def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
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Soliciting Material Pursuant to §240.14a-12 |
Oclaro, Inc.
(Name of Registrant as Specified In Its Charter)
n/a
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OCLARO,
INC.
2584
Junction Avenue
San Jose, California 95134
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on October 27, 2010
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 27,
2010, at 2:00 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 III directors to serve
three-year terms.
2. To approve an amendment and restatement of the Oclaro,
Inc. Amended and Restated 2004 Stock Incentive Plan (the
Plan) to (i) increase the number of shares
reserved for issuance thereunder from 19,000,000 shares to
23,000,000 shares, (ii) provide that each share
underlying a full value award (such as a restricted
stock award or restricted stock unit) made after stockholder
approval of the amended and restated Plan will be counted as
1.25 shares for purposes of the Plan, (iii) provide
that shares tendered to the Company by a Plan participant after
stockholder approval of the amended and restated Plan to pay the
exercise price of an award or applicable withholding taxes shall
not become available for reuse under the Plan and (iv) to
provide for a new
10-year term
of the Plan beginning on the date that the amended and restated
Plan is approved by our stockholders.
3. 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 on
Form 10-K
for the fiscal year ended July 3, 2010 with the proxy
statement that accompanies this notice of meeting. The Annual
Report on
Form 10-K
for the fiscal year ended July 3, 2010 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 7, 2010 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 9, 2010
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.
OCLARO, INC.
Proxy Statement for the Annual Meeting of Stockholders
Table
of Contents
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A-1
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OCLARO, INC.
Proxy Statement for the Annual Meeting of Stockholders
To Be Held on October 27, 2010
This proxy statement is furnished to you in connection with the
solicitation of proxies by our board of directors (the
Board) for the 2010 annual meeting of stockholders
to be held on Wednesday, October 27, 2010 at 2 p.m.,
local time, at our corporate headquarters, 2584 Junction Avenue,
San Jose, California, including any postponements or
adjournments thereof (which we sometimes refer to as the Annual
Meeting).
The notice of the Annual Meeting, this proxy statement, our
Annual Report on
Form 10-K
for the fiscal year ended July 3, 2010 (which we sometimes
refer to as our 2010 Annual Report), which includes our audited
financial statements for the fiscal year ended July 3, 2010
(which we sometimes refer to as fiscal year 2010), and the
enclosed proxy card are first being mailed to stockholders on or
about September 16, 2010.
Important
Notice Regarding the Availability of Proxy Materials for the
2010 Annual
Meeting of Stockholders to be Held on October 27,
2010:
This proxy statement and our 2010 Annual Report are available
for viewing, printing and downloading at
www.oclaro.com.
You can find this proxy statement and our 2010 Annual Report
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 2010 Annual Report, 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 2010
Annual Report without exhibits unless you specify in writing
that you are requesting 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.
If you are a stockholder of record, 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.
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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.
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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.
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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.
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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.
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Stockholders who have their shares in street name,
meaning the name of a broker or other nominee who is the record
holder, are not considered stockholders of record,
and therefore may not vote their shares in the manners described
above. Such stockholders must either direct the record holder of
their shares (i.e. the broker or other nominee) to vote
their shares or obtain a proxy from the record holder to vote
their shares at the Annual Meeting.
A proxy may be revoked and your vote changed in advance of the
Annual Meeting. If you are a stockholder of record, you can
change your vote and revoke your proxy at any time before the
vote is taken at the Annual Meeting 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 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 your shares are held in the name of a broker or
other nominee who is the record holder, you must follow the
instructions of your broker or other nominee to revoke a
previously given proxy.
If a proxy card does not specify how the proxy is to be voted
with respect to (i) the election of the two nominated
Class III directors for a three year term, the shares will
be voted FOR the election of the two nominated
Class III directors; (ii) the amendment and
restatement of the Oclaro, Inc. Amended and Restated 2004 Stock
Incentive Plan (the Plan) to increase the shares
reserved for issuance thereunder from 19,000,000 shares to
23,000,000 shares, among other amendments, the shares will
be voted FOR the approval of the amendment and
restatement of the Plan; and (iii) 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;
The form of proxy accompanying this proxy statement confers
discretionary authority upon the named proxy holders with
respect to amendments or variations to the matters identified in
the accompanying notice of annual meeting and with respect to
any other matters which may properly come before the Annual
Meeting. Our board of directors does not know of any other
matters that may come before the Annual Meeting. 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.
Attendance
at the Annual Meeting
Only holders of the shares of our outstanding common stock,
their proxy holders, and guests we may invite may attend the
Annual Meeting. If you wish to attend the Annual Meeting in
person but you hold your shares through someone else, such as a
broker, you must bring proof of your ownership and photo
identification to the annual meeting. For example, you could
bring an account statement showing that you beneficially owned
shares of our common stock as of the record date as acceptable
proof of ownership. You must also contact your broker and follow
their instructions in order to vote your shares at the annual
meeting. You may not vote your shares at the Annual Meeting
unless you have first followed the procedures outlined by your
broker.
3
Stockholders
Entitled to Vote
Our board of directors has fixed September 7, 2010 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 7, 2010, there were 49,510,499 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 that 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. 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.
On all matters, each share has one vote. Directors are elected
by a plurality vote. Therefore, the nominees for the two
director seats who receive the most affirmative votes of shares
outstanding as of the record date that are present in person or
represented by proxy at the Annual Meeting will be elected to
serve as directors. With respect to the proposal regarding the
election of our directors, neither broker non-votes
nor abstentions are included in the tabulation of the voting
results and, accordingly, they do not have the effect of votes
AGAINST such proposal. The proposals to approve an
amendment and restatement of the Plan and to ratify the
appointment of Grant Thornton LLP as our independent registered
public accounting firm for the current fiscal year require the
affirmative vote of the holders of a majority of the shares as
of the record date that are present in person or represented by
proxy at the Annual Meeting and entitled to vote on these
matters. Neither broker non-votes nor abstentions
are included in the tabulation of the voting results and,
accordingly, they do not have the effect of votes
AGAINST such proposals.
Security
Ownership of Certain Beneficial Owners and Management
The following table shows the number of shares of our common
stock beneficially owned as of August 6, 2010 by each
entity or person who is known to us to own five percent or more
of our common stock, each director, each executive officer
listed in the Fiscal Year 2010 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 other rights to
acquire shares of common stock that are exercisable within
60 days of August 6, 2010 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 49,398,956 shares of our
common stock outstanding as of August 6, 2010. The
information contained in the following table is not necessarily
4
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.
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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None(1)
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Executive Officers and Directors
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Alain Couder(2)
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245,831
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*
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Jerry Turin(3)
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71,998
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*
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Jim Haynes(4)
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113,140
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*
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Kate Rundle(5)
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37,888
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*
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Scott Parker(6)
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44,850
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Bernard Couillaud(7)
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10,000
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Giovanni Barbarossa(8)
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206,777
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Edward Collins(9)
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10,000
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Greg Dougherty(10)
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13,888
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Lori Holland(11)
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23,085
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Joel A. Smith, III(12)
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23,632
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All executive officers and directors as a group (11 persons)
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801,089
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1.62
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less than 1% |
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Based solely on review of Schedule 13G and
Schedule 13D filings made through August 6, 2010, we
are not aware of any holder of five percent or more of the total
outstanding shares our common stock. |
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Represents 54,892 shares owned by Mr. Couder and
190,939 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 2,461 shares owned by Mr. Turin and
69,537 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 17,177 shares owned by Mr. Haynes and
95,963 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 8,806 shares owned by Ms. Rundle and
29,082 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 15,193 shares owned by Mr. Parker,
15,193 shares issuable pursuant to restricted stock units
vesting within 60 days of August 6, 2010 and
29,657 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 1,000 shares owned by Mr. Couillaud and
9,000 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 31,417 shares owned by Mr. Barbarossa and
175,360 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 1,000 shares owned by Mr. Collins and
9,000 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 1,873 shares owned by Mr. Dougherty and
12,015 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 6,000 shares owned by Ms. Holland and
17,085 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
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Represents 9,180 shares owned by Mr. Smith
individually, 86 shares owned by his spouse and
14,366 shares issuable pursuant to options exercisable
within 60 days of August 6, 2010. |
5
PROPOSAL 1
ELECTION
OF CLASS III 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 2011, 2012, and 2010 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. Alain Couder and Joel
A. Smith III are currently serving as Class III
directors. If Messrs. Couder and Smith are elected this
year, they will be elected to serve as members of our board of
directors until the 2013 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. Couder and Smith as Class III directors unless
the proxy is marked otherwise. Upon the recommendation of the
nominating and corporate governance committee, our board of
directors has nominated Messrs. Couder and Smith to serve
as Class III directors. Each of Messrs. Couder and
Smith has indicated his 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. Couder and Smith 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, or has during the past five years served, 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 Alain Couder and Joel
A. Smith III to serve
as Class III 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, 67, 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 2010,
Mr. Collins has served as chairman, and is currently a
director only, of California Bank of Commerce. He is also a
member of its compensation committee. From 1999 to present, he
has served as chairman of the audit 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. With his 15 years of experience in the
private equity industry, Mr. Collins brings to our Board
in-depth knowledge of finance and strategic investment strategy.
Mr. Collins experience and training as a practicing
attorney also enables him to bring valuable insights to the
Board, including his thorough understanding of the legal risk of
our business. Based on the Boards identification of these
qualifications, skills and experiences, the Board has concluded
that Mr. Collins should serve as a director.
Lori Holland, 52, 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,
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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. . From June 2005 to December
2006, Ms. Holland served on the board of directors of
WiderThan, a Korean company listed on the NASDAQ National
Market. Ms. Holland received a BS in Economics from
California Polytechnic University. Ms. Holland brings
significant financial management and financial disclosure
experience, as well as significant knowledge of the
Companys history and experiences to the Board.
Ms. Holland brings to the Board her extensive knowledge in
the areas of accounting, financial reporting and controls, and
experience as a leader of several technology companies. Based on
the Boards identification of these qualifications, skills
and experiences, the Board has concluded that Ms. Holland
should serve as a director.
Giovanni Barbarossa, 49, has served as a director since
April 2009. Prior to Oclaro, Dr. Barbarossa served as a
director of Avanex from July of 2008 to April 2009 (when Avanex
Corporation (Avanex) and Bookham, Inc.
(Bookham) merged to create Oclaro).
Dr. Barbarossa joined Avanex in February 2000 and was most
recently Avanexs President and Chief Executive Officer.
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 2002, and Senior Director of R&D from February
2000 to July 2001. In addition, he was the General Manager of
Avanexs Active Component Business Unit. 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. Dr. Barbarossas legacy relationship
with the Company through his various and significant roles at
Avanex bring a unique perspective to our business and strategy.
He also has significant experience in the optical communications
industry. Based on the Boards identification of these
qualifications, skills and experiences, the Board has concluded
that Dr. Barbarossa should serve as a director of the
Company.
Class II
Directors Term Expiring 2012
Bernard Couillaud, 66, 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
and was a director of Coherent 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. Dr. Couillaud brings significant leadership
experience to the Board. Dr. Couillauds extensive
experience leading companies in the optical communications
industry is directly aligned with the Companys operations
in this area. Based on the Boards identification of these
qualifications, skills and experiences, the Board has concluded
that Dr. Couillaud should serve as a director of the
Company.
Greg Dougherty, 50, has served as a director of Oclaro
since April of 2009. Prior to Oclaro, Mr. Dougherty served
as a director of Avanex from April of 2005 to April 2009 (when
Avanex and Bookham merged to create Oclaro). Mr. Dougherty
has served as a director of Picarro, Inc. a manufacturer of
ultra sensitive gas spectroscopy equipment using laser based
technology since October of 2002. He also has served on the
board of directors of the Ronald McDonald House at Stanford
since January of 2004. From February 2001 until September 2002,
Mr. Dougherty was the Chief Operating Officer at JDS
Uniphase (JDS), an optical technology company. Prior to JDS he
was the Chief Operating Officer of SDL, Inc. from March 1997 to
February 2001 when they were acquired by JDS. From 1989 to 1997,
Mr. Dougherty was the Director of Product Management and
Marketing at
7
Lucent Technologies Microelectronics in the Optoelectronics
Strategic Business Unit. Mr. Dougherty received a B.Sc.
degree in Optics in 1983 from the University of Rochester.
Mr. Dougherty brings significant leadership, operations,
sales, marketing and general management experience to the Board.
Mr. Dougherty provides the Board with valuable insight into
managements perspective with respect to the Companys
operations. Mr. Dougherty also brings to the Board
significant experience in executive compensation matters, which
gives him the ability to assist in compensation decisions. Based
on the boards identification of these qualifications,
skills and experiences, the Board has concluded that
Mr. Dougherty should serve as a director of the Company.
Class III
Directors Terms Expiring 2010
Alain Couder, 64, 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 has been a director
at Sanmina-SCI, an electronic manufacturing services firm, since
February 2005. Mr. Couder holds a Masters degree in
electrical engineering from the Ecole Superieure
dElectricite in Paris. Mr. Couder brings significant
leadership, operational and corporate governance experience to
the Board, which enables him to aptly communicate the insight of
the Company to members of the Board. Mr. Couders
experience, through nearly 8 years of executive officer
service with companies in a high growth phase, gives him a
unique perspective on the Companys business. Based on the
Boards identification of these qualifications, skills and
experiences, the Board has concluded that Mr. Couder should
serve as a director of the Company as well as President and
Chief Executive Officer.
Joel A. Smith III, 65, has served as a director since
April 2009. Prior to Oclaro, Mr. Smith served as a director
of Avanex from December 1999 to April 2009 (when Avanex and
Bookham merged to create Oclaro). 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 Bancshares (and was formerly a director of Carolina
National Corporation, prior to its acquisition by First National
Bancshares). Mr. Smith received a B.A. from the University
of the South in Sewanee, Tennessee. Mr. Smith brings
significant financial management and financial disclosure
experience, as well as significant knowledge of Avanexs
history and experiences to the Board. Mr. Smith brings to
the Board his extensive knowledge in the areas of finance,
management, financial reporting, and controls and experience as
a leader of large, well-respected financial institutions.
Mr. Smith also brings to the Board significant experience
in corporate governance matters, which gives him the ability to
assist in governance decisions and related responsibilities.
Based on the Boards identification of these
qualifications, skills and experiences, the Board has concluded
that Mr. Smith should serve as a director of the Company.
Non-Director
Executive Officers
Jerry Turin, 48, has served as our Chief Financial
Officer since August 2008. From April 2008 to July 2008,
Mr. Turin served as our Vice President of Finance. From
July 2005 to July 2008, Mr. Turin served as our Corporate
Controller. 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
8
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, 48, has served as Chief Operating Officer
since March 2005. From August 2004 to March 2005,
Mr. Haynes was the Officer Vice President, U.K. Operations,
of Bookham Technology plc. From June 2003 to August 2004,
Mr. Haynes served as Vice President 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, Wales.
Kate Rundle, 53, 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
worldwide legal support of the companys marketing
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 sociology and political
science from the University of California, Berkeley and her J.D.
from the University of California, Hastings College of the Law.
Scott Parker, 54, has served as our Executive Vice
President of Sales and Marketing Communications, since April
2009. He 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.
Director
Compensation
Fiscal
Year 2010
In fiscal year 2010, each of our non-employee directors received
an annual retainer of $37,000 and certain additional
compensation (as described below) for meetings in excess of 5
in-person meetings and 4 telephonic meetings per year.
