause
|
|
$
|
175,000
|
|
|
$
|
60,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
31,219
|
|
|
$
|
266,219
|
|
Change of Control
|
|
$
|
175,000
|
|
|
$
|
60,000
|
|
|
$
|
|
|
|
$
|
7,066
|
|
|
$
|
|
|
|
$
|
242,066
|
|
Yves LeMaitre
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination Without Cause
|
|
$
|
145,833
|
|
|
$
|
50,000
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
17,538
|
|
|
$
|
213,372
|
|
Change of Control
|
|
$
|
145,833
|
|
|
$
|
50,000
|
|
|
$
|
|
|
|
$
|
11,594
|
|
|
$
|
|
|
|
$
|
207,427
|
|
24
|
|
|
(1) |
|
The exercise prices for all stock options outstanding as of
June 27, 2009 are higher than the $0.53 closing price of
our common stock as quoted on the NASDAQ Global Market on
June 26, 2009; hence the calculated value of accelerating
these awards is zero. |
|
(2) |
|
Consists of earned but unpaid vacation as of June 27, 2009. |
|
(3) |
|
Converted from U.K. pounds sterling to U.S. dollars using the
noon buying rate of exchange of U.S. dollars to U.K. pounds
sterling of $1.64 on June 26, 2009. |
|
(4) |
|
Mr. Abely resigned from Oclaro effective as of
July 31, 2008 and was therefore not an employee of Oclaro
as of June 27, 2009. As a result, Mr. Abely is not
included in this table. |
Compensation
Committee Interlocks and Insider Participation
In the year ended June 27, 2009, our audit committee
consisted of Greg Dougherty, Edward Collins, and Lori Holland.
During fiscal 2009, Joe Cook, served on our audit committee from
the beginning of the fiscal year through April 27 2009. In the
year ended June 27, 2009, our compensation committee
consisted of Greg Dougherty, Edward Collins, and Lori
Holland. During fiscal 2009, Joe Cook, David Simpson and Bernard
Couillaud served on our compensation committee from the
beginning of the year through April 27 2009. In the year ended
June 27, 2009, our nominating & corporate
governance committee consisted of Joel Smith, Edward Collins,
and Lori Holland. During fiscal 2009, W. Arthur Porter, Edward
Collins and Bernard Couillaud served on our
nominating & corporate governance committee from the
beginning of the year through April 27 2009. During the year
ended June 27, 2009, no executive officer of Oclaro served
as a director or member of the compensation committee (or other
committee serving an equivalent function) of any other entity,
whose executive officers served on our board of directors or
compensation committee.
Corporate
Governance
Our board of directors believes that good corporate governance
is important to ensure that Oclaro is managed for the long-term
benefit of stockholders. This section describes key corporate
governance guidelines and practices that Oclaro has adopted.
Complete copies of the committee charters and code of conduct
described below are available on our website at www.oclaro.com.
Alternatively, you can request a copy of any of these documents
by writing to, Inc., 2584 Junction Avenue, San Jose,
California 95134, Attention: Corporate Secretary.
Corporate
Governance Guidelines
Our board of directors has adopted corporate governance
guidelines to assist the board in the exercise of its duties and
responsibilities and to serve the best interests of Oclaro and
our stockholders. These guidelines, which provide a framework
for the conduct of the boards business, provide that:
|
|
|
|
|
the principal responsibility of the directors is to oversee the
management of Oclaro,
|
|
|
|
a majority of the members of the board shall be independent
directors,
|
|
|
|
the independent directors shall meet in executive session at
least twice a year and at other times upon request of an
independent director,
|
|
|
|
directors shall have full and free access to officers and
employees of Oclaro and, as necessary and appropriate,
independent advisors,
|
|
|
|
new directors shall participate in an orientation program and
all directors are expected to participate in continuing director
education on an ongoing basis, and
|
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at least annually the nominating and corporate governance
committee shall oversee a self-evaluation of the board which is
designed to determine whether it and the board committees are
functioning effectively.
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Board
Determination of Independence
Under applicable NASDAQ rules, a director of Oclaro will qualify
as an independent director only if, in the opinion
of our board of directors, that person does not have a
relationship which would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director.
Our board of directors has determined that neither Bernard
Couillaud, Edward Collins, Lori Holland, Greg Dougherty nor Joel
Smith has a relationship which would interfere with the exercise
of independent judgment in carrying out the responsibilities of
a director and that each of these directors is an
independent director as defined under Rule 5605
of the NASDAQ Stock Market, Inc. Marketplace Rules.
Director
Attendance at Annual Meeting of Stockholders
Our Corporate Governance Guidelines provide that each director
is responsible for his or her attendance at our annual
stockholder meeting. Eight of our directors attended our 2008
annual meeting of stockholders.
Board
of Directors Meetings
Our board of directors held 17 meetings, including by telephone
conference, during fiscal 2009. The compensation committee of
our board of directors held seven meetings, including by
telephone conference, during fiscal 2009. The audit committee of
our board of directors held six meetings, including by telephone
conference, during fiscal 2009. The nominating and corporate
governance committee of our board of directors held five
meetings during fiscal 2009. All directors attended at least 75%
of the meetings of our board of directors and the committees on
which they served, if any, during the period that they served on
our board of directors or any such committees.
Board
Committees
Our board of directors has established three standing
committees audit, compensation, and nominating and
corporate governance each of which operates under a
charter that has been approved by our board. A current copy of
each committees charter is posted on the Governance
section of our website, www.oclaro.com.
Since April 27, 2009, the members of the compensation
committee of our board of directors are Mr. Dougherty
(Chair), Mr. Collins and Ms. Holland; the members of
the audit committee of our board of directors are
Ms. Holland (Chair), Mr. Collins, and
Mr. Dougherty; and the members of our nominating and
corporate governance committee are Mr. Smith (Chair),
Dr. Couillaud and Mr. Collins.
Prior to April 27, 2009, the members of the compensation
committee of our board of directors were Joseph Cook (Chair),
David Simpson and Mr. Couillaud; the members of the audit
committee of our board of directors were Ms. Holland
(Chair), Mr. Cook and Mr. Collins; and the members of
our nominating and corporate governance committee were
Mr. W. Arthur Porter (Chair), Mr. Collins and
Mr. Couillaud.
Our board of directors has determined that all of the members of
each of the boards three standing committees are
independent as defined under the rules of the NASDAQ Stock
Market, including, in the case of all members of the audit
committee, the independence requirements of
Rule 10A-3
under the Exchange Act.
Audit Committee. The audit committees
responsibilities include:
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appointing, approving the compensation of, and evaluating the
independence of our independent registered public accounting
firm,
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overseeing the work of our independent registered public
accounting firm, including through the receipt and consideration
of certain reports from the firm,
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reviewing and discussing with management and our independent
registered public accounting firm our annual and quarterly
financial statements and related disclosures,
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monitoring our internal control over financial reporting,
disclosure controls and procedures and code of business conduct
and ethics,
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establishing procedures for the receipt and retention of
accounting related complaints and concerns, and
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meeting independently with our independent registered public
accounting firm and management. Our board of directors has
determined that Lori Holland and Edward Collins are audit
committee financial experts as defined in
Item 407(d)(5)(ii) of
Regulation S-K.
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Compensation Committee. The compensation
committees responsibilities include:
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reviewing and approving, or making recommendations to the board
with respect to, the compensation of our chief executive officer
and other executive officers,
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making recommendations to the board with respect to incentive
compensation and equity-based plans, and
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administering our incentive compensation and equity-based plans.
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Nominating and Corporate Governance
Committee. The nominating and corporate
governance committees responsibilities include:
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reviewing with the board, on an annual basis, the requisite
skills and criteria for new board members and the composition of
the board as a whole,
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recommending to the board the persons to be nominated for
election as directors and to each of the boards committees,
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reviewing and making recommendations to the board with respect
to director compensation,
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developing and recommending to the board corporate governance
guidelines,
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overseeing the self-evaluation of the board, and
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overseeing an annual review by the board of succession planning.
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Director
Nomination Process
The process followed by the nominating and corporate governance
committee to identify and evaluate director candidates includes
requests to board members and others for recommendations,
meetings from time to time to evaluate biographical information
and background material relating to potential candidates and
interviews of selected candidates by the Chair and members of
the committee and the board.
The Agreement and Plan of Merger and Reorganization (the
Merger Agreement) by and among Bookham, Ultraviolet
Acquisition Sub, Inc. and Avanex, specified that the board of
directors of Oclaro, the surviving entity of the merger between
Bookham and Avanex consummated on April 27, 2009, would be
composed of three directors from Avanex and four directors from
Bookham. The nominating and corporate governance committee
engaged in a special process in connection with the merger.
Dr. W. Arthur Porter, the chairman of the nominating and
corporate governance committee of Bookham prior to the merger,
held discussions with the members of the boards of directors of
both Bookham and Avanex prior to the closing of the merger
regarding the individuals to serve on the board of directors of
the surviving entity, Oclaro. A consensus was reached among the
two boards as to the members of Oclaros board of
directors. Effective at the closing of the merger on
April 27, 2009, and in order to reflect the consensus
reached by the two boards, each of Peter Bordui, Joseph Cook,
Dr. Porter and David Simpson resigned. Also effective as of
April 27, 2009, the board of directors of Oclaro, upon the
recommendation of the nominating and corporate governance
committee, appointed each of Giovanni Barbarossa, Gregory
Dougherty and Joel A. Smith, III to the board to fill the
vacancies resulting from the resignations described above.
Pursuant to the consensus by the two boards, and as set forth in
the Merger Agreement, Mr. Dougherty was also appointed as
the chair of the compensation committee and Mr. Smith was
appointed as the chair of the nominating and corporate
governance committee, each effective as of April 27, 2009,
and either Mr. Smith or Mr. Dougherty were to be
appointed to the audit
27
committee after the closing of the merger. On May 6, 2009,
our board of directors appointed Mr. Dougherty to the audit
committee.
In general, in considering whether to recommend any particular
candidate for inclusion in the boards slate of recommended
director nominees, the nominating and corporate governance
committee will apply the criteria set forth in our Corporate
Governance Guidelines. These criteria include the
candidates integrity, business acumen, commitment to
understanding our business and industry, experience, conflicts
of interest and the ability to act in the interests of all
stockholders. The committee does not assign specific weights to
particular criteria and no particular criterion is a
prerequisite for each prospective nominee. We believe that the
backgrounds and qualifications of our directors, considered as a
group, should provide a composite mix of experience, knowledge
and abilities that will allow the board to fulfill its
responsibilities.
Stockholders may recommend individuals to the nominating and
corporate governance committee for consideration as potential
director candidates by submitting their names, together with
appropriate biographical information and background materials
and a statement as to whether the stockholder or group of
stockholders making the recommendation has beneficially owned
more than 5% of our common stock for at least a year as of the
date such recommendation is made, to our nominating and
corporate governance committee,
c/o Corporate
Secretary, Oclaro, Inc., 2584 Junction Avenue, San Jose,
California 95134. Assuming that appropriate biographical and
background material has been provided on a timely basis, the
committee will evaluate stockholder recommended candidates by
following substantially the same process, and applying
substantially the same criteria, as it follows for candidates
submitted by others.
Stockholders also have the right under our bylaws to directly
nominate director candidates, without any action or
recommendation on the part of the committee or the board, by
following the procedures set forth under Stockholder
Proposals for 2010 Annual Meeting.
At the annual meeting of stockholders, stockholders will be
asked to consider the election of Bernard Couillaud and Greg
Dougherty who have been nominated for election as a director for
the first time. Mr. Dougherty was a member of the Avanex
Board since April 2005 and joined the Oclaro Board in
conjunction with the Avanex acquisition on April 27, 2009.
Dr. Couillaud joined the Oclaro (formerly Bookham) Board in
May 2008.
Communicating
with the Directors
The board will give appropriate attention to written
communications that are submitted by stockholders and will
respond if and as appropriate. The chairman of the board, with
the assistance of our General Counsel, is primarily responsible
for monitoring communications from stockholders and for
providing copies or summaries to the other directors as he
considers appropriate.
Communications are forwarded to all directors if they relate to
important substantive matters and include suggestions or
comments that the chairman of the board considers to be
important for the directors to know. In general, communications
relating to corporate governance and long-term corporate
strategy are more likely to be forwarded than communications
relating to ordinary business affairs, personal grievances and
matters as to which we tend to receive repetitive or duplicative
communications.
Stockholders who wish to send communications on any topic to the
board should address such communications to our board of
directors
c/o Corporate
Secretary, Oclaro, Inc., 2584 Junction Avenue, San Jose,
California 95134.
Code
of Business Conduct and Ethics
We have adopted a written code of business conduct and ethics
that applies to our directors, officers and employees, including
our principal executive officer, principal financial officer,
principal accounting officer or controller, or persons
performing similar functions. We have posted a current copy of
the code on our website, www.oclaro.com. In addition, we intend
to post on our website all disclosures that are required by law
or NASDAQ listing standards concerning any amendments to, or
waivers from, any provision of the code.
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Report of
the Audit Committee of the Board of Directors
The audit committee has reviewed Oclaros audited financial
statements for the fiscal year ended June 27, 2009 and has
discussed these financial statements with Oclaros
management and independent registered public accounting firm.
The audit committee has also received from, and discussed with
Grant Thornton LLP, Oclaros independent registered public
accounting firm, various communications that Oclaros
independent registered public accounting firm is required to
provide to the audit committee, including the matters required
to be discussed by Statement on Auditing Standards No. 61,
as amended (AICPA, Professional Standards, Vol. 1, AU
Section 380), as adopted by the Public Company Accounting
Oversight Board Rule 3200T.
Oclaros independent registered public accounting firm also
provided the audit committee with the written disclosures and
the letter required by Independence Standards Board Standard
No. 1 (Independence Discussions with Audit Committees), as
adopted by he Public Company Accounting Oversight Board in
Rule 3600T. The audit committee has discussed with the
independent registered public accounting firm its independence
from Oclaro.
Based on its discussions with management and the independent
registered public accounting firm, and its review of the
representations and information provided by management and the
independent registered public accounting firm, the audit
committee recommended to Oclaros board of directors that
the audited financial statements be included in Oclaros
annual report on
Form 10-K
for the fiscal year ended June 27, 2009.
By the Audit Committee of the Board of Directors of Oclaro, Inc.
