pre14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
þ Preliminary Proxy Statement
o Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o Definitive Proxy Statement
o Definitive Additional Materials
o Soliciting Material Pursuant to §240.14a-12
FLEXTRONICS INTERNATIONAL LTD.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
o Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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offsetting fee was paid previously. Identify the previous filing
by registration statement number, or the Form or Schedule and the
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PRELIMINARY
COPY
FLEXTRONICS INTERNATIONAL LTD.
(Incorporated in the Republic of Singapore)
(Company Registration Number 199002645H)
To Our Shareholders:
On July 23, 2010, we will hold two general meetings of our
shareholders at our U.S. corporate offices located at 847
Gibraltar Drive, Milpitas, California, 95035, U.S.A. Our 2010
annual general meeting of shareholders will begin at
10:00 a.m., California time. We will also hold an
extraordinary general meeting of shareholders at
11:00 a.m., California time, or immediately following the
conclusion or adjournment of our 2010 annual general meeting.
The matters to be voted upon at each meeting are listed in the
notices that follow this letter and are described in more detail
in the accompanying joint proxy statement. We urge you to read
the entire proxy statement carefully before returning your proxy
cards. Part I of the accompanying proxy statement provides
general information about the meetings, Part II describes
the proposals to be voted upon at the 2010 annual general
meeting of shareholders, Part III describes the proposal to
be voted upon at the extraordinary general meeting of
shareholders and Part IV provides additional information,
including information about our executive officers and their
compensation.
IMPORTANT NOTE REGARDING PROXY CARDS: If you
are a registered shareholder, you will receive at least two
proxy cards one for the 2010 annual general meeting
and one for the extraordinary general meeting. It is very
important that you return all proxy cards to ensure that your
vote is represented at the relevant meetings. Whether or not
you plan to attend the meeting, please complete, date and sign
the enclosed proxy cards and return them in the enclosed
envelope as promptly as possible, so that your shares may be
represented at the relevant meetings and voted in accordance
with your wishes.
You may revoke your proxies at any time prior to the time they
are voted. Shareholders who are present at the meetings may
revoke their proxies and vote in person or, if they prefer, may
abstain from voting in person and allow their proxies to be
voted.
Sincerely,
Bernard Liew Jin Yang
Company Secretary
Singapore
,
2010
ii
FLEXTRONICS INTERNATIONAL LTD.
(Incorporated in the Republic of Singapore)
(Company Registration Number 199002645H)
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
To Be Held on July 23, 2010
To our shareholders:
You are cordially invited to attend, and NOTICE IS HEREBY GIVEN,
of the annual general meeting of shareholders of FLEXTRONICS
INTERNATIONAL LTD. (Flextronics or the
Company), which will be held at our
U.S. corporate offices located at 847 Gibraltar Drive,
Milpitas, California, 95035, U.S.A., at 10:00 a.m.,
California time, on July 23, 2010, for the following
purposes:
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To re-elect the following directors: Mr. H. Raymond Bingham
and Dr. Willy C. Shih. (Proposal 1);
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To approve the re-appointment of Deloitte & Touche LLP
as our independent auditors for the 2011 fiscal year and to
authorize the Board of Directors, upon the recommendation of the
Audit Committee, to fix their remuneration
(Proposal 2);
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To approve a general authorization for the Directors of
Flextronics to allot and issue ordinary shares
(Proposal 3); and
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To approve the adoption of the Flextronics International Ltd.
2010 Equity Incentive Plan (Proposal 4).
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The full text of the resolutions proposed for approval by our
shareholders is as follows:
As
Ordinary Business
1. To re-elect each of the
following directors, who will retire by rotation pursuant to
Article 95 of our Articles of Association, to the Board of
Directors:
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(a)
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Mr. H. Raymond Bingham; and
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(b)
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Dr. Willy C. Shih.
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2. To consider and vote upon a
proposal to re-appoint Deloitte & Touche LLP as our
independent auditors for the fiscal year ending March 31,
2011, and to authorize our Board of Directors, upon the
recommendation of the Audit Committee of the Board of Directors,
to fix their remuneration.
As
Special Business
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3.
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To pass
the following resolution as an Ordinary Resolution:
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RESOLVED THAT, pursuant to the provisions of
Section 161 of the Singapore Companies Act, Cap. 50, but
subject otherwise to the provisions of the Singapore Companies
Act, Cap. 50 and our Articles of Association, authority be and
is hereby given to our Directors to:
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(a)
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(i) allot and issue ordinary shares
in our capital; and/or
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(ii)
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make or grant offers, agreements or options that might or would
require ordinary shares in our capital to be allotted and
issued, whether after the expiration of this authority or
otherwise (including but not limited to the creation and
issuance of warrants, debentures or other instruments
convertible into ordinary shares in our capital),
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at any time to
and/or with
such persons and upon such terms and conditions and for such
purposes as our Directors may in their absolute discretion deem
fit, and with such rights or restrictions as our Directors may
think fit to impose and as are set forth in our Articles of
Association; and
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(b)
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(notwithstanding that the authority conferred by this resolution
may have ceased to be in force) allot and issue ordinary shares
in our capital in pursuance of any offer, agreement or option
made or granted by our Directors while this resolution was in
force,
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and that such authority shall continue in force until the
conclusion of our next annual general meeting or the expiration
of the period within which our next annual general meeting is
required by law to be held, whichever is the earlier.
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4.
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To pass
the following resolution as an Ordinary Resolution:
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RESOLVED THAT, approval be and is hereby given for:
the adoption of a new equity incentive plan to be known as the
Flextronics International Ltd. 2010 Equity Incentive
Plan, which we refer to as the 2010 Plan, a summary of
which is set out in the attached proxy statement and the rules
of which, for the purpose of identification, have been
subscribed to by the Chairman of the Meeting, and that our
Directors be and are hereby authorized to:
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(a)
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establish and administer the 2010 Plan;
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(b)
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modify
and/or alter
the 2010 Plan from time to time, provided that such modification
and/or
alteration is effected in accordance with the provisions of the
2010 Plan, and to do all such acts and to enter into all such
transactions, agreements and arrangements as may be necessary or
expedient in order to give full effect to the 2010 Plan; and
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(c)
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offer and/or
grant options, restricted share units, stock appreciation
rights, performance share awards, performance share units
and any other share-based awards under the 2010 Plan, all in
accordance with the provisions of the 2010 Plan and to allot and
issue from time to time such number of ordinary shares in our
capital as may be required to be allotted and issued pursuant to
the (i) exercise of options
and/or stock
appreciation rights; and (ii) vesting of restricted share
units, performance share awards, performance share units
and/or such
other share-based awards under the 2010 Plan, all pursuant to
the 2010 Plan.
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5.
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To
transact any other business which may properly be put before the
annual general meeting.
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Notes
Singapore Financial Statements. At the 2010
annual general meeting, our shareholders will have the
opportunity to discuss and ask any questions that they may have
regarding our Singapore audited accounts for the fiscal year
ended March 31, 2010, together with the reports of the
directors and auditors thereon, in compliance with Singapore
law. Shareholder approval of our audited accounts is not being
sought by this joint proxy statement and will not be sought at
the 2010 annual general meeting.
Eligibility to Vote at Annual General Meeting; Receipt of
Notice. The Board of Directors has fixed the
close of business on May 24, 2010 as the record date for
determining those shareholders of the company who will be
entitled to receive copies of this notice and accompanying joint
proxy statement. However, all shareholders of record on
July 23, 2010, the date of the 2010 annual general meeting,
will be entitled to vote at the 2010 annual general meeting.
Quorum. Representation of at least
331/3%
of all outstanding ordinary shares of the company is required to
constitute a quorum. Accordingly, it is important that your
shares be represented at the 2010 annual general meeting.
Proxies. A shareholder entitled to attend and
vote at the 2010 annual general meeting is entitled to appoint a
proxy to attend and vote on his or her behalf. A proxy need not
also be a shareholder. Whether or
iv
not you plan to attend the meeting, please complete, date and
sign the enclosed proxy card and return it in the enclosed
envelope. A proxy card must be received by Flextronics
International Ltd.,
c/o Proxy
Services,
c/o Computershare
Investor Services, PO Box 43101, Providence, RI
02940-5067
not less than 48 hours before the time appointed for
holding the 2010 annual general meeting. You may revoke your
proxy at any time prior to the time it is voted. Shareholders
who are present at the meeting may revoke their proxies and vote
in person or, if they prefer, may abstain from voting in person
and allow their proxies to be voted.
Availability of Proxy Materials on the
Internet. We are pleased to take advantage of
Securities and Exchange Commission rules that allow issuers to
furnish proxy materials to some or all of their shareholders on
the Internet. In accordance with Singapore law, our registered
shareholders (shareholders who own our ordinary shares in their
own name through our transfer agent, Computershare Investor
Services, LLP) will not be able to vote their shares over the
Internet, but we will be providing this service to our
beneficial holders (shareholders whose ordinary shares are held
by a brokerage firm, a bank or a trustee). We believe these
rules will allow us to provide our shareholders with the
information they need, while lowering the costs of delivery and
reducing the environmental impact of our annual general meeting
of shareholders.
By order of the Board of Directors,
Bernard Liew Jin Yang
Company Secretary
Singapore
,
2010
v
FLEXTRONICS INTERNATIONAL LTD.
(Incorporated in the Republic of Singapore)
(Company Registration Number 199002645H)
To Be Held on July 23, 2010
To our shareholders:
You are cordially invited to attend, and NOTICE IS HEREBY GIVEN,
of an extraordinary general meeting of shareholders of
FLEXTRONICS INTERNATIONAL LTD. (Flextronics or the
Company), which will be held at our
U.S. corporate offices located at 847 Gibraltar Drive,
Milpitas, California, 95035, U.S.A., on July 23, 2010 at
11:00 a.m., California time, or immediately following the
conclusion or adjournment of our 2010 annual general meeting of
shareholders (which is being held at 10:00 a.m., California
time on the same day and at the same place). The extraordinary
general meeting of shareholders is being held for the purpose of
approving a renewal of the Share Purchase Mandate permitting
Flextronics to purchase or otherwise acquire its own issued
ordinary shares.
We are asking our shareholders to approve this renewal of the
Share Purchase Mandate at the extraordinary general meeting in
order to provide the Company with additional flexibility in the
number of shares that it may repurchase pursuant to the Share
Purchase Mandate.
In accordance with the provisions of the Singapore Companies
Act, Cap. 50, the Share Purchase Mandate generally permits us to
purchase up to an aggregate of 10% of our ordinary shares,
calculated based on the greater of the total number of issued
ordinary shares outstanding as of (x) the date of our last
annual general meeting of shareholders and (y) the date on
which the Share Purchase Mandate renewal is approved. All
shares purchased by us following the date of our last annual
general meeting of shareholders (that is, the annual general
meeting that precedes the meeting at which the mandate is
renewed) are subject to this 10% limitation. For example, if we
sought approval for the renewal of the Share Purchase Mandate at
our 2010 annual general meeting of shareholders, we would have
to reduce the number of new shares that we could repurchase by
the number of shares purchased by us at any time after the date
of our 2009 annual general meeting. By holding an
extraordinary general meeting after our 2010 annual general
meeting for the purpose of approving the renewal of the Share
Purchase Mandate, the applicable date of our last annual general
meeting of shareholders will be the date of the 2010 annual
general meeting (rather than the date of the 2009 annual general
meeting) and we will not need to reduce the number of shares
that we can repurchase by any shares repurchased between the
2009 and 2010 annual general meetings. For additional
information on this proposal, please refer to the joint proxy
statement accompanying this notice.
The full text of the resolution proposed for approval by our
shareholders is as follows:
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1.
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To pass
the following resolution as an Ordinary Resolution:
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RESOLVED THAT:
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(a)
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for the purposes of Sections 76C and 76E of the Singapore
Companies Act, Cap. 50, the exercise by our Directors of all of
our powers to purchase or otherwise acquire issued ordinary
shares in the capital of the Company, not exceeding in aggregate
the number of issued ordinary shares representing 10% (or such
other higher percentage as the Minister may by notification
prescribe pursuant to the Singapore Companies Act) of the total
number of issued Ordinary Shares outstanding as of the date of
the passing of this Resolution (excluding any ordinary shares
which are held as treasury shares as at that date), at such
price or prices as may be determined by our Directors from time
to
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time up to the maximum purchase price described in paragraph
(c) below, whether by way of:
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(i)
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market purchases on the NASDAQ Global Select Market or any other
stock exchange on which our ordinary shares may for the time
being be listed and quoted; and/or
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(ii)
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off-market purchases (if effected other than on the NASDAQ
Global Select Market or, as the case may be, any other stock
exchange on which our ordinary shares may for the time being be
listed and quoted) in accordance with any equal access scheme(s)
as may be determined or formulated by our Directors as they
consider fit, which scheme(s) shall satisfy all the conditions
prescribed by the Singapore Companies Act, Cap. 50,
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and otherwise in accordance with all other laws and regulations
and rules of the NASDAQ Global Select Market or, as the case may
be, any other stock exchange on which our ordinary shares may
for the time being be listed and quoted as may for the time
being be applicable, be and is hereby authorized and approved
generally and unconditionally;
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(b)
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unless varied or revoked by our shareholders in a general
meeting, the authority conferred on our Directors pursuant to
the mandate contained in paragraph (a) above may be
exercised by our Directors at any time and from time to time
during the period commencing from the date of the passing of
this resolution and expiring on the earlier of:
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(i)
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the date on which our next annual general meeting is
held; or
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(ii)
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the date by which our next annual general meeting is required by
law to be held;
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(c)
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the maximum purchase price (excluding brokerage commission,
applicable goods and services tax and other related expenses)
which may be paid for an ordinary share purchased or acquired by
us pursuant to the mandate contained in paragraph
(a) above, shall not exceed:
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(i)
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in the case of a market purchase of an ordinary share, the
highest independent bid or the last independent transaction
price, whichever is higher, of our ordinary shares quoted or
reported on the NASDAQ Global Select Market or, as the case may
be, any other stock exchange on which our ordinary shares may
for the time being be listed and quoted, or shall not exceed any
volume weighted average price, or other price determined under
any pricing mechanism, permitted under SEC
Rule 10b-18,
at the time the purchase is effected; and
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(ii)
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in the case of an off-market purchase pursuant to an equal
access scheme, 150% of the Prior Day Close Price, which means
the closing price of our ordinary shares as quoted on the NASDAQ
Global Select Market or, as the case may be, any other stock
exchange on which our ordinary shares may for the time being be
listed and quoted, on the day immediately preceding the date on
which we announce our intention to make an offer for the
purchase or acquisition of our ordinary shares from holders of
our ordinary shares, stating therein the purchase price (which
shall not be more than the maximum purchase price calculated on
the foregoing basis) for each ordinary share and the relevant
terms of the equal access scheme for effecting the off-market
purchase; and
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(d)
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our Directors
and/or any
of them be and are hereby authorized to complete and do all such
acts and things (including executing such documents as may be
required) as they
and/or he
may consider expedient or necessary to give effect to the
transactions contemplated
and/or
authorized by this resolution.
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2. To
transact any other business which may properly be put before the
extraordinary general
meeting.
Notes
Eligibility to Vote at Extraordinary General Meeting; Receipt
of Notice. The Board of Directors has fixed the
close of business on May 24, 2010 as the record date for
determining those shareholders of the company who will be
entitled to receive copies of this notice and accompanying joint
proxy statement. However, all shareholders of record on
July 23, 2010, the date of the extraordinary general
meeting, will be entitled to vote at the extraordinary general
meeting.
Quorum. Representation of at least
331/3%
of all outstanding ordinary shares of the company is required to
constitute a quorum. Accordingly, it is important that your
shares be represented at the extraordinary general meeting.
Proxies. A shareholder entitled to attend and
vote at the extraordinary general meeting is entitled to appoint
a proxy to attend and vote on his or her behalf. A proxy need
not also be a shareholder. Whether or not you plan to attend
the meeting, please complete, date and sign the enclosed proxy
card and return it in the enclosed envelope. A proxy card
must be received by Flextronics International Ltd.,
c/o Proxy
Services,
c/o Computershare
Investor Services, PO Box 43101, Providence, RI
02940-5067
not less than 48 hours before the time appointed for
holding the extraordinary general meeting. You may revoke your
proxy at any time prior to the time it is voted. Shareholders
who are present at the meeting may revoke their proxies and vote
in person or, if they prefer, may abstain from voting in person
and allow their proxies to be voted.
Availability of Proxy Materials on the
Internet. We are pleased to take advantage of
Securities and Exchange Commission rules that allow issuers to
furnish proxy materials to some or all of their shareholders on
the Internet. In accordance with Singapore law, our registered
shareholders (shareholders who own our ordinary shares in their
own name through our transfer agent, Computershare Investor
Services, LLP) will not be able to vote their shares over the
Internet, but we will be providing this service to our
beneficial holders (shareholders whose ordinary shares are held
by a brokerage firm, a bank or a trustee). We believe these
rules will allow us to provide our shareholders with the
information they need, while lowering the costs of delivery and
reducing the environmental impact of our extraordinary general
meeting of shareholders.