Additional compensation consisted of an additional $1,000 for
each in-person meeting in excess of 5 in-person meetings per
year and $500 for each telephonic meeting lasting less than
2 hours and $1,000 for each telephonic meeting lasting 2 or
more hours, in excess of 4 telephonic meetings per year. The
chairman of our board of directors received an additional annual
retainer of $80,000. The chairman of the audit committee
received an additional annual fee of $37,000, the chairman of
the compensation committee received an additional annual fee of
$18,000 and the chairman of the nominating and corporate
governance committee received an additional annual fee of
$16,500. Each member of the audit committee received an
additional $10,000 per year for up to 8 meetings and was
entitled to receive additional compensation (as described above)
for meetings in excess of 8 meetings per year. Each member of
the compensation committee received an additional $7,000 per
year for up to 8 meetings and was entitled to receive additional
compensation (as described above) for meetings in excess of 8
meetings per year. Each member of the nominating and corporate
governance committee received an additional $5,000 per year for
up to 6 meetings and was entitled to receive additional
compensation (as described above) for meetings in excess of 6
meetings per year. We reimbursed 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 2009 annual meeting of stockholders, each non-employee
director was granted a nonstatutory stock option to acquire
8,000 shares of our common stock, provided that the
director was serving as a director both immediately before and
immediately after the 2009 annual meeting of stockholders. Such
options vest as to all of the underlying shares on the first
anniversary of the date of grant, and will vest in full upon a
change in control of Oclaro.
9
Fiscal
Year 2011
At a meeting on July 28, 2010, our board of directors
adopted new non-employee director compensation arrangements for
fiscal year 2011. The fiscal year 2011 arrangements are the same
as those for fiscal year 2010, except for the amount of the
annual retainer and the amount and nature of the annual equity
grants. In fiscal year 2011, the annual retainer for each of our
non-employee directors will be $40,000, with the same additional
compensation as in fiscal year 2010. With respect to equity, at
our Annual Meeting, each non-employee director will be granted a
nonstatutory stock option to acquire a number of shares of our
common stock with a value equal to $37,500 calculated based on a
30-day
average stock price and Black-Scholes-Merton assumptions as of
the grant date, and a restricted stock grant with a value equal
to $37,500 calculated based on a
30-day
average stock price at the grant date. The qualification and
vesting terms of each such award will be the same as those for
the options granted in fiscal year 2010. In our discretion, we
may grant additional equity awards to our non-employee directors
under our Amended and Restated 2004 Stock Incentive Plan. The
following table sets forth information concerning the
compensation of our directors for fiscal year 2010:
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Option
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All Other
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Fees Earned or
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Stock
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Awards
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Compensation
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Name(1)
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Paid in Cash ($)
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Awards ($)
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($)(2)
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($)
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Total ($)
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Bernard J. Couillaud
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$
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123,000
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$
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32,746
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(4)
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$
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155,746
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Giovanni Barbarossa
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$
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38,000
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$
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32,746
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(4)
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$
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309,574
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(3)
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$
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380,320
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Edward B. Collins
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$
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60,000
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$
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32,746
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(4)
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$
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92,746
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Greg Dougherty
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$
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73,000
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$
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32,746
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(4)
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$
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105,746
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Lori Holland
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$
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92,500
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$
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32,746
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(4)
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$
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125,246
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Joel A. Smith III
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$
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59,500
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$
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32,746
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(4)
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$
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92,246
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(1) |
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Compensation information for Mr. Couder is set forth below
under Compensation Discussion and Analysis and the
corresponding compensation tables. |
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(2) |
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The amounts in this column reflects the total grant date fair
value, computed in accordance with Financial Accounting
Standards Board Accounting Standards Codification Topic 718,
Compensation Stock Compensation (ASC
718) of grants of stock options made during the fiscal
year ended July 3, 2010. There can be no assurance that the
ASC 718 amounts will ever be realized. The assumptions we used
to calculate these amounts are included in Note 11 to our
audited consolidated financial statements included in our 2010
Annual Report. The options vest as to 100% of the shares subject
to the option one year following the date of grant. Each option
has a term of 10 years, and generally expires after the
recipient ceases to be a director. |
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(3) |
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This amount includes $300,000 in consulting fees paid to
Dr. Barbarossa pursuant to the consulting agreement entered
into by and among Dr. Barbarossa, Avanex Corporation and us
on January 27, 2009, and $9,574 for reimbursement of
medical insurance costs in connection with the separation and
release agreement entered into by and among Dr. Barbarossa,
Avanex Corporation and us on April 28, 2009. |
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(4) |
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Consists of the grant date fair value, computed in accordance
with ASC 718, of $32,746 of the stock option award granted on
October 21, 2009. |
10
Outstanding
Stock Options and Stock Awards Held by Directors
The following table summarizes the number of outstanding stock
awards and option awards held by each of our non-employee
directors as of the end of fiscal year 2010.
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Name
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Stock Awards(1)
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Option Awards(2)
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Bernard J. Couillaud
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340
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17,000
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Giovanni Barbarossa
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183,360
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Edward B. Collins
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340
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17,000
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Greg Dougherty
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20,015
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Lori Holland
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25,085
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Joel A. Smith III
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|
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22,366
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|
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(1) |
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Stock awards consist of 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 2010, 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 2010 annual meeting of
stockholders.
Submitted by the Compensation Committee of the Board of
Directors:
Greg Dougherty, Chairman
Lori Holland
Edward Collins
11
EXECUTIVE
COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
In this section, we discuss the material elements of our
executive compensation programs and policies, including program
objectives and reasons why we pay each element and the specific
amounts of our executives compensation. Following this
discussion, you will find a series of tables containing more
specific details about the compensation earned by, or awarded
to, the following individuals, whom we refer to as our named
executive officers:
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Name
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Position
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Alain Couder
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Chief Executive Officer
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Jerry Turin
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Chief Financial Officer
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Jim Haynes
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Chief Operations Officer
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Scott Parker
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Executive Vice President of Sales and Marketing Communications
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Kate Rundle
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Executive Vice President, General Counsel and Corporate
Secretary
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This discussion focuses principally on compensation and
practices relating to the named executive officers for our 2010
fiscal year. In addition, we discuss certain changes in our
compensation programs and policies that we have implemented
beginning with our 2011 fiscal year.
Executive
Summary
In response to the global economic crisis that continued through
the beginning of fiscal year 2010, we made a number of critical
decisions regarding fiscal year 2010 executive compensation. We
froze most executive base salaries and target incentive bonus
levels, but chose to provide modest increases in base salary and
target annual cash incentives for two named executive officers
whose compensation packages were well below the
25th percentile of their peers in order to mitigate
retention risk. We also chose to make long-term equity incentive
grants to our named executive officers to address retention
concerns, but given the depressed value of our stock, these
grants of time-based options roughly approximated the
25th percentile of our peers in fiscal year 2010. As a
result, total target direct compensation for all of our named
executive officers for fiscal year 2010 was below the
25th percentile of our peer companies.
Based on strong operational performance in fiscal year 2010, we
exceeded the target payout levels for performance metrics under
our fiscal year 2010 variable pay program and sales incentive
plan. As a result, incentive cash payouts were in excess of
target for the named executive officers for fiscal year 2010.
For fiscal year 2011, we have adopted various changes in our
executive compensation programs in order to ensure we are able
to retain our key executive talent and remain competitive with
our market peers. These changes are discussed further in
Fiscal Year 2011 Changes in Executive Compensation
below.
We also expect to discuss our fiscal year 2011 executive
compensation programs and rationale for our decisions more in
next years proxy statement for our 2011 annual meeting of
stockholders.
Compensation
Committee
The compensation committee of our board of directors (referred
to in this discussion as the Committee) annually assesses our
compensation programs to assure that they are appropriately
aligned with our business strategy and are achieving their
objectives. The Committee also reviews market trends and changes
in competitive compensation practices. Based on its review and
assessment, the Committee from time to time recommends changes
in our compensation programs to our Board. For fiscal year 2010,
the Committee recommended to our Board the compensation of our
Chief Executive Officer and all other executive officers. The
Committee also oversaw managements decisions concerning
the compensation of other company officers, administered our
equity compensation plans, and evaluated the effectiveness of
our overall executive compensation programs.
12
Independent
Consultants and Advisors
The Committee has the authority to retain and terminate any
independent, third-party compensation consultants and to obtain
advice and assistance from internal and external legal,
accounting and other advisors. During our 2010 fiscal year, the
Committee engaged Compensia, Inc. (Compensia) as its
independent adviser for certain executive compensation matters.
Compensia was engaged directly by the Committee to provide an
independent review of our executive compensation programs,
including an analysis of both the competitive market and the
design of the programs. More specifically, Compensia furnished
the Committee with reports on peer company practices relating to
the following matters:
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short- and long-term compensation program design;
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annual share utilization and shareowner dilution levels
resulting from equity plans; and
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executive stock ownership and retention values.
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As part of its reports to the Committee, Compensia evaluated our
selected peer companies, and provided competitive compensation
data and analysis relating to the compensation of our Chief
Executive Officer and our other executives and officers.
Compensia also assisted us with our risk assessment of our
compensation programs. The Committee asked Compensia to prepare
and present peer company benchmarking data in connection with
fiscal year 2010 compensation decisions. Compensia provided no
additional consulting services apart from executive and director
compensation matters in fiscal year 2010. The Committee has
retained Compensia as its independent compensation consultant
once again for fiscal year 2011 and intends to engage Compensia
to review the elements listed above along with executive change
of control and severance agreements. The Committee expects that
it will continue to retain an independent compensation
consultant in the future.
Compensation
Philosophy and Objectives
We believe that the quality, skills and dedication of our
executive officers are critical factors affecting the
companys performance and stockholder value. Accordingly,
the key objective of our compensation programs is to attract,
retain and motivate superior executive talent while maintaining
an appropriate cost structure. In addition, our compensation
programs are designed to link a substantial component of our
executives compensation to the achievement of performance
goals that directly correlate to the enhancement of stockholder
value (often referred to as pay for performance). Finally, our
compensation programs are designed to have the right balance of
short- and long-term compensation elements to ensure an
appropriate focus on operational objectives and the creation of
long-term value.
To accomplish these objectives, the Committee has structured our
compensation programs to include the following key features and
compensation elements:
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base salaries that are competitive with those paid by peer group
companies, allowing us to attract and retain key executives;
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variable pay, earned twice per year, based on pre-established
performance goals related to our important financial objectives;
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equity-based compensation, which aligns our executives
interests with those of our stockholders and promotes executive
retention; and
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change in control and severance benefits.
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As a general matter, the Committee seeks to allocate a
substantial portion of the named executive officers
compensation to components that are performance-based. The
Committee also generally seeks to allocate a substantial portion
of executive compensation to long-term equity awards. The
Committee does not maintain fixed policies for allocating among
current and long-term compensation or among cash and non-cash
compensation. Instead, the Committee maintains flexibility and
adjusts different elements of compensation based upon its
evaluation of the key compensation goals set forth above.
13
While compensation levels may differ among named executive
officers based on the role, responsibilities and performance of
each specific executive, there are no material differences in
the compensation philosophies, objectives or policies for our
executives. We do not maintain a policy regarding internal pay
equity.
Role of
Executive Officers in Compensation Decisions
The Committee makes recommendations to our Board on all
compensation actions relating to our executive officers,
including our named executive officers. As part of its process,
the Committee meets with our Chief Executive Officer and
Executive Vice President of Human Resources to obtain
recommendations with respect to the structure of our
compensation programs, as well as an assessment of the
performance of individual executives and recommendations on
compensation for individual executives. As discussed in greater
detail below under Variable Pay
Program / Cash Incentive Awards, our Chief
Executive Officer, Chief Financial Officer and Executive Vice
President of Human Resources develop recommendations for
performance measures and target and payout opportunities under
our variable pay program based on managements business
forecast both at the company and business unit levels. These
recommendations are reviewed and approved by our Board.
Competitive
Positioning
In arriving at its recommendations to our Board on the amounts
and components of compensation for our Chief Executive Officer
and other executive officers for fiscal year 2010, the Committee
relied on competitive compensation data prepared by Compensia.
Peer companies were recommended by Compensia and approved by the
Committee. In selecting peer companies, the Committee sought to
select companies that were comparable to us on the basis of
revenues, industry, global scope of operations, and market
capitalization, and that the Committee believes compete with us
for executive talent. In particular, the peer group for fiscal
year 2010 was determined based on the following criteria:
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global communications equipment and semiconductor companies;
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companies with revenues between $140 million and
$600 million (approximately
1/2
to 2 times Oclaros trailing 12 months
revenues); and
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companies with an average market capitalization of approximately
$434 million.
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In fiscal year 2010, Compensia recommended and the Committee
approved the peer group set forth below. Compensia also
recommended and the Committee approved the use of the Radford
survey data for benchmarking other executives compensation
in fiscal year 2010.
The peer group consisted of the following companies:
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Coherent Inc.
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MRV Communications Inc.
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Cymer Inc.
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Newport Corporation
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Emcore Corporation
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Oplink Communications Inc.
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EXFO Electro-Optical Engineering Inc.
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Opnext Inc.
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Extreme Networks
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PMC-Sierra Inc.
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Finisar Corporation
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TriQuint Semiconductor Inc.
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GSI Group Inc.
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Zygo Corporation
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Harmonic Inc.
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ARM Holdings Ltd.*
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II-VI Incorporated
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Dialight Ltd.*
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Infinera Corporation
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Filtronic Plc*
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IPG Photonics Corporation
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Renishaw Plc*
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Mindspeed Technologies Inc.
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Spirent Communications Plc*
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* |
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United Kingdom peer companies |
14
In connection with its compensation review process for fiscal
year 2011, and based upon the recommendation of Compensia, the
Committee approved certain changes to our peer group for use in
making fiscal year 2011 compensation decisions. The peer group
for fiscal year 2011 was determined based on the same criteria
used to determine the fiscal year 2010 peer group, except that
the fiscal year 2011 peer group includes companies with revenues
between $200 million and $1 billion (approximately
1/2
to 2 times Oclaros trailing 12 months revenues).
The changes to the peer group for fiscal year 2011 generally
reflect the inclusion of companies with higher annual revenue
and market capitalization and the removal of companies whose
revenues or market capitalization did not fall within the above
criteria. We expect to discuss the peer group for fiscal year
2011 more in next years proxy statement for our 2011
annual meeting of stockholders.
In addition, for fiscal year 2011, Compensia recommended and the
Committee approved using data from Radfords published
compensation survey for technology companies for benchmarking
compensation for our other executives and officers, including
our named executive officers. Compensia recommended and the
Committee approved using survey data for technology companies
with annual revenues between $200 million and
$1 billion and with manufacturing operations in order to
align the data more closely to the criteria selected for the
peer group. Compensia recommended and the Committee approved the
use of this survey data because this survey data provided a
better match based upon job responsibility and is more
reflective of the market for talent for these positions.
In past years, the Committee generally sought to set total
target direct compensation for our executives at the
50th percentile of that provided by peer companies. Total
target direct compensation is the sum of base salary, target
annual incentive compensation and target long-term equity
incentive awards. The Committee also sought to target each
component of total target direct compensation at this level.