Lori Holland, Chairman
Edward Collins
Greg Dougherty
Policies
and Procedures for Related Person Transactions
Our board or directors has adopted a written policy that
contains procedures for the reporting and review of any
transaction, arrangement or relationship in which Oclaro is a
participant, the amount involved exceeds $120,000, and one of
our executive officers, directors, director nominees or 5%
stockholders (or their immediate family members), each of whom
we refer to as a related person, has a direct or
indirect material interest.
If a related person proposes to enter into such a transaction,
arrangement or relationship, which we refer to as a
related person transaction, the related person must
report the proposed related person transaction to our general
counsel. Our policy requires that the proposed related person
transaction be reviewed and, if deemed consistent with the
standards contained in our policy, approved by the audit
committee of our board of directors. Whenever practicable, the
reporting, review and approval must occur prior to the
effectiveness or consummation of the transaction. If advance
review and approval is not practicable, our audit committee must
review, and, in its discretion, may ratify the related person
transaction. The policy permits the chairman of our audit
committee to review and, if deemed consistent with the standards
contained in our policy, approve the proposed related person
transaction if it arises between audit committee meetings,
subject to ratification of the related person transaction by our
audit committee at its next meeting. Any related person
transaction that is ongoing in nature must be reviewed annually
by our audit committee.
A related person transaction reviewed under our policy will be
considered approved or ratified if it is authorized by the audit
committee after full disclosure of the related persons
interest in the transaction. As appropriate for the
circumstances, our audit committee must review and consider:
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the related persons interest in the related person
transaction;
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the approximate dollar value of the amount involved in the
related person transaction;
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the approximate dollar value of the amount of the related
persons interest in the transaction without regard to the
amount of any profit or loss;
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whether the transaction was undertaken in the ordinary course of
our business;
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whether the transaction with the related person is proposed to
be, or was, entered into on terms no less favorable to us than
terms that could have been reached with an unrelated third party;
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the purpose of, and the potential benefits to us of, the related
person transaction; and
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any other information regarding the related person transaction
or the related person in the context of the proposed transaction
that would be material to investors in light of the
circumstances of the particular transaction.
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Our audit committee may approve or ratify the transaction only
if our audit committee determines that, under all of the
circumstances, the transaction is in, or is not inconsistent
with, Oclaros best interests. Our audit committee may
impose any conditions on the related person transaction that it
deems appropriate.
Our policy excludes from the definition of related person
transaction the transactions identified by the Commission
as not requiring disclosure under the Commissions related
person transaction disclosure rule. Accordingly, such
transactions are not subject to reporting, review, approval or
ratification under our policy. In addition, our board of
directors has determined that, under certain circumstances, a
transaction does not create a material direct or indirect
interest on behalf of a related person (and therefore is not a
related person transaction under our policy) including if:
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the transaction is specifically contemplated by the provisions
of our certificate of incorporation or bylaws; or
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the related persons interests in the transaction arise
solely from his or her position as an executive officer of
another entity (whether or not he or she is also a director of
such entity) that is a participant in the transaction, where
(i) the related person and all other related persons own in
the aggregate less than a 10% equity interest in such entity,
(ii) the related person and his or her immediate family
members are not involved in the negotiation of the terms of the
transaction and do not receive any special benefits as a result
of the transaction, and (iii) the amount involved in the
transaction equals less than the greater of $200,000 or 5% of
the annual consolidated gross revenues of the entity receiving
payment under the transaction.
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PROPOSAL 2
APPROVAL OF A ONE-TIME STOCK OPTION EXCHANGE PROGRAM
Introduction
We are asking our stockholders to approve a one-time stock
option exchange program, which we refer to below as the option
exchange program. Our compensation committee recommended and our
board of directors authorized the stock option exchange program
on July 22, 2009, subject to stockholder approval. If
implemented, this option exchange program would permit some of
our employees to surrender certain outstanding options that are
significantly underwater (i.e., those options with
an exercise price that is significantly greater than the current
trading price of our common stock) for cancellation in exchange
for a lesser number of stock options with an exercise price
equal to the closing price of our shares on the final day of the
option exchange period, which will also be the grant date of the
new options. The replacement stock options would be issued under
our Amended and Restated 2004 Stock Incentive Plan, which we
refer to as the 2004 Plan, and our Avanex Corporation 1998 Stock
Plan, which we refer to as the 1998 Plan, depending on which
plan the options surrendered for exchange were issued under.
We believe that this option exchange program would be in the
best interests of our stockholders and Oclaro, as the
replacement stock options would help us to retain and motivate
further our most talented employees so that we can continue to
build value for our stockholders. In addition, the option
exchange program would reduce the total number of outstanding
stock options held by our employees and because we
will incur minimal incremental compensation expense in
connection with the exchange program allow us to
more effectively utilize the compensation expense that we have
already recognized in our financial statements in connection
with the grants of the existing underwater stock options.
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Summary
of the Option Exchange Program
The following is a summary of the material terms of the option
exchange program, which are described in more detail below under
the section, captioned Terms of the Option Exchange
Program. If you approve this Proposal 2 we intend
to effect the program on substantially the terms described
below, although we may make immaterial variations for reasons of
convenience, legal compliance or otherwise.
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Only stock options issued at least 12 months prior to the
date of the commencement of the option exchange program that
have an exercise price of at least the greater of (a) $1.75
per share and (b) if greater than $1.75, the highest per
share trading price of our common stock for the 52-week period
immediately preceding the date of the commencement of the option
exchange program, would be eligible to be exchanged for new
options pursuant to the option exchange program;
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The option exchange program would not be a one-for-one
exchange of options. Rather, employees who participate in the
program would exchange their existing options for fewer options
with a lower exercise price. The exchange ratios for the
exchange program would be determined in a manner intended to
result in the grant of new options that have a fair value
approximately equal to the fair value of the options surrendered
for cancellation in the exchange. Therefore, the exchange
program should not cause any material incremental costs in the
stock-based compensation expense that we will recognize in our
financial statements;
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The exercise price of each new option would be equal to the
closing price of our common stock on the NASDAQ Global Market on
the final day of the option exchange period, which would also be
the date of grant of the new options. Each new option would have
a new term of seven years;
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None of the new options would be vested on the date of grant. To
enhance their retentive value, all new options issued pursuant
to the exchange program would be subject to a new vesting
schedule of two or three years, depending on the current vesting
schedule of the options surrendered in the program;
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In order to reduce our stock option dilution, upon completion of
the exchange, we will cancel 3 million shares of common
stock that would otherwise remain available for grant under the
1998 Plan until its expiration and
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The option exchange program would generally be available to all
of our employees who hold eligible options, other than the
members of our board of directors, our named executive officers
and certain other designated employees.
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If our stockholders approve this Proposal 2 at the general
meeting, we intend to commence the option exchange program as
soon as practicable after the meeting. The actual implementation
date will be set by our board of directors, our compensation
committee, or an individual designated by the board or the
compensation committee for such purpose. However, we must
commence the option exchange program within 12 months of
the date that our stockholders approve this Proposal 2,
unless we seek additional stockholder approval for such program.
Reasons
for the Option Exchange Program
The price of our common stock, along with that of other optical
component/fiber optic companies, has been significantly impacted
by the worldwide economic downturn. From September 2008 to
July 1, 2009, share prices have declined on average more
than 60% within our industry, based on a weighted average
percentage of the changes in the share prices of Oclaro, JDS
Uniphase, Finisar, Opnext and Oplink. This decline compares with
the approximately 31% share price decline of the NASDAQ
Composite Index during the same period.
Market capitalization declines have been particularly pronounced
in certain industries, such as ours, since October 2008. Certain
of our customers have reduced their spending plans, leading them
to draw down their existing inventory and reducing anticipated
orders for optical components. These actions have had an adverse
impact on our own revenues and market capitalization. We are
unable to predict the likely duration and
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severity of the current disruption in financial markets and
adverse economic conditions in the U.S. and other
countries, but the longer the duration the greater risks we face
in operating our business.
These market factors have contributed to substantially all
employee stock options granted by us prior to September 2008
being significantly underwater, including options that we have
granted to our employees over the seven years prior. As of
July 1, 2009, exercise prices for outstanding underwater
options that would be eligible to be exchanged pursuant to the
option exchange program ranged from $1.75 to $510.28, with an
average exercise price of $6.29 per share, approximately 10
times above our current price of $.69 per share, the closing
price of our common stock on the NASDAQ Global Market on such
date. Our board of directors believes that these underwater
options provide little motivational or retention value for our
existing employees.
Our board of directors believes that allowing our employees the
opportunity to exchange their underwater stock options for a
lesser number of new at-the-money options (i.e., options that
have an exercise price equal to the current trading price of our
common stock) would help us retain such employees as well as
provide an additional incentive for our employees during these
difficult economic times. The newly-issued options would include
additional vesting requirements to enhance their retentive value
and no options would be eligible to be exchanged that have
exercise prices below the greater of (a) $1.75 or
(b) if greater than $1.75, the highest trading price of our
common stock in the 52-week period immediately preceding the
date that we commence the exchange offer to employees. The
highest trading price of our common stock in the 52-week period
immediately preceding the date of this proxy statement was
$1.30. We plan to commence the exchange offer as soon as
practicable after the general meeting if our stockholders
approve this Proposal 2. The option exchange program is
generally intended to be a value neutral program
from an accounting perspective. Therefore, we do not expect that
the program would result in any material incremental increase in
our share-based compensation costs. Furthermore, members of our
board of directors and our named executive officers would not be
eligible to participate in this option exchange program. While
these individuals also hold options that are significantly
underwater, we have excluded them from participation in the
option exchange program.
While we are executing an aggressive strategy (including cost
cutting, salary freezes, and layoffs) designed to enable us to
emerge from the downturn in the strongest possible position, we
are concerned that the strain from these activities could
adversely impact the morale and retention of our employees. In
addition, as we discuss in more detail below, the underwater
options that remain outstanding represent potential dilution for
our stockholders and ongoing compensation expense for us even
though the options provide minimal retentive value to our
employees and may never be exercised. We believe that our
proposed option exchange program would significantly mitigate
our retention risk and create a positive solution for our
employees and stockholders by reducing our stock option dilution
and enhancing our return from the compensation expense already
recognized for the existing underwater options.
Value
to our Employees: Create a Return on Investment from
our Equity Incentive Program
We are facing significant challenges relating to how we
compensate our most talented employees in the current
macroeconomic environment. As we are taking aggressive actions
to conserve our cash balances and control our operating
expenses, we have been unable to provide across the board
increases to our employees total cash compensation this
past year. With limited resources to expend on other
employee-based benefits, we have experienced higher than average
voluntary turnover rates this past fiscal year. Because of the
worldwide demand for talent, we believe that the use of non-cash
incentives, such as a viable equity incentive program, is
essential to effectively attract and retain employees during
these difficult times.
Our desire to maintain our overall stock dilution at or below
the dilution levels of our peers and the broader market has
limited our issuance of equity awards to a select group of
employees who have a direct impact on helping us to attain our
operational and strategic objectives. Approximately 40% of our
employee base receives equity awards, either at the time of hire
or on an ongoing basis. It is critical that our employees
return on investment of time and effort in these
equity awards be meaningful, and we believe that the option
exchange program will make possible such a positive return on
investment.
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In response to deteriorating macroeconomic conditions, we have
implemented restructuring activities to improve our operational
efficiencies by reducing excess workforce and capacity. In
addition, we have taken the following significant actions to
reduce our global total compensation costs:
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implemented a global salary freeze and salary reductions in
certain locations;
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implemented plant shut downs and leave-without-pay
programs; and
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taken other steps across our business to materially reduce our
paid time off liability, expense for company provided cars, and
expenses for the reimbursement of external education and
training.
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In the context of these pronounced benefit reductions and the
challenges that we face retaining employees, we believe that the
exchange program will allow us to provide a meaningful, tangible
benefit to our employees at little additional cost to us.
Benefits
to our Stockholders: Reduced Overhang and Effective Use of
Compensation Expense
As of July 1, 2009, our stock option overhang
(i.e., the total number of stock options outstanding as a
percentage of our total common stock outstanding), as measured
under the common guidelines of major proxy advisory services,
was 8.49%, based on approximately 15,827,666 employee stock
options outstanding and 186,020,922 total shares of common stock
issued and outstanding. Approximately 8 million of these
outstanding options would be eligible to be included in the
exchange program. We believe that keeping these underwater
options outstanding provides little or no retentive value to us.
Nevertheless, these options will remain in overhang
until they are exercised, expire or are cancelled. By replacing
these outstanding options with fewer new at-the-money options,
we would reduce our stock option overhang as measured by these
services. The total overhang reduction is difficult to estimate
and will only be known when the actual exchange is complete.
However, if all eligible employees decided to tender their
eligible underwater options in the exchange, and the fair values
of the options received in the exchange are similar to our
estimate of such fair values as of July 1, 2009, the option
exchange program would reduce our overhang by approximately 25%
(from 8.49% to 6.39%). In addition, in connection with the
option exchange program, we will cancel three million shares of
common stock currently available for grant under the 1998 Plan,
which will further reduce dilution of our stockholders. These
shares would otherwise remain available for us to grant to
employees until the expiration the 1998 Plan in December 2009.
Therefore, we expect that the option exchange program could
meaningfully reduce the potential stock option dilution for our
stockholders while helping us more effectively achieve the
objectives of our equity program to attract, retain and motivate
our employees.
Lastly, the option exchange program will allow us to enhance our
return on the compensation expense that we have already
recognized or will recognize with respect to existing underwater
stock options. Generally, we recognize an expense that reduces
our net income whenever we grant stock options to our employees.
This share-based compensation expense is calculated at the time
the option is granted (not exercised) in accordance with
SFAS 123R and is recognized over the vesting period of the
option. Because the amount of expense is not re-measured as our
stock price declines, we must continue to incur expense for
underwater options without regard to the decreasing likelihood
that they will ever be exercised. By implementing a value
neutral exchange with additional vesting requirements for the
new stock options, the granting of the new options should not
result in any material incremental SFAS 123R costs to us.
At the same time, by allowing us to replace underwater options
that have little or no retentive value with a lesser number of
new at-the-money options, we believe that the exchange program
would result in a meaningful, tangible benefit to our employees.
Therefore, the exchange program would allow us to more
efficiently utilize the share-based compensation expense that we
have already recognized or will recognize in our financial
statements.