Disclosure Regarding Share Purchase Mandate
Funds. Only funds legally available for
purchasing or acquiring our issued ordinary shares in accordance
with our Articles of Association and the applicable laws of
Singapore will be used for the purchase or acquisition by us of
our own issued ordinary shares pursuant to the proposed renewal
of the Share Purchase Mandate referred to in this notice. We
intend to use our internal sources of funds
and/or
borrowed funds to finance the purchase or acquisition of our
issued ordinary shares. The amount of financing required for us
to purchase or acquire our issued ordinary shares, and the
impact on our financial position, cannot be ascertained as of
the date of this notice, as these will depend on the number of
ordinary shares purchased or acquired and the price at which
such ordinary shares are purchased or acquired and whether the
ordinary shares purchased or acquired are held in treasury or
cancelled. Our net tangible assets and the consolidated net
tangible assets of the company and its subsidiaries will be
reduced by the purchase price of any ordinary shares purchased
or acquired and cancelled. We do not anticipate that the
purchase or acquisition of our ordinary shares in accordance
with the Share Purchase Mandate would have a material impact on
our consolidated results of operations, financial condition and
cash flows.
By order of the Board of Directors,
Bernard Liew Jin Yang
Company Secretary
Singapore
,
2010
viii
You
should read this entire proxy statement
carefully prior to returning your proxy cards.
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to Be Held on
July 23, 2010. The accompanying joint proxy statement and
our annual report to shareholders are available on our website
at www.flextronics.com/secfilings.
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ELECTRONIC
DELIVERY OF OUR SHAREHOLDER COMMUNICATIONS
We strongly encourage our shareholders to conserve natural
resources, as well as significantly reduce our printing and
mailing costs, by signing up to receive your shareholder
communications via
e-mail.
With electronic delivery, we will notify you when the annual
report and the proxy statement are available on the Internet.
Electronic delivery can also help reduce the number of bulky
documents in your personal files and eliminate duplicate
mailings. To sign up for electronic delivery:
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If you are a registered holder (that is, you hold your
Flextronics ordinary shares in your own name through our
transfer agent, Computershare Investor Services, LLC),
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visit: www.computershare.com/us/ecomms to enroll. Under
Option 2, select Flextronics from the drop-down box of
companies, then enter your account number and zip code (or
family/last name if outside the United States).
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2.
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If you are a beneficial holder (that is, your shares are held by
a brokerage firm, a bank or a trustee), the voting instruction
form provided by most banks or brokers will contain instructions
for enrolling in electronic delivery.
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Your electronic delivery enrollment will be effective until you
cancel it. If you have questions about electronic delivery,
please call our Investor Relations department at
(408) 576-7722.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
2010 ANNUAL GENERAL MEETING OF SHAREHOLDERS
We have elected to provide access to our proxy materials to
(i) our registered shareholders by mailing them a full set
of proxy materials, including a proxy card, unless the
shareholder previously consented to electronic delivery, and
(ii) our beneficial holders by notifying them of the
availability of our proxy materials on the Internet. For
beneficial holders, instructions on how to request a printed
copy of our proxy materials may be found in the Notice of
Availability of Proxy Materials on the Internet.
xi
PRELIMINARY
COPY
FLEXTRONICS
INTERNATIONAL LTD.
JOINT
PROXY STATEMENT
FOR THE
2010 ANNUAL GENERAL MEETING OF
SHAREHOLDERS
To Be Held on July 23, 2010
10:00 a.m. (California Time)
AND AN EXTRAORDINARY GENERAL MEETING OF
SHAREHOLDERS OF
To Be Held on July 23, 2010
11:00 a.m. (California Time)
(or immediately following the conclusion or adjournment
of the 2010 Annual General Meeting)
Both meetings to be held at our U.S. corporate offices
847 Gibraltar Drive
Milpitas, California, 95035, U.S.A.
PART I -
INFORMATION ABOUT THE MEETINGS
We are furnishing this joint proxy statement in connection with
the solicitation by our Board of Directors of proxies to be
voted at the 2010 annual general meeting of our shareholders and
an extraordinary general meeting of our shareholders, or at any
adjournments thereof, for the purposes set forth in the notices
of annual general meeting and extraordinary general meeting that
accompany this joint proxy statement. Unless the context
requires otherwise, references in this joint proxy statement to
the company, we, us,
our and similar terms mean Flextronics International
Ltd. and its subsidiaries.
Proxy Mailing. This joint proxy statement and the
enclosed proxy cards were first mailed on or about
June , 2010 to shareholders of record as of
May 24, 2010.
Costs of Solicitation. The entire cost of
soliciting proxies will be borne by us. Following the original
mailing of the proxies and other soliciting materials, our
directors, officers and employees may also solicit proxies by
mail, telephone,
e-mail, fax
or in person. These directors, officers and employees will not
receive additional compensation for those activities, but they
may be reimbursed for any reasonable
out-of-pocket
expenses. Following the original mailing of the proxies and
other soliciting materials, we will request that brokers,
custodians, nominees and other record holders of our ordinary
shares forward copies of the proxy and other soliciting
materials to persons for whom they hold ordinary shares and
request authority for the exercise of proxies. In these cases,
we will reimburse such holders for their reasonable expenses if
they ask that we do so. We have retained Georgeson Inc., an
independent proxy solicitation firm, to assist in soliciting
proxies at an estimated fee of $7,500, plus reimbursement of
reasonable expenses.
Registered Office. The mailing address of our
registered office is One Marina Boulevard, #28-00,
Singapore 018989.
VOTING
RIGHTS AND SOLICITATION OF PROXIES
The close of business on May 24, 2010 is the record date
for shareholders entitled to notice of our 2010 annual general
meeting and the extraordinary general meeting. All of the
ordinary shares issued and outstanding on July 23, 2010,
the date of both the annual general meeting and the
extraordinary general meeting, are entitled to be voted at each
of the annual general meeting and the extraordinary general
meeting, and shareholders of record on July 23, 2010 and
entitled to vote at each such meeting will, on a poll, have one
vote for each ordinary share so held on the matters to be voted
upon. As of May 25, 2010, we had 814,622,993 ordinary
shares issued and outstanding.
Proxies. Ordinary shares represented by
proxies in the forms accompanying this joint proxy statement
that are properly executed and returned to us will be voted at
the 2010 annual general meeting and the extraordinary general
meeting, as applicable, in accordance with our
shareholders instructions.
If your ordinary shares are held through a broker, bank, or
other nominee, which is sometimes referred to as holding shares
in street name, you have the right to instruct your
broker bank or other nominee on how to vote the shares in your
account. Your broker, bank or nominee will send you a voting
instruction form for you to use to direct how your shares should
be voted.
Quorum and Required Vote. Representation at
each of the annual general meeting and the extraordinary general
meeting of at least
331/3%
of all of our issued and outstanding ordinary shares is required
to constitute a quorum to transact business at each meeting.
The affirmative vote by a show of hands of at least a majority
of the shareholders present and voting, or, if a poll is
demanded by the chair or by holders of at least 10% of the total
number of our
paid-up
shares in accordance with our Articles of Association, a simple
majority of the shares voting, is required (i) at the 2010
annual general meeting, to re-elect the directors nominated
pursuant to Proposal No. 1, to re-appoint
Deloitte & Touche LLP as our independent auditors
pursuant to Proposal No. 2 and to approve the ordinary
resolutions contained in Proposals Nos. 3 and 4 and
(ii) at the extraordinary general meeting, to approve the
ordinary resolution to approve the renewal of the Share Purchase
Mandate. Consistent with the companys historical
practice, the chair of each of the 2010 annual general meeting
and the extraordinary general meeting will demand a poll in
order to enable the ordinary shares represented in person or by
proxy to be counted for voting purposes.
Abstentions and Broker Non-Votes. Abstentions
and broker non-votes are considered present and
entitled to vote at each of the 2010 annual general meeting and
the extraordinary general meeting for purposes of determining a
quorum. A broker non-vote occurs when a broker or
other holder of record who holds shares for a beneficial owner
does not vote on a particular proposal because the record holder
does not have discretionary power to vote on that particular
proposal and has not received directions from the beneficial
owner. If a broker or nominee indicates on the proxy card that
it does not have discretionary authority to vote as to a
particular matter, those shares, along with any abstentions,
will not be counted in the tabulation of the votes cast on the
proposal being presented to shareholders.
If you are a beneficial owner, your broker has authority to vote
your shares for or against certain routine matters,
such as the re-appointment of our independent auditors, even if
the broker does not receive voting instructions from you. Your
broker or other nominee, however, does not have the discretion
to vote your shares on any other proposals included in this
joint proxy statement without receiving voting instructions from
you. It is very important that you instruct your broker or
nominee how to vote on these proposals. If you do not
complete the voting instructions, your shares will not be
considered in the election of directors, the approval of the
2010 Equity Incentive Plan, or any other proposal included in
this joint proxy statement (other than the re-appointment of our
independent auditors).
If you are a registered shareholder, in the absence of
contrary instructions, shares represented by proxies submitted
by you will be voted at the 2010 annual general meeting
FOR the Board nominees in Proposal No. 1
and FOR Proposals Nos. 2 through 4, and at the
extraordinary general meeting, FOR the proposal to
approve the Share Purchase Mandate. Our management does not
know of any matters to be presented at the 2010 annual general
meeting or the extraordinary general meeting other than those
set forth in this joint proxy statement and in the notices
accompanying this joint proxy statement. If
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other matters should properly be put before either of the
meetings, the proxy holders will vote on such matters in
accordance with their best judgment.
Any shareholder of record has the right to revoke his or her
proxy at any time prior to voting at the 2010 annual general
meeting or the extraordinary general meeting by:
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submitting a subsequently dated proxy; or
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by attending the meeting and voting in person.
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If you are a beneficial holder who holds your ordinary shares
through a broker, bank or other nominee and you wish to change
or revoke your voting instructions, you will need to contact the
broker, bank or other nominee of your shares and follow their
instructions. If you are a beneficial holder and not the
shareholder of record, you may not vote your shares in person at
the 2010 annual general meeting unless you obtain a legal proxy
from the record holder giving you the right to vote the shares.
We have prepared, in accordance with Singapore law, Singapore
statutory financial statements, which are included with the
annual report which will be delivered to our shareholders prior
to the date of the 2010 annual general meeting. Except as
otherwise stated herein, all monetary amounts in this joint
proxy statement have been presented in U.S. dollars.
PART II
PROPOSALS TO BE CONSIDERED AT THE
2010 ANNUAL GENERAL MEETING OF SHAREHOLDERS
PROPOSAL NO. 1:
RE-ELECTION OF DIRECTORS
Article 95 of our Articles of Association requires that at
each annual general meeting one-third of the directors (or, if
their number is not a multiple of three, then the number nearest
to but not more than one-third of the directors), are required
to retire from office. The directors required to retire in each
year are those who have been in office the longest since their
last re-election or appointment. As between persons who became
or were last re-elected directors on the same day, those
required to retire are (unless they otherwise agree among
themselves) determined by lot. Under Article 91 of our
Articles of Association, any director holding office as a Chief
Executive Officer shall not be subject to retirement by
rotation, unless the Board of Directors determines otherwise, or
be taken into account in determining the number of directors
required to retire by rotation. Retiring directors are eligible
for re-election. H. Raymond Bingham and Willy C.
Shih, Ph.D., are the members of our Board of Directors who
will retire by rotation at our 2010 annual general meeting.
Mr. Bingham and Dr. Shih are eligible for re-election
and have been nominated to stand for re-election at the 2010
annual general meeting. If Mr. Bingham or Dr. Shih
fails to receive the affirmative vote of a majority of the
shares present and voting on the resolution to approve his
re-election (that is, if the number of shares voted
for the director nominee does not exceed the
number of votes cast against that nominee), he will
not be re-elected to the Board and the number of incumbent
Directors comprising the Board of Directors will be reduced
accordingly.
The Singapore Companies Act, Cap. 50, which we refer to as the
Companies Act, requires that we must have at all times at least
one director ordinarily resident in Singapore. Mr. Tan,
the only member of our board of directors who is ordinarily
resident in Singapore, was last re-elected to the Board at the
2009 annual general meeting and is not up for re-election at the
2010 annual general meeting.
The proxy holders intend to vote all proxies received by them in
the accompanying form for the nominees for directors listed
below. In the event that any nominee is unable or declines to
serve as a director at the time of the 2010 annual general
meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors of the company, in
accordance with Article 100 of our Articles of Association,
to fill the vacancy.
As of the date of this joint proxy statement, our Board of
Directors is not aware of any other nominee who is unable or
will decline to serve as a director.
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Qualifications
of Directors and Nominees
Headquartered in Singapore, we are a leading international
Electronics Manufacturing Services (EMS) provider focused on
delivering complete design, engineering and manufacturing
services to automotive, computing, consumer, industrial,
infrastructure, medical and mobile original equipment
manufacturers. We help customers design, build, ship, and
service electronics products through a network of facilities in
30 countries on four continents. This global presence provides
design and engineering solutions that are combined with core
electronics manufacturing and logistics services, and vertically
integrated with components technologies, to optimize customer
operations by lowering costs and reducing time to market.
Our Nominating and Corporate Governance Committee is responsible
for assessing the composition and performance of the Board of
Directors and Committees of the Board of Directors and for
recruiting, evaluating and recommending candidates to be
presented for appointment or election to serve as members of the
Board of Directors. In evaluating our Board of Directors, our
Nominating and Corporate Governance Committee has considered
that our directors, including our nominees for election as
directors, have experience as officers, directors and private
equity investors of large, complex technology companies. In
these positions, they have also gained experience in core
management skills that are important to their service on our
Board of Directors, such as international business, supply chain
management, strategic and financial planning, compliance, risk
management, intellectual property matters and leadership
development. Our directors also have experience serving on the
boards of directors and board committees of other public
companies, which provides them with an understanding of current
corporate governance practices and trends and executive
compensation matters. Our Nominating and Corporate Governance
Committee also believes that our directors have other key
attributes that are important to an effective board, including
the highest professional and personal ethics and values, a broad
diversity of business experience and expertise, an understanding
of our business and industry, a high level of education,
broad-based business acumen, and the ability to think
strategically.
In addition to the qualifications described above, the
Nominating and Corporate Governance Committee also considered
the specific experience described in the biographical details
that follow in determining whether each individual nominee or
director should serve on our Board of Directors.
Nominees
to our Board of Directors
H. Raymond Bingham (age 64)
Mr. Bingham has served as our Chairman of the Board since
January 2008 and as a member of our Board of Directors since
October 2005. He is an Advisory Director of General Atlantic
LLC, a global private equity firm, and from 2006 to 2010 was a
Managing Director of General Atlantic. Previously,
Mr. Bingham served in various positions with Cadence Design
Systems, Inc., a supplier of electronic design automation
software and services, from 1997 through 2005, most recently as
its Executive Chairman from May 2004 to July 2005, director from
November 1997 to April 2004, President and Chief Executive
Officer from April 1999 to May 2004, and Executive Vice
President and Chief Financial Officer from April 1993 to April
1999. Mr. Bingham also serves on the boards of
STMicroelectronics and Oracle Corporation. Mr. Bingham was
named a 2009 Outstanding Director by the Outstanding Director
Exchange, a division of the Financial Times; and
Mr. Bingham also serves as a director of the Silicon Valley
Education Foundation and as a board member of the National Parks
Conservation Association.
Mr. Binghams distinguished career and his extensive
executive leadership experience, serving as a chief executive
officer, chief financial officer and director of large
international corporations, provides the Board with the critical
perspective of someone familiar with all facets of an
international enterprise.
Willy C. Shih, Ph.D. (age 59)
Dr. Shih has served as a member of our Board of Directors
since January 2008. Dr. Shih is currently a Professor of
Management Practice at the Harvard Business School, a role he
has held since January 2007. Dr. Shihs broad
industry career experience includes significant accomplishments
for globally-recognized organizations such as Kodak, IBM,
Silicon Graphics and Thomson. From August 2005 to September
2006, Dr. Shih served as Executive Vice President of
Thomson, a provider of digital video technologies. He was an
intellectual property consultant from February to August 2005,
and from 1997 to 2005 served as Senior Vice President of Eastman
Kodak Company. Dr. Shih holds a Ph.D. in
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Chemistry from the University of California, Berkeley and S.B.
degrees in Chemistry and Life Sciences from the Massachusetts
Institute of Technology. Dr. Shih also serves on the board
of directors of Atheros Communications, Inc.
Dr. Shihs broad experience in the technology industry
and with international corporations, as well as his current role
at a premier educational institution, provide the Board with key
perspectives relating to the Companys operations and
ongoing initiatives. In addition, Dr. Shihs
experience in teaching and consulting provide him with
significant insight into strategic alternatives that are
available to technology companies.
Directors
Not Standing for Re-election
James A. Davidson (age 51)
Mr. Davidson has served as a member of our Board of
Directors since March 2003. He is a Co-founder and Co-Chief
Executive of Silver Lake, a private equity investment firm.
Mr. Davidson also serves on the board of Avago Technologies
Limited, a public company that specializes in analog,
mixed-signal and optoelectronic components and subsystems, as
well as a number of private companies. From 1990 to 1998, he
was an investment banker with Hambrecht & Quist, most
recently serving as Managing Director and Head of Technology
Investment Banking. From 1984 to 1990, Mr. Davidson was a
corporate and securities lawyer with Pillsbury,
Madison & Sutro.