However, total target direct compensation, as well as individual
components, have in the past varied by executive based on the
executives experience, level of responsibility and
performance. For fiscal year 2010 compensation, the Committee
considered the economic environment and determined to recommend
to our Board that, other than for Mr. Haynes and
Mr. Turin, no adjustments be made to base salaries and
target annual incentive levels for fiscal year 2010. As a
result, total target direct compensation for our named executive
officers for fiscal year 2010 fell below the
50th percentile of our peer companies.
Fiscal
Year 2011 Changes in Executive Compensation
As a result of the Committees review of our compensation
programs and peer company data and best practices in the
executive compensation area, the Committee recommended and our
Board approved various changes in our executive compensation
programs in order to ensure we are able to retain our key
executive talent and remain competitive with our market peers.
These changes include the following:
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base salary is once again targeted at the 50th percentile
of peer companies;
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incentive pay is now targeted at the 50th percentile of
peer companies;
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our variable pay performance goals will be based on several
important financial metrics rather than just one performance
metric and payout levels will continue to be capped at 150% of
target under our variable pay program and 250% of target under
our sales incentive program;
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long-term incentive compensation will be comprised of both
performance-based stock options and time-based restricted stock
units, and is now targeted at the 75th percentile of peer
companies; and
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total direct compensation, comprised of base salary and short-
and long-term incentive compensation, is now targeted at above
the 50th percentile of peer companies.
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We expect to discuss our fiscal year 2011 executive compensation
program more in next years proxy statement for our 2011
annual meeting of stockholders.
15
Fiscal
Year 2010 Executive Compensation
Summary
of Fiscal Year 2010 Compensation Decisions
Our improved operational performance during difficult economic
conditions was reflected in several key outcomes for fiscal year
2010. We were able to continue to increase margin expansion,
generate positive cash flow, rapidly integrate several
acquisitions and achieve operational profitability. We achieved
our annual performance measures under our variable pay program
at the following levels:
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achieved Adjusted EBITDA of $8.4 million for the six months
ended January 2, 2010, which resulted in a payout at the
stretch level of 150%; and
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achieved Adjusted EBITDA of $18.1 million for the six
months ended July 3, 2010, which resulted in a payout of
just over the target level of 101%.
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Target awards (as a percentage of base salary) and payout
opportunities generally were maintained at the same levels as
prior years (with the exception of Mr. Haynes and
Mr. Turin). Based on our performance in fiscal year 2010,
payouts under the variable pay program were 150% of target for
the six-month period ended January 2, 2010 and 101% of
target for the six-month period ended July 3, 2010.
Adjusted EBITDA, as used in our variable pay program, is
calculated as net income/loss excluding the impact of income
taxes, net interest income/expense, depreciation and
amortization and net foreign currency translation gains/losses,
as well as restructuring, merger and related costs, impairment,
non-cash compensation related to stock and options, and related
costs outside of our normal course of business.
As part of our response to the ongoing economic crisis, the
Committee recommended that no increases to base salary and
target annual incentive levels be awarded to our executives in
fiscal year 2010 with the exception of Mr. Haynes and
Mr. Turin. The Committee recommended that both
Mr. Haynes and Mr. Turin received market adjustments
to their base salaries and also recommended to increase their
target annual incentive levels to 60%. These recommendations
were made to address the fact that both individuals were well
below the 25% percentile of their peer groups which proposed a
significant retention risk. Mr. Haynes base salary
increased from £186,434 to £215,000 while
Mr. Turins increased from $260,000 to $280,000.
While the Committee recommended a freeze in cash compensation
levels as discussed above, in order to retain our key executives
during the difficult economic environment, the Committee did
recommend to the Board that each executive receive a long-term
equity incentive grant. For fiscal year 2010, given the
depressed value of our stock, it was not possible to grant
long-term equity at market levels. Instead each named executive
received a grant of time-based options which roughly
approximated the 25th percentile of the peer group levels.
The allocation of these grants to the executives was determined
based on individual performance, criticality of skills, and
retention risk, among other factors.
Based on company performance, the Committee believes that
compensation levels for fiscal year 2010 were appropriate and
consistent with the philosophy and objectives of our
compensation programs.
Elements
of Compensation
We allocate compensation among the following components for our
named executive officers:
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base salary;
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variable pay (cash incentive awards);
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long-term incentives and stock-based compensation;
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change of control and severance benefits; and
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other benefits.
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16
Base
Salary
We seek to set our executives base salaries at levels
which are competitive with our peer companies based on each
individual executives role and the scope of his or her
responsibilities, also taking into account the executives
experience and the base salary levels of other executives within
the company. The Committee typically reviews base salaries every
fiscal year and adjusts base salaries to take into account
competitive market data, individual performance and promotions
or changes in responsibilities.
As a result of the global economic crisis that continued into
fiscal year 2010, and our resulting focus on controlling costs,
the Committee did not recommend base salary adjustments for
fiscal year 2010 other than for Mr. Haynes and
Mr. Turin.
Mr. Hayness base salary was increased to
£215,000 effective October 1, 2009, which approximated
the 50th percentile of our peer companies when it was
analyzed as part of the fiscal year 2010 compensation review.
Mr. Turins base salary was increased to $280,000
effective October 1, 2009, which approximated the
50th percentile of the peer company data for his position.
Base salary levels for the other named executive officers
remained unchanged for fiscal year 2010.
Variable
Pay Program / Cash Incentive Awards
Through our variable pay program, we seek to provide pay for
performance by linking cash incentive awards to company
financial performance. In designing the variable pay program,
our Chief Executive Officer, Chief Financial Officer and
Executive Vice President of Human Resources develop and
recommend performance metrics and targets, which are reviewed
and are subject to adjustment by the Committee and our Board.
Performance metrics and payout levels are determined based on
managements business forecast both at the company and
business unit levels, as reviewed and approved by the Board. In
fiscal year 2010, target levels for performance under the plan
were set above the levels included in our business forecast in
order to challenge management.
For fiscal year 2010, performance measures were based on
cumulative Adjusted EBITDA targets for the six months ended
January 2, 2010 and July 3, 2010.
Key features of the variable pay program in fiscal year 2010
were as follows:
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Performance targets were based on the key company financial
metric of Adjusted EBITDA.
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For the six months ended January 2, 2010, the trigger,
target and stretch Adjusted EBITDA amounts were negative
$5 million, zero dollars and $5 million, respectively.
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For the six months ended July 3, 2010, the trigger, target
and stretch Adjusted EBITDA amounts were $11 million,
$18 million and $25 million, respectively.
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Performance targets were measured and paid out on a six-month
basis.
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All non-GAAP adjustments were subject to approval by the
Committee to ensure that the non-GAAP adjustment effects on
payout levels appropriately reflected company performance.
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Payouts were based entirely on achievement of financial
performance objectives; there was no individual performance
component.
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Each executives target variable pay was set at a
percentage of base salary, based on both competitive
benchmarking and the level of the executives
responsibilities, as follows:
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The Chief Executive Officers target variable pay was set
at 100% of base salary and the Chief Operating Officer and Chief
Financial Officers target variable pay were set at 60% of
base salary;
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Our Executive Vice President of Sales and Marketing
Communications participated in our sales incentive plan with a
target level of 60% of base salary; and
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For all other executives, the target variable pay was set at 40%
of base salary.
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17
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Payout opportunities for each component ranged from 50% of
target, or the trigger amount, to a maximum of 150% of target,
or the stretch amount (a maximum of 250% in the case of the
Executive Vice President of Sales and Marketing Communications).
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If we failed to achieve the trigger level for the performance
measure, no payout was awarded.
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The variable pay program award targets for each named executive
officer are shown in the Fiscal Year 2010 Grants of Plan-Based
Awards Table on page 23.
Non-GAAP Adjustments
We used an adjusted non-GAAP performance measure for our
variable pay program in fiscal year 2010. We use an adjusted
measure to eliminate the distorting effect of certain unusual
income or expense items. The adjustments are intended to:
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align award payout opportunities with the underlying growth of
our business; and
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avoid outcomes based on unusual items.
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In calculating non-GAAP financial measures, we exclude certain
items to facilitate a review of the comparability of our
operating performance on a period-to-period basis because such
items are not, in the Committees view, related to our
ongoing operational performance. The non-GAAP measures are used
to evaluate more accurately our operating performance, for
calculating return on investment, and for benchmarking
performance against competitors. All adjustments are subject to
approval by the Committee to assure that payout levels are
consistent with performance.
Sales
Incentive Plan for Executive Vice President of Sales and
Marketing Communications
Mr. Parker serves as our Executive Vice President of Sales
and Marketing Communications. In his sales role during fiscal
year 2010, Mr. Parker participated in our sales incentive
plan. Mr. Parkers participation in this quota-based
plan was at a target level of 60% of his annual base salary. As
a participant in our sales incentive plan, Mr. Parker
received a quarterly quota for company-wide sales revenue.
Unless a minimum trigger of 60% of the target quota was
achieved, there was no payout under this plan, and
Mr. Parkers payout under this plan was capped at 250%
of his target level, which equals 150% of his annual base
salary. During fiscal year 2010, Mr. Parker achieved 101%
of quota for the quarter ended September 26, 2009; 107% of
quota for the quarter ended January 2, 2010; 102% of quota
for the quarter ended April 3, 2010 and 107% of quota for
the quarter ended July 3, 2010. Payments to Mr. Parker
under our sales incentive plan are included in the Fiscal Year
2010 Summary Compensation Table on page 22.
Mr. Parker, as a participant in our sales incentive plan,
was not eligible to participate in our variable pay program.
We believe that disclosing our quarterly company-wide sales
revenue goals, even on a historical basis, would cause us
competitive harm by, among other things, providing our
competitors with insight into our business strategy and
anticipated sales capabilities within the fiscal year. For
fiscal year 2010, we set quarterly company-wide sales revenue
targets based on our Board-approved internal business plan at
levels that are challenging, but not exceedingly difficult to
achieve, relative to our historical performance and future
expectations at the time the levels are set. The Committee
believes that incentives awarded under our variable pay program
and sales incentive plan appropriately reflected our performance
and appropriately rewarded the performance of the named
executive officers.
Long-Term
Incentive Programs
Stock-Based
Compensation
Stock
Options Awards
The Committee grants stock options, which are designed to align
the interests of the named executive officers with those of our
stockholders and provide each individual with a significant
incentive to manage the company from the perspective of an
owner, with an equity stake in the business. These awards are
also intended to promote
18
executive retention, as unvested stock options are generally
forfeited if the executive voluntarily leaves the company. Each
stock option allows the executive officer to acquire our
ordinary shares at a fixed price per share (the market price on
the grant date) over a period of ten years, thus providing a
return to the officer only if the market price of the shares
appreciates over the option term.
The size of the option grant award to each executive officer
generally is set at a level that is intended to create a
meaningful opportunity for share ownership based upon the
individuals current position with the company, but the
Committee and Board also take into account (i) the
individuals potential for future responsibility and
promotion over the term of the award, (ii) the
individuals performance in recent periods, and
(iii) the number of option awards held by the individual at
the time of grant. In addition, the Committee and Board consider
competitive equity award data, and determine award size
consistent with the Committees and our Boards
objective of setting long-term incentive compensation at a
competitive level (50th percentile) in relation to our peer
companies, subject to individual variances. The Committee and
Board also consider annual share usage and overall stockholder
dilution when determining the size of equity awards.
Commencing with fiscal year 2011, the Committees policy is
to target long-term incentive compensation at the
75th percentile of our peer companies, subject to
individual variances. For fiscal year 2011, the Committee has
determined that equity awards for executives and other senior
officers generally will be allocated 50% to stock option awards
and 50% to time-based restricted stock awards. The Committee
determined to use this mix of equity awards for fiscal year 2011
not only to limit the dilutive effect of equity awards but to
deliver current-year equity at above-market grant levels in
order to reorient executives previously compensated at
below-market levels. Time-based restricted stock awards will
vest 25% after each year over four years. Stock option awards
will vest 25% after one year and then monthly thereafter over
the next three years. We expect to discuss these fiscal year
2011 awards more in next years proxy statement for our
2011 annual meeting of stockholders.
Administration
of Equity Award Grants
The Committee grants options with exercise prices set at the
market price on the date of grant, based on the closing market
price. Our current stock option grant policy is that options and
restricted stock awards granted to executive officers are only
made during open trading windows. Awards are not timed in
relation to the release of material information. Our current
stock option grant policy also provides that annual incentive
grants to executives are made on August 15th each year
after approval from the Board. 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 for fiscal
year 2010 were granted on August 15th. Any special grants
(non-new hire or annual) made by the Committee are effective on
the date of approval by the Committee.
Grants
During Fiscal Year 2010
In determining the size of equity grants to our executives in
fiscal year 2010, the Committee used the Black-Scholes-Merton
valuation model and 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. For fiscal year 2010, due to the economic
environment and the depressed value of our stock, the Committee
awarded equity grants to our executives that were below the
median for equity awards granted to comparable executives at
companies in the peer group and those identified in the Radford
survey.
The 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 Compensia. Given the general economic
conditions and the depressed value of our stock, the use of our
restricted shares provided little retention value given current
stock price and constraints on the number of shares available in
our equity pool. Instead, time-based stock options created both
upside potential if our stock price increases as well as
retention value.
19
Other
Benefits
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. For fiscal
year 2010, we eliminated Mr. Haynes car allowance
(£9,000 per annum) and consolidated that benefit into his
annual base salary effective August 1, 2009.
Severance
and Change of Control Arrangements
Each of the named executive officers other than Mr. Couder
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 upon death or without cause or for
good reason, each as defined in the Executive
Severance and Retention Agreement. Mr. Couders
Amended and Restated Employment Agreement provides for payments
in similar circumstances, other than death. Change of control
payments of salary and variable pay made under the agreements,
and, in the case of Mr. Couder, acceleration of equity
awards, are subject to a double trigger, meaning
that both a change of control and a subsequent termination are
required. In other words, the change of control does not by
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 Employment, Change of Control and Severance
Arrangements below. Acceleration of equity awards for
executives other than Mr. Couder 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 help 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. The Committee periodically
reviews 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 under Section 162(m) so that the compensation
remains tax deductible to us. However, the Committee may, in its
judgment, authorize compensation payments that do not comply
with the exemptions under Section 162(m) when it believes
that such payments are appropriate to attract and retain
executive talent.
ASC 718 requires us to recognize in our consolidated 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 ASC 718 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 United States, 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
20
performance-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 continue to operate in a highly competitive industry. One of
our principal goals is to achieve significant levels of
profitability by reducing expenses and increasing revenues. In
fiscal year 2010, significant progress was made toward achieving
these goals. 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. 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 performance-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
overall compensation 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.
For fiscal year 2011, we have made some proactive changes to our
compensation policies to ensure that we can continue to retain
the best executives while balancing this with the interests of
our stockholders. 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.
Compensation
Risk Assessment
The Committee reviewed our compensation policies and practices
and determined that our compensation programs do not encourage
excessive or inappropriate risk-taking. The Committee believes
that the design and mix of our compensation programs
appropriately encourage our executives to focus on the creation
of long-term stockholder value. In its review, the Committee
noted the following features:
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payout levels under our variable pay and sales incentive plans
are capped and payout opportunities may be achieved on a
straight line interpolation basis between trigger and target
levels, and between the target and stretch levels;
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non-GAAP adjustments are made to align achievement of
performance measures with our business strategy;
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all non-GAAP adjustments are subject to Committee approval to
assure that actual payout levels appropriately reflect company
and business unit performance; and
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long-term incentive compensation constitutes a significant
portion of executives compensation thereby focusing such
individuals on enhancing long-term stockholder value.