Implementation
of the Option Exchange Program
The implementation of the option exchange program is subject to
the approval of our stockholders of this Proposal 2. If the
program is commenced, eligible employees will be offered the
opportunity to participate in the option exchange program
pursuant to a written tender offer that will be distributed to
all eligible employees. Eligible employees would be given at
least 20 business days in which to accept the offer to
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surrender their eligible options for cancellation in exchange
for fewer new stock options. The surrendered options would be
cancelled and the new options would be granted upon the
cancellation of the surrendered options. However, our board of
directors reserves the right to postpone or cancel the program
at any time before the exchange program begins.
Prior to the commencement of the option exchange program, we
will file the written offer to exchange with the Commission, as
part of a tender offer statement on Schedule TO. Eligible
employees and our stockholders will be able to review, free of
charge, the offer to exchange, and other related documents filed
by us with the Commission on the Commissions website at
www.sec.gov.
Terms of
the Option Exchange Program
Eligible
Options
To be eligible for exchange pursuant to the option exchange
program, an option must (i) have an exercise price of at
least the greater of (a) $1.75 per share and (b) if
greater than $1.75, the highest per share trading price of our
common stock for the 52-week period immediately preceding the
date of the commencement of the option exchange program and
(ii) have been granted at least 12 months prior to the
commencement of the option exchange program. This approach seeks
to exclude from the option exchange program those stock options
which, because they were granted during the recent economic
downturn, are more likely to have a lower exercise price and a
better chance at becoming in-the-money in the future.
Eligible
Participants
The option exchange program would be open to all of our
U.S. and international employees who hold eligible options,
except for the following individuals:
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members of our board of directors;
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our named executive officers; and
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certain employees residing outside of the United States.
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Although we intend to include our international employees in the
option exchange program, we may exclude some employees if local
law would make their participation in the program illegal,
inadvisable or impractical and where exclusion otherwise is
consistent with our compensation policies with respect to that
jurisdiction. To be eligible, an individual must be employed on
the date the offer to exchange commences and remain employed
through the date that the new options are granted. Therefore,
the program is not available to former employees or retirees. As
of July 1, 2009, there were approximately
795 employees who hold eligible options and would be
eligible to participate in the option exchange program.
Exchange
Ratios
We refer to the number of options that an employee must
surrender for cancellation in exchange for one new replacement
option as the exchange ratio. The exchange ratios
for the option exchange program would be based on the exercise
price of the existing options that are surrendered for exchange
and the estimated fair value of the options that would be
received in the exchange. If our stockholders approve this
Proposal 2, we will determine the exchange ratios shortly
before the offer to exchange commences.
We intend to establish the exchange ratios by dividing the
eligible options into at least four groups based on their
current exercise prices and assigning an exchange ratio to each
group that is designed to result in an approximately value
neutral exchange (calculated using the Black-Scholes option
pricing model) for such group as a whole. The calculation of
fair value using the Black-Scholes option pricing model takes
into account many variables, such as the volatility of our
common stock, the remaining term of the applicable options, the
exercise prices of such options, the trading price of our common
stock on the date of grant and the potential for forfeiture of
such options if the service-based vesting requirements are not
satisfied. As a result, the exchange ratios would not solely
reflect the difference in the exercise prices of the existing
options. Setting the exchange ratios in this manner will avoid
Oclaro having to recognize any material incremental
34
compensation expense upon the issuance of the new options.
However, because the exchange ratios would be set prior to the
actual exchange of options under the program, it is possible
that we would recognize some additional material incremental
compensation expense due to fluctuations in the trading price of
our common stock between the time the ratios are set and the
date the new options are granted.
The final exchange ratios have not been determined as of the
date of this proxy statement. However, to illustrate the effect
of the program on our outstanding options, we have set forth
below an estimate of what the exchange ratios would be if they
were set as of July 1, 2009, when the closing price of our
common stock on the NASDAQ Global Market was $0.65 per share.
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Weighted Average
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Maximum Number of
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Number of Shares
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Remaining Life of
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Shares Underlying
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Per Share Exercise
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Underlying Eligible
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Eligible Options
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Replacement Options
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Price of Eligible Options
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Options
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(Years)
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Exchange Ratio
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that May Be Granted
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$1.75 to $4.89
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3,984,427
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7.95
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1.50 to 1
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2,656,285
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$4.90 to $6.72
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2,114,337
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5.89
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2.00 to 1
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1,057,169
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$6.73 to 7.99
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845,937
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4.92
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3.00 to 1
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281,979
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$8.00 and Up
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1,075,220
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2.86
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6.00 to 1
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179,203
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Total: 8,019,921
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Total: 4,174,636
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The total number of replacement options that an employee would
receive in exchange for the surrender of eligible options would
be determined, on a
grant-by-grant
basis, by converting the number of shares underlying the
eligible option according to the appropriate exchange ratio and
rounding down to the nearest whole share. For example, using the
example exchange ratios set forth above, if an employee were to
surrender 100 eligible options with an exercise price of $2.00
per share, the employee would receive 66 replacement options
(100 divided by 1.50, rounded down to the nearest whole share)
in exchange for the surrendered options. Likewise, if the
employee surrendered 100 eligible options with an exercise price
of $7 per share, the employee would receive 33 replacement
options (100 divided by 3, rounded down to the nearest whole
share). The exercise prices of the new replacement options will
equal the closing price of our common stock on the NASDAQ Global
Select Market on the final date of the exchange period.
Assuming the use of the illustrative exchange ratios and the
estimated number of eligible options set forth above, if all
eligible options are surrendered for cancellation in the option
exchange program, the total maximum number of common stock
underlying replacement options would be 4,174,636 shares,
resulting in a reduction of 3,845,285 shares of common
stock subject to outstanding employee stock options.
Election
to Participate
Participation in the option exchange program would be completely
voluntary and eligible employees would be permitted to exchange
all or none of their eligible options on a
grant-by-grant
basis. If an employee declines to participate in the exchange
program with respect to all or a portion of his or her eligible
option grants, all existing stock options that are not
surrendered will remain outstanding subject to their existing
terms, including vesting schedules, expiration dates and
exercise prices.
If you are both a stockholder and an employee who would be
eligible to participate in the option exchange program, your
vote to approve this Proposal 2 does not constitute
an election to participate in the exchange program.
Terms
of Replacement Options
All replacement options would be nonstatutory stock options
granted under the 2004 Plan or the 1998 Plan. As stated above,
the exercise price of all new options received in exchange for
the surrender of existing eligible options would be equal to the
closing price of our common stock on the final day of the
exchange period, which will also be the date of grant of the new
options. All new options will have a new exercise term of seven
years. In addition, each new option would be subject to a new
vesting schedule based on the time
35
remaining in the existing vesting schedule of the options
surrendered for cancellation in the exchange. The table below
sets forth the new vesting schedules that would apply to the
replacement options:
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Time Remaining in Vesting Schedule
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for Existing Options:
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Vesting Schedule for New Options:
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Fully Vested
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Two Years (with 25% of the options vesting on the first
anniversary of the grant date and the remaining options vesting
in 12 equal monthly installments thereafter)
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Partially Vested or Unvested
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Three Years (with 25% of the options vesting on the first
anniversary of the grant date and the remaining options vesting
in 24 equal monthly installments thereafter)
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An employee would not be able to exercise his or her new options
prior to the time such options have vested in accordance with
the schedule listed above. If any employee ceases to provide
services to us prior to the end of the vesting period for any
reason, all unvested options would be forfeited, subject to the
provisions of the 2004 Plan or the 1998 Plan, as the case may
be. The other terms and conditions of the replacement options
would be set forth in new grant agreements to be entered into as
soon as practicable beginning on the grant date. Any additional
terms of the new options would generally be comparable to the
terms and conditions of the options surrendered in the option
exchange.
In general, options outstanding under our equity incentive plans
have a term of seven to ten years and a vesting schedule of four
years, with 25% of the options vesting on the first anniversary
of the grant date and the remaining options vesting in equal
monthly installments over the remaining three years. In
designing the term and vesting schedules of the new options, we
considered various alternatives, such as applying the weighted
average term of the existing eligible options to the new
options. However, we believe that the use of a seven-year term
for all new options is appropriate because it enables us to
apply a longer associated vesting schedule, which enhances the
retentive power of the replacement awards. In addition, the
seven-year term of the new options would be reflected in the
Black-Scholes calculation used to arrive at the exchange ratios
used in the option exchange program.
Cancellation
of Surrendered Options
All eligible options that are surrendered pursuant to the option
exchange program will be cancelled promptly at the end of the
exchange period, and new options will be granted on that date.
In addition, in order to reduce our stock option overhang and
minimize dilution for our stockholders, we will immediately
cancel three million shares of common stock reserved and
available for future grant under the 1998 Plan in connection
with the option exchange program. All other common stock subject
to options cancelled in the exchange program will be returned to
the share reserve of the applicable equity incentive plan under
which the surrendered options were originally granted and will
be available for future grant under such plan, except that
shares subject to cancelled options granted under certain of our
prior and assumed plans that have been consolidated into the
2004 Plan will be available for future issuance under the 2004
Plan.
Potential
Modifications to Terms
It is currently our intention to make the option exchange
program available to all of our eligible employees (other than
directors and named executive officers), including eligible
employees located in jurisdictions outside of the United States,
where the exchange is permitted by local law and we determine
that such employees participation is consistent with our
compensation policies with respect to a particular jurisdiction.
It is possible that we would need to make modifications to the
terms of the option exchange program for any offers made to
employees outside of the United States in order to comply with
local requirements, or for tax or accounting reasons.
The terms of the option exchange program will be described in a
tender offer statement that will be filed on Schedule TO
with the Commission. Although we do not anticipate that the
Commission would require us to modify the terms materially, it
is possible that we will need to alter the terms of the option
exchange program to comply with potential Commission comments.
36
Accounting
Impact
We have adopted the provisions of SFAS 123R, which requires
employee equity awards to be accounted for in our financial
statements under the fair value method. Generally, when we grant
new share-based awards, we recognize compensation expense for
the fair value of such awards, which we recognize over the
vesting schedule of the award. However, under these rules, the
exchange of options pursuant to the option exchange program will
be characterized as a modification of the existing option awards
and no additional expense will be recognized if the modification
is value neutral. To be value neutral under SFAS 123R, the
fair value of the stock options surrendered as calculated
immediately prior to their surrender must be at least equal to
the fair value of the stock options received by employees in the
option exchange program. As described above, we use the
Black-Scholes option pricing model to determine the fair value
of all stock options granted to employees. The ultimate
accounting consequences will depend in part on participation
levels as well as on the exchange ratios and vesting schedules
established at the time of the option exchange. However, the
program would result in incremental compensation expense of
approximately $141,000 under SFAS 123R based on modeling at
the time of this stockholder proposal. We believe this expense
strikes an appropriate balance between the interests of
employees and stockholders.
Any previously unrecognized compensation expense from the
surrendered stock options and incremental compensation costs
associated with the new stock options received in the option
exchange program will be recognized over the vesting period of
the new options.
U.S.
Federal Income Tax Consequences
The following is a summary of the anticipated material
U.S. federal income tax consequences of participating in
the option exchange program. A more detailed summary of the
applicable tax considerations to participants will be provided
in the offer to exchange. We believe the exchange of eligible
options for new options pursuant to the program should be
treated as a non-taxable exchange and neither we nor any of our
employees should recognize any income for U.S. federal
income tax purposes upon the surrender of eligible options and
the grant of new options. Since all new options issued under the
option exchange program will be nonstatutory stock options, an
employee who participates and receives the new options will
recognize ordinary income upon exercise of the new options equal
to the excess, if any, of the fair market value of the purchased
common shares on the exercise date over the exercise price paid
for those shares. At the time of exercise of the new options,
the ordinary income will be subject to applicable tax
withholding.
Upon disposition of the common shares resulting from the
exercise of the new options, the participating employee will
recognize a capital gain or loss (which will be long- or
short-term depending upon whether the shares were held for more
than one year) equal to the difference between the selling price
and the sum of the amount paid for the shares plus any amount
recognized as ordinary income upon acquisition of the shares.
Additionally, as all new options will be nonstatutory stock
options, an individuals tax treatment upon exercise of the
new options may differ from the treatment otherwise applicable
to the surrendered eligible options. The tax consequences for
participating employees subject to tax outside the United States
may differ from the U.S. federal income tax consequences
described in the preceding sentences. All holders of eligible
options are urged to consult their own tax advisors regarding
the tax implications of participating in the option exchange
program under all applicable laws prior to participating in the
option exchange program.
Plan
Benefits Relating to the Option Exchange Program
The members of our board of directors and our named executive
officers will not be eligible to participate in the option
exchange program. With respect to those employees who are
eligible to participate in the option exchange program, the
decision to participate in the program is voluntary and,
therefore, we are not able to predict:
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who would participate in the program;
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how many options would be surrendered for cancellation by any
particular group of employees pursuant to the program; or
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how many new options would be granted pursuant to the program.
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37
Effect of
Option Exchange Program on Stockholders
Although we are not able to predict the precise impact of the
option exchange program on our stockholders because of the
voluntary nature of the program, we have designed the program in
a manner intended to ensure, from an accounting perspective,
that the value of the options granted in the program is not
materially greater than the value of the options surrendered. In
addition, the option exchange program is intended to reduce our
stock option overhang and minimize the stock option dilution for
our stockholders, while effectively advancing the objectives of
our equity program to attract, retain and motivate our
employees. Lastly, because the program is designed to be
approximately value neutral, it is also intended to more
effectively recapture value from the share-based compensation
expense that we have already recognized or will recognize in our
financial statements.