Mr. Davidsons depth of experience in financial and
investment matters and his familiarity with a broad range of
companies in the technology, technology-enabled, and related
growth industries, as well as his legal background and
expertise, enable him to provide invaluable experience to the
Board in these areas.
Robert L. Edwards (age 54)
Mr. Edwards has served as a member of our Board of
Directors since October 2008. Mr. Edwards, executive vice
president and chief financial officer of Safeway Inc., was
appointed to his current position in March 2004, and previously
was executive vice president and chief financial officer of
Maxtor Corporation from September 2003 to March 2004. Prior to
joining Maxtor, Mr. Edwards was an officer at Imation
Corporation, a developer, manufacturer and supplier of magnetic
and optical data storage media, where he held the position of
senior vice president, chief financial officer and chief
administrative officer from 1998 to 2003. Before joining
Imation, Mr. Edwards had a successful
20-year
career at Santa Fe Pacific Corporation, and held positions
of increasing responsibility in the areas of finance,
administration and corporate development .
Mr. Edwardss expertise in financial and accounting
matters provides a critical skill-set and perspective in the
diverse issues facing an international enterprise, most
importantly in the areas relating to financial matters.
Mr. Edwards also brings seasoned and diverse leadership in
the storage and memory technologies sectors.
Michael M. McNamara (age 53)
Mr. McNamara has served as a member of our Board of
Directors since October 2005, and as our Chief Executive
Officer, or CEO, since January 1, 2006. Prior to his
appointment as Chief Executive Officer, Mr. McNamara served
as our Chief Operating Officer from January 2002 through
January 2006 and as President, Americas Operations from April
1997 to December 2001, and as Vice President, North
American Operations from April 1994 to April 1997.
Mr. McNamara also serves on the boards of MEMC Electronic
Materials, Inc. and Delphi Automotive LLP, and is on the
Advisory Board of Tsinghua University School of Economics and
Management.
Mr. McNamaras long service with the Company,
extensive leadership and management experience in international
operations and his service on other public company boards
provide invaluable perspective to the Board. In addition, as
the only management representative on our Board,
Mr. McNamara provides management perspective in Board
discussions about the business and strategic direction of our
company.
Daniel H. Schulman (age 52)
Mr. Schulman has served as a member of our Board of
Directors since June 2009. Since November 2009,
Mr. Schulman has served as the President of Sprints
Prepaid Group. Prior to that, he was Chief Executive Officer
and Director for Virgin Mobile USA, a wireless service provider,
which he joined in 2001. Mr. Schulman also served as the
Chief Executive Officer of Priceline.com from June 1999 to May
2001. Prior to joining Priceline, Mr. Schulman served more
than 18 years at AT&T. Mr. Schulman is a member
of the board of directors of Symantec Corporation and the chair
of its
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compensation committee and also is a director of The Telx Group,
Inc. Mr. Schulman also serves on the board of governors of
Rutgers University, is a board member of Autism Speaks, and
serves on the advisory committee for Greycroft Partners. He is
also a member of the Compensation Chair Leadership Network, an
organization comprised of twenty leading Fortune 1,000
Compensation Chairs that considers best practices in public
company compensation practices.
Mr. Schulman has extensive senior management experience as
both a chief executive officer and director, and he possesses
the knowledge and expertise necessary to contribute an important
viewpoint on a wide variety of governance and operational
issues. Mr. Schulmans experience in the wireless and
telecommunications sectors is particularly valuable to us as we
continually enhance the competitive positioning of our segment
offerings, such as those in infrastructure and mobile.
Lip-Bu Tan (age 50) Mr. Tan has
served as a member of our Board of Directors since April 2003.
Mr. Tan serves as President, Chief Executive Officer and a
director of Cadence Design Systems, Inc. In 1987, he founded
and since that time has served as Chairman of Walden
International, a venture capital fund. He also serves on the
boards of Semiconductor Manufacturing International Corporation
and SINA Corporation, and on the board of directors of both the
Electronic Design Automation Consortium (EDAC) and the Global
Semiconductor Association (GSA).
Mr. Tans extensive senior management, investment and
director experiences provide key perspectives to the Board on a
wide range of issues. In particular, as the founder and
Chairman of an international venture capital firm and a director
of a number of technology companies, Mr. Tan has extensive
experience in the electronic design and semiconductor
industries, as well as international operations and corporate
governance expertise.
William D. Watkins (age 57)
Mr. Watkins has served as a member of our Board of
Directors since April 2009. Mr. Watkins was appointed
Chief Executive Officer of Bridgelux, Inc., a US-based developer
and manufacturer of solid state lighting and light-emitting
diode (LED) technologies, in January 2010. He previously served
as Seagate Technologys Chief Executive Officer from 2004
through January 2009, and previously served as Seagates
President and Chief Operating Officer from 2000 until 2004.
During that time, he was responsible for the companys hard
disc drive operations, including recording heads, media and
other components, and related R&D and product development
organizations. Mr. Watkins joined Seagate in 1996 with the
companys merger with Conner Peripherals. Mr. Watkins
currently serves on the boards of directors of Vertical Circuits
Inc. and Maxim Integrated Products.
Mr. Watkins operational expertise and broad
experience in the technology industry and with international
corporations, particularly with product development companies,
provides critical insight and perspective relating to the
companys customer base.
The Board
recommends a vote FOR
the re-election of Mr. Bingham and Dr. Shih
to our Board of Directors.
CORPORATE
GOVERNANCE
Code of
Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics that
applies to all of our directors, officers and employees. The
Code of Business Conduct and Ethics, which we refer to as the
Code, is available on the Corporate Governance page of our
website at www.flextronics.com. In accordance with SEC
rules, we intend to disclose on the Corporate Governance page of
our website any amendment (other than technical, administrative
or other non-substantive amendments) to or any material waiver
from, a provision of the Code that applies to our principal
executive officer, principal financial officer, principal
accounting officer, controller or persons performing similar
functions.
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Director
Retirement Age
Under Section 153(2) of the Companies Act, the office of a
director of a public company or of a subsidiary of a public
company becomes vacant at the conclusion of the next annual
general meeting commencing after such director attains the age
of 70 years. However, under Section 153(6) of the
Companies Act, a person 70 years old or older may, by
ordinary resolution be appointed or re-appointed as a director
of that company, or be authorized to continue in office as a
director of that company, to hold office until the next annual
general meeting of shareholders.
Shareholder
Communications with our Board of Directors
Our shareholders may communicate with our Board of Directors by
sending an
e-mail to
Board@flextronics.com. All
e-mails
received will be sent to the Chairman of the Board and the Chief
Financial Officer
and/or
Senior Vice President, Finance. The
e-mail
correspondence is regularly reviewed and summaries are provided
to the full Board.
Board of
Directors
Our Articles of Association give our Board of Directors general
powers to manage our business. The Board oversees and provides
policy guidance on our strategic and business planning
processes, oversees the conduct of our business by senior
management and is principally responsible for the succession
planning for our key executives, including our Chief Executive
Officer.
Our Board of Directors held a total of ten meetings during
fiscal year 2010, of which five were regularly scheduled
meetings and five were special meetings. During the period for
which each current director was a director or a committee
member, each director attended at least 75% of the aggregate of
the total number of meetings of our Board in fiscal 2010
together with the total number of meetings held by all
committees of our Board on which he served. During fiscal year
2010, our non-employee directors met at regularly scheduled
executive sessions without management participation.
Our Board has adopted a policy that encourages each director to
attend the annual general meeting, but attendance is not
required. Mr. McNamara attended the companys 2009
annual general meeting.
Director
Independence
To assist our Board of Directors in determining the independence
of our directors, the Board has adopted Director Independence
Guidelines that incorporate the definition of
independence adopted by The NASDAQ Stock Market LLC,
which we refer to below as Nasdaq. Our Board has determined
that each of the companys directors, other than
Mr. McNamara, is an independent director as defined by the
applicable rules of Nasdaq and our Director Independence
Guidelines. Our Board also determined that
Messrs. Rockwell A. Schnabel and Ajay B. Shah, who served
as directors during part of our last fiscal year, qualified as
independent directors. Under the Nasdaq definition and our
Director Independence Guidelines, a director is independent only
if the Board determines that the director does not have any
relationship that would interfere with the exercise of
independent judgment in carrying out the responsibilities of a
director. In addition, under the Nasdaq definition and our
Director Independence Guidelines, a director will not be
independent if the director has certain disqualifying
relationships. In evaluating independence, the Board broadly
considers all relevant facts and circumstances. Our Director
Independence Guidelines are included in our Guidelines with
Regard to Certain Governance Matters, a copy of which is
available on the Corporate Governance page of our website at
www.flextronics.com.
In evaluating the independence of our independent directors, the
Board considered certain transactions, relationships and
arrangements between us and various third parties with which
certain of our independent directors are affiliated, and
determined that such transactions, relationships and
arrangements did not interfere with such directors
exercise of independent judgment in carrying out their
responsibilities as directors. In addition to the information
set forth under the section entitled Certain
Relationships and Related Person
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Transactions Transactions with Related
Persons beginning on page 73 of this joint
proxy statement, these transactions, relationships and
arrangements were as follows:
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Mr. H. Raymond Bingham, the Chairman of our Board of
Directors, is a non-management director of STMicroelectronics
N.V. and a non-management director of Oracle Corporation (of
which Mr. Bingham owns less than 1%), each of which was a
supplier of our company during the most recent fiscal year. In
addition, Mr. Bingham is an Advisory Director of General
Atlantic LLC, a private equity firm. In connection with his
position as Advisory Director of General Atlantic LLC,
Mr. Bingham is a non-management director
and/or
indirect beneficial owner of certain portfolio companies of
General Atlantic LLC, which are customers
and/or
suppliers of our company. Sales to or purchases from each of
these other organizations were made in the ordinary course of
business and amounted to less than the greater of $1,000,000 or
2% of the recipient companys gross revenues during the
most recent fiscal year.
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Mr. James A. Davidson, a member of our Board of Directors,
is a Co-founder and Co-Chief Executive Officer of Silver Lake, a
private equity investment firm, and in connection with his
position as managing director, Mr. Davidson is a
non-management director
and/or
indirect beneficial owner of certain portfolio companies of
affiliated funds of Silver Lake, which are customers
and/or
suppliers of our company. Sales to or purchases from each of
these other organizations were made in the ordinary course of
business and amounted to less than the greater of $1,000,000 or
2% of the recipient companys gross revenues during the
most recent fiscal year, except that purchases from Avago
Technologies Limited accounted for approximately 3.5% of the
gross revenues of Avago during the most recent fiscal year.
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Mr. Daniel H. Schulman, a member of our Board of Directors,
is a non-management director of Symantec Corporation, which was
one of our suppliers during the fiscal year. Purchases from
Symantec were made in the ordinary course of business and
amounted to less than the greater of $1,000,000 or 2% of
Symantecs gross revenues during the most recent fiscal
year.
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Mr. Ajay Shah, who served as a member of our Board of
Directors during the 2010 fiscal year and retired following our
2009 annual general meeting, is the Managing Partner of Shah
Capital Partners, L.P., a technology focused private equity
firm, and Manager of Shah Management LLC, a related entity. In
connection with his position as Managing Partner of Shah Capital
Partners and Manager of Shah Management LLC, Mr. Shah is a
non-management director
and/or
indirect beneficial owner of certain portfolio companies of Shah
Capital Partners and Shah Management LLC, which are customers
and/or
suppliers of our company. Sales to or purchases from each of
these other organizations were made in the ordinary course of
business and amounted to less than the greater of $1,000,000 or
2% of the recipient companys gross revenues during the
most recent fiscal year, except that purchases from Smart
Modular Technologies accounted for approximately 28.5% of the
gross revenues for Smart Modular during the most recent fiscal
year. In the case of purchases from Smart Modular Technologies,
pursuant to arrangements with certain of our customers,
substantially all of the purchases were made at the direction of
such customers. Mr. Shah is also a Managing Director of
Silver Lake Sumeru, a private equity fund within Silver Lake.
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Dr. Willy Shih, a member of our Board of Directors, is a
non-management director of Atheros Communications, which is one
of our suppliers. Purchases from Atheros Communications were
made in the ordinary course of business and amounted to less
than the greater of $1,000,000 or 2% of Atheros gross
revenues during the most recent fiscal year.
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Mr. Lip-Bu Tan, a member of our Board of Directors, is the
CEO, president and director of Cadence Design Systems, which is
one of our customers. He is also the founder and Chairman of
Walden International, a venture capital fund. In connection
with his position as Chairman of Walden International,
Mr. Tan is a non-management director/observer
and/or
indirect beneficial owner of certain portfolio companies of
Walden International, which are
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customers
and/or
suppliers of our company. Sales to or purchases from each of
these other organizations were made in the ordinary course of
business and amounted to less than the greater of $1,000,000 or
2% of the recipient companys gross revenues during the
most recent fiscal year, except that purchases from Multiplex,
Inc. accounted for approximately 11.3% of the gross revenues for
Multiplex during the most recent fiscal year and purchases from
Aptina Imaging Corp. accounted for approximately 5.6% of the
gross revenues for Aptina during the most recent fiscal year.
Substantially all of the purchases from Multiplex and Aptina
were made at the direction of certain of our customers.
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Mr. William D. Watkins, a member of our Board of Directors,
is the former chief executive officer of Seagate Technologies
and a non-management director of Maxim Integrated Products,
Inc., both of which are suppliers of our company. Sales to or
purchases from each of these other organizations were made in
the ordinary course of business and amounted to less than the
greater of $1,000,000 or 2% of the recipient companys
gross revenues during the most recent fiscal year.
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Board
Leadership Structure and Role in Risk Oversight
Our Board of Directors currently consists of eight directors,
each of whom, other than Mr. McNamara, is independent under
the companys Director Independence Guidelines and the
applicable rules of Nasdaq. Mr. McNamara has served as our
CEO since January 1, 2006 and as a member of our Board of
Directors since October 2005. Mr. Bingham, who is an
independent director, has served as our Chairman of the Board
since January 2008. The Board has separated the roles of
Chairman and CEO since 2003.
Our Board of Directors believes that the most effective Board
leadership structure for the company at the present time is for
the roles of CEO and Chairman of the Board to be separated, and
for the Chairman of the Board to be an independent director.
Under this structure, our CEO is generally responsible for
setting the strategic direction for the company and for
providing the
day-to-day
leadership over the companys operations, while the
Chairman of the Board provides guidance to the CEO, sets the
agenda for meetings of the Board and presides over Board
meetings. Our Board of Directors believes that having an
independent Chairman set the agenda and establish the priorities
and procedures for the work of the Board provides a greater role
for the independent directors in the oversight of the company,
and also provides the continuity of Board leadership necessary
for the Board to fulfill its responsibilities. This leadership
structure is supplemented by the fact that all of our directors,
other than Mr. McNamara, are independent and all of the
committees of the Board are composed solely of, and chaired by,
independent directors. In addition, our non-employee directors
meet at regularly scheduled executive sessions without
management participation. The Board retains the authority to
modify this leadership structure as and when appropriate to best
address the companys unique circumstances at any given
time and to serve the best interests of our shareholders.
Our Board of Directors role in risk oversight involves
both the full Board of Directors and its committees. The Audit
Committee is charged with the primary role in carrying out risk
oversight responsibilities on behalf of the Board. Pursuant to
its Charter, the Audit Committee reviews the companys
policies and practices with respect to risk assessment and risk
management, including discussing with management the
companys major risk exposures and the steps that have been
taken to monitor and mitigate such exposures. The
companys enterprise risk management process is designed to
identify risks that could affect the companys achievement
of business goals and strategies, to assess the likelihood and
potential impact of significant risks on the companys
business, and to prioritize risk control and mitigation. Our
Chief Financial Officer, and our General
Counsel / Chief Compliance Officer periodically report
on the Companys risk management policies and practices to
relevant Board committees and to the full Board. The Audit
Committee reviews the companys major financial risk
exposures as well as major operational, compliance, reputational
and strategic risks, including steps to monitor, manage and
mitigate those risks. In addition, each of the other Board
committees is responsible for oversight of risk management
practices for categories of risks relevant to their functions.
For example, the Compensation Committee has oversight
responsibility for the companys overall compensation
structure, including review of its compensation practices, with
a view to assessing associated risk. See
Compensation Discussion and Analysis
Compensation Risk Assessment. The Board as a
group is
-9-
regularly updated on specific risks in the course of its review
of corporate strategy, business plans and reports to the Board
by its respective committees. The Board believes that its
leadership structure supports its risk oversight function by
providing a greater role for the independent directors in the
oversight of the company.
Board
Committees
The standing committees of our Board of Directors are the Audit
Committee, Compensation Committee and Nominating and Corporate
Governance Committee. The table below provides current
membership for each of these committees.
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Nominating and
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Audit
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Compensation
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Corporate Governance
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Name
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Committee
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Committee
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Committee
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H. Raymond Bingham
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X*
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James A. Davidson
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X
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Robert L. Edwards
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X*
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X
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Daniel H. Schulman
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X*
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Willy C. Shih
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X
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Lip-Bu Tan
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X
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William D. Watkins
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X
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Audit
Committee
The Audit Committee of the Board of Directors is currently
composed of Messrs. Edwards, Tan and Watkins, each of whom
the Board has determined to be independent and to meet the
financial experience requirements under both the rules of the
SEC and the listing standards of the NASDAQ Global Select
Market. The Board has also determined that Mr. Edwards is
an audit committee financial expert within the
meaning of the rules of the SEC and is financially
sophisticated within the meaning of the rules of Nasdaq.