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21
Summary
Compensation Table
The following table sets forth certain information concerning
the compensation for fiscal years 2010, 2009 and 2008 for each
individual who served as our Principal Executive Officer
(Mr. Couder) and our Principal Financial Officer
(Mr. Turin) during fiscal year 2010 and our three other
most highly compensated executive officers (Messrs. Haynes
and Parker and Ms. Rundle) who received annual compensation
in excess of $100,000 during fiscal year 2010. We refer to these
officers collectively as our named executive officers.
Fiscal
Year 2010 Summary Compensation Table
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Non-Equity
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Stock
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Option
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Incentive Plan
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All Other
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Bonus
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Awards
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Awards
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year(1)
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Salary ($)
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($)(2)
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($)(3)
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($)(3)
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|
($)
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|
($)
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($)
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Alain Couder
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2010
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$
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498,654
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$
|
460,875
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$
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627,429
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(9)
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$
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1,586,958
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President and Chief
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2009
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$
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487,500
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$
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187,500
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|
|
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$
|
614,277
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|
|
$
|
161,958
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$
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1,451,235
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Executive Officer(4)
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2008
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|
$
|
432,692
|
|
|
|
|
|
|
$
|
1,083,750
|
|
|
$
|
875,387
|
|
|
$
|
127,004
|
|
|
|
|
|
|
$
|
2,518,833
|
|
Jerry Turin
|
|
|
2010
|
|
|
$
|
266,223
|
|
|
|
|
|
|
|
|
|
|
$
|
204,832
|
|
|
$
|
210,816
|
(9)
|
|
|
|
|
|
$
|
681,871
|
|
Chief Financial Officer(5)
|
|
|
2009
|
|
|
$
|
253,500
|
|
|
$
|
39,000
|
|
|
|
|
|
|
$
|
158,360
|
|
|
$
|
33,687
|
|
|
|
|
|
|
$
|
484,547
|
|
Jim Haynes
|
|
|
2010
|
|
|
$
|
314,371
|
(8)
|
|
|
|
|
|
|
|
|
|
$
|
286,765
|
|
|
$
|
245,713
|
(8)(9)
|
|
$
|
29,812
|
(8)(11)
|
|
$
|
876,661
|
|
Chief Operating Officer
|
|
|
2009
|
|
|
$
|
283,231
|
(8)
|
|
$
|
49,051
|
|
|
|
|
|
|
$
|
167,320
|
|
|
$
|
47,048
|
(8)
|
|
$
|
42,454
|
(8)
|
|
$
|
589,104
|
|
|
|
|
2008
|
|
|
$
|
327,632
|
(8)
|
|
|
|
|
|
$
|
127,741
|
|
|
$
|
113,420
|
|
|
$
|
78,587
|
(8)
|
|
$
|
49,828
|
(8)
|
|
$
|
697,208
|
|
Kate Rundle
|
|
|
2010
|
|
|
$
|
299,253
|
|
|
|
|
|
|
|
|
|
|
$
|
92,174
|
|
|
$
|
150,583
|
(9)
|
|
|
|
|
|
$
|
542,010
|
|
Executive V.P., General Counsel
|
|
|
2009
|
|
|
$
|
292,500
|
|
|
$
|
45,000
|
|
|
|
|
|
|
$
|
153,880
|
|
|
$
|
38,870
|
|
|
|
|
|
|
$
|
530,250
|
|
and Corporate Secretary(6)
|
|
|
2008
|
|
|
$
|
173,077
|
|
|
|
|
|
|
$
|
96,000
|
|
|
$
|
59,676
|
|
|
$
|
9,781
|
|
|
|
|
|
|
$
|
338,534
|
|
Scott Parker
|
|
|
2010
|
|
|
$
|
250,000
|
|
|
|
|
|
|
|
|
|
|
$
|
71,691
|
|
|
$
|
185,250
|
(10)
|
|
|
|
|
|
$
|
506,941
|
|
Executive V.P. of Sales and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing Communications(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The years in this column refer to the fiscal years ended
July 3, 2010, June 27, 2009 and June 28, 2008. |
|
(2) |
|
The amounts in this column for fiscal year 2009 represent
discretionary amounts awarded January 22, 2009 by the
Committee under the incentive-based cash variable pay program. |
|
(3) |
|
The amounts in these columns for the fiscal years 2010, 2009 and
2008 reflect the grant date fair value, computed in accordance
with ASC 718, of grants of stock options and restricted stock
awards made during each fiscal year. Amounts included in the
stock awards column, option awards column and total column for
fiscal years 2009 and 2008 were recomputed to present the
grant-date fair value of awards granted during the respective
year. There can be no assurance that the ASC 718 amounts will
ever be realized. The assumptions we used to calculate these
amounts are included in Note 11 to our audited consolidated
financial statements included in our 2010 Annual Report. For
more information about these awards, see the discussion above
under Compensation Discussion and Analysis and the
narrative below following the Fiscal Year 2010 Grants of
Plan-Based Awards Table. |
|
(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) |
|
Ms. Rundle was appointed our Executive Vice President,
General Counsel and Corporate Secretary effective as of
November 21, 2007. |
|
(7) |
|
Mr. Parker was appointed our Executive Vice President of
Sales and Marketing Communications effective as of
April 27, 2009. |
|
(8) |
|
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 $1.52 on July 2, 2010, $1.64 on June 26,
2009 and $1.98 on August 1, 2008, respectively. |
|
(9) |
|
For fiscal year 2010, consists of payments in connection with
our incentive-based cash variable pay program related to the
first and second six-month periods of fiscal year 2010, which
were paid on February 5, 2010 and August 6, 2010, as
further discussed above under Compensation Discussion and
Analysis. |
22
|
|
|
(10) |
|
For Mr. Parker, consists of payment of $185,250 in
connection with Mr. Parkers fiscal year 2010
participation in our sales incentive plan, as further discussed
above under Compensation Discussion and Analysis. |
|
(11) |
|
Consists of $1,138 in car allowance, $26,668 pension
contribution and $2,005 private medical allowance for fiscal
year 2010. |
For more information about discretionary and non-discretionary
payouts under the incentive-based cash variable pay program and
sales incentive plan for fiscal year 2010, see the discussion
under Compensation Discussion and Analysis above.
For more information about the items included under the
All Other Compensation column for fiscal year 2010,
see footnotes 8 and 11 to the Fiscal Year 2010 Summary
Compensation Table above.
Fiscal
Year 2010 Grants of Plan-Based Awards Table
The following table sets forth information regarding each grant
of an award made to a named executive officer during fiscal year
2010 under any plan, contract, authorization or arrangement
pursuant to which cash, securities, similar instruments or other
property may be received.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
Estimated Possible Payouts
|
|
Estimated Possible Payouts
|
|
Awards:
|
|
Awards:
|
|
Exercise or
|
|
Grant Date
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive
|
|
Number of
|
|
Number of
|
|
Base Price
|
|
Fair Value
|
|
|
|
|
Plan Awards
|
|
Plan Awards
|
|
Shares of
|
|
Securities
|
|
of Option
|
|
of Stock
|
|
|
Grant
|
|
Thresh-
|
|
|
|
Max-
|
|
Thresh-
|
|
|
|
Max-
|
|
Stock
|
|
Underlying
|
|
Awards
|
|
and Option
|
Name
|
|
Date
|
|
hold
|
|
Target
|
|
imum
|
|
hold
|
|
Target
|
|
imum
|
|
or Units
|
|
Options
|
|
($/Sh)
|
|
Awards(1)
|
|
Alain Couder
|
|
|
6/28/2009
|
(3)
|
|
$
|
125,000
|
|
|
$
|
250,000
|
|
|
$
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/3/2010
|
(4)
|
|
$
|
125,000
|
|
|
$
|
250,000
|
|
|
$
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,001
|
(6)
|
|
$
|
3.50
|
|
|
$
|
460,875
|
|
Jerry Turin
|
|
|
6/28/2009
|
(3)
|
|
$
|
42,000
|
|
|
$
|
84,000
|
|
|
$
|
126,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/3/2010
|
(4)
|
|
$
|
42,000
|
|
|
$
|
84,000
|
|
|
$
|
126,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
(6)
|
|
$
|
3.50
|
|
|
$
|
204,832
|
|
Jim Haynes(2)
|
|
|
6/28/2009
|
(3)
|
|
$
|
48,952
|
|
|
$
|
97,905
|
|
|
$
|
146,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/3/2010
|
(4)
|
|
$
|
48,952
|
|
|
$
|
97,905
|
|
|
$
|
146,857
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,000
|
(6)
|
|
$
|
3.50
|
|
|
$
|
286,765
|
|
Kate Rundle
|
|
|
6/28/2009
|
(3)
|
|
$
|
30,000
|
|
|
$
|
60,000
|
|
|
$
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/3/2010
|
(4)
|
|
$
|
30,000
|
|
|
$
|
60,000
|
|
|
$
|
90,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36,000
|
(6)
|
|
$
|
3.50
|
|
|
$
|
92,174
|
|
Scott Parker
|
|
|
6/28/2009
|
(5)
|
|
$
|
90,000
|
|
|
$
|
150,000
|
|
|
$
|
375,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28,000
|
(6)
|
|
$
|
3.50
|
|
|
$
|
71,691
|
|
|
|
|
(1) |
|
The amounts in this column reflect the grant date fair value of
the respective stock options computed in accordance with ASC
718. There can be no assurance that the ASC 718 amounts will
ever be realized. The assumptions we used to calculate these
amounts are included in Note 11 to our audited consolidated
financial statements included in our 2010 Annual Report. |
|
(2) |
|
For Mr. Haynes, threshold, target
and maximum estimated future payouts under
non-equity incentive plan awards are 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 $1.52 on July 2,
2010. |
|
(3) |
|
For the first half of fiscal year 2010, the first-half variable
pay program was based on cumulative Adjusted EBITDA for the six
months ended December 2009. For more information, see the
discussion above under Compensation Discussion and
Analysis. |
|
(4) |
|
For the second half of fiscal year 2010, the second-half
variable pay program was based on cumulative Adjusted EBITDA for
the six months ended June 2010. For more information, see the
discussion above under Compensation Discussion and
Analysis. |
23
|
|
|
(5) |
|
In his sales role, Mr. Parker participates in our sales
incentive plan. Mr. Parkers participation in this
quota-based plan was at a threshold level of 30% of his annual
base salary, a target level of 60% of his annual base salary and
a maximum level of 150% of his annual base salary. For more
information, see the discussion above under Compensation
Discussion and Analysis. |
|
(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 next
36 months. |
In terms of the option awards for which disclosure is provided
for fiscal year 2010 in the Fiscal Year 2010 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. In terms of the stock awards for
which disclosure is provided for fiscal year 2008 in the Fiscal
Year 2010 Summary Compensation Table above, 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 as to
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,
upon the recommendation of the 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 provided that the shares subject to such restricted
stock agreements would then 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.
24
Outstanding
Equity Awards at Fiscal 2010 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
July 3, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
Stock Awards
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
Market Value
|
|
|
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
Number of
|
|
of Shares or
|
|
|
Option
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
Option
|
|
Shares or Units
|
|
Units That
|
|
|
Grant
|
|
Options (#)
|
|
Options (#)
|
|
Exercise
|
|
Expiration
|
|
of Stock That
|
|
Have Not
|
Name
|
|
Date
|
|
Exercisable
|
|
Unexercisable
|
|
Price ($)
|
|
Date
|
|
Have Not Vested
|
|
Vested(1)
|
|
Alain Couder
|
|
|
8/13/2007
|
|
|
|
67,292
|
(2)
|
|
|
27,709
|
|
|
$
|
14.45
|
|
|
|
8/13/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2008
|
|
|
|
43,084
|
(2)
|
|
|
50,917
|
|
|
$
|
8.90
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2009
|
|
|
|
16,250
|
(2)
|
|
|
43,751
|
|
|
$
|
3.10
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
180,001
|
(2)
|
|
$
|
3.50
|
|
|
|
8/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
(5)
|
|
$
|
135,000
|
|
Jerry Turin
|
|
|
11/11/2005
|
|
|
|
26,000
|
(2)
|
|
|
|
|
|
$
|
24.55
|
|
|
|
11/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
6/12/2007
|
|
|
|
2,250
|
(2)
|
|
|
750
|
|
|
$
|
10.05
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
1/28/2008
|
|
|
|
1,450
|
(2)
|
|
|
950
|
|
|
$
|
8.75
|
|
|
|
1/28/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2008
|
|
|
|
11,000
|
(2)
|
|
|
13,000
|
|
|
$
|
8.90
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2009
|
|
|
|
4,333
|
(2)
|
|
|
11,667
|
|
|
$
|
3.10
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
80,000
|
(2)
|
|
$
|
3.50
|
|
|
|
8/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350
|
(5)
|
|
$
|
3,780
|
|
Jim Haynes
|
|
|
8/7/2003
|
|
|
|
3,000
|
(2)
|
|
|
|
|
|
$
|
60.72
|
(4)
|
|
|
8/7/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
9/25/2003
|
|
|
|
1,500
|
(2)
|
|
|
|
|
|
$
|
102.65
|
(4)
|
|
|
9/25/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
6/2/2004
|
|
|
|
1,000
|
(2)
|
|
|
|
|
|
$
|
44.40
|
(4)
|
|
|
6/2/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
9/22/2004
|
|
|
|
2,800
|
(2)
|
|
|
|
|
|
$
|
33.65
|
|
|
|
9/22/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
11/11/2005
|
|
|
|
25,000
|
(2)
|
|
|
|
|
|
$
|
24.55
|
|
|
|
11/11/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
6/12/2007
|
|
|
|
3,750
|
(2)
|
|
|
1,250
|
|
|
$
|
10.05
|
|
|
|
6/12/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
1/28/2008
|
|
|
|
13,233
|
(2)
|
|
|
8,669
|
|
|
$
|
8.75
|
|
|
|
1/28/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2008
|
|
|
|
11,000
|
(2)
|
|
|
13,000
|
|
|
$
|
8.90
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2009
|
|
|
|
5,416
|
(2)
|
|
|
14,584
|
|
|
$
|
3.10
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
8/13/2009
|
|
|
|
|
|
|
|
112,000
|
(2)
|
|
$
|
3.50
|
|
|
|
8/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,470
|
(5)
|
|
$
|
37,476
|
|
Kate Rundle
|
|
|
11/26/2007
|
|
|
|
5,167
|
(2)
|
|
|
2,833
|
|
|
$
|
12.00
|
|
|
|
11/26/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2008
|
|
|
|
11,000
|
(2)
|
|
|
13,000
|
|
|
$
|
8.90
|
|
|
|
8/15/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2009
|
|
|
|
2,913
|
(2)
|
|
|
10,209
|
|
|
$
|
3.10
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
8/13/2009
|
|
|
|
|
|
|
|
36,000
|
(2)
|
|
$
|
3.50
|
|
|
|
8/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,583
|
(5)
|
|
$
|
17,096
|
|
Scott Parker
|
|
|
12/2/2009
|
|
|
|
|
|
|
|
12,299
|
(3)
|
|
$
|
6.80
|
|
|
|
12/2/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
11/20/2008
|
|
|
|
15,035
|
(2)
|
|
|
22,947
|
|
|
$
|
0.75
|
|
|
|
11/20/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
5/13/2009
|
|
|
|
3,791
|
(2)
|
|
|
10,209
|
|
|
$
|
3.10
|
|
|
|
5/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
8/15/2009
|
|
|
|
|
|
|
|
28,000
|
(2)
|
|
$
|
3.50
|
|
|
|
8/15/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,172
|
(5)
|
|
$
|
207,058
|
|
|
|
|
(1) |
|
Calculated by multiplying the number of unvested shares by
$10.80, the closing price per share of our common stock on the
NASDAQ Global Market on July 2, 2010. |
|
(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) |
|
In connection with our stock option exchange program which
closed December 2, 2009, Mr. Parker exchanged 18,449
options to purchase common stock, which were originally granted
December 21, 2007 at an exercise price of $18.25 per share,
for 12,299 options to purchase common stock with an exercise
price of $6.80 per share, the closing price of our common stock
on the NASDAQ Global Market on December 2, 2009. These |
25
|
|
|
|
|
options have a term of 7 years and vest as to 25% of the
shares subject to the option on the first anniversary of the
date of grant and as to the remaining 75% of the shares subject
to the option ratably thereafter on a monthly basis over the
remaining 24 months. Mr. Parker was not one of our
named executive officers at the time of the exchange, and was
therefore eligible to participate in the exchange offer. The
exchange officer, however, was not considered in any material
way in connection with the establishment of
Mr. Parkers fiscal year 2010 compensation. |
|
(4) |
|
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 $1.52 on July 2, 2010. |
|
(5) |
|
On April 21, 2009, our board of directors, upon the
recommendation of the Committee, approved amendments to the
restricted stock agreements related to these restricted shares.