EQUITY
COMPENSATION PLAN INFORMATION
As of June 27, 2009, we maintained the 2004 Plan, the
Bookham 1998 Equity Incentive Plan, the New Focus 1999 Plan, the
New Focus 2000 Equity Incentive Plan, the 1998 Plan and the
Avanex 1999 Director Option Plan. The following table
summarizes our equity compensation plans as of June 27,
2009:
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Number of Securities
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Remaining Available for
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Number of Securities to
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Future Issuance Under
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be Issued Upon Exercise
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Equity Compensation
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of Outstanding Options
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Weighted-Average
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Plans (Excluding
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and Vesting of Restricted
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Exercise Price of
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Securities Reflected in
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Stock Units(1)
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Outstanding Options(2)
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Column (a))
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(a)
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(b)
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(c)
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Equity compensation plans approved by security holders
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18,018,000
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$
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4.20
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12,803,000
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Equity compensations plans not approved by security holders
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18,018,000
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$
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4.20
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12,803,000
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(1) |
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As of June 27, 2009, there were 5.3 million options
outstanding which were assumed in the merger with Avanex. |
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(2) |
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The weighted-average exercise price does not take into account
ordinary shares issuable upon the vesting of outstanding
restricted stock unit awards, which have no exercise price. |
Summary
of the 2004 Plan
The following is a summary of the material terms of the 2004
Plan and is qualified in its entirety by reference to the 2004
Plan. A copy of the 2004 Plan may be found attached as
exhibit 10.1 to our Quarterly Report on
Form 10-Q
filed on February 6, 2008.
Administration.
Our compensation committee administers the 2004 Plan, under the
authority delegated to it by our board of directors. The
compensation committee has the authority to grant awards under
the 2004 Plan and to adopt, amend and repeal administrative
rules, guidelines and practices relating to the 2004 Plan. The
compensation committee interprets the terms of the 2004 Plan and
any award agreements entered into under it. The compensation
committee may delegate to one or more of our officers the power
to grant awards under the 2004 Plan, but such officers are not
authorized to grant awards to any of our officers.
Eligible
Participants.
All of the our employees, officers, directors, consultants and
advisors are eligible to be granted awards under the 2004 Plan.
38
Shares
Available for Awards.
Awards may be made under the 2004 Plan for up to
19,000,000 shares of common stock. The maximum number of
shares of common stock that may be granted in awards to any
participant is 1,000,000 per calendar year. The maximum number
of shares that may be granted through awards that are not stock
options or stock appreciation rights (SARs) is
17,000,000. The compensation committee will adjust the aggregate
number of shares reserved for issuance under the 2004 Plan in
the case of a stock split, reverse stock split, stock dividend,
recapitalization, combination of shares, reclassification of
shares, spin-off or other similar change in capitalization or
event, or any distribution to holders of common stock other than
an ordinary cash dividend. If any award expires or is
terminated, surrendered or canceled without having been fully
exercised, the unused common stock covered by such award shall
again be available for grant under the 2004 Plan.
Types
of Awards and Terms and Conditions.
The 2004 Plan permits the grant of the following awards:
(i) nonstatutory stock options; (ii) incentive stock
options (ISOs); (iii) SARs;
(iv) restricted stock; and (v) other stock-based
awards. Awards may be granted alone, in addition to, or in
combination with any other award granted under the 2004 Plan.
Stock
Options.
The compensation committee may grant incentive stock options or
nonstatutory stock options with an exercise no less than the
fair market value of our common stock at the date of grant. The
option exercise price may be payable in cash, by delivery of an
irrevocable and unconditional undertaking by a creditworthy
broker to deliver sufficient funds, by promissory note, or, at
the discretion of the compensation committee, in shares of
common stock having a fair market value on the exercise date
equal to the exercise price.
Directors
Options.
On the date of each annual meeting of stockholders of Oclaro, we
will grant to each member of our board of directors who is not
an employee a nonstatutory stock option to purchase
5,000 shares of common stock. Such options will have an
exercise price equal to the closing sale price of our common
stock on the trading date immediately prior to the date of grant
and will be immediately exercisable at the time of grant. The
compensation committee may impose conditions or vesting
limitations on such grants, may increase or decrease the number
of shares subject to such options, and may make additional
grants of nonstatutory stock options to board members who are
not employees.
Stock
Appreciation Rights (SARs).
A SAR is an award entitling the holder, upon exercise, to
receive an amount in cash or common stock based on the
appreciation, after the date of grant, in the fair market value
of our common stock. The date by which such appreciation is
measured is the exercise date unless the compensation committee
specifies otherwise. SARs may be granted in tandem with stock
options (tandem SARs) or on their own
(independent SARs). Tandem SARs are only exercisable
when the related stock option is exercisable and will terminate
upon the termination or exercise of the related stock option
(except that a SAR that covers less than the full number of
shares covered by a stock option will not be reduced until the
number of shares covered by the exercised or terminated stock
option exceeds the number of shares not covered by the SAR).
Independent SARs are exercisable at such time or times, and on
such conditions, as the compensation committee specifies in the
award.
Restricted
Stock.
The compensation committee may grant restricted stock awards
entitling recipients to acquire shares of our common stock,
subject to our right to repurchase all or part of such shares at
their issue price upon certain specified conditions. The
compensation committee determines the conditions for repurchase
and the issue price, if any, of the restricted stock awards. Any
restricted stock granted after January 25, 2008 that vests
solely based on the passage of time may not be more than
one-third vested prior to the first anniversary of the
39
date of grant, no more than two-thirds vested prior to the
second anniversary of the date of grant, and the balance must
vest no more than ratably over the period from the second
anniversary to the third anniversary of the date of grant. Any
restricted stock awards granted after January 25, 2008 that
do not vest solely based on the passage of time shall not vest
prior to the first anniversary of the date of grant.
Other
Stock-Based Awards.
The compensation committee may make other awards of shares of
our common stock or other awards that are valued by reference to
shares of our common stock. Such awards may be paid in shares of
our common stock or in cash, as the compensation committee so
determines. The compensation committee may determine the
conditions of such awards, including any applicable purchase
price.
Reorganization
Event.
In the event of a reorganization event of Oclaro (as defined in
the 2004 Plan), subject to certain limitations and restrictions
as more fully described in the 2004 Plan, the compensation
committee may:
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provide that Awards (other than restricted stock) shall be
assumed by the acquiring or succeeding corporation;
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provide that unexercised stock options or other unexercised
awards (other than restricted stock) shall become exercisable in
full and will terminate immediately prior to the consummation of
the reorganization event unless exercised by the holder in a
specific time period;
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provide that restrictions applicable to outstanding awards
(other than restricted stock) shall lapse prior to the
reorganization event;
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provide that holders of awards (other than restricted stock) may
receive a portion of the acquisition price in proportion to the
number of shares of common stock subject to the holders
awards minus the aggregate exercise price of the awards;
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provide that awards (other than restricted stock) shall convert
into a right to receive liquidation proceeds; and
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in the case of restricted stock awards, may provide that, in a
reorganization event that is not a liquidation or dissolution,
Oclaros repurchase right shall transfer to Oclaros
successor entity and apply to the consideration into which our
common stock was converted or exchanged in the reorganization
event.
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Termination
of Employment.
The compensation committee shall determine effect of the
disability, death, retirement, authorized leave of absence or
other change in the employment or other status of a holder on
any award.
Duration,
Termination and Amendment.
No awards shall be granted under the 2004 Plan after the
completion of 10 years from the date on which the 2004 Plan
was adopted by our board of directors, but awards previously
granted may extend beyond that date. The compensation committee
or our board of directors may amend, suspend or terminate the
2004 Plan or any portion of it at any time, except that no
amendment requiring stockholder approval under any applicable
legal, regulatory or Nasdaq listing requirement shall become
effective until such stockholder approval is obtained. No award
may be made that is conditioned upon stockholder approval of any
amendment to the 2004 Plan.
Transferability
of Awards.
Unless otherwise provided by the Compensation Committee, awards
under the 2004 Plan may only be transferred by will or the laws
of descent and distribution, or, other than in the case of an
incentive stock
40
option, under a qualified domestic relations order. In no event
are transfers to a third party for consideration permitted.
Prohibition
on Repricing Awards.
Unless approved by our stockholders, no stock option or SAR may
be amended to reduce its exercise price or measurement price,
the compensation committee may not cancel any outstanding stock
option or SAR and grant in substitution any new awards with a
lower exercise price or measurement price, and no outstanding
stock option or SAR may be cancelled in exchange for cash,
except in connection with a reorganization event or change of
control. However, upon the approval of this Proposal 2 by
our stockholders, we may conduct a one-time option exchange
program pursuant to which outstanding options may be tendered to
us for cancellation in exchange for the issuance of a lesser
amount of new options with a lower exercise price.
U.S.
Federal Income Tax Consequences.
The following is a brief summary of the U.S. federal income
tax consequences of certain transactions under the 2004 Plan
based on federal income tax laws in effect as of the date of
this proxy statement. This summary is not intended to be
exhaustive and does not describe foreign, state or local tax
consequences, nor does it describe consequences based on
particular circumstances. Each participant should refer to the
actual text of the 2004 Plan and should consult with a tax
advisor as to specific questions relating to tax consequences of
participation in the 2004 Plan.
Incentive
Stock Options.
No income generally will be recognized by an optionee upon the
grant or exercise of an ISO. The exercise of an ISO, however,
may result in alternative minimum tax liability. If common
shares are issued to the optionee pursuant to the exercise of an
ISO, and if no disqualifying disposition of such shares is made
by such optionee within two years after the date of grant or
within one year after the transfer of such shares to the
optionee, then upon sale of such shares, any amount realized in
excess of the exercise price will be taxed to the optionee as a
long-term capital gain and any loss sustained will be a
long-term capital loss.
If common shares acquired upon the exercise of an ISO are
disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary
income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of such shares at the
time of exercise (or, if less, the amount realized on the
disposition of such shares if a sale or exchange) over the
exercise price paid for such shares. Any further gain (or loss)
realized by the participant generally will be taxed as
short-term or long-term capital gain (or loss) depending on the
holding period.
Nonstatutory
Stock Options.
In general, (a) no income will be recognized by an optionee
at the time a nonstatutory stock option is granted; (b) at
the time of exercise of a nonstatutory stock option, ordinary
income will be recognized by the optionee in an amount equal to
the difference between the exercise price paid for the shares
and the fair market value of the shares on the date of exercise;
and (c) at the time of sale of shares acquired pursuant to
the exercise of a nonstatutory stock option, any increase (or
decrease) in value of the shares after the date of exercise will
be treated as either short-term or long-term capital gain (or
loss) depending on how long the shares have been held.
Stock
Appreciation Rights.
No income will be recognized by a participant in connection with
the grant of a SAR. When the SAR is exercised, the participant
normally will be required to recognize ordinary income in the
year of exercise an amount equal to the amount of cash received
and the fair market value of any shares received on the
exercise. Upon the sale of the shares, the participant will have
capital gain or loss due to any increase (or decrease) in value
of the shares after exercise. This capital gain or loss will be
long-term if the participant held the stock for more than one
year and otherwise will be short-term.
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Restricted
Stock Awards.
The recipient of restricted stock awards generally will be
subject to tax at ordinary income rates on the fair market value
of the underlying shares (reduced by any amount paid by the
participant for such shares) at such time as the shares are no
longer subject to forfeiture or restrictions on transfer for
purposes of Section 83 of the Code
(Restrictions). Generally, the recipient will be
subject to tax at vesting. However, a participant who so elects
under Section 83(b) of the Code within 30 days of the
date of transfer of the shares will have taxable ordinary income
on the date of transfer of the shares equal to the excess of the
fair market value of such shares (determined without regard to
the Restrictions) over the purchase price, if any, of such stock
awards. If a Section 83(b) election has not been made, any
dividends received with respect to shares that are subject to
the Restrictions generally will be treated as compensation that
is taxable as ordinary income to the participant. When the stock
is sold, the participant will have capital gain or loss equal to
the difference between the sales price and the fair market value
of the shares on the date of grant or vesting, as applicable.
Any capital gain or loss will be long-term if the participant
held the shares for more than one year and otherwise will be
short-term.
Other
Stock-Based Awards.
The tax consequences associated with any other stock-based award
granted under the 2004 Plan will vary depending on the specific
terms of the award. Among the relevant factors are whether or
not the award has a readily ascertainable fair market value,
whether or not the award is subject to forfeiture provisions or
restrictions on transfer, the participants holding period,
and amount paid for the award or underlying common stock.
Tax
Consequences to Oclaro.
To the extent that a recipient recognizes ordinary income in the
circumstances described above, we will be entitled to a
corresponding deduction provided that, among other things, the
income meets the test of reasonableness, is an ordinary and
necessary business expense, is not an excess parachute
payment within the meaning of Section 280G of the
Code and is not disallowed by the $1 million limitation on
certain executive compensation under Section 162(m) of the
Code. At such time, we will also have a withholding and
reporting obligation with regard to such income.
Compliance
with Section 409A of the Code.
The American Jobs Creation Act of 2004 revised the federal
income tax law applicable to certain types of awards that may be
granted under the 2004 Plan. To the extent applicable, it is
intended that the 2004 Plan and any grants made under the 2004
Plan comply with the provisions of Section 409A of the Code.
Summary
of the 1998 Plan
The following is a summary of the material terms of the 1998
Plan and is qualified in its entirety by reference to the 1998
Plan. A copy of the 1998 Plan may be found attached as
exhibit 10.2 to the Avanex Annual Report on
Form 10-K
filed by Avanex on September 5, 2008.
Administration.
Our compensation committee administers the 1998 Plan, under the
authority delegated to it by our board of directors. The
compensation committee has the authority to select award
recipients, determine the size of the award, determine the terms
and conditions of any award, including exercise price, time for
exercise and vesting restrictions, to modify or amend each
award, to interpret the terms of the 1998 Plan and awards
granted under it, and to prescribe or rescind rules and
regulations relating to the 1998 Plan. The compensation
committees decisions and interpretations are binding on
participants in the 1998 Plan.
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Eligible
Participants.
All of the our employees, directors, and consultants are
eligible to be granted nonstatutory stock options, stock
purchase rights and restricted stock units. Only employees may
receive incentive stock options.
Shares
Available for Awards.
The maximum aggregate number of shares of common stock that may
be issued under the 1998 Plan is 10,689,220 shares of our
common stock, plus an annual increase added on the first day of
our fiscal year equal to the lesser of
(i) 2,170,400 shares, (ii) 4.9% of the
outstanding shares on such date or (iii) a lesser amount
determined by the compensation committee. The compensation
committee will adjust the aggregate number of shares reserved
for issuance under the 1998 Plan in the case of a stock split,
reverse stock split, stock dividend, spin-off, combination or
reclassification of or common stock, or any other increase or
decrease in the number of issued shares of our common stock
effected without receipt of consideration by us. If any award
expires or is terminated, surrendered or canceled without having
been fully exercised, the unused common stock covered by such
award shall again be available for grant under the 1998 Plan.