The Audit Committee held six meetings during fiscal year 2010
and regularly meets in executive sessions without management
present. The committees principal functions are to:
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monitor and evaluate periodic reviews of the adequacy of the
accounting and financial reporting processes and systems of
internal control that are conducted by our financial and senior
management, and our independent auditors;
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be directly responsible for the appointment, compensation and
oversight of the work of our independent auditors (including
resolution of any disagreements between our management and the
auditors regarding financial reporting); and
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facilitate communication among our independent auditors, our
financial and senior management and our Board.
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Our Board has adopted an Audit Committee Charter that is
available on the Corporate Governance page of our website at
www.flextronics.com.
Compensation
Committee
Responsibilities
and Meetings
The Compensation Committee of our Board of Directors is
responsible for reviewing and approving the goals and objectives
relating to, and recommending to our Board the compensation of,
our Chief Executive Officer and all other executive
officers. The committee also oversees
managements decisions concerning the performance and
compensation of other officers, administers the companys
equity compensation plans, reviews and recommends to our Board
the compensation of our non-employee directors and regularly
evaluates the effectiveness of our overall executive
compensation program. The Compensation Committee is currently
composed of
-10-
Messrs. Davidson and Schulman, each of whom our Board has
determined to be an independent director under applicable
listing standards of the NASDAQ Global Select Market. The
committee held eleven meetings during fiscal year 2010 and
regularly meets in executive sessions without management
present. The specific powers and responsibilities of the
Compensation Committee are set forth in more detail in the
Compensation Committee Charter, which is available on the
Corporate Governance page of our website at
www.flextronics.com.
Delegation
of Authority
When appropriate, our Compensation Committee may form, and
delegate authority to, subcommittees. In addition, in
accordance with the companys equity compensation plans,
the Compensation Committees charter allows the committee
to delegate to our Chief Executive Officer its authority to
grant stock options to employees of the company who are not
directors or executive officers. Pursuant to the Compensation
Committees Equity Compensation Grant Policy, however, all
grants of equity awards (including stock options and share bonus
awards) must be approved by the Board of Directors or the
committee.
Compensation
Processes and Procedures
The Compensation Committee makes all compensation decisions for
our executive officers. As part of its process, the
Compensation Committee meets with our Chief Executive Officer,
Chief Financial Officer, Executive Vice President, Worldwide
Human Resources and Management Systems and our Vice President,
Global Compensation and Benefits 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. In
addition, the committee has the authority to retain and
terminate any third-party compensation consultant and to obtain
advice and assistance from internal and external legal,
accounting and other advisors. During our 2010 fiscal year, the
Committee engaged Radford Consulting (referred to in this
discussion as Radford) as its independent adviser for certain
executive compensation matters. Radford was retained by the
Committee to provide an independent review of the companys
executive compensation programs, including an analysis of both
the competitive market and the design of the programs. More
specifically, Radford furnished the Committee with reports on
peer company practices relating to the following matters: short
and long-term compensation program design; annual share
utilization and shareowner dilution levels resulting from equity
plans; executive stock ownership and retention values; stock
ownership guidelines; and incentive compensation recoupment
policies. As part of its reports to the Committee, Radford
evaluated our peer companies, and provided competitive
compensation data and analysis relating to the compensation of
our Chief Executive Officer and our other executives and senior
officers. Radford also assisted the company with its risk
assessment of our compensation programs.
The Compensation Committee relied on input from Radford in
evaluating managements recommendations and arriving at the
Committees recommendations to the Board with respect to
the elements of compensation discussed below under
Compensation Discussion and Analysis.
The Committee expects that it will continue to retain a
compensation consultant on future executive compensation matters.
The Compensation Committee also reviews and makes
recommendations to our Board for the compensation of our
non-employee directors. To assist the Committee in its annual
review of director compensation, our management provides
director compensation data compiled from the annual reports and
proxy statements of companies in our peer comparison group. In
addition, in July 2009, the Compensation Committee retained
Radford to assist the committee in its review of our
non-employee director compensation program. This review was
conducted to establish whether the compensation paid to our
non-employee directors was competitive when compared to the
practices of our peer group of companies. The Compensation
Committee reviewed, among other things, the existing cash
compensation of our non-employee directors, the grant date fair
value of options and share bonus awards, the total compensation
of our non-employee Chairman of the Board and the aggregate
number of our ordinary shares held by each of our non-employee
directors. The Compensation Committee, with the assistance of
Radford, also took into consideration compensation trends for
outside directors and the recent implementation of new share
ownership guidelines for non-employee directors. Based on
Radfords review and analysis of the compensation practices
of our peer group, our Board of Directors, upon the
recommendation of the Compensation Committee, approved changes
-11-
in our non-employee director compensation program, which are
discussed in the section below captioned Non-Management
Directors Compensation for Fiscal Year 2010.
Relationship
with Compensation Consultant
In addition to serving as compensation consultant to the
Compensation Committee in fiscal year 2010 with respect to the
compensation of our executive officers and non-employee
directors, Radford and its affiliates have provided other
services to our management and to the Compensation Committee.
Radfords fees in connection with providing consulting
services with respect to the compensation of our executive
officers and non-employee directors in fiscal year 2010 were
$132,000.
Radford is a division of Aon Corporation. During the fiscal
year, Aon Corporation and its affiliates, which we refer to
collectively as Aon, were retained by the company to provide
services unrelated to executive and director compensation
matters, relating to global employee benefits services, property
insurance and risk services. The decision to engage Aon for
these other services was made by management, other than services
relating to an option exchange program offer made in 2009 where
Radford was retained by the Compensation Committee to provide
consulting services. Although aware of such other services, our
Compensation Committee did not review or approve such other
services provided by Aon, which services were approved by
management in the ordinary course of business. The aggregate
fees paid for those other services in fiscal 2010 were
approximately $1,314,500.
Our Compensation Committee has determined that the provision by
Aon of services unrelated to executive and director compensation
matters in fiscal year 2010 were compatible with maintaining the
objectivity of Radford in its role as compensation consultant to
the committee and that the consulting advice it received from
Radford was not influenced by Aons other relationships
with the company. The Compensation Committee is sensitive to
the concern that the services provided by Aon, and the related
fees, could impair the objectivity and independence of Radford,
and the committee believes that it is important that objectivity
be maintained. However, the committee also recognizes that the
services provided by Aon are valuable to the company and that it
could be inefficient and not in the companys interest to
use a separate firm to provide those services at this time. In
addition, the Compensation Committee has confirmed that Radford
and Aon maintain appropriate safeguards to assure that the
consulting services provided by Radford are not influenced by
the companys business relationship with Aon.
Compensation
Committee Interlocks and Insider Participation
During our 2010 fiscal year, Messrs. Davidson, Schulman and
Schnabel served as members of the Compensation Committee.
Mr. Schnabel resigned from the committee effective
September 22, 2009. Mr. Davidson served as chairman of
the Compensation Committee during fiscal year 2010. On
May 26, 2010, Mr. Schulman was appointed as the chair
of the committee. None of our executive officers served on the
Compensation Committee during our 2010 fiscal year. None of our
directors has interlocking or other relationships with other
boards, compensation committees or our executive officers that
require disclosure under Item 407(e)(4) of
Regulation S-K.
In March 2003, we issued $195.0 million aggregate principal
amount of our Zero Coupon Convertible Junior Subordinated Notes
due 2008 to funds affiliated with Silver Lake. In connection
with the issuance of the notes, we appointed James A. Davidson,
a co-founder and managing director of Silver Lake, to our Board
of Directors. In July 2006, we entered into an agreement with
the Silver Lake note holders to, among other things
(i) extend the maturity date of the notes to July 31,
2009 and (ii) provide for net share settlement of the notes
upon maturity. The terms of the transaction were based on
arms-length negotiations between us and Silver Lake, and were
approved by our Board of Directors as well as by the Audit
Committee of our Board of Directors. On July 31, 2009, we
paid $195.0 million to pay off the notes at their maturity.
Nominating
and Corporate Governance Committee
Our Nominating and Corporate Governance Committee currently is
currently composed of Messrs. Bingham, Edwards and Shih,
each of whom our Board has determined to be an independent
director under the applicable listing standards of Nasdaq. The
Nominating and Corporate Governance Committee held five
-12-
meetings during fiscal year 2010 and regularly meets in
executive sessions without management present. The committee
recruits, evaluates and recommends candidates for appointment or
election as members of our Board. The committee also recommends
corporate governance guidelines to the Board and oversees the
Boards annual self-evaluation process. Our Board has
adopted a Nominating and Corporate Governance Committee Charter
that is available on the Corporate Governance page of our
website at www.flextronics.com. In 2010, the
committees responsibilities were expanded to include
shaping and overseeing the application of the companys
corporate governance policies and procedures and overseeing any
Board communications with shareholders.
The goal of the Nominating and Corporate Governance Committee is
to ensure that our Board possesses a variety of perspectives and
skills derived from high-quality business and professional
experience. The committee seeks to achieve a balance and
diversity of knowledge, experience and capability on our Board,
while maintaining a sense of collegiality and cooperation that
is conducive to a productive working relationship within the
Board and between the Board and management. In addition, the
committee seeks nominees with the highest professional and
personal ethics and values, an understanding of our business and
industry, a high level of education, broad-based business
acumen, and the ability to think strategically. Although the
committee uses these and other criteria to evaluate potential
nominees, we have no stated minimum criteria for nominees. The
committee does not have different standards for evaluating
nominees depending on whether they are proposed by our directors
and management or by our shareholders.
The Nominating and Corporate Governance Committee generally
recruits, evaluates and recommends nominees for our Board based
upon recommendations by our directors and management. The
committee will also consider recommendations submitted by our
shareholders. Shareholders can recommend qualified candidates
for our Board to the Nominating and Corporate Governance
Committee by submitting recommendations to our corporate
secretary at Flextronics International Ltd., 2 Changi South
Lane, Singapore 486123. Submissions that are received and meet
the criteria outlined above will be forwarded to the Nominating
and Corporate Governance Committee for review and
consideration. Shareholder recommendations for our 2011 annual
general meeting should be made not later than February 7,
2011 to ensure adequate time for meaningful consideration by the
Nominating and Corporate Governance Committee. To date, we have
not received any such recommendations from our shareholders.
Director
Share Ownership Guidelines
At the recommendation of the Compensation Committee, our Board
of Directors adopted share ownership guidelines for non-employee
directors in July 2009 in connection with its review of our
non-employee directors compensation. The ownership
guidelines encourage our non-employees directors to hold a
minimum number of our ordinary shares equivalent to $225,000 in
value. The guidelines encourage our
non-employee
directors to reach this goal within five years of the date that
the Board approved the guidelines or the date of their election
to our Board of Directors, whichever is later, and to hold at
least such minimum value in shares for as long as he or she
serves on our Board.
NON-MANAGEMENT
DIRECTORS COMPENSATION FOR FISCAL YEAR 2010
The key objective of our non-employee directors
compensation program is to attract and retain highly qualified
directors with the necessary skills, experience and character to
oversee our management. By using a combination of cash and
equity-based compensation, the compensation program is designed
to recognize the time commitment, expertise and potential
liability relating to active Board service, while aligning the
interests of our Board of Directors with the long-term interests
of our shareholders. In accordance with the policy of our Board
of Directors, we do not pay management directors for Board
service in addition to their regular employee compensation. For
a discussion of the compensation paid to Mr. McNamara, our
only management director, for services provided as our CEO, see
the section of this joint proxy statement entitled
Executive Compensation.
In addition to the compensation provided to our non-employee
directors, which is detailed below, each non-employee director
is reimbursed for any reasonable
out-of-pocket
expenses incurred in connection with attending in-person
meetings of the Board of Directors and Board committees, as well
for any fees incurred in attending continuing education courses
for directors.
-13-
Fiscal
Year 2010 Annual Cash Compensation
Under the Companies Act, we may only provide cash compensation
to our non-employee directors for services rendered in their
capacity as directors with the prior approval of our
shareholders at a general meeting. Our shareholders approved
the current cash compensation arrangements for our non-employee
directors at our 2009 annual general meeting. The current
arrangements include the following compensation:
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annual cash compensation of $75,000, payable quarterly in
arrears to each non-employee director for services rendered as a
director;
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additional annual cash compensation of $100,000, payable
quarterly in arrears to the Chairman of the Board of Directors
for services rendered as Chairman of the Board;
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additional annual cash compensation of $50,000, payable
quarterly in arrears to the Chairman of the Audit Committee of
the Board of Directors for services rendered as Chairman of the
Audit Committee and for participation on the committee;
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additional annual cash compensation of $15,000, payable
quarterly in arrears to each other
non-employee
director who serves on the Audit Committee for participation on
the committee;
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additional annual cash compensation of $25,000, payable
quarterly in arrears to the Chairman of the Compensation
Committee for services rendered as Chairman of the Compensation
Committee and for participation on the committee;
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additional annual cash compensation of $10,000, payable
quarterly in arrears to each other non-employee director who
serves on the Compensation Committee for participation on the
committee;
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additional annual cash compensation of $10,000, payable
quarterly in arrears to the Chairman of the Nominating and
Corporate Governance Committee for services rendered as Chairman
of the Nominating and Corporate Governance Committee and for
participation on the committee; and
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additional annual cash compensation of $5,000 payable quarterly
in arrears to each of our
non-employee
directors for participation on each standing committee other
than the Audit Committee and the Compensation Committee (which
is currently limited to the Nominating and Corporate Governance
Committee).
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Non-employee directors do not receive any non-equity incentive
compensation, or participate in any pension plan or deferred
compensation plan.
The foregoing summary of our non-employee director cash
compensation program reflects the following changes to the
program, which were approved by the Board and our shareholders
effective as of September 22, 2009, the date of our 2009
annual general meeting: (i) an increase from $60,000 to
$75,000 with respect to the annual cash compensation payable to
each of the companys non-employee directors for services
rendered as a director; (ii) the provision of additional
annual cash consideration of $100,000 to the non-employee
Chairman of the Board for services rendered as Chairman of the
Board in lieu of one-half of the annual share bonus award that
was previously provided to our Chairman of the Board; and
(iii) an increase from $5,000 to $10,000 with respect to
the annual cash compensation payable to the members of the
Compensation Committee (other than the Chairman of the
Compensation Committee) for participation on the committee.
Fiscal
Year 2010 Equity Compensation
Initial
Awards
Prior to July 22, 2009, upon becoming a director of the
company, each non-employee director received a one-time grant of
stock options to purchase 25,000 ordinary shares under the
automatic option grant provisions of our 2001 Equity Incentive
Plan, which we refer to in this joint proxy statement as the
2001 Plan. These options vested and were exercisable as to 25%
of the shares on the first anniversary of the grant date and in
36 equal monthly installments thereafter. The options have an
expiration date of five years from the
-14-
date of grant. Messrs. Daniel H. Schulman and William D.
Watkins each received stock options to purchase 25,000 ordinary
shares under this program on June 18, 2009 and
April 14, 2009, respectively.
On July 22, 2009, our Board of Directors replaced the
initial option grant with a pro-rated share of the revised
yearly share bonus award, which is discussed below. The
pro-rated award will vest on the date immediately prior to the
date of our next annual general meeting and will be based on the
amount of time that the director serves on the Board until such
date. No director received any share bonus awards under this
program in fiscal year 2010.
Yearly
Share Bonus Awards
Under the terms of the discretionary share bonus grant
provisions of the 2001 Plan and as approved by our Compensation
Committee, each non-employee director receives, following each
annual general meeting of the company, a yearly share bonus
award consisting of such number of shares having an aggregate
fair market value of $125,000 on the date of grant, which share
bonus awards vest in full on the date immediately prior to the
date of the next years annual general meeting. During
fiscal year 2010, each non-employee director received a share
bonus award of 16,622 ordinary shares under this program.
On July 22, 2009, our Board of Directors modified the terms
of the yearly share bonus awards granted to our non-employee
directors, which previously were fully vested at grant and
served as compensation for past service on the Board. In
addition, the old yearly share bonus awards consisted of such
number of shares having an aggregate fair market value of only
$100,000 on the date of grant. As described above, the new
yearly share bonus awards granted to our non-employee directors
are subject to a vesting requirement and serve as compensation
for future service during the vesting period of the award. The
foregoing changes were effective as of the date of the 2009
annual general meeting and did not affect compensation payable
with respect to prior service. Therefore, in addition to share
bonus awards received by our non-employee directors under the
new yearly share bonus award program, following our 2009 annual
general meeting, our non-employee directors also received the
yearly share bonus awards payable with respect to their service
on the Board since the date of the 2008 annual general meeting.
Each non-employee director received a share bonus award of
13,298 ordinary shares under the previous program during fiscal
year 2010.
Discretionary
Grants
Under the terms of the discretionary option grant provisions of
the 2001 Plan, non-employee directors are eligible to receive
stock options granted at the discretion of the Compensation
Committee. No director received stock options pursuant to the
discretionary grant program during fiscal year 2010. The
maximum number of ordinary shares that may be subject to awards
granted to each non-employee director under the 2001 Plan is
100,000 ordinary shares in each calendar year.