Prior to the adoption of these amendments, the shares subject to
each such restricted stock agreement vested as to 25% on the
one-year anniversary of the grant date and an additional 2.083%
at the end of each month following the first anniversary of the
grant date until the fourth anniversary of the grant date. The
amendments provided that the shares subject to such restricted
stock agreements would then vest on a quarterly basis on the
tenth day of the second month of each fiscal quarter. None of
the amendments, however, revise the final vesting date for any
of the restricted stock agreements that were so amended. |
Fiscal
Year 2010 Option Exercises and Stock Vested Table
The following table sets forth information regarding options
exercised by the named executive officers and the vesting of
restricted stock held by the named executive officers during the
fiscal year ended July 3, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
|
Acquired on
|
|
Realized on
|
|
Acquired on
|
|
Realized on
|
Name
|
|
Exercise (#)
|
|
Exercise ($)(1)
|
|
Vesting (#)(2)
|
|
Vesting ($)(3)
|
|
Alain Couder
|
|
|
|
|
|
|
|
|
|
|
9,375
|
|
|
$
|
68,693
|
|
Jerry Turin
|
|
|
|
|
|
|
|
|
|
|
216
|
|
|
$
|
1,531
|
|
Jim Haynes
|
|
|
|
|
|
|
|
|
|
|
3,971
|
|
|
$
|
23,974
|
|
Kate Rundle
|
|
|
3,500
|
|
|
$
|
36,225
|
|
|
|
1,083
|
|
|
$
|
7,664
|
|
Scott Parker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts shown represent the number of shares acquired on
exercise of option awards during fiscal year 2010, multiplied by
the difference between the closing price of our common stock as
quoted on the NASDAQ Global Market on each corresponding
exercise date and the exercise price for each option. |
|
(2) |
|
Reflects restricted stock awards that vested in fiscal year 2010. |
|
(3) |
|
Amounts shown represent the number of shares of restricted stock
that vested on dates during fiscal year 2010 multiplied by the
closing price of our common stock as quoted on the NASDAQ Global
Market on each corresponding vesting date. |
26
Employment,
Change of Control and Severance Arrangements
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
assuming that the employment termination or change of control
took place on July 2, 2010. The closing price per share of
our common stock on the NASDAQ Global Market on July 2,
2010 was $10.80.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
Accelerated
|
|
|
|
|
|
|
Base
|
|
Incentive Plan
|
|
Accelerated
|
|
Vesting of
|
|
|
|
|
|
|
Salary
|
|
Compensation
|
|
Vesting of
|
|
Restricted
|
|
Benefits
|
|
Total
|
|
|
($)
|
|
($)
|
|
Options(2)
|
|
Stock(3)
|
|
($)
|
|
($)
|
|
Alain Couder(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
termination without cause
|
|
$
|
1,150,000
|
(4)
|
|
$
|
735,927
|
(6)
|
|
|
|
|
|
|
|
|
|
$
|
76,712
|
(8)
|
|
$
|
1,962,639
|
|
change of control
|
|
$
|
1,437,500
|
(4)
|
|
$
|
919,909
|
(6)
|
|
$
|
1,747,632
|
|
|
$
|
135,000
|
|
|
$
|
85,818
|
(8)
|
|
$
|
4,325,859
|
|
Jerry Turin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
termination without cause
|
|
$
|
280,000
|
|
|
$
|
84,000
|
|
|
|
|
|
|
|
|
|
|
$
|
32,308
|
(9)
|
|
$
|
396,308
|
|
change of control
|
|
$
|
280,000
|
|
|
$
|
84,000
|
|
|
$
|
701,046
|
|
|
$
|
3,780
|
|
|
$
|
32,308
|
(9)
|
|
$
|
1,101,134
|
|
Jim Haynes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
termination without cause
|
|
$
|
380,740
|
(5)
|
|
$
|
97,905
|
(5)
|
|
|
|
|
|
|
|
|
|
$
|
14,560
|
(9)(5)
|
|
$
|
493,205
|
|
change of control
|
|
$
|
380,740
|
(5)
|
|
$
|
97,905
|
(5)
|
|
$
|
973,306
|
|
|
$
|
37,476
|
|
|
$
|
14,560
|
(9)(5)
|
|
$
|
1,503,987
|
|
Kate Rundle
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
termination without cause
|
|
$
|
250,000
|
|
|
$
|
60,000
|
|
|
|
|
|
|
|
|
|
|
$
|
32,567
|
(9)
|
|
$
|
342,567
|
|
change of control
|
|
$
|
250,000
|
|
|
$
|
60,000
|
|
|
$
|
366,109
|
|
|
$
|
17,096
|
|
|
$
|
32,567
|
(9)
|
|
$
|
725,772
|
|
Scott Parker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
termination without cause
|
|
$
|
208,333
|
|
|
$
|
150,000
|
(7)
|
|
|
|
|
|
|
|
|
|
$
|
21,382
|
(9)
|
|
$
|
379,716
|
|
change of control
|
|
$
|
208,333
|
|
|
$
|
150,000
|
(7)
|
|
$
|
562,823
|
|
|
$
|
207,058
|
|
|
$
|
21,382
|
(9)
|
|
$
|
1,149,597
|
|
|
|
|
(1) |
|
On August 4, 2010, we entered into an amended and restated
employment agreement with Mr. Couder. The amended and
restated agreement is effective as of July 1, 2010. As a
result, given the assumption that Mr. Couders
employment termination or change of control took place on
July 2, 2010, the amounts presented in this table are
calculated based on the provisions of the amended and restated
agreement, and represent an indication of what Mr. Couder
may be entitled to receive upon an actual termination event in
fiscal year 2011 and beyond. |
|
(2) |
|
Amounts shown represent the intrinsic value of all unvested
option awards which would be accelerated upon the occurrence of
the termination event. Intrinsic value for each award is
calculated based on the number of shares that would be acquired
upon the exercise of the portion of the option award subject to
acceleration, multiplied by the difference between the closing
price of our common stock of $10.80 on July 2, 2010, as
quoted on the NASDAQ Global Market, and the exercise price for
each option. Except for Mr. Couder, whose equity awards are
subject to double-trigger acceleration, our named executive
officers equity awards are subject to single-trigger
acceleration. As a result, the named executive officers would be
entitled to receive the amounts listed in this column in the
event of a change in control even absent a corresponding
termination of employment. |
|
(3) |
|
Amounts shown represent the intrinsic value of all unvested
restricted awards which would be accelerated upon the occurrence
of the termination event, calculated based on the number of
restricted awards subject to acceleration multiplied by the
closing price of our common stock of $10.80 on July 2,
2010, as quoted on the NASDAQ Global Market. Except for
Mr. Couder, whose equity awards are subject to
double-trigger acceleration, our named executive officers
equity awards are subject to single-trigger acceleration. As a
result, the named executive officers would be entitled to
receive the amounts listed in this column in the event of a
change in control even absent a corresponding termination of
employment. |
|
(4) |
|
For termination without cause, represents two times
Mr. Couders annual salary of $575,000 as of
July 2, 2010. For change of control, represents two and
one-half times Mr. Couders annual salary. |
|
(5) |
|
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 $1.52 on July 2, 2010. |
27
|
|
|
(6) |
|
For termination without cause, represents two times the total of
all bonuses (including amounts reported as non-equity incentive
plan compensation in the Fiscal Year 2010 Summary Compensation
Table above) paid to Mr. Couder in the three fiscal years
ended July 3, 2010 divided by three. For change of control,
represents two and one-half times the total of all bonuses paid
to Mr. Couder in the three fiscal years ended July 3,
2010 divided by three. Mr. Couder received total bonuses
and non-equity incentive plan compensation of $627,429 in fiscal
year 2010, $349,458 in fiscal year 2009 and $127,004 in fiscal
year 2008. |
|
(7) |
|
Represents annual payout at the target level to Mr. Parker
under our sales incentive plan. |
|
(8) |
|
For termination without cause, represents $58,501 of earned but
unpaid vacation as of July 3, 2010 and $18,211 for employee
medical insurance coverage and employee group life insurance
coverage for a period of 24 months following termination.
For change of control, represents $58,501 of earned but unpaid
vacation as of July 3, 2010 and $27,317 for employee
medical insurance coverage and employee group life insurance
coverage for a period of 36 months following termination. |
|
(9) |
|
Consists of earned but unpaid vacation as of July 3, 2010. |
Compensation
Committee Interlocks and Insider Participation
During fiscal year 2010, 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 business
conduct and ethics 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 Oclaro, 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:
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the principal responsibility of the directors is to oversee the
management of Oclaro,
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a majority of the members of the Board shall be independent
directors,
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the independent directors shall meet in executive session at
least twice a year and at other times upon request of an
independent director,
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directors shall have full and free access to officers and
employees of Oclaro and, as necessary and appropriate,
independent advisors,
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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 designed
to determine whether the Board and its 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.
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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. All seven of our directors attended our
2009 annual meeting of stockholders.
Board
of Directors Meetings
Our board of directors held 12 meetings, including by telephone
conference, during fiscal year 2010. The compensation committee
of our board of directors held four meetings, including by
telephone conference, during fiscal year 2010. The audit
committee of our board of directors held four meetings,
including by telephone conference, during fiscal year 2010. The
nominating and corporate governance committee of our board of
directors held four meetings during fiscal year 2010. All
directors attended at least 92% 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 standing audit, compensation, and
nominating and corporate governance committees, 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.
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.
Our board of directors has determined that all of the current
members of each of the three standing committees described above
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
consolidated 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.
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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.
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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Board
Leadership and Risk Oversight
Our board of directors has determined that having an independent
director serve as Chairman of the Board is in the best interest
of stockholders at this time. As a result, the positions of
Chairman of the Board and Chief Executive Officer are not
currently held by the same person. This structure promotes
active participation of the independent directors in setting
agendas and establishing priorities for the work of the Board.
While the Board believes its current leadership structure is
appropriate at this time, the Board may determine in the future
that the positions of Chief Executive Officer and Chairman of
the Board should be held by the same individual.
Our Board as a whole has oversight responsibility for our risk
management process. This risk oversight function is carried out
both by the full board and by individual committees that are
tasked by the Board with oversight of specific risks. The audit
committee oversees risks associated with financial and
accounting matters including compliance with legal and
regulatory requirements, and our financial reporting and
internal control systems. The compensation committee evaluates
risks associated with our compensation policies and practices so
as not to encourage or reward excessive risk-taking by our
executives or employees.
On a regular basis the Board receives information and reports
from committees, senior management
and/or
outside counsel and consultants and discusses the
identification, assessment, management and mitigation of the
risks associated with our strategic and business plans and
operations. The Board also holds regular sessions with members
of management with the specific purpose of identifying,
prioritizing and managing those risks that we believe are
material to our operations.
Director
Nomination Process
In the event of a decision to nominate one or more
non-incumbents for service on the Board, due to the resignation
of a sitting director or otherwise, our nominating and corporate
governance committee would undertake a process to identify and
evaluate director candidates. This process would include
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 Chairman of the Board
and members of the committee and the board. The committee would
also consider the extent to which a given candidate increases
the diversity of the Board in terms of professional background,
business experience, education, and other factors.
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. Further, specific consideration is given to, among
other things, diversity of background
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and experience that a candidate would bring to the Board. 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 at the following address: Oclaro,
Inc., 2584 Junction Avenue, San Jose, California 95134,
Attention: Corporate Secretary. 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 2011 Annual Meeting.
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 of business conduct and
ethics.
Policies
and Procedures for Related Person Transactions
Our board of 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
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transaction. If advance review and approval is not practicable,
our audit committee must review, and, in its discretion, 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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Related
Party Transactions:
Alain Couder, our President and Chief Executive Officer, also
serves as a director on the board of directors of Sanmina-SCI
Corporation (Sanmina). During the fiscal years ended
July 3, 2010, June 27, 2009 and June 28, 2008,
sales to Sanmina were $12.6 million, $3.6 million and
$4.1 million, respectively. As of July 3, 2010, and
June 27, 2009 accounts receivable from Sanmina were
$6.2 million and $0.8 million, respectively.
In connection with the merger with Avanex on April 27,
2009, we entered into a one year consulting agreement with
Giovanni Barbarossa, which became effective upon consummation of
the merger. Under the consulting agreement, Dr. Barbarossa
provided consulting services to us for the purpose of assisting
in the integration of
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Avanexs operations into those of Oclaro, including, among
other things, advice and assistance on strategic and
technological matters and customer relations. Under the
consulting agreement, Dr. Barbarossa received consulting
fees of $300,000 and $60,000 for the fiscal years ended
July 3, 2010 and June 27, 2009, respectively.
PROPOSAL 2
AMENDMENT
OF THE OCLARO, INC. AMENDED AND RESTATED 2004 STOCK INCENTIVE
PLAN
On July 27, 2010, our compensation committee amended and
restated the Oclaro, Inc. 2004 Stock Incentive Plan (the
Plan), subject to approval of our stockholders at
the Annual Meeting. The Plan affords our board of directors the
ability to design compensatory awards that are responsive to our
needs, and includes authorization for a variety of awards
designed to advance our interests and long-term success by
encouraging stock ownership among our employees, directors,
officers, and consultants/advisors.
The changes to the Plan include an increase in the number of
shares available under the Plan from 19,000,000 shares to
23,000,000 shares. Based on our current share usage, we
expect that these additional shares will be sufficient for our
needs for approximately three years. In addition to the increase
in number of shares available for issuance under the Plan, the
compensation committee also adopted additional changes, as
discussed more fully below, which provide that shares underlying
full value awards are counted as 1.25 shares
under the Plan and amend provisions relating to the return and
re-issuance of shares subject to awards including a prohibition
on recycling of repurchased shares in cases where
shares are used to exercise an award or shares are withheld for
taxes. We have also included a description of the material terms
of the performance-based compensation elements of the Plan for
purposes of Section 162(m) of the Internal Revenue Code
(the Code), including the individuals eligible to
receive compensation, a description of the performance criteria
and the maximum amount of performance compensation which may be
paid. These items are discussed more fully in the section titled
Performance Awards.