Types
of Awards and Terms and Conditions.
The 1998 Plan permits the grant of the following awards:
(i) nonstatutory stock options; (ii) incentive stock
options; (iii) stock purchase rights; and
(iv) restricted stock units. Awards may be granted alone,
in addition to, or in combination with any other award granted
under the 1998 Plan.
Stock
Options.
The compensation committee may grant incentive stock options or
nonstatutory stock options. However, to the extent the fair
market value of the shares subject to an incentive stock option
exceed $100,000 in a calendar year, the option shall be treated
as a nonstatutory stock option. No plan participant shall be
granted options to purchase more than 8,139,000 shares of
common stock in any one fiscal year, although in connection with
his or her initial service, a participant may be granted options
to purchase up to 24,170,000 shares that will not be
counted towards that limit.
Incentive stock options may be granted with an exercise no less
than the fair market value of our common stock at the date of
grant; provided that in the case of an employee who holds more
than 10% of our outstanding stock, the exercise price must be at
least 110% of the fair market value. Nonstatutory stock options
intended to qualify as performance-based
compensation within the meaning of Section 162(m) of
the Code must be granted with an exercise no less than the fair
market value of our common stock at the date of grant. The
compensation committee may grant stock options with an exercise
price less than fair market value in connection with a merger or
similar corporate transaction.
The option exercise price may be payable in cash, check,
promissory note, shares of common stock having a fair market
value on the exercise date equal to the exercise price (as long
as, in the case of shares received upon a stock option exercise,
such shares have been owned for six months), under a cashless
exercise program established by Oclaro, or by a reduction in the
amount of any liability of Oclaro to the holder.
If the participant ceases to provide services to Oclaro, unless
the compensation committee decides otherwise, the participant
shall have three months from the date of termination to exercise
his or her options with respect to any vested portion of such
options.
Stock
Purchase Rights.
The compensation committee may grant participants the right to
purchase shares of our common stock (stock repurchase
rights), subject to our option to repurchase such shares
at the price paid by the participant upon the participants
termination of employment. The compensation committee may set
the rate at which our repurchase option lapses. In addition, the
compensation committee may subject stock repurchase rights to
vesting contingent on the achievement of specific performance
goals. No participant may receive stock purchase rights covering
more than 271,300 shares in any one fiscal year. However,
in connection with an
43
employees initial service, an Oclaro employee may be
granted additional stock purchase rights covering up to
813,900 shares.
Restricted
Stock Units.
A restricted stock unit is a bookkeeping entry the fair market
value of one share of our common stock. The compensation
committee may grant restricted stock units subject to vesting
criteria, which may determine the number of restricted stock
units that will be paid out to a participant or such other terms
and conditions as it determines in its sole discretion. Upon
meeting the applicable vesting or other restriction criteria, we
will pay the participant, in cash, shares or a combination,
according to the award agreement. In no event may a participant
receive more than 271,300 restricted stock units in any one
fiscal year. However, in connection with an employees
initial service, an Oclaro employee may be granted additional
restricted stock units up to 813,900.
Change
of Control.
In the event of a dissolution or liquidation of Oclaro, the
compensation committee may:
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provide for a participant to have the right to exercise his or
her stock option with respect to all shares of common stock
covered by the option, until ten days prior to such to the
liquidation or dissolution; and
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provide that any repurchase option held by us and applicable to
any award may lapse 100% and that any award vesting shall
accelerate 100%.
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To the extent an award has not been previously exercised (stock
options and stock purchase rights) or vested (restricted stock
units), an award will terminate immediately prior to the
consummation of the dissolution or liquidation.
In the event of a merger or similar change of control of Oclaro
(as set forth in the 1998 Plan), outstanding awards will be
assumed, or an equivalent award will be substituted, by the
successor corporation. In the event the successor refuses to so
assume or substitute:
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all stock options and stock purchase rights will fully vest and
will be fully exercisable for 15 days after we send notice
to participants of such event, and will terminate upon the
expiration of such period; and
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all other awards will be fully paid out immediately prior to the
consummation of the change of control.
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Duration,
Termination and Amendment.
The 1998 Plan will terminate in December 2009. In addition, our
board of directors may amend, suspend or terminate the 1998 Plan
at any time. However, no amendment, suspension or termination of
the 1998 Plan shall impair the rights of any participant, unless
mutually agreed by the participant and the compensation
committee or our board of directors otherwise. The termination
of the 1998 Plan will not affect the compensation
committees ability to exercise its powers with respect to
stock options granted prior to such termination.
Transferability
of Awards.
Unless determined by the compensation committee, an award may
not be sold, pledged, assigned, transferred, or disposed of
other than by will or by the laws of descent or distribution.
Authority
to Reprice Awards.
Under the 1998 Plan, the compensation committee is empowered to
reduce the exercise price of any stock option, stock repurchase
right or restricted stock unit to the then current fair market
value of our common stock if the fair market value of the common
stock covered by such awards has declined since the date of
44
grant. In addition, the compensation committee is authorized to
institute an option exchange program under which stock options
may be surrendered in exchange for options with a lower exercise
price.
U.S.
Federal Income Tax Consequences.
The following is a brief summary of the U.S. federal income
tax consequences of certain transactions under the 1998 Plan
based on federal income tax laws in effect as of the date of
this proxy statement. This summary is not intended to be
exhaustive and does not describe foreign, state or local tax
consequences, nor does it describe consequences based on
particular circumstances. Each participant should refer to the
actual text of the 1998 Plan and should consult with a tax
advisor as to specific questions relating to tax consequences of
participation in the 1998 Plan.
Incentive
Stock Options.
No income generally will be recognized by an optionee upon the
grant or exercise of an ISO. The exercise of an ISO, however,
may result in alternative minimum tax liability. If common
shares are issued to the optionee pursuant to the exercise of an
ISO, and if no disqualifying disposition of such shares is made
by such optionee within two years after the date of grant or
within one year after the transfer of such shares to the
optionee, then upon sale of such shares, any amount realized in
excess of the exercise price will be taxed to the optionee as a
long-term capital gain and any loss sustained will be a
long-term capital loss.
If common shares acquired upon the exercise of an ISO are
disposed of prior to the expiration of either holding period
described above, the optionee generally will recognize ordinary
income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of such shares at the
time of exercise (or, if less, the amount realized on the
disposition of such shares if a sale or exchange) over the
exercise price paid for such shares. Any further gain (or loss)
realized by the participant generally will be taxed as
short-term or long-term capital gain (or loss) depending on the
holding period.
Nonstatutory
Stock Options.
In general, (a) no income will be recognized by an optionee
at the time a nonstatutory stock option is granted; (b) at
the time of exercise of a nonstatutory stock option, ordinary
income will be recognized by the optionee in an amount equal to
the difference between the exercise price paid for the shares
and the fair market value of the shares on the date of exercise;
and (c) at the time of sale of shares acquired pursuant to
the exercise of a nonstatutory stock option, any increase (or
decrease) in value of the shares after the date of exercise will
be treated as either short-term or long-term capital gain (or
loss) depending on how long the shares have been held.
Stock
Purchase Rights.
When a stock purchase right is exercised, the participant
generally will be required to include as ordinary income an
amount equal to the difference between the fair market value of
any common stock received on the exercise and the amount paid
for such shares. Upon the sale of the shares, the participant
will have capital gain or loss equal to the difference between
the sales price and the fair market value of the shares on the
day the stock purchase right was exercised. This capital gain or
loss will be long-term if the participant held the stock for
more than one year and otherwise will be short-term.
Restricted
Stock Units.
The recipient of restricted stock unit awards generally will be
subject to tax on the fair market value of the underlying shares
at such time of vesting. When the shares are sold, the
participant will have capital gain or loss equal to the sales
price less the fair market value of the shares on the vesting
date. Any capital gain or loss will be long-term if the
participant held the stock for more than one year and otherwise
will be short-term.
45
Tax
Consequences to Oclaro.
To the extent that a recipient recognizes ordinary income in the
circumstances described above, we will be entitled to a
corresponding deduction provided that, among other things, the
income meets the test of reasonableness, is an ordinary and
necessary business expense, is not an excess parachute
payment within the meaning of Section 280G of the
Code and is not disallowed by the $1 million limitation on
certain executive compensation under Section 162(m) of the
Code. At such time, we will also have a withholding and
reporting obligation with regard to such income.
Compliance
with Section 409A of the Code.
The American Jobs Creation Act of 2004 revised the federal
income tax law applicable to certain types of awards that may be
granted under the 2004 Plan. To the extent applicable, it is
intended that the 2004 Plan and any grants made under the 2004
Plan comply with the provisions of Section 409A of the Code.
Stockholder
Approval
This proposal for a one-time option exchange program will be
approved if the votes cast in favor of the proposal exceed the
votes cast against the proposal. If our stockholders approve
this proposal, we intend to commence the option exchange program
as soon as practicable after the general meeting, but in no
event later than twelve months after the date our stockholders
approve the proposal. If our stockholders do not approve the
proposal, the option exchange program will not take place.
Our Board
recommends a vote FOR
the proposal to approve a one-time stock option exchange
program.
PROPOSAL 3
EXTENDING THE AUTHORIZATION OF OUR BOARD OF DIRECTORS TO EFFECT
A REVERSE STOCK SPLIT FROM APRIL 27, 2010 TO DECEMBER 31,
2010.
Overview
At a special meeting of our stockholders held on April 27,
2009, our stockholders approved a proposal to authorize our
board of directors to select and file one of several possible
amendments to our restated certificate of incorporation to
effect a reverse stock split of all issued and outstanding
shares of our common stock at a reverse stock split ratio
ranging from
one-for-five
to
one-for-thirty
and to effect a corresponding proportionate reduction in the
total number of authorized shares of our common stock and
preferred stock in connection with the reverse stock split. Our
board of directors was authorized by our stockholders to file
such amendment, at the boards sole discretion, at any time
within one year of the date of the special meeting, or up to
April 27, 2010.
As of September 1, 2009, our common stock currently trades
below $1.00 per share on the Nasdaq Global Market. Under
Nasdaqs Listing Rule 5450, companies listed on the
Nasdaq Global Market must maintain a minimum bid price of $1.00.
Due to deteriorating economic conditions, Nasdaq had suspended
the $1.00 minimum bid price rule, but it has reinstated the rule
as of August 3, 2009. Under Nasdaq Listing Rule 5810,
if our common stock continues to trade below $1.00 per share for
30 business days following August 3, 2009, we will receive
a notice of deficiency from Nasdaq regarding the minimum bid
price requirement and will have 180 days thereafter to
raise our stock price above $1.00 for 10 consecutive trading
days. If we transfer the listing of our common stock from the
Nasdaq Global Market to the Nasdaq Capital Market, we will
receive an additional 180 days to comply with the $1.00
minimum bid price requirement, provided that that is the only
Nasdaq listing requirement we do not meet.
Assuming our common stock continues to trade below $1.00 per
share for 30 business days following August 3, 2009, and
assuming we are able to transfer the listing of our common stock
to the Nasdaq Capital Market, we will have until
September 9, 2010 to raise our stock price above $1.00
before it is delisted by Nasdaq. Such deadline is approximately
five months after the authorization of our Board to effect a
reverse
46
stock split expires on April 27, 2010. In order to preserve
the maximum flexibility for Oclaro, including in the event of
any future suspension of the $1.00 minimum bid price requirement
by Nasdaq, our board of directors has concluded that it is in
the best interests of Oclaro and its stockholders to reserve the
ability to effect a reverse stock split up to December 31,
2010, should our stock price continue to remain below the $1.00
minimum bid price up to any applicable Nasdaq deadline.
To date, we have not effected such a reverse stock split.
Provided that we have not effected such a reverse stock split
before October 21, 2009, the date of our annual stockholder
meeting, our board of directors proposes that our stockholders
authorize the Board to undertake such a reverse stock split, in
the discretion of the board, within the same parameters approved
by our stockholders at their special meeting on
April 27, 2009, up to December 31, 2010. Our
board of directors has unanimously approved the extension of
such authorization to effect a reverse stock split. The board
has declared the extension to be advisable and has recommended
that it be presented to our stockholders for approval.
Upon receiving stockholder approval, our board of directors will
have the sole discretion, but not the obligation, at any time up
to December 31, 2010 and pursuant to Section 242(c) of
the Delaware General Corporation Law to elect, as it determines
to be in the best interests of Oclaro and its stockholders,
whether to effect a reverse stock split, and if so, the whole
number of shares of our common stock between and including five
and thirty that will be combined and reclassified into one share
of our common stock with the resulting corresponding
proportionate reduction of the total number of authorized shares
of our common stock and preferred stock. The discretion to
select a specific reverse stock split ratio among those approved
by our stockholders provides our board of directors with maximum
flexibility to react to then-current market conditions.
By approving this extension of authorization, our
stockholders: (a) extend their approval up to
December 31, 2010 of a series of amendments to our restated
certificate of incorporation, in substantially the form approved
by our stockholders on April 27, 2009, pursuant to which
any whole number of outstanding shares between and including
five and thirty would be combined and reclassified into one
share of our common stock and pursuant to which the total number
of authorized shares of our common stock and preferred stock
would be proportionately reduced; and (b) extend their
authorization of our board of directors to file only one such
amendment up to December 31, 2010, as determined by the
board in its sole discretion, and to abandon each amendment not
selected by the Board. Our board of directors may also elect not
to undertake any reverse stock split and therefore abandon all
amendments. The text of the form of certificate of amendment to
the restated certificate of incorporation is attached hereto as
Annex A and is in substantially the form of the certificate
of amendment approved by our stockholders on April 27,
2009.
If approved by our stockholders, and following such stockholder
approval, our board of directors may determine up to
December 31, 2010 that effecting a reverse stock split is
in the best interests of Oclaro and its stockholders, and the
reverse stock split and the corresponding proportionate
reduction in the total number of authorized shares of our common
stock and preferred stock will become effective upon the filing
of such amendment of our restated certificate of incorporation
with the Secretary of State of the State of Delaware. The
amendment filed thereby will contain the number of shares
selected by our board of directors, within the limits approved
by our stockholders on April 27, 2009, to be combined and
reclassified into one share of our common stock, and the
resulting corresponding proportionate reduction in the total
number of authorized shares of our common stock and preferred
stock. The decision by our board of directors to effect the
reverse stock split, and if implemented the reverse stock split
ratio, will be based on a number of factors, including market
conditions, existing and expected trading prices for our common
stock and the applicable listing requirements of the Nasdaq
Global Market and, if applicable, the Nasdaq Capital Market.