Compensation
for the Non-Employee Chairman of the Board
On July 22, 2009, our Board of Directors, at the
recommendation of the Compensation Committee, approved changes
to the cash and equity compensation payable to our non-executive
Chairman. Our shareholders approved the changes to the
Chairmans cash compensation at the 2009 annual general
meeting. Following those changes, our non-executive Chairman is
entitled to receive, following each annual general meeting of
the Company, (i) $100,000 in cash compensation, payable
quarterly in arrears, and (ii) a yearly share bonus award
that consists of such number of shares having an aggregate fair
market value of $100,000 on the date of grant, which vests on
the date immediately prior to the date of the next years
annual general meeting. Our Chairman of the Board is also
eligible to receive all other compensation payable to our
non-employee directors, other than cash compensation payable for
service on any Board committees.
The foregoing changes were effective as of the date of our 2009
annual general meeting. Prior to such date, our non-executive
Chairman was entitled to receive, following each annual general
meeting of the company, a yearly share bonus award that was
fully vested on the date of grant and consisted of such number
of shares having an aggregate fair market value of $200,000 on
the grant date. The non-executive Chairman was also entitled to
continue to receive cash compensation for service as chairman of
the Audit Committee if
-15-
appointed to such position, but otherwise was not eligible to
receive cash compensation for service on any Board committees.
Our Chairman was eligible for all other compensation payable to
our non-employee directors.
Following the 2009 annual general meeting, our non-employee
Chairman of the Board received 26,595 ordinary shares, which
vested immediately, with respect to his service as our Chairman
since the date of the 2008 annual general meeting and 13,298
ordinary shares, which will vest on the date immediately prior
to the date of our 2010 annual general meeting, with respect to
his service as our Chairman from the date of the 2009 annual
general meeting to the date of the 2010 annual general meeting.
Director
Summary Compensation in Fiscal Year 2010
The following table sets forth the fiscal year 2010 compensation
for our non-employee directors. As discussed above, our Board
approved certain changes for non-employee director compensation
effective July 2009, and our shareholders approved changes for
the cash compensation payable to our non-employee directors on
September 22, 2009, at our 2009 annual general meeting. As
a result, the compensation described below includes
(i) share bonus awards granted with respect to past service
on the Board from the 2008 annual general meeting to the 2009
annual general meeting and (ii) share bonus awards granted
with respect to future service on the Board during the vesting
term of the awards (from the 2009 annual general meeting until
the 2010 annual general meeting).
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Fees Earned or
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Paid in
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Option
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Cash
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Stock Awards
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Awards
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Total
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Name
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($) (1)
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($) (2)
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($) (3)
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($)
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H. Raymond Bingham
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$
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126,576
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$
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525,000
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$
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$
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651,576
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James A. Davidson
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$
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92,826
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$
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225,000
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$
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$
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317,826
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Robert L. Edwards
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$
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116,217
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$
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225,000
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$
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$
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341,217
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Rockwell A. Schnabel*
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$
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35,859
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$
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100,000
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$
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$
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135,859
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Daniel H. Schulman
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$
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61,945
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$
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225,000
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$
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54,250
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$
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341,195
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Ajay B. Shah*
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$
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35,869
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$
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100,000
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|
$
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|
|
|
$
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135,869
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Willy C. Shih, Ph.D.
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|
$
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72,826
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$
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225,000
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$
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|
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|
$
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297,826
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Lip-Bu Tan
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$
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82,825
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$
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225,000
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$
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$
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307,825
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William D. Watkins
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$
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80,143
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$
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225,000
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$
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42,250
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$
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347,393
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*
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Mr. Schnabel and Mr. Shah
retired from our Board of Directors on September 22, 2009,
immediately following our 2009 annual general meeting of
shareholders.
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(1) |
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This column represents the amount of cash compensation earned in
fiscal year 2010 for Board and committee service. |
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(2) |
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This column represents the grant date fair value of share bonus
awards granted in fiscal year 2010 in accordance with FASB ASC
Topic 718. The grant date fair value of share bonus awards is
the closing price of our ordinary shares on the date of grant. |
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(3) |
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This column represents the grant date fair value of stock
options granted in fiscal year 2010 in accordance with FASB ASC
Topic 718. We made initial option grants of 25,000 options to
Messrs. Watkins and Schulman at the time they became
non-employee directors of the company in April 2009 and June
2009, respectively. The fair value of their initial stock
options were $1.69 and $2.17, respectively, per option on the
grant dates. Information regarding the assumptions made in
calculating the amounts reflected in this column for grants made
in fiscal year 2010 is included in the section entitled
Stock-Based Compensation under Note 2 to our
audited consolidated financial statements for the fiscal year
ended March 31, 2010, included in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010. |
-16-
The table below shows the aggregate number of ordinary shares
underlying stock options held by our non-employee directors as
of the 2010 fiscal year-end:
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Number of Ordinary Shares
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Number of Ordinary Shares Underlying
|
|
|
Underlying Outstanding Stock Options
|
|
Outstanding Share Bonus Awards
|
Name
|
|
(#)
|
|
(#)
|
|
|
|
|
|
|
H. Raymond Bingham
|
|
62,500
|
|
29,920
|
|
|
|
|
|
James A. Davidson
|
|
75,000
|
|
16,622
|
|
|
|
|
|
Robert L. Edwards
|
|
25,000
|
|
16,622
|
|
|
|
|
|
Rockwell A. Schnabel
|
|
|
|
|
|
|
|
|
|
Daniel H. Schulman*
|
|
25,000
|
|
16,622
|
|
|
|
|
|
Ajay B. Shah
|
|
|
|
|
|
|
|
|
|
Willy C. Shih, Ph.D.
|
|
37,500
|
|
16,622
|
|
|
|
|
|
Lip-Bu Tan
|
|
75,000
|
|
16,622
|
|
|
|
|
|
William D. Watkins*
|
|
25,000
|
|
16,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Mr. Watkins was appointed to our Board of Directors
on April 14, 2009. Mr. Schulman was appointed to our
Board of Directors on June 18, 2009.
Change of
Control and Termination Provisions of the 2001 Plan
Under the terms of the 2001 Plan, if a director ceases to
provide services to the company for any reason other than death,
cause (as defined in the plan) or disability (as defined in the
plan), then the director may exercise any options which have
vested by the date of such termination within three months of
the termination date or such other period not exceeding five
years or the term of the option, as determined by the
Compensation Committee. If a director ceases to provide
services to the company because of death or disability, then the
director may exercise any options which have vested by the date
of such termination within 12 months of the termination
date or such other period not exceeding five years or the term
of the option, as determined by the Compensation Committee. All
stock options held by a director who is terminated for cause
expire on the termination date, unless otherwise determined by
the Compensation Committee. In addition, subject to any waiver
by the Compensation Committee, all unvested share bonus awards
held by a director will be forfeited if he or she ceases to
provide services to the company for any reason.
Except for grants made under the automatic option grant program,
in the event of a dissolution or liquidation of the company or
if we are acquired by merger or asset sale or in the event of
other change of control events, each outstanding stock option
and unvested share bonus award shall automatically accelerate so
that each such award shall, immediately prior to the effective
date of such transaction, become fully vested with respect to
the total number of shares then subject to such award. However,
subject to the specific terms of a given award, vesting shall
not so accelerate if, and to the extent, such award is either to
be assumed or replaced with a comparable right covering shares
of the capital stock of the successor corporation or parent
thereof or is replaced with a cash incentive program of the
successor corporation which preserves the inherent value
existing at the time of such transaction.
For grants made under the automatic option grant program, in the
event of a change of control transaction described above, each
outstanding option will accelerate so that each such option
shall, prior to the effective date of such transaction at such
times and with such conditions as determined by the Compensation
Committee, (i) become fully vested with respect to the
total number of shares then subject to such award and
(ii) remain exercisable for a period of three months
following the consummation of the change of control transaction.
However, in the event of a hostile take-over of the company
pursuant to a tender or exchange offer, the director has a right
to surrender each option, which has been held by him or her for
at least six
-17-
months, in return for a cash distribution by the company in an
amount equal to the excess of (a) the take-over price per
share over (b) the exercise price payable for such share.
PROPOSAL NO. 2:
RE-APPOINTMENT OF INDEPENDENT AUDITORS FOR FISCAL YEAR 2011
AND
AUTHORIZATION OF OUR BOARD TO FIX THEIR REMUNERATION
Our Audit Committee has approved, subject to shareholder
approval, the re-appointment of Deloitte & Touche LLP
as the companys independent registered public accounting
firm to audit our accounts and records for the fiscal year
ending March 31, 2011, and to perform other appropriate
services. In addition, pursuant to Section 205(16) of the
Singapore Companies Act, Cap. 50, our Board of Directors is
requesting that the shareholders authorize the directors, upon
the recommendation of the Audit Committee, to fix the
auditors remuneration for services rendered through the
next annual general meeting. We expect that a representative
from Deloitte & Touche LLP will be present at the 2010
annual general meeting. This representative will have the
opportunity to make a statement if he or she so desires and is
expected to be available to respond to appropriate questions.
Principal
Accountant Fees and Services
Set forth below are the aggregate fees billed by our principal
accounting firm, Deloitte & Touche LLP, a member firm
of Deloitte Touche Tohmatsu, and their respective affiliates for
services performed during fiscal years 2010 and 2009. All audit
and permissible non-audit services reflected in the fees below
were pre-approved by the Audit Committee in accordance with
established procedures.
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
7.4
|
|
|
$
|
10.0
|
|
|
|
|
|
|
|
|
|
|
Audit-Related Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Fees
|
|
|
2.5
|
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
9.9
|
|
|
$
|
13.1
|
|
|
|
|
|
|
|
|
|
|
Audit Fees consist of fees for professional services
rendered by our independent registered public accounting firm
for the audit of our annual consolidated financial statements
included in our Annual Report on
Form 10-K
(including services incurred with rendering an opinion under
Section 404 of the Sarbanes-Oxley Act of 2002) and the
review of our consolidated financial statements included in our
Quarterly Reports on
Form 10-Q.
These fees include fees for services that are normally incurred
in connection with statutory and regulatory filings or
engagements, such as comfort letters, statutory audits, consents
and the review of documents filed with the SEC.
Audit-Related Fees consist of fees for assurance and
related services by our independent registered public accounting
firm that are reasonably related to the performance of the audit
or review of our consolidated financial statements and not
included in Audit Fees. We did not incur fees under this
category during fiscal years 2010 or 2009.
Tax Fees consist of fees for professional services
rendered by our independent registered public accounting firm
for tax compliance, tax advice, and tax planning services.
These services include assistance regarding federal, state and
international tax compliance, return preparation, tax audits and
customs and duties.
All Other Fees consist of fees for professional services
rendered by our independent registered public accounting firm
for permissible non-audit services, if any. We did not incur
fees under this category during fiscal years 2010 or 2009.
-18-
Audit
Committee Pre-Approval Policy
Our Audit Committees policy is to pre-approve all audit
and permissible non-audit services provided by our independent
registered public accounting firm. These services may include
audit services, audit-related services, tax services and other
services. Pre-approval is generally provided for up to one
year, and any
pre-approval
is detailed as to the particular service or category of
services. The independent registered public accounting firm and
management are required to periodically report to the Audit
Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with
this
pre-approval,
and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a
case-by-case
basis.
Our Audit Committee has determined that the provision of
non-audit services under appropriate circumstances may be
compatible with maintaining the independence of
Deloitte & Touche LLP, and that all such services
provided by Deloitte & Touche LLP to us in the past
were compatible with maintaining such independence. The Audit
Committee is sensitive to the concern that some non-audit
services, and related fees, could impair independence and the
Audit Committee believes it important that independence be
maintained. However, the Audit Committee also recognizes that
in some areas, services that are identified by the relevant
regulations as tax fees or other fees
are sufficiently related to the audit work performed by
Deloitte & Touche LLP that it would be highly
inefficient and unnecessarily expensive to use a separate firm
to perform those non-audit services. The Audit Committee
intends to evaluate each such circumstance on its own merits,
and to approve the performance of non-audit services where it
believes efficiency can be obtained without meaningfully
compromising independence.
The Board
recommends a vote FOR the re-appointment of
Deloitte & Touche LLP
as our independent auditors for fiscal year 2011 and
authorization of the
Board, upon the recommendation of the Audit Committee, to fix
their remuneration.
AUDIT
COMMITTEE REPORT
The information contained under this Audit Committee
Report shall not be deemed to be soliciting
material or to be filed with the SEC, nor
shall such information be incorporated by reference into any
filings under the Securities Act of 1933, as amended, which we
refer to as the Securities Act, or under the Securities Exchange
Act of 1934, as amended, which we refer to as 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 Audit Committee assists our Board of Directors in overseeing
financial accounting and reporting processes and systems of
internal controls. The Audit Committee also evaluates the
performance and independence of our independent registered
public accounting firm. The Audit Committee operates under a
written charter, a copy of which is available on the Corporate
Governance page of our website at www.flextronics.com.
Under the written charter, the Audit Committee must consist of
at least three directors, all of whom must be
independent as defined by the Exchange Act and the
rules of the SEC and Nasdaq. The members of the committee
during fiscal year 2010 were Messrs. Bingham, Edwards, Shah
and Tan, each of whom is (or, in the case of Mr. Shah, who
retired after our 2009 annual meeting of shareholders, was) an
independent director. The current members of the committee are
Messrs. Edwards, Tan and Watkins, each of whom is an
independent director.
Our financial and senior management supervise our systems of
internal controls and the financial reporting process. Our
independent auditors perform an independent audit of our
consolidated financial statements in accordance with generally
accepted auditing standards and express opinions on these
consolidated financial statements. In addition, our independent
auditors express their own opinion on the effectiveness of our
internal control over financial reporting. The Audit Committee
monitors these processes.
The Audit Committee has reviewed and discussed with both the
management of the company and our independent auditors our
audited consolidated financial statements for the fiscal year
ended March 31, 2010,
-19-
as well as managements assessment and our independent
auditors evaluation of the effectiveness of our internal
control over financial reporting. Our management represented to
the Audit Committee that our audited consolidated financial
statements were prepared in accordance with accounting
principles generally accepted in the United States of America.
The Audit Committee also discussed with our independent auditors
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 Oversight Board in Rule 3800T. The Audit
Committee also has discussed with our independent auditors the
firms independence from Company management and the
Company, and reviewed the written disclosures and letter from
the independent registered certified public accounting firm
required by applicable requirements of the Public Company
Accounting Oversight Board regarding the independent registered
certified public accounting firms communications with the
Audit Committee concerning independence. The Audit Committee
has also considered whether the provision of non-audit services
by our independent auditors is compatible with maintaining the
independence of the auditors. The Audit Committees policy
is to pre-approve all audit and permissible non-audit services
provided by our independent auditors. All audit and permissible
non-audit services performed by our independent auditors during
fiscal year 2010 and fiscal year 2009 were pre-approved by the
Audit Committee in accordance with established procedures.
Based on the Audit Committees discussions with the
management of the company and our independent auditors and based
on the Audit Committees review of our audited consolidated
financial statements together with the reports of our
independent auditors on the consolidated financial statements
and the representations of our management with regard to these
consolidated financial statements, the Audit Committee
recommended to the companys Board of Directors that the
audited consolidated financial statements be included in our
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010, which was filed
with the SEC on May 24, 2010.
Submitted by the Audit Committee of the Board of Directors:
Robert L. Edwards
Lip-Bu Tan
William D. Watkins
-20-
PROPOSAL NO. 3:
ORDINARY RESOLUTION TO AUTHORIZE
ORDINARY SHARE ISSUANCES
We are incorporated in the Republic of Singapore. Under
Singapore law, our directors may only issue ordinary shares and
make or grant offers, agreements or options that might or would
require the issuance of ordinary shares, with the prior approval
from our shareholders. If this proposal is approved, the
authorization would be effective from the date of the 2010
annual general meeting until the earlier of (i) the
conclusion of the 2011 annual general meeting or (ii) the
expiration of the period within which the 2011 annual general
meeting is required by law to be held. The 2011 annual general
meeting is required to be held no later than 15 months
after the date of the 2010 annual general meeting and no later
than six months after the date of our 2011 fiscal year end
(except that Singapore law allows for a one-time application for
an extension of up to a maximum of three months to be made with
the Singapore Accounting and Corporate Regulatory Authority).
Our Board believes that it is advisable and in the best
interests of our shareholders for our shareholders to authorize
our directors to issue ordinary shares and to make or grant
offers, agreements or options that might or would require the
issuance of ordinary shares. In the past, the Board has issued
shares or made agreements that would require the issuance of new
ordinary shares in the following situations:
|
|
|
|
|
in connection with strategic transactions and acquisitions;
|
|
|
|
pursuant to public and private offerings of our ordinary shares
as well as instruments convertible into our ordinary
shares; and
|
|
|
|
in connection with our equity compensation plans and
arrangements.
|
Notwithstanding this general authorization to issue our ordinary
shares, we will be required to seek shareholder approval with
respect to future issuances of ordinary shares where required
under the rules of Nasdaq, such as where the company proposes to
issue ordinary shares that will result in a change in control of
the company or in connection with a transaction involving the
issuance of ordinary shares representing 20% or more of our
outstanding ordinary shares at a price less than the greater of
book or market value.