The affirmative vote of a majority of the shares voting on this
proposal is required for approval of the amended and restated
Plan. The amended and restated Plan will be effective upon
stockholder approval and will have a term of ten years from the
stockholder approval date. The following summary of the material
provisions of the Plan is not intended to be exhaustive and is
qualified in its entirety by the terms of the Plan, a copy of
which is set forth as Appendix A.
Board
Recommendation
Our Board
of Directors unanimously recommends a vote FOR
Proposal 2
to approve the Oclaro, Inc. Amended and Restated 2004 Stock
Incentive Plan.
Plan
Highlights
The Plan authorizes equity-based compensation in the form of
stock options (including incentive stock options and
non-qualified stock options), stock appreciation rights
(SARs), restricted stock, and other awards for the
purpose of providing our employees, directors, officers, and
consultants/advisors incentives and rewards which align their
interest with that of stockholders. Some of the key features of
the Plan that reflect our commitment to effective management of
incentive compensation are set forth below and are described
more fully under the heading Summary of the Plan and
in the Plan, which is attached to this proxy statement.
Plan Limits/Full Value Awards. Awards
under the Plan are limited to 23,000,000 shares of common
stock (including awards other than stock options and SARs), of
which, 19,000,000 shares were previously authorized by
stockholders. Full value awards count against this limit as
1.25 share of common stock for purposes of the share limit.
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No Liberal Recycling Provisions. The
Plan provides that only shares with respect to awards granted
under the Plan that expire or are forfeited or cancelled will
again be available for issuance under the Plan. The following
shares will not be added back to the aggregate plan limit:
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shares tendered in payment of the option exercise price;
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shares withheld by us to satisfy tax withholding obligations.
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No Repricing. Repricing of options and
SARs is prohibited under the Plan without stockholder approval.
No Discounted Stock Options or
SARs. Stock options and SARs may not be
granted with an exercise price which is less than 100% of the
fair market value of our shares at the time the option or SAR is
granted, except in the case of substitute options issued in a
merger/acquisition. Further, the Plan specifies that no SAR will
be exercisable for more than 10 years.
Summary
of the Plan
The following is a summary of the material terms of the Plan and
is qualified in its entirety by the terms of the Plan, a copy of
which is set forth in Appendix A.
Administration
Our compensation committee administers the Plan, under the
authority delegated to it by our board of directors. The
compensation committee has the authority to grant awards under
the Plan and to adopt, amend and repeal administrative rules,
guidelines and practices relating to the Plan. The compensation
committee interprets the terms of the 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 Plan, but such officers are not authorized to
grant awards to any of our officers.
Eligible
Participants
All of our employees, officers, directors, consultants and
advisors, presently estimated at 2,885 persons, are
eligible to be granted awards under the Plan.
Shares
Available for Awards
Awards may be made under the Plan for up to
23,000,000 shares of common stock, of which,
19,000,000 shares of common stock were previously
authorized by stockholders. Full value awards granted under the
Plan count as 1.25 share 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
23,000,000, subject to the share counting requirements for full
value awards.
The compensation committee will adjust the aggregate number of
shares reserved for issuance under the 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 Plan. Further, shares of
common stock tendered to us to exercise an award or shares of
common stock withheld for taxes shall not be added to the number
of shares of common stock available for the grant of awards
under the Plan.
Types of
Awards and Terms and Conditions
The 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 (sometimes referred to collectively herein as
Awards). Awards may be granted alone, in addition
to, or in combination with any other award granted under the
Plan. Each person who receives an Award under the Plan is deemed
a Participant.
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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
market price of our common stock as reported on NASDAQ on
September 7, 2010 was $12.59. The option exercise price may
be payable in cash, by delivery of an irrevocable and
unconditional undertaking by a broker to deliver sufficient
funds, by promissory note, or, 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 one or more nonstatutory stock options in an amount
as shall be designated from time to time. 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 and may make additional grants of
nonstatutory stock options on Awards 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 or on their own. Tandem SARs generally are only
exercisable when the related stock option is exercisable and
will terminate upon the termination or exercise of the related
stock option. Independent SARs are exercisable at such time or
times, and on such conditions, as the compensation committee
specifies in the Award. No SAR will be exercisable later than
the 10th anniversary of its grant date. The exercise price
for each SAR will not be less than the fair market value of a
share of our common stock on the date the SAR is granted.
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 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.
Performance
Awards
Restricted stock awards and other stock-based awards under the
Plan may be made subject to the achievement of performance goals
to an eligible employee, subject to a limit of 1,000,000 per
calendar year on shares covered by such grants per participant.
No performance awards shall vest prior to the first anniversary
of the date of grant.
Grants of performance awards to any covered employee intended to
qualify as performance-based compensation under
Section 162(m) (Performance-Based Compensation)
shall be made only by a committee (or
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subcommittee of a committee) comprised solely of two or more
directors eligible to serve on a committee (the
Committee) making Awards qualifying as
performance-based compensation under
Section 162(m).
For any Award that is intended to qualify as Performance-Based
Compensation, the Committee shall specify that the degree of
granting, vesting
and/or
payout shall be subject to the achievement of one or more
objective performance measures established by the Committee,
which shall be based on the relative or absolute attainment of
specified levels of one or any combination of the following: net
income, earnings before or after discontinued operations,
interest, taxes, depreciation
and/or
amortization, earnings per share (before or after discontinued
operations, interest, taxes, depreciation
and/or
amortization), operating profit before or after discontinued
operations
and/or
taxes, sales, sales growth, earnings growth, cash flow or cash
position, gross margins, stock price, market share, return on
sales, assets, equity or investment, improvement of financial
ratings, achievement of balance sheet or income statement
objectives or total stockholder return, and may be absolute in
their terms or measured against or in relationship to other
companies comparably, similarly or otherwise situated. The
Committee may specify that such performance measures shall be
adjusted to exclude any one or more of (i) extraordinary
items, (ii) gains or losses on the dispositions of
discontinued operations, (iii) the cumulative effects of
changes in accounting principles, (iv) the write down of
any asset, (v) charges for restructuring and
rationalization programs, (vi) non-cash compensation
expense from stock compensation and (vii) one-time charges
or credits. Such performance measures: (i) may vary by
Participant and may be different for different Awards;
(ii) may be particular to a Participant or the department,
branch, line of business, subsidiary or other unit in which the
Participant works and may cover such period as may be specified
by the Committee; and (iii) shall be set by the Committee
within the time period prescribed by, and shall otherwise comply
with the requirements of, Section 162(m). Awards that are
not intended to qualify as Performance-Based Compensation may be
based on these or such other performance measures as the board
may determine.
Reorganization
Event
In the event of a reorganization event of Oclaro (as defined in
the Plan), subject to certain limitations and restrictions as
more fully described in the Plan, the compensation committee may:
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provide that Awards (other than restricted stock) shall be
assumed/substituted 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.
36
Duration,
Termination and Amendment
No Awards shall be granted under the Plan after the completion
of ten years from the date on which the amended and restated
Plan is approved by stockholders, but awards granted prior to
the Plans termination may extend beyond that date. The
compensation committee or our board of directors may amend,
suspend or terminate the 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.
Transferability
of Awards
Unless otherwise provided by the compensation committee, awards
under the Plan may only be transferred by will or the laws of
descent and distribution, or, other than in the case of an
incentive stock 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.
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 Plan based on
U.S. 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 Plan and should consult with a tax advisor as
to specific questions relating to tax consequences of
participation in the 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.
37
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.
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). 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 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 generally 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 Plan. To the extent applicable, it is intended
that the Plan and any grants made under the Plan comply with the
provisions of Section 409A of the Code.
New Plan
Benefits
It is not possible to determine specific amounts and types of
awards that may be awarded in the future under the Amended and
Restated 2004 Stock Incentive Plan because the grant and actual
pay-out of awards under such plans are discretionary.
38
Equity
Compensation Plan Information
As of July 3, 2010, we maintained the Plan, the Bookham
1998 Equity Incentive Plan, the Avanex Corporation 1998 Stock
Plan and the Avanex 1999 Director Option Plan. The
following table summarizes our equity compensation plans as of
July 3, 2010:
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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
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Outstanding Options (1)
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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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3,889,000
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$
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8.77
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1,089,000
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Equity compensations plans not approved by security holders
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3,889,000
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$
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8.77
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1,089,000
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(1) |
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The weighted-average exercise price does not take into account
shares issuable upon the vesting of outstanding restricted stock
unit awards, which have no exercise price. |
PROPOSAL 3
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 2, 2011, 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 has served as our independent
registered public accounting firm since February 11, 2008,
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 2, 2011 is in the best
interests of Oclaro and our stockholders
and, therefore, unanimously recommends that the stockholders
vote FOR this proposal.
39
Principal
Accounting Fees and Services
The following table summarizes the fees of Grant Thornton LLP,
our independent registered accounting firm for the fiscal years
ended July 3, 2010 and June 27, 2009. For the fiscal
year ended July 3, 2010, 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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Fee Category
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July 3, 2010
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June 27, 2009
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(Thousands)
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Audit fees(1)
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$
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1,918
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$
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1,945
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Audit-related fees(2)
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163
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98
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Tax fees
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All other fees
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Total fees
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$
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2,081
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$
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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 consolidated
financial statements, the audit of our internal control over
financial reporting, the review of our interim consolidated
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) |
|
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 consolidated financial statements
and which are not reported under Audit Fees. These
services primarily relate to due diligence related to accounting
consultations and audits in 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. |
Report of
the Audit Committee of the Board of Directors
The audit committee has reviewed Oclaros audited
consolidated financial statements for the fiscal year ended
July 3, 2010 and has discussed these consolidated 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 the 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 consolidated financial statements be included in
Oclaros Annual Report on
Form 10-K
for the fiscal year ended July 3, 2010.
By the Audit Committee of the Board of Directors of Oclaro, Inc.
Lori Holland, Chairman
Edward Collins
Greg Dougherty
40
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. Our 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 may delegate 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.
STOCKHOLDER
PROPOSALS FOR 2011 ANNUAL MEETING
If a stockholder intends to submit a proposal for inclusion in
the proxy statement and proxy card for our 2011 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, 2011.
If a stockholder wishes to present a proposal at the 2011 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 27, 2011. However, if the
2011 annual meeting is scheduled to be held prior to
October 7, 2011 or after December 26, 2011, the notice
must be received no earlier than the 120th day prior to the
2011 annual meeting and no later than the close of business on
the later of (1) the 90th day prior to the 2011 annual
meeting and (2) the 10th day following the date on
which notice of the date of the meeting is mailed or public
disclosure of the date of such meeting is made, whichever occurs
first. The adjournment or postponement of the 2011 annual
meeting (or the public announcement thereof) will not commence a
new time period (or extend any time period) for the giving of a
stockholders notice. If the stockholder fails to provide
timely notice of a proposal to be presented at the 2011 annual
meeting, the proposal will be untimely, 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 2010 Annual Report may have been sent to
multiple stockholders in your household. We will promptly
deliver a separate copy of our 2010 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 2010 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.
41
FINANCIAL
STATEMENTS AVAILABLE; INCORPORATION BY REFERENCE
A copy of our Annual Report on
Form 10-K
for the fiscal year ended July 3, 2010, containing our
audited consolidated financial statements for the fiscal year
ended July 3, 2010, accompanies this proxy statement. Such
consolidated financial statements are hereby incorporated herein
by reference.
OTHER
MATTERS
Our board of directors knows of no 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 Annual
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 9, 2010
San Jose, California
42
Appendix A
OCLARO,
INC.
AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN
The purpose of this Amended and Restated 2004 Stock Incentive
Plan (the Plan) of Oclaro, Inc. a Delaware
corporation (the Company), is to advance the
interests of the Companys stockholders by enhancing the
Companys ability to attract, retain and motivate persons
who are expected to make important contributions to the Company
and by providing such persons with equity ownership
opportunities and performance-based incentives that are intended
to align their interests with those of the Companys
stockholders. Except where the context otherwise requires, the
term Company shall include any of Oclaro,
Inc.s present or future parent or subsidiary corporations
as defined in Sections 424(e) or (f) of the Internal
Revenue Code of 1986, as amended, and any regulations
promulgated thereunder (the Code) and any other
business venture (including, without limitation, joint venture
or limited liability company) in which Oclaro, Inc. has a
controlling interest, as determined by the Board of Directors of
the Company (the Board).
All of the Companys employees, officers, directors,
consultants and advisors are eligible to be granted options,
stock appreciation rights, restricted stock and other
stock-based awards (each, an Award) under the Plan.
Each person who receives an Award under the Plan is deemed a
Participant.
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3.
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Administration
and Delegation
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(a) Administration by Board of
Directors. The Plan will be administered by
the Board. The Board shall have authority to grant Awards and to
adopt, amend and repeal such administrative rules, guidelines
and practices relating to the Plan as it shall deem advisable.
The Board may construe and interpret the terms of the Plan and
any Award agreements entered into under the Plan. The Board may
correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Award in the manner and to the
extent it shall deem expedient to carry the Plan into effect and
it shall be the sole and final judge of such expediency. All
decisions by the Board shall be made in the Boards sole
discretion and shall be final and binding on all persons having
or claiming any interest in the Plan or in any Award. No
director or person acting pursuant to the authority delegated by
the Board shall be liable for any action or determination
relating to or under the Plan made in good faith.
(b) Appointment of Committees. To
the extent permitted by applicable law, the Board may delegate
any or all of its powers under the Plan to one or more
committees or subcommittees of the Board (a
Committee). All references in the Plan to the
Board shall mean the Board or a Committee of the
Board or the officers referred to in Section 3(c) to the
extent that the Boards powers or authority under the Plan
have been delegated to such Committee or officers.
(c) Delegation to Officers. To the
extent permitted by applicable law, the Board may delegate to
one or more officers of the Company the power to grant Awards to
employees or officers of the Company or any of its present or
future subsidiary corporations and to exercise such other powers
under the Plan as the Board may determine, provided that the
Board shall fix the terms of the Awards to be granted by such
officers (including the exercise price of such Awards, which may
include a formula by which the exercise price will be
determined) and the maximum number of shares subject to Awards
that the officers may grant; provided further, however, that no
officer shall be authorized to grant Awards to any
executive officer of the Company (as defined by
Rule 3b-7
under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) or to any officer of the
Company (as defined by
Rule 16a-1
under the Exchange Act).
(d) Awards to Non-Employee
Directors. Discretionary Awards to
non-employee directors will only be granted and administered by
a Committee, all of the members of which are independent as
defined by Section 4200(a)(15) of the NASDAQ Marketplace
Rules.
A-1
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4.
|
Stock
Available for Awards
|
(a) Number of Shares. Subject to
adjustment under Section 10, Awards may be made under the
Plan for up to 23,000,000 shares of common stock,
$.01 par value per share, of the Company (the Common
Stock). Full value awards granted under the Plan, after
the approval of this provision by the stockholders at the
Companys 2010 Annual Stockholders Meeting, shall count as
1.25 share of Common Stock for purposes of the share limits
under the Plan. If any Award expires or is terminated,
surrendered or canceled without having been fully exercised or
is forfeited in whole or in part (including as the result of
shares of Common Stock subject to such Award being repurchased
by the Company at the original issuance price pursuant to a
contractual repurchase right) or results in any Common Stock not
being issued, the unused Common Stock covered by such Award
shall again be available for the grant of Awards under the Plan.