If our board of directors elects to effect a reverse stock
split, the number of issued and outstanding shares of our common
stock would be reduced in accordance with a reverse stock split
ratio determined by the board within the limits approved by our
stockholders on April 27, 2009, and the total number of
shares of our common stock and preferred stock that we are
authorized to issue would be proportionately reduced.
47
Except for adjustments that may result from the treatment of
fractional shares as described below, each Oclaro stockholder
will hold the same percentage of our outstanding common stock
immediately following the reverse stock split as such Oclaro
stockholder held immediately prior to the reverse stock split.
The par value of the common stock would remain unchanged at
$0.01 per share.
Reasons
for Extending the Authorization of the Reverse Stock
Split
Our board of directors believes that a reverse stock split may
be desirable for a number of reasons. The board believes that a
reverse stock split may allow us to meet the listing
requirements of, and thus remain listed on, the Nasdaq Global
Market or, if applicable, the Nasdaq Capital Market. Extending
the authorization of the reverse stock split to
December 31, 2010 will give us the ability to effect the
reverse stock split before its common stock may be delisted by
Nasdaq, as explained below. In addition, the board believes that
a reverse stock split could improve the marketability and
liquidity of our common stock.
Our common stock is currently listed on the Nasdaq Global
Market. According to applicable Nasdaq rules, in order for our
common stock to continue to be listed on the Nasdaq Global
Market, we must satisfy certain listing maintenance standards.
Among other things, if the closing bid price of our common stock
is under $1.00 per share for 30 consecutive trading days and
does not thereafter reach $1.00 per share or higher for a
minimum of ten consecutive trading days during the 180 calendar
days following notification by Nasdaq, Nasdaq may take action to
delist our common stock from trading on the Nasdaq Global
Market. If we transfer the listing of our common stock from the
Nasdaq Global Market to the Nasdaq Capital Market, a similar
$1.00 minimum bid price requirement would apply. However, if we
meet all the listing maintenance standards of the Nasdaq Capital
Market except the $1.00 minimum bid price requirement, then we
would have an additional 180 calendar days thereafter in order
to raise our stock price above the minimum.
On October 16, 2008, Nasdaq announced that it had suspended
the enforcement of its rules requiring a minimum bid price of
$1.00 per share through January 16, 2009, and the
suspension was subsequently extended by Nasdaq on
December 18, 2008 and March 18, 2009, such that
companies were not cited for failure to meet the minimum bid
price requirement. Nasdaq reinstated the minimum bid price
requirement on August 3, 2009. We do not expect to receive
a staff deficiency notice with respect to the delisting of our
common stock resulting from a failure to meet the minimum bid
requirement unless we have failed to demonstrate compliance with
the minimum bid requirement on or after August 3, 2009. As
of September 1, 2009, the closing bid price of our common
stock was $0.77, lower than the minimum bid requirement. If the
closing bid price remains below $1.00, and if we successfully
transfer the listing of our common stock to the Nasdaq Capital
Market, we would have until September 9, 2010 to meet the
minimum bid price requirement. Extending the authorization for
the reverse stock split to December 31, 2010 is intended to
allow us full flexibility to comply with Nasdaqs minimum
bid requirement, including in the event Nasdaq were to suspend
the minimum bid requirement for some period in the future, and
thereby permit our common stock to continue to be listed on the
Nasdaq Global Market or, if applicable, the Nasdaq Capital
Market.
Our board of directors expects that a reverse stock split of our
common stock would increase the market price of our common stock
so that we would be able to maintain compliance with the Nasdaq
minimum bid requirement for the foreseeable future.
Our board of directors also believes that the increased market
price of our common stock expected as a result of implementing a
reverse stock split could improve the marketability and
liquidity of our common stock and encourage interest and trading
in our common stock. Because of the trading volatility often
associated with low-priced stocks, many brokerage houses and
institutional investors have internal policies and practices
that either prohibit them from investing in low-priced stocks or
tend to discourage individual brokers from recommending
low-priced stocks to their customers. Some of those policies and
practices may function to make the processing of trades in
low-priced stocks economically unattractive to brokers.
Additionally, because brokers commissions on low-priced
stocks generally represent a higher percentage of the stock
price than commissions on higher-priced stocks, the current
average price per share of our common stock can result in
individual stockholders paying transaction costs representing a
higher percentage of their total share value than would be the
case if the share price were substantially higher. It should
be noted that the liquidity of
48
our common stock may be harmed by the proposed reverse stock
split given the reduced number of shares that would be
outstanding after the reverse stock split. Our board of
directors is hopeful, however, that the anticipated higher
market price will reduce, to some extent, the negative effects
of the policies and practices of institutional investors and
brokerage houses described above on the liquidity and
marketability of the common stock.
Notwithstanding the foregoing, there can be no assurance
that: (a) the market price per share following the reverse
stock split would rise in proportion to the reduction in the
number of pre-split shares of our common stock outstanding
before the reverse stock split; (b) the market price per
share following the reverse stock split would remain in excess
of the $1.00 minimum bid price for a sustained period of time,
or long enough to satisfy Nasdaqs continued listing
requirements; (c) our common stock will not be delisted by
Nasdaq due to a failure to meet other continued listing
requirements even if the market price per post-reverse split
share of our common stock remains in excess of the $1.00 minimum
bid requirement; and (d) the reverse stock split would
result in a per share price that would attract brokers and
investors who do not trade in lower priced stock. The market
price of our common stock will also be based on our performance
and other factors, some of which are unrelated to the number of
shares outstanding and many of which are beyond our control. If
the reverse stock split is effected and the market price of our
common stock declines, the percentage decline as an absolute
number and as a percentage of our overall market capitalization
may be greater than would occur in the absence of a reverse
stock split.
The
Boards Discretion to Effect the Reverse Stock
Split
If the authorization to effect a reverse stock split and a
corresponding proportionate reduction in the total number of
authorized shares of our common stock and preferred stock is
extended to December 31, 2010 by our stockholders, the
filing of any amendment to our restated certificate will
continue to be effected, if at all, only upon a determination by
our board of directors that a reverse stock split (with a
reverse stock split ratio determined by the board as described
above) and a proportionate corresponding reduction in the total
number of authorized shares of our common stock and preferred
stock are in the best interests of Oclaro and its stockholders.
Such determination shall be based upon certain factors,
including existing and expected marketability and liquidity of
our common stock, meeting the listing requirements for the
Nasdaq Global Market or, if applicable, the Nasdaq Capital
Market, prevailing market conditions and the likely effect on
the market price of our common stock. Notwithstanding approval
by the stockholders of an extension of authorization for the
reverse stock split, our board of directors may, in its sole
discretion, abandon all of the proposed amendments and determine
prior to the effectiveness of any filing with the Secretary of
State of the State of Delaware not to effect the reverse stock
split and corresponding proportionate reduction in the total
number of authorized shares of our common stock and preferred
stock before December 31, 2010, as permitted under
Section 242(c) of the Delaware General Corporation Law. If
our board of directors does not effect the reverse stock split
and the corresponding proportionate reduction in the total
number of authorized shares of our common stock and preferred
stock before December 31, 2010, stockholder approval again
would be required prior to implementing any reverse stock split.
Summary
of the Terms and Conditions of the Proposed Reverse Stock Split,
as Approved by Our Stockholders at the Special Meeting of
Stockholders on April 27, 2009
Effects
of the Reverse Stock Split
After the effective date of the proposed reverse stock split and
the corresponding proportionate reduction in the total number of
authorized shares of our common stock and preferred stock, each
Oclaro stockholder would own a reduced number of shares of our
common stock. However, any reverse stock split and corresponding
proportionate reduction in the total number of authorized shares
of our common stock and preferred stock would affect all Oclaro
stockholders uniformly and would not affect any
stockholders percentage ownership interests in Oclaro,
except to the extent that the reverse stock split results in any
Oclaro stockholders owning a fractional share as described
below. Voting rights and other rights and preferences of the
holders of our common stock would not be affected by the
proposed reverse stock split (other than as a
49
result of the payment of cash in lieu of fractional shares). For
example, a holder of 2% of the voting power of the outstanding
shares of our common stock immediately prior to the reverse
stock split would continue to hold 2% of the voting power of the
outstanding shares of our common stock immediately after the
reverse stock split. The number of stockholders of record would
not be affected by the proposed reverse stock split (except to
the extent that any stockholder holds only a fractional share
interest and receives cash for such interest after the proposed
reverse stock split).
The principal effects of the reverse stock split would be that:
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depending on the reverse stock split ratio selected by our board
of directors, each five or thirty shares of our common stock
owned by a stockholder, or any whole number of shares of our
common stock between five and thirty as determined by the board,
would be combined and reclassified into one new share of our
common stock;
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if the reverse stock split is effected, then, dependent on the
reverse stock split ratio selected by the board:
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the total number of authorized shares of our common stock would
be reduced from 450,000,000 to a range of 90,000,000 to
15,000,000,
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the total number of authorized shares of our preferred stock
would be reduced to a range of 1,000,000 to 166,667, and
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the total number of authorized shares of our capital stock would
be reduced to a range of 91,000,000 to 15,166,667;
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based upon the reverse stock split ratio selected by our board
of directors, proportionate adjustments would be made to the per
share exercise price
and/or the
number of shares issuable upon the exercise or vesting of all
then outstanding Oclaro stock options, restricted stock awards,
restricted stock units or warrants, which would result in, with
respect to stock options and warrants, a proportional decrease
in the number of shares of our common stock reserved for
issuance upon exercise of, and a proportional increase in the
exercise price of, all such stock options and warrants; and
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the number of shares then reserved for issuance under our equity
incentive plans would be reduced proportionately based upon the
reverse stock split ratio selected by our board of directors.
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50
The following table illustrates the effect of the reverse stock
split ratio selected by our board of directors on the
proportionate reduction of the authorized shares of our common
stock and preferred stock:
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Total Authorized
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Total Authorized
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Total Authorized
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Shares of Oclaro
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Shares of Oclaro
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Shares of Oclaro
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Common Stock
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Preferred Stock
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Capital Stock
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Pre-Split
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450,000,000
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5,000,000
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455,000,000
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1-for-5
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90,000,000
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1,000,000
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91,000,000
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1-for-6
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75,000,000
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833,333
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75,833,333
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1-for-7
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64,285,714
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714,286
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65,000,000
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1-for-8
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56,250,000
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625,000
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56,875,000
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1-for-9
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50,000,000
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555,556
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50,555,556
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1-for-10
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45,000,000
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500,000
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45,500,000
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1-for-11
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40,909,091
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454,545
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41,363,636
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1-for-12
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37,500,000
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416,667
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37,916,667
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1-for-13
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34,615,385
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384,615
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35,000,000
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1-for-14
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32,142,857
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357,143
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32,500,000
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1-for-15
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30,000,000
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333,333
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30,333,333
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1-for-16
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28,125,000
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312,500
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28,437,500
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1-for-17
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26,470,588
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294,118
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26,764,706
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1-for-18
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25,000,000
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277,778
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25,277,778
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1-for-19
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23,684,211
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263,158
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23,947,368
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1-for-20
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22,500,000
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250,000
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22,750,000
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1-for-21
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21,428,571
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238,095
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21,666,667
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1-for-22
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20,454,545
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227,273
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20,681,818
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1-for-23
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19,565,217
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217,391
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19,782,609
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1-for-24
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18,750,000
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208,333
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18,958,333
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1-for-25
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18,000,000
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200,000
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18,200,000
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1-for-26
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17,307,692
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192,308
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17,500,000
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1-for-27
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16,666,667
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185,185
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16,851,852
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1-for-28
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16,071,429
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178,571
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16,250,000
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1-for-29
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15,517,241
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172,414
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15,689,655
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1-for-30
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15,000,000
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166,667
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15,166,667
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In addition to the above effects, if a reverse stock split is
implemented, it would increase the number of Oclaro stockholders
who own odd lots of fewer than 100 shares of
our common stock. Brokerage commission and other costs of
transactions in odd lots are generally higher than the costs of
transactions of more than 100 shares of common stock.
Accordingly, for some stockholders a reverse stock split may not
achieve the desired results of increasing marketability and
liquidity of our common stock that have been outlined above.
Our common stock is currently registered under
Section 12(b) of the Exchange Act, and we are subject to
the periodic reporting and other requirements of the Exchange
Act. The proposed reverse stock split would not affect the
registration of the common stock under the Exchange Act. Our
common stock would continue to be reported on the Nasdaq Global
Market under the symbol OCLR (although, if the
proposed reverse stock split is implemented, Nasdaq would likely
add the letter D to the end of the trading symbol
for a period of 20 trading days to indicate that the reverse
stock split has occurred).
51
Effective
Date
The proposed reverse stock split would become effective at
5:00 p.m., Eastern time, on the date of filing of a
certificate of amendment to our restated certificate of
incorporation with the office of the Secretary of State of the
State of Delaware. Except as explained below with respect to
fractional shares, on the effective date of the reverse stock
split, shares of our common stock issued and outstanding
immediately prior to the effective date of the reverse stock
split would be combined and reclassified, automatically and
without any action on the part of the stockholders, into a
lesser number of new shares of our common stock in accordance
with the reverse stock split ratio determined by our board of
directors within the limits approved by our stockholders on
April 27, 2009.
Payment
for Fractional Shares
No fractional shares of our common stock would be issued as a
result of the proposed reverse stock split. Instead, an Oclaro
stockholder who would otherwise be entitled to receive
fractional shares (after taking into account all fractional
shares of our common stock otherwise issuable to such holder),
upon receipt by the exchange agent selected by us of a properly
completed and executed letter of transmittal, and where shares
are held in certificated form, surrender to the exchange agent
of the stockholders certificate(s) formerly representing
pre-reverse stock split shares of our common stock, would be
entitled to receive a cash payment (without interest) equal to
the fraction of a share of our common stock to which such
stockholder would otherwise be entitled multiplied by the
closing sales price of a share of our common stock on the date
the amendment effecting the reverse stock split is filed with
the Secretary of State of the State of Delaware.
After the reverse stock split, stockholders would have no
further interest with respect to their cashed-out fractional
shares. A stockholder otherwise entitled to a fractional
interest would not have any voting, dividend or other rights
except to receive payment as described above.