Our Board expects that we will continue to issue ordinary shares
and grant options and share bonus awards in the future under
circumstances similar to those in the past. As of the date of
this joint proxy statement, other than issuances of ordinary
shares or agreements that would require the issuance of new
ordinary shares in connection with our equity compensation plans
and arrangements, we have no specific plans, agreements or
commitments to issue any ordinary shares for which approval of
this proposal is required. Nevertheless, our Board believes
that it is advisable and in the best interests of our
shareholders for our shareholders to provide this general
authorization in order to avoid the delay and expense of
obtaining shareholder approval at a later date and to provide us
with greater flexibility to pursue strategic transactions and
acquisitions and raise additional capital through public and
private offerings of our ordinary shares as well as instruments
convertible into our ordinary shares.
If this proposal is approved, our directors would be authorized
to issue, during the period described above, ordinary shares
subject only to applicable Singapore laws and the rules of
Nasdaq. The issuance of a large number of ordinary shares could
be dilutive to existing shareholders or reduce the trading price
of our ordinary shares on the NASDAQ Global Select Market.
We are submitting this proposal because we are required to do so
under Singapore law before our Board of Directors can issue any
ordinary shares in connection with strategic transactions,
public and private offerings and in connection with our equity
compensation plans. We are not submitting this proposal in
response to a threatened takeover. In the event of a hostile
attempt to acquire control of the company, we could seek to
impede the attempt by issuing ordinary shares, which may dilute
the voting power of our existing shareholders. This could also
have the effect of impeding the efforts of our shareholders to
remove an incumbent director and replace him with a new director
of their choice. These potential effects could limit the
opportunity for our shareholders to dispose of their ordinary
shares at the premium that may be available in takeover attempts.
-21-
The Board
recommends a vote FOR the resolution
to authorize ordinary share issuances.
PROPOSAL NO. 4:
ORDINARY RESOLUTION TO APPROVE THE ADOPTION OF THE FLEXTRONICS
INTERNATIONAL LTD. 2010 EQUITY INCENTIVE PLAN
On May 26, 2010, upon the recommendation of the
Compensation Committee, the Board unanimously approved and
adopted the Flextronics International Ltd. 2010 Equity Incentive
Plan, which we refer to as the 2010 Plan, subject to the
approval of our stockholders. The 2010 Incentive Plan provides
the Compensation Committee with the flexibility to design
incentive awards that are responsive to our needs, and includes
authorization for a variety of awards designed to attract and
retain the best available personnel, to provide additional
incentives to our employees, executives and non-employee
directors, and to promote the success of our business by
providing such individuals with an incentive for outstanding
performance to generate superior returns for our shareholders.
These awards include stock options, stock appreciation rights
and restricted share units, as well as other equity awards that
may qualify as performance-based compensation within
the meaning of Section 162(m) of the Internal Revenue Code
of 1986, as amended, which we refer to in this section as the
Code.
We have historically granted equity awards under various plans,
including our 2001 Equity Incentive Plan, our 2002 Interim
Incentive Plan, the Solectron Corporation 2002 Stock Plan and
our 2004 Award Plan for New Employees, which we refer to in this
section as the Prior Plans. If the 2010 Incentive Plan is
approved by our shareholders, no further awards will be made
under the Prior Plans and ordinary shares available for future
grant under such Prior Plans will become available for grant
under the 2010 Plan, including shares subject to outstanding
equity awards under such Prior Plans that become available for
future grant as a result of the forfeiture, expiration or
termination of such awards under the Prior Plans.
The following summary of certain features of the 2010 Plan is
not a complete description of all of the provisions of the 2010
Plan, and is qualified in its entirety by reference to the full
text of the 2010 Plan, which we have filed electronically and is
available on the SECs website at www.sec.gov. Such
text is not included in the printed version of this joint proxy
statement.
The affirmative vote of a majority of the votes cast on this
proposal is required to approve the adoption of the 2010 Plan.
If you are a beneficial shareholder, it is very important that
you provide your bank, broker or other agent with voting
restrictions as such agent may not vote your shares on this
proposal absent instructions from you.
The Board
recommends a vote FOR the resolution to approve
the adoption of the Flextronics International Ltd. 2010 Equity
Incentive Plan.
Summary
of the 2010 Plan
If the holders of a majority of the ordinary shares present and
voting on this proposal vote for the adoption of the 2010 Plan,
it will immediately become effective and no further grants will
be made under the Prior Plans. If our shareholders do not
approve the 2010 Plan, the plan will not become effective and
the Prior Plans, as they presently exist, will continue in
effect. The results of the vote will not affect any awards
outstanding under the Prior Plans at the time of the annual
general meeting.
Term of
the 2010 Plan
Unless terminated earlier, the 2010 Plan will continue until
May 26, 2020, 10 years after the date the 2010 Plan
was adopted by our Board of Directors.
-22-
Eligibility
All of our employees and directors and those of our subsidiaries
and affiliates, including officers, members of our Board of
Directors (including both employee and non-employee directors)
and directors of our subsidiaries and affiliates, are eligible
to be selected as award recipients under the 2010 Plan. Where
intended to comply with Section 162(m) of the Code, any one
participant in the 2010 Plan may not receive awards for more
than 6,000,000 ordinary shares (or if denominated in cash, an
amount equal to 6,000,000 multiplied by the average daily
trading price of the companys ordinary shares during the
preceding calendar year) in the aggregate per calendar year
under the 2010 Plan.
Awards under the 2010 Plan will generally only be exercisable or
payable only while the participant is an employee or director,
as applicable. However, the Compensation Committee may, in its
discretion and subject to the requirements of
Section 162(m) of the Code, provide that an award may be
paid or exercised following termination of service, a change of
control event, or the retirement, death or disability of the
participant.
As of May 27, 2010, eight executive officers, seven
non-employee directors and approximately 2,000 employees
were eligible to participate in the 2010 Plan.
Administration
The 2010 Plan is administered by the Compensation Committee of
our Board of Directors. The Compensation Committee has complete
discretion, subject to the provisions of the 2010 Plan, to
select each eligible individual to whom awards will be granted
and to determine the type and amount of awards to be granted,
the timing of such awards, and the other terms and conditions of
awards granted under the 2010 Plan. The Compensation Committee
also has the power to interpret the 2010 Plan and award
agreements, to establish rules and regulations relating to the
2010 Plan, and to make all other determinations necessary or
advisable for administering the 2010 Plan.
Available
Awards
The 2010 Plan authorizes the company to provide equity-based
compensation in the form of: (i) stock options, including
incentive stock options entitling the optionee to favorable tax
treatment under Section 422 of the Code;
(ii) restricted share units, which we sometimes refer to as
share bonus awards; (iii) stock appreciation rights;
(iv) performance share awards and performance share units;
and (v) other share-based awards that are not inconsistent
with the 2010 Plan. Each type of award is described below under
the section captioned Types of Awards Authorized Under the
2010 Plan. Each award granted under the 2010 Plan will be
evidenced by an award agreement that sets forth the terms,
conditions and limitations applicable to such award as
determined by the Compensation Committee in its discretion.
Any share-based awards based on performance measures shall have
a minimum performance period of one year and any share-based
awards with vesting based on the passage of time and continuous
service shall have a minimum total vesting period of at least
three years (which may be pro rata). Share-based awards granted
which are not in compliance with these requirements may not
exceed 5% of the total shares reserved for grant and issuance
under the 2010 Plan (as determined in accordance with the
paragraph above).
Shares
Available for Awards
Subject to approval by our shareholders, our Board of Directors,
upon the recommendation of the Compensation Committee, adopted
the 2010 Plan with a reserve of 10,000,000 ordinary shares. In
addition, all ordinary shares available for future grant under
our Prior Plans will become available for grant under the 2010
Plan, including shares subject to outstanding equity awards
under such Prior Plans that become available for future grant as
a result of the forfeiture, expiration or termination of such
awards under the Prior Plans. As of March 31, 2010, under
the Prior Plans: (i) 71,670,178 ordinary shares were
subject to outstanding stock options and unvested share bonus
awards under the Prior Plans; and
(ii) 51,457,779 shares were available for future grant
under the Prior Plans. Up to 68,000,000 ordinary shares may be
used to grant incentive stock options during the term of the
2010 Plan.
-23-
Valuation
The fair market value of our ordinary shares on any relevant
date under the 2010 Plan is the closing sales price per share on
that date on the NASDAQ Global Select Market. As of
May 26, 2010, the closing price of our ordinary shares on
the NASDAQ Global Select Market was $6.40 per share.
Share
Counting
Under the 2010 Plan, each ordinary share that is subject to a
stock option or stock appreciation right will count against the
aggregate 2010 Plan limit as one ordinary share. Each ordinary
share that is subject to a full-value award will
count against the aggregate 2010 Plan limit as 1.71 ordinary
shares. When we refer to a full-value award in this
section, we refer to any award other than a stock option, stock
appreciation right or other award for which the participant pays
a minimum of the fair market value of the ordinary shares, as
determined as of the date of grant.
To the extent that an Award terminates, expires, lapses for any
reason, or is settled in cash, any ordinary shares subject to
the award will again be available for the grant of an award
pursuant to the 2010 Plan. Each ordinary share that becomes
available for the grant of awards in this manner (including
awards under the Prior Plans) will be added back to the
aggregate 2010 Plan limit as one ordinary share if such ordinary
share was subject to an option or stock appreciation right, and
as 1.71 shares if such ordinary share was subject to a
full-value award.
Ordinary shares that are withheld to satisfy the grant or
exercise price or tax withholding obligations will be treated as
issued under the 2010 Plan and will be deducted from the number
of shares that may be issued under the 2010 Plan. Any ordinary
shares that are tendered by the participant (if and to the
extent permitted by applicable law) to satisfy the grant or
exercise price or tax withholding obligations pursuant to any
award under the 2010 Plan, however, will not be added back to
the aggregate number of shares that may be issued pursuant to
the plan.
Repricing Prohibited Without Shareholder Approval
Except in connection with an adjustment involving a corporate
transaction or change in capital structure, the repricing,
replacement or regranting of any previously granted award,
through cancellation or by lowering the exercise price or
purchase price of such award, will be prohibited unless the
shareholders of the company first approve such repricing,
replacement or regranting. Similarly, no underwater
option or stock appreciation right may be cancelled in exchange
for cash unless otherwise approved by the shareholders.
Types of Awards Authorized Under the 2010 Plan
Stock Options. Stock options may be granted that
entitle the optionee to purchase ordinary shares at a price set
forth in the applicable award agreement. Stock options may be
granted as non-qualified stock options or as incentive stock
options, or in any combination of the two. The exercise price
of any stock option may not be less than the fair market value
of an ordinary share on the date of grant, and the maximum term
for any stock option is 7 years (5 years, in the case
of grants to any non-employee member of our Board of
Directors). The Compensation Committee will determine the
methods by which the exercise price of a stock option may be
paid, which may include: (i) a payment in cash or by check;
(ii) a same day sale commitment from the
participant and a broker-dealer whereby the optionee irrevocably
elects to exercise the stock option and to sell a portion of the
ordinary shares so purchased to pay the exercise price, and
whereby the broker-dealer irrevocably commits upon receipt of
such ordinary shares to forward the exercise price directly to
the company; (iii) delivery of other property acceptable to
the Compensation Committee; or (iv) any combination of the
foregoing methods of payment.
Incentive stock options may only be granted to our employees and
those of our subsidiaries. In addition, in the case of any
incentive stock options granted to any individual who owns, as
of the date of grant, stock possessing more than 10 percent
of the total combined voting power of all classes of our shares,
the incentive stock option must have an exercise price that is
not less than 110% of the fair market value of an ordinary share
on the date of grant and the maximum term of any such incentive
stock option is 5 years. The
-24-
aggregate fair market value (determined as of the time the
option is granted) of all shares with respect to which incentive
stock options are first exercisable by a grantee in any calendar
year may not exceed $100,000 or such other limitation as imposed
by Section 422(d) of the Code.
Stock Appreciation Rights. A stock appreciation
right is a right, exercisable by the surrender of all or a
portion of the stock appreciation right, to receive the product
of: (i) the excess of (A) the fair market value of the
ordinary shares on the date the stock appreciation right is
exercised over (B) the grant price of the stock
appreciation right; and (ii) the number of ordinary shares
with respect to which the stock appreciation right is
exercised. The grant price per ordinary share subject to a
stock appreciation right may not be less than the fair market
value of an ordinary share on the date of grant. No stock
appreciation right may be exercisable more than 7 years
from the date of grant. A stock appreciation right may be paid
in cash, in ordinary shares (based on the fair market value of
such ordinary shares on the date the stock appreciation right is
exercised) or in a combination of cash and ordinary shares, as
determined by the Compensation Committee.
Restricted Share Units. A restricted share unit is a
type of contingent stock award sometimes referred to as
restricted stock units or share bonus awards. A restricted
share unit generally entitles the participant to receive a
number of our ordinary shares, or the value of such shares, in
connection with the satisfaction of vesting conditions
determined by the Compensation Committee, as specified in the
award agreement for the restricted share units. Restricted
share units may be denominated in unit equivalents of ordinary
shares
and/or units
of value including the dollar value of shares. At the time of
grant of the restricted share unit award, the Compensation
Committee will specify the date or dates on which the award will
become fully vested and non-forfeitable, and may specify any
other terms and conditions. In addition, the Compensation
Committee will specify the settlement date applicable to each
restricted share unit, which may not be earlier than the vesting
date or dates of the award. Settlement of restricted share units
may be made in ordinary shares or in cash (in an amount
reflecting the fair market value of the ordinary shares that
would have been issued) or any combination of cash and shares,
as determined by the Compensation Committee in its sole
discretion.
Performance Shares and Performance Share
Units. Performance shares represent the right to
receive ordinary shares of the company, the payment of which is
contingent upon achieving certain performance criteria
established by the Compensation Committee. Performance share
units represent a right to receive ordinary shares, or the value
of such shares, the payment of which is contingent upon
achieving certain performance criteria established by the
Compensation Committee. Performance share unit awards may be
denominated in unit equivalents of ordinary shares
and/or units
of value including the dollar value of shares. Performance
share awards and performance share units may be linked to any
one or more of the performance criteria specified in the 2010
Plan, or other specific performance criteria determined
appropriate by the Compensation Committee, in each case on a
specified date or dates or over any performance period
determined by the Compensation Committee. In addition, the
Compensation Committee will specify the settlement date
applicable to each performance share award or performance share
unit award, which may not be earlier than the vesting date or
dates of the award. Settlement of a performance share or a
performance share unit may be made in ordinary shares or in cash
(in an amount reflecting the fair market value of the ordinary
shares that would have been issued) or in any combination of
cash and shares, as determined by the Compensation Committee in
its sole discretion.
Subject to waiver in cases of death, disability or termination
of service, any share awards which vest based on performance
goals are subject to a minimum performance period of one year,
and any share awards with vesting based solely on the passage of
time and continued service to the company are subject to a
minimum service period of three years. However share awards
which do not satisfy these minimum performance or service
periods may be granted up to 5% of the total shares reserved and
available for issuance under the 2010 Plan.
Other Share-Based Awards. In addition to restricted
share units, performance share awards and performance share unit
awards, the Compensation Committee is authorized under the 2010
Plan to make any other award to an eligible individual that is
not inconsistent with the provisions of the 2010 Plan and that
by its terms involves or might involve the issuance of:
(i) ordinary shares; (ii) a right with an exercise or
conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of
-25-
performance criteria specified in the 2010 Plan or other
conditions; or (iii) any other security with the value
derived from the value of the ordinary shares.
Singapore law currently prohibits us from issuing restricted
stock or restricted share awards (i.e. awards involving the
immediate transfer by the company to a participant of ownership
of a specified number of ordinary shares of the company, which
are subject to restrictions on transfer and may be forfeited
prior to vesting) and we do not intend to issue any such awards
at this time. However, if there is a change in Singapore law or
other development that would permit us to grant restricted share
awards, the 2010 Plan would provide us with the flexibility to
do so.
Section 162(m)
of the Code
The 2010 Plan is designed to allow the Compensation Committee to
grant awards that satisfy the requirements for the
performance-based compensation exclusion from the deduction
limitations under Section 162(m) of the Code.
Section 162(m) of the Code generally limits the
deductibility for federal income tax purposes of annual
compensation paid to a companys Chief Executive Officer
and three most highly compensated executive officers other than
the Chief Executive Officer and the Chief Financial Officer,
which officers we refer to as covered executives, to
$1 million per covered executive in a taxable year.
However, qualified performance-based compensation does not count
towards the $1 million limit.
The Board and the Compensation Committee believe that it is in
our interests and the interests of our shareholders to maintain
an equity compensation plan under which certain compensation
awards made to our covered executives can qualify for
deductibility for federal income tax purposes. Accordingly, the
2010 Plan has been structured in a manner such that certain
awards under it can satisfy the requirements for the
performance-based compensation exclusion from the deduction
limitations under Section 162(m) of the Code. In order to
allow for certain awards to satisfy such requirements, the 2010
Plan specifies performance measures and other material terms
that must be approved by our shareholders. Approval of the 2010
Plan by the required vote of our shareholders, as described
above, is intended to constitute such approval.
Grants of certain performance-based compensation will be subject
to the attainment of one or more specified performance goals
over a specified period of time of not less than one year. We
refer to this time period as a performance period. The
performance goals will be based upon certain performance
criteria selected by the Compensation Committee, as described
below under the section captioned Performance
Measures.