Further, for the avoidance of doubt, shares of Common Stock
tendered to the Company by a Participant to exercise an Award or
shares of Common Stock withheld for taxes shall not be added to
the number of shares of Common Stock available for the grant of
Awards under the Plan. However, in the case of Incentive Stock
Options (as hereinafter defined), the foregoing provisions shall
be subject to any limitations under the Code. Shares issued
under the Plan may consist in whole or in part of authorized but
unissued shares or treasury shares.
(b) Sub-limits. Subject to
adjustment under Section 10, the following sub-limits on
the number of shares subject to Awards shall apply:
(1) Section 162(m) Per-Participant
Limit. The maximum number of shares of Common
Stock with respect to which Awards may be granted to any
Participant under the Plan shall be 1,000,000 per calendar year.
For purposes of the foregoing limit, the combination of an
Option in tandem with a SAR (as each is hereafter defined) shall
be treated as a single Award. The per-Participant limit
described in this Section 4(b)(1) shall be construed and applied
consistently with Section 162(m) of the Code or any successor
provision thereto, and the regulations thereunder
(Section 162(m)).
(2) Limit on Awards other than Options and
SARS. The maximum number of shares with
respect to which Awards other than Options and SARs may be
granted shall be 23,000,000.
(a) General. The Board may grant
options to purchase Common Stock (each, an Option)
and determine the number of shares of Common Stock to be covered
by each Option, the exercise price of each Option and the
conditions and limitations applicable to the exercise of each
Option, including conditions relating to applicable federal or
state securities laws, as it considers necessary or advisable.
An Option which is not intended to be an Incentive Stock Option
(as hereinafter defined) shall be designated a
Nonstatutory Stock Option.
(b) Incentive Stock Options. An
Option that the Board intends to be an incentive stock
option as defined in Section 422 of the Code (an
Incentive Stock Option) shall only be granted to
employees of Oclaro, Inc., any of Oclaro, Inc.s present or
future parent or subsidiary corporations as defined in
Sections 424(e) or (f) of the Code, and any other
entities the employees of which are eligible to receive
Incentive Stock Options under the Code, and shall be subject to
and shall be construed consistently with the requirements of
Section 422 of the Code. The Company shall have no
liability to a Participant, or any other party, if an Option (or
any part thereof) that is intended to be an Incentive Stock
Option is not an Incentive Stock Option or for any action taken
by the Board pursuant to Section 11(f), including without
limitation the conversion of an Incentive Stock Option to a
Nonstatutory Stock Option.
(c) Exercise Price. The Board
shall establish the exercise price of each Option and specify
such exercise price in the applicable option agreement;
provided, however, that the exercise price shall not be less
than 100% of the Fair Market Value (as defined below) at the
time that the Option is granted.
(d) Duration of Options. Each
Option shall be exercisable at such times and subject to such
terms and conditions as the Board may specify in the applicable
option agreement; provided, however, that no Option will be
granted for a term in excess of 10 years.
A-2
(e) Exercise of Option. Options
may be exercised by delivery to the Company of a written notice
of exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board
together with payment in full as specified in Section 5(f)
for the number of shares for which the Option is exercised.
Shares of Common Stock subject to the Option will be delivered
by the Company following exercise either as soon as practicable
or, subject to such conditions as the Board shall specify, on a
deferred basis (with the Companys obligation to be
evidenced by an instrument providing for future delivery of the
deferred shares at the time or times specified by the Board).
(f) Payment Upon Exercise. Common
Stock purchased upon the exercise of an Option granted under the
Plan shall be paid for as follows:
(1) in cash or by check, payable to the order of the
Company;
(2) except as the Board may otherwise provide in an option
agreement, by (i) delivery of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver
promptly to the Company sufficient funds to pay the exercise
price and any required tax withholding or (ii) delivery by
the Participant to the Company of a copy of irrevocable and
unconditional instructions to a creditworthy broker to deliver
promptly to the Company cash or a check sufficient to pay the
exercise price and any required tax withholding;
(3) when the Common Stock is registered under the
Securities Exchange Act of 1934 (the Exchange Act),
by delivery of shares of Common Stock owned by the Participant
valued at their fair market value as determined by (or in a
manner approved by) the Board (Fair Market Value),
provided (i) such method of payment is then permitted under
applicable law, (ii) such Common Stock, if acquired
directly from the Company, was owned by the Participant for such
minimum period of time, if any, as may be established by the
Board in its discretion and (iii) such Common Stock is not
subject to any repurchase, forfeiture, unfulfilled vesting or
other similar requirements;
(4) to the extent permitted by applicable law and by the
Board, by (i) delivery of a promissory note of the
Participant to the Company on terms determined by the Board, or
(ii) payment of such other lawful consideration as the
Board may determine; or
(5) by any combination of the above permitted forms of
payment.
(g) Substitute Options. In
connection with a merger or consolidation of an entity with the
Company or the acquisition by the Company of property or stock
of an entity, the Board may grant Options in substitution for
any options or other stock or stock-based awards granted by such
entity or an affiliate thereof. Substitute Options may be
granted on such terms as the Board deems appropriate in the
circumstances, notwithstanding any limitations on Options
contained in the other sections of this Section 5 or in
Section 2.
(h) Limitation on
Repricing. Unless such action is approved by
the Companys stockholders: (1) no outstanding Option
granted under the Plan may be amended to provide an exercise
price per share that is lower than the exercise price per share
of such outstanding Option (other than adjustments pursuant to
Section 10), (2) the Board may not cancel any
outstanding option (whether or not granted under the Plan) and
grant in substitution therefor new Awards under the Plan
covering the same or a different number of shares of Common
Stock and having an exercise price per share lower than the
exercise price per share of the cancelled option, and
(3) no outstanding Option granted under the Plan may be
cancelled in exchange for the payment of cash consideration by
the Company, except as provided for upon a Reorganization Event
(as defined in Section 10) as contemplated by
Section 10(b) or in connection with a similar change in
corporate structure or change of control of the Company.
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6.
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Director
Options/Awards
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(a) Annual Grant. On the date of
each annual meeting of stockholders of the Company, the Company
shall automatically grant to each member of the Board of
Directors of the Company who is both serving as a director of
the Company immediately prior to and immediately following such
annual meeting and who is not then an employee of the Company or
any of its subsidiaries, one or more Nonstatutory Stock Options
and/or
Awards. The type(s) and number(s) of Awards (subject to
adjustment under Section 10) shall be as designated by
the Board from time to time.
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(b) Terms of Director
Options/Awards. Options granted under this
Section 6 shall (i) have an exercise price equal to the
closing sale price (for the primary trading session) of the
Common Stock on the NASDAQ Stock Market or the national
securities exchange on which the Common Stock is then traded on
the trading date immediately prior to the date of grant (and if
the Common Stock is not then traded on the NASDAQ Stock Market
or a national securities exchange, the fair market value of the
Common Stock on such date as determined by the Board),
(ii) be immediately exercisable at the time of grant,
(iii) expire on the earlier of 10 years from the date
of grant or one year following cessation of service on the Board
and (iv) contain such other terms and conditions as the
Board shall determine. Awards other than Options shall contain
terms and conditions as the Board shall determine pursuant to
the terms of the Plan.
(c) Board
Discretion. Notwithstanding anything herein
to the contrary, the Board retains the specific authority to
from time to time (i) to make additional grants of
Nonstatutory Stock Options or Awards to members of the Board who
are not employees of the Company or any subsidiary of the
Company; and (ii) provide conditions or limitations (such
as vesting limitations) applicable to awards and the exercise of
options granted under this Section 6.
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7.
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Stock
Appreciation Rights
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(a) General. A Stock Appreciation
Right, or SAR, is an Award entitling the holder, upon exercise,
to receive an amount in cash or Common Stock or a combination
thereof (such form to be determined by the Board) determined in
whole or in part by reference to appreciation, from and after
the date of grant, in the fair market value of a share of Common
Stock. SARs may be based solely on appreciation in the fair
market value of Common Stock or on a comparison of such
appreciation with some other measure of market growth such as
(but not limited to) appreciation in a recognized market index.
The date as of which such appreciation or other measure is
determined shall be the exercise date unless another date is
specified by the Board in the SAR Award.
(b) Grants. SARs may be granted in
tandem with, or independently of, Options granted under the Plan.
(1) Tandem Award. When SARs are
expressly granted in tandem with Options, (i) the SAR will
be exercisable only at such time or times, and to the extent,
that the related Option is exercisable (except to the extent
designated by the Board in connection with a Reorganization
Event) and will be exercisable in accordance with the procedure
required for exercise of the related Option; (ii) the SAR
will terminate and no longer be exercisable upon the termination
or exercise of the related Option, except to the extent
designated by the Board in connection with a Reorganization
Event and except that a SAR granted with respect to less than
the full number of shares covered by an Option will not be
reduced until the number of shares as to which the related
Option has been exercised or has terminated exceeds the number
of shares not covered by the SAR; (iii) the Option will
terminate and no longer be exercisable upon the exercise of the
related SAR; and (iv) the SAR will be transferable only
with the related Option.
(2) Independent SARs. A SAR not
expressly granted in tandem with an Option will become
exercisable at such time or times, and on such conditions, as
the Board may specify in the SAR Award.
(c) Duration, Exercise Price and Exercise of
SARs. Each SAR shall expire at such time as
the Committee shall determine at the time of grant; provided,
however, that no SAR shall be exercisable later than the
10th anniversary of its grant date. The exercise price for
each grant of an SAR shall not be less than the Fair Market
Value of a share of common stock on the date the SAR is granted.
(d) Exercise. SARs may be
exercised by delivery to the Company of a written notice of
exercise signed by the proper person or by any other form of
notice (including electronic notice) approved by the Board,
together with any other documents required by the Board.
(e) Limitation on
Repricing. Unless such action is approved by
the Companys stockholders: (1) no outstanding SAR
granted under the Plan may be amended to provide a measurement
price per share that is lower than the measurement price per
share of such outstanding SAR (other than adjustments pursuant
to Section 10), (2) the Board may not cancel any
outstanding SAR (whether or not granted under the Plan) and
grant in substitution therefor new Awards under the Plan
covering the same or a different number of shares of Common
Stock and having a measurement price per share lower than the
measurement price per share of the cancelled SAR, and
(3) no
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outstanding SAR granted under the Plan may be cancelled in
exchange for the payment of cash consideration by the Company,
except as provided for upon a Reorganization Event (as defined
in Section 10) as contemplated by Section 10(b)
or in connection with a similar change in corporate structure or
change of control of the Company.
(a) General. The Board may grant
Awards entitling recipients to acquire shares of Common Stock,
subject to the right of the Company to repurchase all or part of
such shares at their issue price or other stated or formula
price (or to require forfeiture of such shares if issued at no
cost) from the recipient in the event that conditions specified
by the Board in the applicable Award are not satisfied prior to
the end of the applicable restriction period or periods
established by the Board for such Award (each, a
Restricted Stock Award).
(b) Terms and Conditions. The
Board shall determine the terms and conditions of a Restricted
Stock Award, including the conditions for repurchase (or
forfeiture) and the issue price, if any. Any Restricted Stock
Awards granted after January 25, 2008 that vest solely
based on the passage of time shall be: (i) no more than
one-third vested prior to the first anniversary of the date of
grant (or, in the case of Awards to non-employee directors, if
earlier, the date of the first annual meeting held after the
date of grant), (ii) no more than two-thirds vested prior
to the second anniversary of the date of grant (or, in the case
of Awards to non-employee directors, if earlier, the date of the
second annual meeting held after the date of grant) and
(iii) the balance shall vest at a rate no more than ratably
over the period from the second anniversary of the date of grant
to the third anniversary of the date of grant (or, in the case
of Awards to non-employee directors, if the date of the third
annual meeting held after the date of grant is earlier than the
third anniversary of the date of grant, the period from the
second anniversary of the date of grant to the third annual
meeting held after 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 (or, in the case of
Awards to non-employee directors, if earlier, the date of the
first annual meeting held after the date of grant).
(c) Stock Certificates. Any stock
certificates issued in respect of a Restricted Stock Award shall
be registered in the name of the Participant and, unless
otherwise determined by the Board, deposited by the Participant,
together with a stock power endorsed in blank, with the Company
(or its designee). At the expiration of the applicable
restriction periods, the Company (or such designee) shall
deliver the certificates no longer subject to such restrictions
to the Participant or if the Participant has died, to the
beneficiary designated, in a manner determined by the Board, by
a Participant to receive amounts due or exercise rights of the
Participant in the event of the Participants death (the
Designated Beneficiary). In the absence of an
effective designation by a Participant, Designated
Beneficiary shall mean the Participants estate.
(d) Deferred Delivery of
Shares. The Board may, at the time any
Restricted Stock Award is granted, provide that, at the time
Common Stock would otherwise be delivered pursuant to the Award,
the Participant shall instead receive an instrument evidencing
the right to future delivery of Common Stock at such time or
times, and on such conditions, as the Board shall specify. The
Board may at any time accelerate the time at which delivery of
all or any part of the Common Stock shall take place. The Board
may also permit an exchange of unvested shares of Common Stock
that have already been delivered to a Participant for an
instrument evidencing the right to future delivery of Common
Stock at such time or times, and on such conditions, as the
Board shall specify.
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9.
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Other
Stock-Based Awards
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Other Awards of shares of Common Stock, and other Awards that
are valued in whole or in part by reference to, or are otherwise
based on, shares of Common Stock or other property, may be
granted hereunder to Participants (Other Stock-Based
Awards), including without limitation Awards entitling
recipients to receive shares of Common Stock to be delivered in
the future. Such Other Stock-Based Awards shall also be
available as a form of payment in the settlement of other Awards
granted under the Plan or as payment in lieu of compensation to
which a Participant is otherwise entitled. Other Stock-Based
Awards may be paid in shares of Common Stock or cash, as the
Board shall determine. Subject to the provisions of the Plan,
the Board shall determine the conditions of each Other
Stock-Based Awards, including any purchase price applicable
thereto. At the time any Award is granted, the Board
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may provide that, at the time Common Stock would otherwise be
delivered pursuant to the Award, the Participant will instead
receive an instrument evidencing the Participants right to
future delivery of the Common Stock.
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10.
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Adjustments
for Changes in Common Stock and Certain Other Events.
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(a) Changes in Capitalization. In
the event of any 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, (i) the
number and class of securities available under this Plan,
(ii) the sub-limits set forth in Section 4(b),
(iii) the number and class of securities and exercise price
per share of each outstanding Option and each Option issuable
under Section 6, (iv) the share- and per-share related
provisions of each Stock Appreciation Right, (v) the
repurchase price per share subject to each outstanding
Restricted Stock Award and (vi) the share- and
per-share-related provisions of each outstanding Other
Stock-Based Award, shall be appropriately adjusted by the
Company (or substituted Awards may be made, if applicable) to
the extent determined by the Board.
(b) Reorganization Events.
(1) Definition. A
Reorganization Event shall mean: (a) any merger
or consolidation of the Company with or into another entity as a
result of which all of the Common Stock of the Company is
converted into or exchanged for the right to receive cash,
securities or other property or is cancelled (b) any
exchange of all of the Common Stock of the Company for cash,
securities or other property pursuant to a share exchange
transaction or (c) any liquidation or dissolution of the
Company.