Exchange
of Stock Certificates
As soon as practicable after the effective date of the reverse
stock split, holders of our common stock immediately prior to
the effective date of reverse stock split would be notified that
the reverse stock split has been effected. We would also select
an exchange agent for purposes of implementing the exchange of
stock certificates. Holders of pre-reverse stock split shares of
our common stock would be asked to surrender to the exchange
agent certificates representing pre-reverse stock split shares
in exchange for certificates representing post-reverse stock
split shares and payment in lieu of fractional shares (if any)
in accordance with the procedures to be set forth in a letter of
transmittal to be sent by us or our exchange agent. No new
certificates will be issued to an Oclaro stockholder until such
Oclaro stockholder has surrendered such stockholders
outstanding certificate(s) together with the properly completed
and executed letter of transmittal to the exchange agent.
Oclaro stockholders should not destroy any stock certificate
and should not submit any certificates until requested to do
so.
Accounting
Consequences
The par value per share of our common stock would remain
unchanged at $0.01 per share after the reverse stock split. As a
result, on the effective date of the reverse stock split, the
stated capital on our balance sheet attributable to our common
stock would be reduced proportionally, based on the reverse
stock split ratio, from its present amount, and the additional
paid-in capital account would be credited (i.e.,
increased) with the amount by which the stated capital is
reduced. The per share common stock net income or loss and net
book value would be increased because there will be fewer shares
of our common stock outstanding. The reverse stock split would
be reflected retroactively in our financial statements. We do
not anticipate that any other accounting consequences would
arise as a result of the reverse stock split.
Material
U.S. Federal Income Tax Consequences of the Reverse Stock
Split
The following discussion summarizes the material
U.S. federal income tax considerations of the proposed
reverse stock split that are expected to apply generally to
U.S. Holders (as defined below) of our common
52
stock. This summary is based upon current provisions of the
Code, existing Treasury Regulations under the Code and current
administrative rulings and court decisions, all of which are
subject to change or different interpretation. Any change, which
may or may not be retroactive, could alter the tax consequences
to us or our stockholders as described in this summary. No
ruling from the IRS has been or will be requested in connection
with the reverse stock split. No attempt has been made to
comment on all U.S. federal income tax consequences of the
reverse stock split that may be relevant to particular
U.S. Holders, including holders:
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who are subject to special tax rules such as dealers, brokers
and traders in securities, foreign persons, mutual funds,
regulated investment companies, real estate investment trusts,
insurance companies, banks or other financial institutions or
tax-exempt entities;
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who are subject to the alternative minimum tax provisions of the
Code;
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who acquired their shares of our common stock in connection with
stock options, warrants, restricted stock units or stock
purchase plans or in other compensatory transactions;
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who hold their shares of our common stock as a hedge or as part
of a hedging, straddle or other risk reduction strategy;
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who are partnerships or other pass-through entities or investors
in such pass-through entities;
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who do not hold their shares of our common stock as capital
assets;
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whose shares of our common stock constitute qualified small
business stock with the meaning of Section 1202 of the
Code; or
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who have a functional currency other than the U.S. dollar.
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In addition, the following discussion does not address the tax
consequences of the reverse stock split under state, local and
foreign tax laws. Furthermore, the following discussion does not
address the tax consequences of transactions effectuated before,
after or at the same time as the reverse stock split, whether or
not they are in connection with the reverse stock split.
For purposes of this discussion, a U.S. Holder means a
beneficial owner of our common stock who is:
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an individual who is a citizen or resident of the United States;
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a corporation (or other entity taxable as a corporation for
U.S. federal income tax purposes) created or organized in
the United States or under the laws of the United States or any
subdivision thereof;
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an estate the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its
source; or
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a trust (other than a grantor trust) if (A) a court within
the United States is able to exercise primary supervision over
the administration of the trust and one or more
U.S. persons have the authority to control all substantial
decisions of the trust or (B) it has a valid election in
place to be treated as a U.S. person.
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HOLDERS OF OUR COMMON STOCK ARE ADVISED AND EXPECTED TO
CONSULT THEIR OWN TAX ADVISORS REGARDING THE U.S. FEDERAL
INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT IN LIGHT OF
THEIR PERSONAL CIRCUMSTANCES AND THE CONSEQUENCES OF THE REVERSE
STOCK SPLIT UNDER STATE, LOCAL AND FOREIGN TAX LAWS.
53
The reverse stock split is expected to qualify for one or more
non-recognition provisions of the Code. Assuming the reverse
stock split so qualifies, the following consequences would
result:
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no gain or loss would be recognized by us as a result of the
reverse stock split;
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an Oclaro stockholder who receives only our common stock in the
reverse stock split generally would not recognize any gain or
loss on the reverse stock split, and the aggregate tax basis of
the post-reverse split shares received would be equal to the
aggregate tax basis of the pre-reverse split shares exchanged
therefor;
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an Oclaro stockholder who receives both our common stock and
cash in lieu of fractional shares of our common stock in the
reverse stock split generally would recognize any gain inherent
in our common stock surrendered up to the amount of cash
received, but would not recognize any loss;
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the aggregate tax basis of the post-reverse split shares
received, including any fractional share not actually received,
would be equal to the aggregate tax basis of the pre-reverse
split shares exchanged therefor, increased by the amount of any
gain recognized as a result of the reverse stock split;
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the holding period of our common stock received in the reverse
stock split would include the holding period of the pre-reverse
stock split shares exchanged;
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an Oclaro stockholder who receives only cash in exchange for our
common stock in the reverse stock split generally would
recognize gain or loss equal to the difference between such
stockholders tax basis in the shares of our common stock
exchanged and the amount of cash received in exchange for those
shares; and
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any gain or loss recognized by an Oclaro stockholder as a result
of the reverse stock split would be a capital gain or loss and
would be long term capital gain or loss if the
stockholders holding period for the shares of our common
stock exchanged is more than one year.
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Certain Oclaro stockholders may be required to attach a
statement to their tax returns for the year in which the reverse
stock split is consummated that contains the information listed
in Treasury
Regulation Section 1.368-3(b),
if applicable. Oclaro stockholders are urged to consult their
own tax advisors with respect to the applicable reporting
requirements.
For purposes of the above discussion of the bases and holding
periods for shares of our common stock, and except as provided
therein, stockholders who acquired different blocks of our
common stock at different times for different prices must
calculate their basis, gains and losses, and holding periods
separately for each identifiable block of such stock exchanged,
reclassified, canceled or received in the reverse stock split.
Any cash payments for fractional shares made to our stockholders
in connection with the reverse stock split may be subject to
backup withholding on a holders receipt of cash, unless
such holder furnishes a correct taxpayer identification number
and certifies that he or she is not subject to backup
withholding or such stockholder is otherwise exempt from backup
withholding. Any amount withheld under the backup withholding
rules would generally be allowed as a refund or credit against
the holders U.S. federal income tax liability,
provided the required information is furnished to the IRS.
No
Appraisal Rights
Under Delaware law, our stockholders are not entitled to
dissenters appraisal rights with respect to the proposed
amendments to our restated certificate of incorporation to
effect the reverse stock split and to reduce the number of
authorized shares of our common stock and preferred stock, and
we will not independently provide our stockholders with any such
right.
Vote
Required; Recommendation of the Board
The affirmative vote of the holders of a majority of the voting
power of our common stock outstanding on the record date for the
Oclaro annual meeting of stockholders is required to approve the
extension from April 27, 2010 to December 31, 2010 of
the authorization to effect a reverse stock split and a
corresponding
54
proportionate reduction in the total number of authorized shares
of our common stock and preferred stock, in accordance with the
terms and conditions of such reverse stock split and reduction
in shares approved by our stockholders at the special meeting of
stockholders held April 27, 2009.
A failure to submit a proxy card or vote at the annual meeting,
or an abstention, vote withheld or broker non-vote
will have the same effect as a vote FOR Oclaro
Proposal 3.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
STOCKHOLDERS VOTE FOR OCLARO PROPOSAL 3 TO
EXTEND THE AUTHORIZATION TO EFFECT A REVERSE STOCK SPLIT FROM
APRIL 27, 2010 TO DECEMBER 31, 2010. SUCH REVERSE STOCK SPLIT
WOULD BE EFFECTED IN ACCORDANCE WITH THE TERMS AND CONDITIONS
APPROVED BY OUR STOCKHOLDERS AT THE SPECIAL MEETING OF
STOCKHOLDERS HELD ON APRIL 27, 2009.
PROPOSAL 4
RATIFICATION OF THE SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of our board of directors has selected Grant
Thornton LLP as our independent registered public accounting
firm for the fiscal year ending July 3, 2010, subject to
ratification by our stockholders at the annual meeting. If our
stockholders do not ratify the selection of Grant Thornton LLP,
our audit committee will reconsider the matter. A representative
of Grant Thornton LLP, which served as our independent
registered public accounting firm from February 11, 2008
until June 27, 2009, is expected to be present at the
annual meeting to respond to appropriate questions and to make a
statement if he or she so desires. Even if the selection of
Grant Thornton LLP is ratified, our audit committee may, in its
discretion, select a different independent registered public
accounting firm at any time during the year if it determines
that such a change would be in the best interest of Oclaro and
its stockholders.
Board
Recommendation
Our board of directors believes that the selection of Grant
Thornton LLP as independent auditor for the fiscal year ending
July 3, 2010 is in the best interests of Oclaro and our
stockholders and, therefore, unanimously recommends that the
stockholders vote FOR this proposal.
Principal
Accounting Fees and Services
The following table summarizes the fees of Grant Thornton LLP,
our independent registered accounting firm from
February 11, 2008 until June 27, 2009. For the fiscal
year ended June 27, 2009, audit fees include an estimate of
amounts not yet billed by Grant Thornton LLP.
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Fiscal Year Ended
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Fiscal Year Ended
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Fee Category
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June 28, 2008
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June 27, 2009
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(In thousands)
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Audit Fees(1)
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$
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1,690
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$
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1,945
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Audit-Related Fees(2)
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$
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$
|
98
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Tax Fees
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$
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$
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All Other Fees
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|
$
|
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|
|
$
|
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Total Fees
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$
|
1,690
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$
|
2,043
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(1) |
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Audit fees consist of fees for the audit of our financial
statements, the audit of our internal control over financial
reporting, the review of the interim financial statements
included in our quarterly reports on
Form 10-Q,
and other professional services provided in connection with
statutory and regulatory filings or engagements. |
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(2) |
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Audit-related fees consist of fees for assurance and related
services that are reasonably related to the performance of the
audit and the review of our financial statements and which are
not reported under Audit Fees. These services
primarily relate to due diligence related to accounting
consultations and audits in |
55
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connection with acquisitions (including the Avanex merger),
services in connection with the filing of registration
statements with the Commission, and consultations concerning
internal controls, financial accounting and reporting standards. |
None of the all other fees billed in fiscal 2008 or fiscal 2009
were provided under the de minimis exception to the audit
committee pre-approval requirements.
Pre-Approval
Policies and Procedures
The audit committee has adopted policies and procedures relating
to the approval of all audit and non-audit services that are to
be performed by our independent registered public accounting
firm. This policy generally provides that we will not engage our
independent registered public accounting firm to render audit or
non-audit services unless the service is specifically approved
in advance by the audit committee or the engagement is entered
into pursuant to one of the pre-approval procedures described
below.
From time to time, the audit committee may pre-approve specified
types of services that are expected to be provided to us by our
independent registered public accounting firm during the next
12 months. Any such preapproval is detailed as to the
particular service or type of services to be provided and is
also generally subject to a maximum dollar amount.
The audit committee has also delegated to each individual member
of the audit committee the authority to approve any audit or
non-audit services to be provided to us by our independent
registered public accounting firm. Any approval of services by a
member of the audit committee pursuant to this delegated
authority is reported on at the next meeting of the audit
committee.
Change in
Independent Registered Public Accounting Firm
On February 11, 2008, we dismissed Ernst & Young
LLP, or EY, as our independent registered public accounting
firm. The decision to dismiss EY was approved by our audit
committee.
The reports of EY on our financial statements as of
June 30, 2007 and July 1, 2006 and for each of the two
fiscal years in the period ended June 30, 2007, contained
no adverse opinion or disclaimer of opinion and were not
qualified or modified as to uncertainty, audit scope or
accounting principles, other than to include explanatory
paragraphs related to substantial doubt about our ability to
continue as a going concern and for the change of method of
accounting for stock based compensation to Statement of
Financial Accounting Standards No. 123(R),
Share-Based Payment in the auditors report
related to fiscal 2006.
During the fiscal years ended June 30, 2007, and
July 1, 2006, and in the subsequent interim period through
February 11, 2008, there have been no disagreements with EY
on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of EY, would
have caused EY to make reference thereto in its reports on our
financial statements for such years.
During the years ended June 30, 2007 and July 1, 2006
and in the subsequent interim period through February 11,
2008 , other than as set forth in the following sentence there
have been no reportable events (as defined in
Item 304(a)(1)(v) of
Regulation S-K).
As previously reported in our Annual Report on
Form 10-K
for the period ended June 30, 2006, our management
identified a material weakness in its internal control related
to the translation of intercompany loan balances in periods
prior to July 1, 2006. Management believes that changes
made to its internal controls in the quarter ended
September 29, 2006 remediated this past material weakness
by the end of the quarter ended December 30, 2006.
In connection with the filing of our Current Report on
Form 8-K,
which was filed on February 14, 2008, we furnished a copy
of the above disclosures to EY and requested that EY furnish the
Registrant with a letter addressed to the Securities and
Exchange Commission stating whether or not EY agrees with the
above
56
statements. A copy of such letter dated February 13, 2008
was attached as Exhibit 16.1 to such Current Report on
Form 8-K,
and read as follows:
We have read Item 4.01 of
Form 8-K
dated February 11, 2008, of Bookham, Inc. and are in
agreement with the statements contained in the first, second,
and third paragraphs, the first two sentences of the fourth
paragraph, and the first sentence of the fifth paragraph, under
Item 4.01 on page 2 therein. We have no basis to agree
or disagree with other statements of the registrant contained
therein.
Regarding the registrants statement concerning the lack of
internal control to prepare financial statements, included in
the fourth paragraph under Item 4.01 on page 2
therein, we had considered such matter in determining the
nature, timing, and extent of procedures performed in our audit
of the registrants fiscal 2006 financial statements.