To the extent necessary to comply with the applicable provisions
of Section 162(m)(4)(C) of the Code, when granting awards
intended to qualify as performance-based compensation, the
Compensation Committee will, in writing: (i) designate one
or more covered employees to whom such awards may be made;
(ii) select the performance criteria applicable to the
performance period; (iii) establish the performance goals,
and amount of such awards, as applicable, which may be earned
for the performance period; and (iv) specify the
relationship between the performance criteria and the
performance goals and the amounts of such awards that may be
earned by each covered employee for the performance period. To
the extent required by Section 162(m)(4)(C) of the Code,
the Committee shall establish the performance criteria and
performance goals no later than 90 days following the
commencement of any performance period in question or any other
designated performance period (or such other time as may be
required or permitted by Section 162(m) of the Code).
Following the completion of the performance period, the
Compensation Committee will certify in writing whether the
applicable performance goals have been achieved for the
performance period. In determining the amount earned by a
covered employee, the Compensation Committee will have the right
to reduce or eliminate (but not to increase) the amount payable
at a given level of performance to take into account additional
factors that it may deem relevant to the assessment of
individual or corporate performance for the performance period.
Furthermore, a participant shall be eligible to receive payment
pursuant to a performance-based award for a performance period
only if the performance goals for such period are achieved.
-26-
Performance
Measures
In granting awards that are contingent upon the achievement of
certain performance goals, including awards intended to qualify
as qualified performance-based compensation under
Section 162(m) of the Code, the Compensation Committee may
base a performance goal on one or more of the following
performance criteria, which may be applied to the performance of
the company or any of its affiliates, or any business unit of
the company or any of its affiliates:
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net revenue
and/or net
revenue growth;
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earnings before income taxes and amortization
and/or
earnings before income taxes and amortization growth;
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operating income
and/or
operating income growth;
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|
net income
and/or net
income growth;
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|
earnings per share
and/or
earnings per share growth;
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|
total shareholder return
and/or total
shareholder return growth;
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return on equity;
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operating cash flow;
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|
free cash flow (operating cash flow minus net capital
expenditures);
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SG&A expense;
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|
inventory turns or other similar working capital measures;
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economic value added; and
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return on invested capital.
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Performance criteria may be computed on an absolute basis or
relative to an index (such as the S&P 500 Index) or to a
specified peer group of companies as determined by the
Compensation Committee at the time awards are granted. In
addition, to the extent consistent with Section 162(m) of
the Code, performance criteria may be computed under generally
accepted accounting principles (GAAP), International Financial
Reporting Standards (IFRS), or on an adjusted basis to exclude
any one or more of the following: stock-based compensation
expense, restructuring charges, non-cash convertible interest
expense, distressed customer charges, intangible amortization,
impairment charges and other charges as may be determined by the
Compensation Committee at the time awards are granted. In
addition, the Compensation Committee may, to the extent
consistent with, and within the time prescribed by,
Section 162(m) of the Code, appropriately adjust or modify
the calculation of performance goals for any performance period
in order to prevent the dilution or enlargement of rights of
participants in certain circumstances specified in the 2010
Plan. In the case of awards that are not intended to qualify as
qualified performance-based compensation under
Section 162(m) of the Code, the above list of performance
criteria is non-exclusive and the Compensation Committee may
select additional performance criteria in addition to those
listed above.
Amendment
and Termination
Our Board of Directors may at any time amend or modify the 2010
Plan in any or all respects, except that (i) any such
amendment or modification may not adversely affect the rights of
any holder of an award previously granted under the 2010 Plan
unless such holder consents and (ii) grants to non-employee
directors may not be amended at intervals more frequently than
once every six months, other than to the extent necessary to
comply with applicable U.S. income tax laws and
regulations. The Board may terminate the
-27-
2010 Plan at any time. However, without the approval of our
shareholders and except as described below under
Adjustments, the Board may not:
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amend the 2010 Plan to materially increase the maximum number of
ordinary shares issuable under the 2010 Plan or the maximum
number of ordinary shares for which any plan participant may be
granted awards;
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materially modify the eligibility requirements for participation
in the 2010 Plan; or
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|
materially increase the benefits accruing to participants in the
2010 Plan.
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Adjustments
The Compensation Committee shall make certain adjustments to the
2010 Plan and to the outstanding awards under the 2010 Plan in
the event of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares, spin-off or other
change affecting the outstanding ordinary shares as a class
without the companys receipt of consideration. In the
event of such a change, appropriate adjustments will be made to:
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the maximum number
and/or class
of securities issuable under the 2010 Plan;
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|
the maximum number
and/or class
of securities for which any participant may be granted awards
under the terms of the 2010 Plan or that may be granted
generally under the terms of the 2010 Plan; and
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the number
and/or class
of securities and price per ordinary share in effect under each
outstanding award.
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Any such adjustments to the outstanding awards will generally be
effected in a manner as to preclude the enlargement or dilution
of rights and benefits under such awards. However, in no event
will fractions of an ordinary share be issued. Rather, any
otherwise payable fraction of any ordinary share will be
replaced by a cash payment equal to the fair market value of
such fraction.
Acceleration
Unless otherwise provided in the applicable award agreement or
other agreement between the company and the participant, in the
event of a change of control of the company (as defined in the
2010 Plan) in which the participants awards are not
converted, assumed, or replaced by a successor or survivor
corporation, or a parent or subsidiary thereof, then such awards
will become fully exercisable and all forfeiture restrictions on
such awards will lapse immediately prior to the change of
control and, following the consummation of such a change of
control, all such awards will terminate and cease to be
outstanding.
Where awards are assumed or continued after a change of control,
the Compensation Committee may provide that one or more awards
will automatically accelerate upon an involuntary termination of
service within a designated period (not to exceed eighteen
(18) months) following the effective date of such change of
control. If the Compensation Committee so determines, any such
award will, immediately upon an involuntary termination of
service following a change of control, become fully exercisable
and all forfeiture restrictions on such award will lapse.
Compliance
with Section 409A of the Internal Revenue Code
To the extent applicable, it is intended that the 2010 Plan and
any grants made under the 2010 Plan will comply with or be
exempt from the provisions of Section 409A of the Code, so
that the income inclusion provisions of Section 409A(a)(1)
of the Code do not apply to the participants. The 2010 Plan and
any grants made under the 2010 Plan will be administered and
interpreted in a manner consistent with this intent.
-28-
Transferability
In general, awards granted under the 2010 Plan may not be
transferred in any manner other than by will or by the laws of
descent and distribution. Awards may be transferred to family
members through a gift or domestic relations order. Subject to
applicable laws, certain optionees who reside outside of the
United States and Singapore may assign their awards to financial
institutions located outside of the United States and Singapore.
Withholding
Taxes
The company or any affiliate of the company, as appropriate, may
deduct or withhold, or require a participant to remit to the
company, an amount sufficient to satisfy U.S. federal,
state and local taxes and any taxes imposed by jurisdictions
outside of the United States (including income tax, social
insurance contributions, payment on account and any other taxes
that may be due) required by law to be withheld with respect to
any taxable event concerning a participant arising as a result
of the 2010 Plan. In addition, the company or any affiliate of
the company may take any action as may be necessary in its
opinion to satisfy withholding obligations for the payment of
taxes by any means authorized by the Compensation Committee. No
ordinary shares will be delivered under the 2010 Plan to any
participant or other person until the participant or such other
person has made arrangements acceptable to the Compensation
Committee for the satisfaction of applicable tax obligations
arising as a result of awards made under the 2010 Plan.
U.S.
Federal Income Tax Consequences
The following is a general summary as of the date of this joint
proxy statement of the United States federal income tax
consequences to the company and the directors, officers and
employees participating in the 2010 Plan. Tax laws may change
and the federal, state and local tax consequences for any
participating employee will depend upon his or her individual
circumstances. In addition, the following discussion does not
purport to describe state or local income tax consequences in
the United States, nor tax consequences for participants who are
subject to tax in other countries. The following general
description does not constitute tax advice and should not be
relied upon as such. Each participating employee has been and
is encouraged to seek the advice of a qualified tax adviser
regarding the tax consequences of participation in the 2010
Plan.
Nonqualified Stock Options. A participant will
generally not recognize any taxable income upon the grant of a
nonqualified stock option and the company will not receive a
deduction at the time of such grant. Upon exercise of a
nonqualified stock option, the participant generally will
realize ordinary income in an amount equal to the excess of the
fair market value of the ordinary shares on the date of exercise
over the exercise price, and the company will generally be
allowed a deduction equal to the amount recognized by the
participant as ordinary income. The participants tax basis
in the shares received will be equal to the exercise price plus
the amount recognized as ordinary income. Upon a subsequent sale
of such shares, the participant will recognize capital gain or
loss.
Incentive Stock Options. No taxable income is
recognized by a participant at the time of grant of an incentive
stock option, and no taxable income is generally recognized at
the time the option is exercised. (However, the excess of the
fair market value of the ordinary shares received upon exercise
over the option exercise price is an item of tax preference
income which may be subject to the alternative minimum tax.)
Instead, the participant will recognize taxable income in the
year in which the acquired shares are sold or otherwise disposed
of. If the sale or other disposition is made after the
participant has held the shares for more than two years after
the option grant date and more than one year after the date on
which the shares are transferred to the participant (referred to
as a qualifying disposition) pursuant to the
options exercise, any gain or loss, generally measured by
the difference between the amount realized on the sale of shares
and the option exercise price, will be treated as long-term
capital gain or loss. However, if either of these two holding
period requirements is not satisfied (referred to as a
disqualifying disposition), then upon the
disqualifying disposition, the participant generally recognizes
ordinary income in the amount of the lesser of (i) the
difference between the fair market value of the shares at the
time of the options exercise and the options
exercise price, or (ii) the difference between the amount
realized on the sale and the options exercise price.
-29-
Any ordinary income recognized is added to the
participants basis for purposes of determining any
additional gain on the sale and any such additional gain will be
capital gain.
If the participant makes a disqualifying disposition of the
acquired shares, we may be entitled to a deduction from our
U.S. taxable income for the taxable year in which such
disposition occurs, equal to the amount of ordinary income the
participant recognizes. In no other instance will we be allowed
a deduction with respect to the participants disposition
of the acquired shares.
Stock Appreciation Rights. The grant of a stock
appreciation right will generally not create any tax
consequences for the participant or the company. Upon the
exercise of a stock appreciation right, the participant will
recognize ordinary income in an amount equal to the cash or fair
market value of the ordinary shares or the amount of cash
received from the exercise. The participants tax basis in
any ordinary shares received upon the exercise of the stock
appreciation right will be equal to the ordinary income
recognized with respect to the shares. Upon disposition of the
shares, the participant will recognize capital gain or loss
equal to the difference between the amount realized and his or
her basis in the shares. Upon the exercise of a stock
appreciation right, the company generally will be entitled to a
deduction in the amount of the compensation income recognized by
the participant.
Restricted Share Units, Performance Share Units and
Performance Share Awards. In general, a participant
will not recognize income with respect to restricted share unit
awards, performance share unit awards or performance share
awards until there is a settlement of the award. On that date,
the participant recognizes ordinary income in an amount equal to
the cash or fair market value of the ordinary shares received.
The participants tax basis in any shares received is the
amount included in his or her income, and the participants
holding period in the shares commences on the day after receipt
of the shares. Upon disposition of the shares, the participant
will recognize capital gain or loss equal to the difference
between the amount realized and his or her basis in the shares.
The Company will generally be entitled to a deduction equal to
the amount included in the participants ordinary income in
the year in which such amount is recognized by the participant.
Section 162(m). Any United States income tax
deductions that would otherwise be available to us may be
subject to a number of restrictions under the Code, including
Section 162(m), which, under guidance issued by the
Internal Revenue Service, can limit the deduction for
compensation paid to our Chief Executive Officer and our three
most highly compensated executive officers other than the Chief
Executive Officer and the Principal Financial Officer.
2010 Plan
New Benefits
The number of shares to be issued under the 2010 Plan to
participants in the plan, including eligible employees,
executive officers and non-employee directors of the company,
and the net values to be realized upon such issuances, are
discretionary, and therefore, not determinable.
-30-
EQUITY
COMPENSATION PLAN INFORMATION
As of March 31, 2010, we maintained (i) the 2001 Plan,
(ii) the 2002 Interim Incentive Plan, which we refer to as
the 2002 Plan, (iii) the 2004 Award Plan for New Employees,
which we refer to as the 2004 Plan, and (iv) the Solectron
Corporation 2002 Stock Plan, which we refer to as the Solectron
Plan. None of the 2004 Plan, the 2002 Plan or the Solectron
Plan have been approved by our shareholders. The following
table provides information about equity awards under all of
these equity incentive plans as of March 31, 2010.
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Number of Ordinary
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Number of Ordinary Shares
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Shares to
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Remaining Available for
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be Issued Upon Exercise
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Weighted-Average
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Future Issuance Under Equity
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of Outstanding Options
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Exercise Price of
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Compensation Plans
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and Vesting of Share
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Outstanding
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(Excluding Ordinary Shares
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Bonus Awards
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Options (1)
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Reflected in Column (a))
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Plan Category
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(a)
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(b)
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(c)
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Equity compensation plans approved by shareholders
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56,530,634 (2
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)
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|
$
|
7.00
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25,586,218 (3
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)
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Equity compensation plans not approved by
shareholders (4), (5), (6)
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15,139,544 (7
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)
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$
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7.90
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25,871,561 (8
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)
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Total
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71,670,178
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$
|
7.16
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51,457,779
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(1) |
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The weighted-average exercise price does not take into account
ordinary shares issuable upon the vesting of outstanding share
bonus awards, which have no exercise price. |
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(2) |
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Includes 5,165,095 ordinary shares issuable upon the vesting of
share bonus awards granted under the 2001 Plan. The remaining
balance consists of ordinary shares issuable upon the exercise
of outstanding stock options. Approximately 2.8 million
shares subject to share bonus awards are subject to performance
criteria which management of the company believes are not
probable of being achieved and these awards are not expected to
vest. |
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(3) |
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Consists of ordinary shares available for grant under the 2001
Plan and shares available under prior company plans and assumed
plans that were consolidated into the 2001 Plan. The 2001 Plan
provides for grants of up to 62.0 million ordinary shares,
plus ordinary shares issued or issuable pursuant to stock awards
available for grant as a result of the forfeiture, expiration or
termination of options granted under such consolidated plans (if
such ordinary shares are issued under such other stock options,
they will not become available under the 2001 Plan) and shares
that were available for grant under such plans at the time of
the consolidation of such plans into the 2001 Plan. |
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(4) |
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The 2004 Plan was established in October 2004 and, unless
earlier terminated by our Board of Directors, will continue
until October 21, 2014. The purpose of the 2004 Plan is to
provide incentives to attract, retain and motivate eligible
persons whose potential contributions are important to our
success by offering such persons an opportunity to participate
in our future performance through stock awards. Awards under
the 2004 Plan may be granted only to persons who: (a) were
not previously an employee or director of the company or
(b) have either (i) completed a period of bona
fide non-employment by the company of at least one year, or
(ii) are returning to service as an employee of the
company, after a period of bona fide non-employment of
less than one year due to our acquisition of such persons
employer; and then only as an incentive to such persons entering
into employment with us. We may grant nonqualified stock
options and share bonus awards under the 2004 Plan. The 2004
Plan provides for grants of up to 10.0 million shares. The
exercise price of options granted under the 2004 Plan is
determined by the Compensation Committee and may not be less
than the fair market value of the underlying stock on the date
of grant. Options granted under the 2004 Plan generally vest
over four years and generally expire seven or ten years from the
date of grant. Unvested options are forfeited upon termination
of employment. Share bonus awards generally vest in
installments over a |
-31-
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three- to five-year period and unvested share bonus awards are
also forfeited upon termination of employment. |
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(5) |
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Our 2002 Plan was adopted by our Board of Directors in May 2002
and, unless earlier terminated by our Board of Directors, will
continue until May 6, 2012. The adoption of the 2002 Plan
was necessitated by our internal growth, our multiple
acquisitions and the requirement to provide equity compensation
for employees consistent with competitors and peer companies.
The Board reserved an aggregate of 20.0 million ordinary
shares for issuance under the 2002 Plan. The 2002 Plan provides
for the grant of nonqualified stock options and share bonus
awards. Grants of awards to executives and non-employee
directors may not exceed 49% of the shares reserved for grant
under the plan. Options granted under the 2002 Plan generally
have an exercise price of not less than the fair market value of
the underlying ordinary shares on the date of grant. Options
granted under the 2002 Plan generally vest over four years and
generally expire either seven or ten years from the date of
grant. Unvested options are forfeited upon termination of
employment. Share bonus awards generally vest in installments
over a three- to five-year period and unvested share bonus
awards are also forfeited upon termination of employment. |
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(6) |
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In connection with the acquisition of Solectron Corporation on
October 1, 2007, we assumed the Solectron Plan, including
all outstanding options to purchase Solectron Corporation common
stock with exercise prices equal to, or less than, $5.00 per
share. Each assumed option was converted into an option to
acquire our ordinary shares at the applicable exchange rate of
0.345. As a result, we assumed approximately 7.4 million
vested and unvested options with exercise prices ranging from
between $5.45 and $14.41 per ordinary share. We may grant
incentive stock options and nonqualified stock options under the
SLR Plan. Options granted under the SLR Plan generally have an
exercise price of not less than the fair value of the underlying
ordinary shares on the date of grant. Such options generally
vest over four years and generally expire either seven or ten
years from the date of grant. Unvested options are forfeited
upon termination of employment. |
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(7) |
|
Includes 3,636,514 ordinary shares issuable upon the vesting of
share bonus awards granted under the 2002 Plan and the 2004
Plan. The remaining balance consists of ordinary shares
issuable upon the exercise of outstanding stock options. |
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(8) |
|
As of March 31, 2010, approximately 2.4 million
ordinary shares remained available for grant under the 2002 Plan
and approximately 8.2 million ordinary shares remained
available for grant under the 2004 Plan. There were
approximately 15.3 million shares available for grant under
the SLR Plan. |
-32-
PART III
PROPOSAL TO BE CONSIDERED AT
THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS
ORDINARY
RESOLUTION TO RENEW THE SHARE PURCHASE MANDATE
Our purchases or acquisitions of our ordinary shares must be
made in accordance with, and in the manner prescribed by, the
Companies Act, the applicable listing rules of Nasdaq and such
other laws and regulations as may from time to time be
applicable.