(2) Consequences of a Reorganization Event on Awards
Other than Restricted Stock Awards. In
connection with a Reorganization Event, the Board shall take any
one or more of the following actions as to all or any
outstanding Awards (other than Restricted Stock Awards) on such
terms as the Board determines: (i) provide that Awards
shall be assumed, or substantially equivalent Awards shall be
substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), (ii) upon written notice to a
Participant, provide that the Participants unexercised
Options or other unexercised Awards shall become exercisable in
full and will terminate immediately prior to the consummation of
such Reorganization Event unless exercised by the Participant
within a specified period following the date of such notice,
(iii) provide that outstanding Awards shall become
realizable or deliverable, or restrictions applicable to an
Award shall lapse, in whole or in part prior to or upon such
Reorganization Event, (iv) in the event of a Reorganization
Event under the terms of which holders of Common Stock will
receive upon consummation thereof a cash payment for each share
surrendered in the Reorganization Event (the Acquisition
Price), make or provide for a cash payment to a
Participant equal to (A) the Acquisition Price times the
number of shares of Common Stock subject to the
Participants Options or other Awards (to the extent the
exercise price does not exceed the Acquisition Price) minus
(B) the aggregate exercise price of all such outstanding
Options or other Awards, in exchange for the termination of such
Options or other Awards, (v) provide that, in connection
with a liquidation or dissolution of the Company, Awards shall
convert into the right to receive liquidation proceeds (if
applicable, net of the exercise price thereof) and (vi) any
combination of the foregoing.
For purposes of clause (i) above, an Option shall be
considered assumed if, following consummation of the
Reorganization Event, the Option confers the right to purchase,
for each share of Common Stock subject to the Option immediately
prior to the consummation of the Reorganization Event, the
consideration (whether cash, securities or other property)
received as a result of the Reorganization Event by holders of
Common Stock for each share of Common Stock held immediately
prior to the consummation of the Reorganization Event (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the
outstanding shares of Common Stock); provided, however, that if
the consideration received as a result of the Reorganization
Event is not solely common stock of the acquiring or succeeding
corporation (or an affiliate thereof), the Company may, with the
consent of the acquiring or succeeding corporation, provide for
the consideration to be received upon the exercise of Options to
consist solely of common stock of the acquiring or succeeding
corporation (or an affiliate thereof) equivalent in fair market
value to the per share consideration received by holders of
outstanding shares of Common Stock as a result of the
Reorganization Event.
A-6
To the extent all or any portion of an Option becomes
exercisable solely as a result of clause (ii) above, the
Board may provide that upon exercise of such Option the
Participant shall receive shares subject to a right of
repurchase by the Company or its successor at the Option
exercise price; such repurchase right (x) shall lapse at
the same rate as the Option would have become exercisable under
its terms and (y) shall not apply to any shares subject to
the Option that were exercisable under its terms without regard
to clause (ii) above.
(3) Consequences of a Reorganization Event on
Restricted Stock Awards. Upon the occurrence
of a Reorganization Event other than a liquidation or
dissolution of the Company, the repurchase and other rights of
the Company under each outstanding Restricted Stock Award shall
inure to the benefit of the Companys successor and shall
apply to the cash, securities or other property which the Common
Stock was converted into or exchanged for pursuant to such
Reorganization Event in the same manner and to the same extent
as they applied to the Common Stock subject to such Restricted
Stock Award. Upon the occurrence of a Reorganization Event
involving the liquidation or dissolution of the Company, except
to the extent specifically provided to the contrary in the
instrument evidencing any Restricted Stock Award or any other
agreement between a Participant and the Company, all
restrictions and conditions on all Restricted Stock Awards then
outstanding shall automatically be deemed terminated or
satisfied.
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11.
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General
Provisions Applicable to Awards
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(a) Transferability of
Awards. Except as the Board may otherwise
determine or provide in an Award, Awards shall not be sold,
assigned, transferred, pledged or otherwise encumbered by the
person to whom they are granted, either voluntarily or by
operation of law, except by will or the laws of descent and
distribution or, other than in the case of an Incentive Stock
Option, pursuant to a qualified domestic relations order, and,
during the life of the Participant, shall be exercisable only by
the Participant. References to a Participant, to the extent
relevant in the context, shall include references to authorized
transferees. Notwithstanding anything to the contrary in this
Section 11(a), no Award may be transferred by a Participant to a
third party for consideration.
(b) Documentation. Each Award
shall be evidenced in such form (written, electronic or
otherwise) as the Board shall determine. Each Award may contain
terms and conditions in addition to those set forth in the Plan.
(c) Board Discretion. Except as
otherwise provided by the Plan, each Award may be made alone or
in addition or in relation to any other Award. The terms of each
Award need not be identical, and the Board need not treat
Participants uniformly.
(d) Termination of Status. The
Board shall determine the effect on an Award of the disability,
death, retirement, authorized leave of absence or other change
in the employment or other status of a Participant and the
extent to which, and the period during which, the Participant,
or the Participants legal representative, conservator,
guardian or Designated Beneficiary, may exercise rights under
the Award.
(e) Withholding. Each Participant
shall pay to the Company, or make provision satisfactory to the
Company for payment of, any taxes required by law to be withheld
in connection with an Award to such Participant. Except as the
Board may otherwise provide in an Award, for so long as the
Common Stock is registered under the Exchange Act, Participants
may satisfy such tax obligations in whole or in part by delivery
of shares of Common Stock, including shares retained from the
Award creating the tax obligation, valued at their Fair Market
Value; provided, however, except as otherwise provided by the
Board, that the total tax withholding where stock is being used
to satisfy such tax obligations cannot exceed the Companys
minimum statutory withholding obligations (based on minimum
statutory withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to such
supplemental taxable income). Shares surrendered to satisfy tax
withholding requirements cannot be subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.
The Company may, to the extent permitted by law, deduct any such
tax obligations from any payment of any kind otherwise due to a
Participant.
(f) Amendment of Award. The Board
may amend, modify or terminate any outstanding Award, including
but not limited to, substituting therefor another Award of the
same or a different type, changing the date of exercise or
realization, and converting an Incentive Stock Option to a
Nonstatutory Stock Option, provided that the Participants
consent to such action shall be required unless the Board
determines that the action, taking into account any related
action, would not materially and adversely affect the
Participant.
A-7
(g) Conditions on Delivery of
Stock. The Company will not be obligated to
deliver any shares of Common Stock pursuant to the Plan or to
remove restrictions from shares previously delivered under the
Plan until (i) all conditions of the Award have been met or
removed to the satisfaction of the Company, (ii) in the
opinion of the Companys counsel, all other legal matters
in connection with the issuance and delivery of such shares have
been satisfied, including any applicable securities laws and any
applicable stock exchange or stock market rules and regulations,
and (iii) the Participant has executed and delivered to the
Company such representations or agreements as the Company may
consider appropriate to satisfy the requirements of any
applicable laws, rules or regulations.
(h) Acceleration. The Board may at
any time provide that any Award, including any Option and any
SAR, shall become immediately exercisable in full or in part,
free of some or all restrictions or conditions, or otherwise
realizable in full or in part, as the case may be. The foregoing
sentence shall not apply to (1) Performance Awards granted
pursuant to Section 11(i) or (2) Restricted Stock
Awards and Other Stock-Based Awards granted, in the aggregate,
in excess of 10% of the maximum number of authorized shares set
forth in Section 4(a). Notwithstanding any other provision
of this Plan (other than Section 11(i), if applicable), the
Board may only waive its right to repurchase shares of Common
Stock (or waive the forfeiture thereof), remove or modify any
part or all of the restrictions or conditions applicable to any
Restricted Stock Award or Other Stock-Based Award or provide
that such Award will become immediately exercisable or
realizable, in full or in part, in excess of 10% of the maximum
number of authorized shares set forth in Section 4(a) in
extraordinary circumstances which shall include, without
limitation, death, disability or retirement of the Participant;
or a merger, consolidation, sale, reorganization,
recapitalization, or change in control of the Company.
(i) Performance Awards.
(1) Grants. Restricted Stock
Awards and Other Stock-Based Awards under the Plan may be made
subject to the achievement of performance goals pursuant to this
Section 11(i) (Performance Awards), subject to
the limit in Section 4(b)(1) on shares covered by such
grants. Subject to Section 11(i)(4), no Performance Awards
shall vest prior to the first anniversary of the date of grant.
(2) Committee. Grants of
Performance Awards to any Covered Employee intended to qualify
as performance-based compensation under
Section 162(m) (Performance-Based Compensation)
shall be made only by a Committee (or subcommittee of a
Committee) comprised solely of two or more directors eligible to
serve on a committee making Awards qualifying as
performance-based compensation under Section 162(m).
In the case of such Awards granted to Covered Employees,
references to the Board or to a Committee shall be deemed to be
references to such Committee or subcommittee. Covered
Employee shall mean any person who is, or whom the
Committee, in its discretion, determines may be, a covered
employee under Section 162(m)(3) of the Code.
(3) Performance Measures. For any
Award that is intended to qualify as Performance-Based
Compensation, the Committee shall specify that the degree of
granting, vesting
and/or
payout shall be subject to the achievement of one or more
objective performance measures established by the Committee,
which shall be based on the relative or absolute attainment of
specified levels of one or any combination of the following: net
income, earnings before or after discontinued operations,
interest, taxes, depreciation
and/or
amortization, earnings per share (before or after discontinued
operations, interest, taxes, depreciation
and/or
amortization), operating profit before or after discontinued
operations
and/or
taxes, sales, sales growth, earnings growth, cash flow or cash
position, gross margins, stock price, market share, return on
sales, assets, equity or investment, improvement of financial
ratings, achievement of balance sheet or income statement
objectives or total stockholder return, and may be absolute in
their terms or measured against or in relationship to other
companies comparably, similarly or otherwise situated. The
Committee may specify that such performance measures shall be
adjusted to exclude any one or more of (i) extraordinary
items, (ii) gains or losses on the dispositions of
discontinued operations, (iii) the cumulative effects of
changes in accounting principles, (iv) the write-down of
any asset, (v) charges for restructuring and
rationalization programs, (vi) non-cash compensation
expense from stock compensation and (vii) one-time charges
or credits. Such performance measures: (i) may vary by
Participant and may be different for different Awards;
(ii) may be particular to a Participant or the department,
branch, line of business, subsidiary or other unit in which the
Participant works and may cover such period as may be specified
by the Committee; and (iii) shall be set by the Committee
A-8
within the time period prescribed by, and shall otherwise comply
with the requirements of, Section 162(m). Awards that are
not intended to qualify as Performance-Based Compensation may be
based on these or such other performance measures as the Board
may determine.
(4) Adjustments. Notwithstanding
any provision of the Plan, with respect to any Performance Award
that is intended to qualify as Performance-Based Compensation,
the Committee may adjust downwards, but not upwards, the cash or
number of Shares payable pursuant to such Award, and the
Committee may not waive the achievement of the applicable
performance measures except in the case of the death or
disability of the Participant or a change in control of the
Company.
(5) Other. The Committee shall
have the power to impose such other restrictions on Performance
Awards as it may deem necessary or appropriate to ensure that
such Awards satisfy all requirements for Performance-Based
Compensation.
(a) No Right to Employment or Other
Status. No person shall have any claim or
right to be granted an Award, and the grant of an Award shall
not be construed as giving a Participant the right to continued
employment or any other relationship with the Company. The
Company expressly reserves the right at any time to dismiss or
otherwise terminate its relationship with a Participant free
from any liability or claim under the Plan, except as expressly
provided in the applicable Award.
(b) No Rights as
Stockholder. Subject to the provisions of the
applicable Award, no Participant or Designated Beneficiary shall
have any rights as a stockholder with respect to any shares of
Common Stock to be distributed with respect to an Award until
becoming the record holder of such shares. Notwithstanding the
foregoing, in the event the Company effects a split of the
Common Stock by means of a stock dividend and the exercise price
of and the number of shares subject to such Option are adjusted
as of the date of the distribution of the dividend (rather than
as of the record date for such dividend), then an optionee who
exercises an Option between the record date and the distribution
date for such stock dividend shall be entitled to receive, on
the distribution date, the stock dividend with respect to the
shares of Common Stock acquired upon such Option exercise,
notwithstanding the fact that such shares were not outstanding
as of the close of business on the record date for such stock
dividend.
(c) Effective Date and Term of
Plan. The amended and restated Plan shall
become effective on the date on which it is approved by the
stockholders at the Companys 2010 Annual Stockholders
Meeting, but no Award may be granted under the amended and
restated Plan such amended and restated Plan has been approved
by the Companys stockholders. No Awards shall be granted
under the Plan after the completion of 10 years from the
date the amended and restated Plan was approved by the
Companys stockholders, but Awards previously granted may
extend beyond that date.
(d) Amendment of Plan. The Board
may amend, suspend or terminate the Plan or any portion thereof
at any time; provided that, to the extent determined by the
Board, no amendment requiring stockholder approval under any
applicable legal, regulatory or listing requirement shall become
effective until such stockholder approval is obtained. No Award
shall be made that is conditioned upon stockholder approval of
any amendment to the Plan.
(e) Provisions for Foreign
Participants. The Board may modify Awards or
Options granted to Participants who are foreign nationals or
employed outside the United States or establish subplans or
procedures under the Plan to recognize differences in laws,
rules, regulations or customs of such foreign jurisdictions with
respect to tax, securities, currency, employee benefits or other
matters.
(f) Governing Law. The provisions
of the Plan and all Awards made hereunder shall be governed by
and interpreted in accordance with the laws of the State of
Delaware, without regard to any applicable conflicts of law.
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OCLARO, INC.
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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. |
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VOTE BY MAIL |
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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. |
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TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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M27075-P01378
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KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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OCLARO, INC.
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For All |
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Withhold All
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For All Except
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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.
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The Board of Directors recommends that you vote FOR the following: |
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Vote on Directors
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¨ |
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1. |
Election of Directors: Nominees:
01) Alain Couder
02) Joel A. Smith III
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Vote on Proposals
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The Board of Directors recommends you vote FOR the following proposals:
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For Against Abstain |
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2.
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Amend and restate the 2004 Stock Incentive Plan to approve, among other things, an increase of the
shares reserved under the Amended and Restated 2004 Stock Incentive Plan pool from 19,000,000 shares to 23,000,000 shares.
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3.
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To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for the current fiscal year.
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For address changes and/or comments, please
check this box and write them on the back where indicated. |
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o |
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Yes
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No |
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Please indicate if you plan to attend this meeting.
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Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date |
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The 2010 Annual Report and Notice and Proxy Statement are available at www.proxyvote.com.
M27076-P01378
PROXY
OCLARO, INC.
ANNUAL MEETING OF SHAREHOLDERS
OCTOBER 27, 2010 2:00 PM PDT
This proxy is solicited by 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 27, 2010 at the Companys headquarters, 2584 Junction Avenue, San
Jose, California, and any adjourned or postponed session thereof, and 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 powers the undersigned would possess, if personally present.
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) 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 capacity 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.
This
proxy, when properly executed, will be voted in the manner directed
herein. If no such direction is made, this proxy will be voted in
accordance with the Board of Directors recommendations.
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Address Changes / Comments: |
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(If you
noted any Address Changes / Comments above, please mark corresponding box on the reverse side.)
CONTINUED AND TO BE SIGNED ON REVERSE SIDE