On February 11 , 2008, we engaged Grant Thornton LLP, or Grant
Thornton, as our new independent registered public accounting
firm to audit our financial statements for the year ended
June 28, 2008 and to review the financial statements to be
included in the our quarterly report on
Form 10-Q
for the quarter ending March 29, 2008.
Prior to our engagement of Grant Thornton, neither we nor anyone
on behalf of the Registrant consulted with Grant Thornton during
our two most recent fiscal years and through the subsequent
interim periods in any manner regarding any matters described in
Item 304(a)(2)(i) or Item 304(a)(2)(ii) of
Regulation S-K.
STOCKHOLDER
PROPOSALS FOR 2010 ANNUAL MEETING
If a stockholder intends to submit a proposal for inclusion in
the proxy statement and proxy card for our 2010 annual meeting,
the stockholder must follow the procedures outlined in
Rule 14a-8
under the Exchange Act. We must receive any proposals intended
for inclusion in the proxy statement at our principal executive
offices, Oclaro, Inc., 2584 Junction Avenue, San Jose,
California 95134, Attention: Corporate Secretary, no later than
June 1, 2010.
If a stockholder wishes to present a proposal at the 2010 annual
meeting, but does not wish to have the proposal considered for
inclusion in our proxy statement and proxy card, the stockholder
must also give written notice to us at the address noted above.
Our bylaws specify the information that must be included in any
such notice, including a brief description of the proposal and
the name of the stockholder proposing such business. We must
receive this notice at least 90 days, but not more than
120 days, prior to October 21, 2010. However, if the
2010 annual meeting is scheduled to be held prior to
October 1, 2010 or after December 20, 2010, the notice
must be received no earlier than the 120th day prior to the
2010 annual meeting and no later than the close of business on
the later of (1) the 90th day prior to the 2010 annual
meeting and (2) the 10th day following the date on
which notice of the date of the meeting was mailed or public
disclosure was made, whichever occurs first. If the stockholder
fails to provide timely notice of a proposal to be presented at
the 2010 annual meeting, the chairman of the meeting may exclude
the proposal from being brought before the meeting and the
proxies designated by our board of directors will have
discretionary authority to vote on such proposal should it be
allowed to come before the meeting.
HOUSEHOLDING
OF PROXY STATEMENT
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
our proxy statement or annual report may have been sent to
multiple stockholders in your household. We will promptly
deliver a separate copy of our annual report
and/or proxy
statement to you if you call or write us at the following
address or phone number: Oclaro, Inc., 2584 Junction Avenue,
San Jose, California 95134, Attention: Corporate Secretary,
(408) 383-1400.
If you would like to receive separate copies of the annual
report and proxy statement in the future, or if you are
receiving multiple copies and would like to receive only one
copy for your household, you should contact your bank, broker,
or other nominee record holder, or you may contact us at the
above address and phone number.
57
FINANCIAL
STATEMENTS AVAILABLE
A copy of our 2009 Annual Report on
Form 10-K
containing audited financial statements accompanies this proxy
statement. Such financial statements are hereby incorporated
herein by reference.
OTHER
MATTERS
Our board of directors knows of no other business that will be
presented for consideration at the annual meeting other than
that described above. Under our bylaws, the deadline for
stockholders to notify us of any proposals or director
nominations to be presented at the annual meeting has passed.
However, if any other business should come before the annual
meeting, it is the intention of the persons named in the
enclosed proxy to vote, or otherwise act, in accordance with
their best judgment on such matters.
We will bear the costs of soliciting proxies. In addition to
solicitations by mail, our directors, officers and regular
employees may, without additional remuneration, solicit proxies
by telephone, telegraph, facsimile and personal interviews. We
will also request brokerage houses, custodians, nominees and
fiduciaries to forward copies of the proxy material to those
persons for whom they hold shares and request instructions for
voting the proxies. We will reimburse brokerage houses and
other persons for their reasonable expenses in connection with
this distribution. We have engaged The Proxy Advisory Group,
LLC, to assist in the solicitation of proxies and provide
related advice and informational support, for a services fee and
the reimbursement of customary disbursements that are not
expected to exceed $15,000 in the aggregate.
We encourage you to attend the annual meeting in person.
However, in order to make sure that you are represented at the
annual meeting, we urge you to vote your shares over the
Internet or by telephone as provided in the instruction set
forth on the proxy card, or complete, sign and return the
enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope. Stockholders who attend the meeting
may vote their stock personally even though they have sent in
their proxies.
By order of the Board of Directors,
Alain Couder
President, Chief Executive Officer and Director
September 4, 2009
San Jose, California
58
Annex A
FORM OF
CERTIFICATE OF AMENDMENT
CERTIFICATE OF AMENDMENT
TO THE RESTATED CERTIFICATE OF INCORPORATION
OF OCLARO, INC.
A
Delaware Corporation
Oclaro, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware, does hereby
certify as follows:
First: The
name of the Corporation is Oclaro, Inc.
Second: The
date of filing the original Certificate of Incorporation of this
company with the Secretary of State of the State of Delaware was
June 29, 2004, as restated on September 9, 2004 and
amended on April 27, 2009.
Third: The
Board of Directors of the Corporation, acting in accordance with
provisions of Sections 141 and 242 of the General
Corporation Law of the State of Delaware, adopted resolutions
amending its Certificate of Incorporation as follows:
The first paragraph of Article FOURTH is hereby deleted in
its entirety and replaced as
follows:1
FOURTH: The total number of shares of all classes of stock
which the Corporation shall have authority to issue is
[ ]2
shares, consisting of (i)
[ ]2
shares of Common Stock, $0.01 par value per share
(Common Stock), and (ii)
[ ]2
shares of Preferred Stock, $0.01 par value per share
(Preferred Stock). Effective as of 5:00 p.m.,
Eastern time, on the date this Certificate of Amendment to the
Restated Certificate of Incorporation is filed with the
Secretary of State of the State of Delaware (the Effective
Time), each [five (5), six (6), seven (7), eight
(8), nine (9), ten (10), eleven (11), twelve (12), thirteen
(13), fourteen (14), fifteen (15), sixteen (16), seventeen (17),
eighteen (18), nineteen (19), twenty (20), twenty-one (21),
twenty-two (22), twenty-three (23), twenty-four (24),
twenty-five (25),
1 These
amendments approve the combination and reclassification of any
whole number of shares of our common stock between and including
five (5) and thirty (30) into one (1) share of
our common stock, and approve a proportionate reduction in the
total number of shares of our common stock and preferred stock
that we are authorized to issue (with respect to such
proportionate reduction, see note 2 below). By these
amendments, our stockholders would approve each of the
twenty-six (26) amendments proposed by our board of
directors. The Certificate of Amendment filed with the Secretary
of State of the State of Delaware will include only that
amendment determined by our board of directors to be in the best
interests of Oclaro and its stockholders. The other twenty-five
(25) amendments will be abandoned pursuant to
Section 242(c) of the Delaware General Corporation Law. Our
board of directors may also elect not to effect any reverse
stock split and proportionate reduction in the total number of
shares of our common stock and preferred stock that we are
authorized to issue, in which case all twenty-six
(26) proposed amendments will be abandoned.
2 The
number of shares of each of (i) our total authorized
capital stock, (ii) our total authorized common stock and
(iii) our total authorized preferred stock would each be
reduced on a proportionate basis assuming that our board of
directors elects to effect a reverse stock split, which
proportionate reduction will be based on the whole number of
shares of our common stock between and including five
(5) and thirty (30) that will be combined and
reclassified into one (1) share of our common stock in the
reverse stock split, as illustrated in the tables under the
caption Summary of the Terms and Conditions of the
Proposed Reverse Stock Split, as Approved by Our Stockholders at
the Special Meeting of Stockholders on April 27,
2009 Effects of the Reverse Stock Split in the
section of the accompanying proxy statement entitled
Proposal 3 Extending the Authorization of
Our Board of Directors to Effect a Reverse Stock Split from
April 27, 2010 to December 31, 2010.
A-1
twenty-six (26), twenty-seven (27), twenty-eight (28),
twenty-nine (29), thirty (30)]
1
shares of the Corporations Common Stock, par value $0.01
per share, issued and outstanding immediately prior to the
Effective Time (Old Common Stock) shall,
automatically and without any action on the part of the
respective holders thereof, be combined and reclassified into
one (1) share of Common Stock, par value $0.01 per share,
of the Corporation (New Common Stock).
Notwithstanding the immediately preceding sentence, no
fractional shares of New Common Stock shall be issued and, in
lieu thereof, upon receipt after the Effective Time by the
exchange agent selected by the Corporation of a properly
completed and duly executed transmittal letter and, where shares
are held in certificated form, the surrender of the stock
certificate(s) formerly representing shares of Old Common Stock,
any stockholder who would otherwise be entitled to a fractional
share of New Common Stock as a result of the foregoing
combination and reclassification of the Old Common Stock (such
combination and reclassification, the Reverse Stock
Split), following the Effective Time (after taking into
account all fractional shares of New Common Stock otherwise
issuable to such stockholder), shall be entitled to receive a
cash payment (without interest) equal to the fractional share of
New Common Stock to which such stockholder would otherwise be
entitled multiplied by the closing sales price (as adjusted to
give effect to the Reverse Stock Split) of a share of the
Corporations Common Stock on the NASDAQ Global Market (or,
if the Corporations Common Stock is not then listed on the
NASDAQ Global Market, any other national securities exchange,
market or trading or quotation facility on which the
Corporations Common Stock is then listed or quoted) on the
date this Certificate of Amendment to the Restated Certificate
of Incorporation is filed with the Secretary of State of the
State of Delaware. Each stock certificate that, immediately
prior to the Effective Time, represented shares of Old Common
Stock shall, from and after the Effective Time, automatically
and without any action on the part of the respective holders
thereof, represent that number of whole shares of New Common
Stock into which the shares of Old Common Stock represented by
such certificate shall have been combined and reclassified (as
well as the right to receive cash in lieu of any fractional
shares of New Common Stock as set forth above); provided,
however, that each holder of record of a certificate that
represented shares of Old Common Stock shall receive, upon
surrender of such certificate, a new certificate representing
the number of whole shares of New Common Stock into which the
shares of Old Common Stock represented by such certificate shall
have been combined and reclassified, as well as any cash in lieu
of fractional shares of New Common Stock to which such holder
may be entitled as set forth above.
Fourth: The
foregoing amendment was submitted to the stockholders of the
Corporation for their approval, and was duly adopted in
accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
In Witness
Whereof, Oclaro, Inc. has caused this Certificate of
Amendment to be signed by its President and Chief Executive
Officer and attested by its Secretary this day
of .
Oclaro, Inc.
Alain Couder
President and Chief Executive Officer
A-2
OCLARO, INC.
ATTN: STOCK ADMINISTRATION
2584 JUNCTION AVENUE SAN JOSE,
CA 95134
VOTE BY INTERNET 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 cut-off date or 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.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can
consent to receiving all future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to
vote using the Internet and, when prompted, indicate that you agree to receive or access proxy
materials electronically in future years.
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 cut-off date or 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.
OCLARO, INC. For Withhold For All All Except The Board of Directors recommends you vote FOR
the following: Vote on Directors 0 0 0 1. To elect the following two Class II directors for the
ensuing three years: Nominees: 01) Bernard Couillaud 02) Greg Dougherty The Board of Directors
recommends you vote FOR the following proposal(s): Vote on Option Exchange For Against Abstain 2.
To approve a one-time stock option exchange program 0 0 0 for employees (excluding directors, named
executive officers and certain other designated employees). Vote on Extension of Authorization for
Reverse Stock Split 3. Provided that Oclaro has not effected a reverse stock 0 0 0 split before
October 21, 2009, to extend the authorization of our board of directors to effect a reverse stock
split from April 27, 2010 to December 31, 2010. For address changes and/or comments, please check
this box and write them on the back where indicated. Yes No Please indicate if you plan to attend
this meeting. 0 0 Please sign exactly as your name(s) appear(s) hereon. All holders
must sign. When signing as attorney, executor, administrator, or other fiduciary, please give full
title as such. Joint owners should each sign personally. If a corporation, please sign in full
corporate name, by authorized officer. If a partnership, please sign in partnership name by
authorized person. To withhold authority to vote for any individual nominee(s), mark For All
Except and write the number(s) of the nominee(s) on the line below. Vote on Registered Public
Accounting Firm 4. To ratify the selection of Grant Thornton LLP as our independent registered
public accounting firm for the current fiscal year. NOTE: Such other business as may properly come
before the meeting or any adjournment thereof. The shares of Oclaro, Inc., represented by this
proxy, will be voted as directed by the undersigned for the proposals herein proposed by Oclaro,
Inc. If no direction is given with respect to any proposal specified herein, this proxy will be
voted FOR the proposal. In their discretion, the proxies are authorized to vote upon any other
business that may properly come before the meeting or any adjournment thereof. |
Please be sure to sign and date this proxy below. |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.
PROXY
OCLARO, INC.
ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 21, 2009
This Proxy is solicited on behalf of the Board of Directors of Oclaro, Inc. (the
Company).
The undersigned, having received notice of the annual meeting of stockholders and the proxy
statement thereof and revoking all prior proxies, hereby appoints Alain Couder, Kate Rundle, and
Jerry Turin (each with full power of substitution), as proxies of the undersigned, to attend the
annual meeting of stockholders of the Company to be held on October 21, 2009 at the Companys
headquarters, 2584 Junction Avenue, San Jose, California, and any adjourned or postponed session
thereof, and there to vote and act as indicated upon the matters on the reverse side in respect of
all shares of common stock which the undersigned would be entitled to vote or act upon, with all
owers the undersigned would possess, if personally present thereat.
Attendance of the undersigned at the annual meeting of stockholders or at any adjourned or
postponed session thereof will not be deemed to revoke this proxy unless the undersigned
affirmatively indicate(s) thereat the intention of the undersigned to vote said shares of common
stock in person. If the undersigned hold(s) any of the shares of common stock in a fiduciary,
custodial or joint capacity or capacities, this proxy is signed by the undersigned in every such
apacity as well as individually.
Unless voting these shares by the Internet or telephone, please vote, date and
sign on the reverse side and return promptly in the enclosed postage pre-paid
envelope.
(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse
side.)
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
SEE REVERSE SIDE |