Singapore law requires that we obtain shareholder approval of a
general and unconditional share purchase mandate
given to our directors if we wish to purchase or otherwise
acquire our ordinary shares. This general and unconditional
mandate is referred to in this joint proxy statement as the
Share Purchase Mandate, and it allows our directors to exercise
all of the companys powers to purchase or otherwise
acquire our issued ordinary shares on the terms of the Share
Purchase Mandate.
Although our shareholders approved a renewal of the Share
Purchase Mandate at the 2009 annual general meeting. The Share
Purchase Mandate renewed at the 2009 annual general meeting will
expire on the date of the 2010 annual general meeting.
Accordingly, we are submitting this proposal to seek approval
from our shareholders at the extraordinary general meeting for
another renewal of the Share Purchase Mandate. On May 26,
2010, the Board authorized the repurchase of our ordinary shares
in an aggregate amount up to $200 million. Until the 2010
annual general meeting, any repurchases would be made under the
Share Purchase Mandate renewed at the 2009 annual general
meeting. Commencing on the date of the 2010 annual general
meeting, any repurchases may only be made if the shareholders
approve the renewal of the Share Purchase Mandate at the
extraordinary general meeting. The share purchase program does
not obligate the company to repurchase any specific number of
shares and may be suspended or terminated at any time without
prior notice.
If renewed by shareholders at the extraordinary general meeting,
the authority conferred by the Share Purchase Mandate will,
unless varied or revoked by our shareholders at a general
meeting, continue in force until the earlier of the date of the
2011 annual general meeting or the date by which the 2011 annual
general meeting is required by law to be held.
The authority and limitations placed on our share purchases or
acquisitions under the proposed Share Purchase Mandate, if
renewed at the extraordinary general meeting, are summarized
below.
Limit on
Allowed Purchases
We may only purchase or acquire ordinary shares that are issued
and fully paid up. We may not purchase or acquire more than 10%
of the total number of issued ordinary shares outstanding at the
date of the extraordinary general meeting or the date of our
last annual general meeting of shareholders, whichever is
greater. Any of our ordinary shares which are held as treasury
shares will be disregarded for purposes of computing this 10%
limitation.
Purely for illustrative purposes, on the basis of 814,622,993
issued ordinary shares outstanding as of May 25, 2010, and
assuming that no additional ordinary shares are issued on or
prior to the 2010 annual general meeting, we would be able to
purchase not more than 81,462,299 issued ordinary shares
pursuant to the proposed renewal of the Share Purchase Mandate.
All ordinary shares purchased by us following the date of our
last annual general meeting of shareholders (that is, the annual
general meeting that precedes the meeting at which the
mandate is renewed) are subject to this 10% limitation. For
example, if we sought approval for the renewal of the Share
Purchase Mandate at our 2010 annual general meeting of
shareholders, we would have to reduce the number of new shares
that we could repurchase by the number of shares purchased by us
at any time following the date of our 2009 annual general
meeting.
We are holding the extraordinary general meeting immediately
following our 2010 annual general meeting so that the applicable
date of our last annual general meeting for purposes of the
Share Purchase Mandate will be the date of the 2010 annual
general meeting (that is, the same date as the extraordinary
-33-
general meeting), rather than the date of the 2009 annual
general meeting. We believe that this approach will provide our
Board with greater flexibility in the number of shares that the
company may repurchase.
Purchases or acquisitions of our ordinary shares pursuant to the
Share Purchase Mandate also are subject to limitations under the
Indenture governing our
61/4% Senior
Subordinated Notes due 2014. Under the Indenture, as amended,
the aggregate amount of purchases or acquisitions generally is
limited to the sum of (A) 50% of our cumulative
consolidated net income (as calculated under the Indenture) for
the period commencing on April 1, 2009, plus (B) 100%
of the fair market value received by us from the issuance or
sale of our ordinary shares since April 1, 2009. In
addition, we generally are permitted to make purchases or
acquisitions of our ordinary shares under the Indenture in an
aggregate amount of up to $250 million.
Duration
of Share Purchase Mandate
Purchases or acquisitions of ordinary shares may be made, at any
time and from time to time, on and from the date of approval of
the Share Purchase Mandate up to the earlier of:
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the date on which our next annual general meeting is held or
required by law to be held; or
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the date on which the authority conferred by the Share Purchase
Mandate is revoked or varied by our shareholders at a general
meeting.
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Manner of
Purchases or Acquisitions of Ordinary Shares
Purchases or acquisitions of ordinary shares may be made by way
of:
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market purchases on the NASDAQ Global Select Market or any other
stock exchange on which our ordinary shares may for the time
being be listed and quoted, through one or more duly licensed
dealers appointed by us for that purpose; and/or
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off-market purchases (if effected other than on the NASDAQ
Global Select Market or, as the case may be, any other stock
exchange on which our ordinary shares may for the time being be
listed and quoted), in accordance with an equal access scheme as
prescribed by the Companies Act.
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If we decide to purchase or acquire our ordinary shares in
accordance with an equal access scheme, our directors may impose
any terms and conditions as they see fit and as are in our
interests, so long as the terms are consistent with the Share
Purchase Mandate, the applicable rules of Nasdaq, the provisions
of the Companies Act and other applicable laws. In addition, an
equal access scheme must satisfy all of the following conditions:
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offers for the purchase or acquisition of ordinary shares must
be made to every person who holds ordinary shares to purchase or
acquire the same percentage of their ordinary shares;
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all of those persons must be given a reasonable opportunity to
accept the offers made; and
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the terms of all of the offers must be the same (except
differences in consideration that result from offers relating to
ordinary shares with different accrued dividend entitlements and
differences in the offers solely to ensure that each person is
left with a whole number of ordinary shares).
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Purchase
Price
The purchase price (excluding brokerage commission, applicable
goods and services tax and other related expenses of the
purchase or acquisition) to be paid for each ordinary share will
be determined by our directors. The maximum purchase price to
be paid for the ordinary shares as determined by our directors
must not exceed:
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in the case of a market purchase, the highest independent bid or
the last independent transaction price, whichever is higher, of
our ordinary shares quoted or reported on the NASDAQ Global
Select Market or, as the case may be, any other stock exchange
on which our ordinary shares may for the time being be listed
and quoted, or shall not exceed any volume weighted average
price, or other price determined under any pricing mechanism,
permitted under SEC
Rule 10b-18,
at the time the purchase is effected; and
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in the case of an off-market purchase pursuant to an equal
access scheme, 150% of the Prior Day Close Price of
our ordinary shares, which means the closing price of an
ordinary share as quoted on the NASDAQ Global Select Market or,
as the case may be, any other stock exchange on which our
ordinary shares may for the time being be listed and quoted, on
the day immediately preceding the date on which we announce our
intention to make an offer for the purchase or acquisition of
our ordinary shares from holders of our ordinary shares, stating
therein the purchase price (which shall not be more than the
maximum purchase price calculated on the foregoing basis) for
each ordinary share and the relevant terms of the equal access
scheme for effecting the off-market purchase.
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Treasury
Shares
Under the Companies Act, ordinary shares purchased or acquired
by us may be held as treasury shares. Some of the provisions on
treasury shares under the Companies Act are summarized below.
Maximum Holdings. The number of ordinary shares held
as treasury shares may not at any time exceed 10% of the total
number of issued ordinary shares.
Voting and Other Rights. We may not exercise any
right in respect of treasury shares, including any right to
attend or vote at meetings and, for the purposes of the
Companies Act, we shall be treated as having no right to vote
and the treasury shares shall be treated as having no voting
rights. In addition, no dividend may be paid, and no other
distribution of our assets may be made, to the company in
respect of treasury shares, other than the allotment of ordinary
shares as fully paid bonus shares. A subdivision or
consolidation of any treasury share into treasury shares of a
smaller amount is also allowed so long as the total value of the
treasury shares after the subdivision or consolidation is the
same as before the subdivision or consolidation, respectively.
Disposal and Cancellation. Where ordinary shares are
held as treasury shares, we may at any time:
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sell the treasury shares for cash;
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transfer the treasury shares for the purposes of or pursuant to
an employees share scheme;
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transfer the treasury shares as consideration for the
acquisition of shares in or assets of another company or assets
of a person;
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cancel the treasury shares; or
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sell, transfer or otherwise use the treasury shares for such
other purposes as may be prescribed by the Minister for Finance
of Singapore.
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Sources
of Funds
Only funds legally available for purchasing or acquiring
ordinary shares in accordance with our Articles of Association
and the applicable laws of Singapore shall be used. We intend
to use our internal sources of funds
and/or
borrowed funds to finance any purchase or acquisition of our
ordinary shares. Our directors do not propose to exercise the
Share Purchase Mandate in a manner and to such an extent that
would materially affect our working capital requirements.
The Companies Act permits us to purchase and acquire our
ordinary shares out of our capital or profits. Acquisitions or
purchases made out of capital are permissible only so long as we
are solvent for the purposes of section 76F(4) of the
Companies Act. A company is solvent if (a) it is able to
pay its debts in full at the time of the payment made in
consideration of the purchase or acquisition (or the acquisition
of any right with respect to the purchase or acquisition) of
ordinary shares in accordance with the provisions of the
Companies Act and will be able to pay its debts as they fall due
in the normal course of business during the
12-month
period immediately following the date of the payment; and
(b) the value of the companys assets is not less than
the value of its liabilities (including contingent liabilities)
and will not, after giving effect to the proposed purchase or
acquisition, become less than the value of its liabilities
(including contingent liabilities).
-35-
Status of
Purchased or Acquired Ordinary Shares
Any ordinary share that we purchase or acquire will be deemed
cancelled immediately on purchase or acquisition, and all rights
and privileges attached to such ordinary share will expire on
cancellation (unless such ordinary share is held by us as a
treasury share). The total number of issued shares will be
diminished by the number of ordinary shares purchased or
acquired by us and which are not held by us as treasury shares.
We will cancel and destroy certificates in respect of purchased
or acquired ordinary shares as soon as reasonably practicable
following settlement of any purchase or acquisition of such
ordinary shares.
Financial
Effects
Our net tangible assets and the consolidated net tangible assets
of our subsidiaries will be reduced by the purchase price of any
ordinary shares purchased or acquired and cancelled or held as
treasury shares. We do not anticipate that the purchase or
acquisition of our ordinary shares in accordance with the Share
Purchase Mandate would have a material impact on our
consolidated results of operations, financial condition and cash
flows.
The financial effects on us and our group (including our
subsidiaries) arising from purchases or acquisitions of ordinary
shares which may be made pursuant to the Share Purchase Mandate
will depend on, among other things, whether the ordinary shares
are purchased or acquired out of our profits
and/or
capital, the number of ordinary shares purchased or acquired,
the price paid for the ordinary shares and whether the ordinary
shares purchased or acquired are held in treasury or cancelled.
As described in more detail above, our purchases or acquisitions
of our ordinary shares may be made out of our profits
and/or our
capital. Where the consideration paid by us for the purchase or
acquisition of ordinary shares is made out of our profits, such
consideration (excluding brokerage commission, goods and
services tax and other related expenses) will correspondingly
reduce the amount available for the distribution of cash
dividends by us. Where the consideration that we pay for the
purchase or acquisition of ordinary shares is made out of our
capital, the amount available for the distribution of cash
dividends by us will not be reduced. To date, we have not
declared any cash dividends on our ordinary shares and have no
current plans to pay cash dividends in the foreseeable future.
Rationale
for the Share Purchase Mandate
We believe that a renewal of the Share Purchase Mandate at the
extraordinary general meeting will benefit our shareholders by
providing our directors with appropriate flexibility to
repurchase ordinary shares if the directors believe that such
repurchases would be in the best interests of our shareholders.
Our decision to repurchase our ordinary shares from time to time
will depend on our continuing assessment of then-current market
conditions, our need to use available cash to finance
acquisitions and other strategic transactions, the level of our
debt and the terms and availability of financing.
Take-Over
Implications
If, as a result of our purchase or acquisition of our issued
ordinary shares, a shareholders proportionate interest in
the companys voting capital increases, such increase will
be treated as an acquisition for the purposes of The Singapore
Code on Take-overs and Mergers. If such increase results in a
change of effective control, or, as a result of such increase, a
shareholder or a group of shareholders acting in concert obtains
or consolidates effective control of the company, such
shareholder or group of shareholders acting in concert could
become obliged to make a take-over offer for the company under
Rule 14 of The Singapore Code on Take-overs and Mergers.
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The circumstances under which shareholders (including directors
or a group of shareholders acting together) will incur an
obligation to make a take-over offer are set forth in
Rule 14 of The Singapore Code on Take-overs and Mergers,
Appendix 2. The effect of Appendix 2 is that, unless
exempted, shareholders will incur an obligation to make a
take-over offer under Rule 14 if, as a result of the
company purchasing or acquiring our issued ordinary shares, the
voting rights of such shareholders would increase to 30% or
more, or if such shareholders hold between 30% and 50% of our
voting rights, the voting rights of such shareholders would
increase by more than 1% in any period of six months.
Shareholders who are in doubt as to their obligations, if any,
to make a mandatory take-over offer under The Singapore Code on
Take-overs and Mergers as a result of any share purchase by us
should consult the Securities Industry Council of Singapore
and/or their
professional advisers at the earliest opportunity.
The Board
recommends a vote FOR the resolution
to approve the proposed renewal of the Share Purchase
Mandate.
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PART IV
ADDITIONAL INFORMATION
EXECUTIVE
OFFICERS
The names, ages and positions of our executive officers as of
May 27, 2010 are as follows:
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Name
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Age
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Position
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Michael M. McNamara
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Chief Executive Officer
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Paul Read
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44
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Chief Financial Officer
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Francois Barbier
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51
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President, Global Operations
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Sean P. Burke
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48
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President, Computing
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Michael J. Clarke
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55
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President, Infrastructure
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Christopher Collier
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Senior Vice President, Finance
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Carrie L. Schiff
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44
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Senior Vice President and General Counsel
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Werner Widmann
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58
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President, Multek
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Michael M. McNamara. Mr. McNamara has served as
our Chief Executive Officer since January 2006, and as a member
of our Board of Directors since October 2005. Prior to his
promotion, Mr. McNamara served as our Chief Operating
Officer from January 2002 through January 2006, as President,
Americas Operations from April 1997 to December 2001, and as
Vice President, North American Operations from April 1994 to
April 1997. Mr. McNamara received a B.S. from the
University of Cincinnati and an M.B.A. from Santa Clara
University. Mr. McNamara serves on the Advisory Board of
Tsinghua University School of Economics and Management.
Paul Read. Mr. Read has served as our Chief
Financial Officer since June 30, 2008. Prior to his
promotion, Mr. Read served as Executive Vice President of
Finance for Flextronics Worldwide Operations since October 2005,
as Senior Vice President of Finance for Flextronics Worldwide
Operations from February 2001 to October 2005, and as Vice
President, Finance of Flextronics Americas Operations from
August 1997 to February 2001. Mr. Read is a member of the
Chartered Institute of Management Accountants.
Francois Barbier. Mr. Barbier has served as our
President, Global Operations since June 2008. Prior to his
appointment as President, Global Operations, Mr. Barbier
was President of Special Business Solutions and has held a
number of executive management roles in Flextronics Europe.
Prior to joining Flextronics in 2001, Mr. Barbier was Vice
President of Alcatel Mobile Phone Division. Mr. Barbier
holds an Engineering degree in Production from Lyceé
Couffignal in Strasbourg.
Sean P. Burke. Mr. Burke has served as our
President, Computing since October 16, 2005. Prior to
joining us, Mr. Burke was the Executive Vice President of
Iomega Corporation from January 2003 through September 2005.
Preceding Iomega Corporation, Mr. Burke held a number of
executive positions at Dell, Inc., Compaq Computer Corporation
and Hewlett-Packard Company. Mr. Burke received a B.B.A.
degree from the University of North Texas.
Michael J. Clarke. Mr. Clarke has served as
President of FlexInfrastructure since January 2006. Prior to
joining us, Mr. Clarke served as a President and General
Manager of Sanmina-SCI Corporation from October 1999 to December
2005. Previously, Mr. Clarke has held senior positions with
international companies including Devtek Corporation, Hawker
Siddeley and Cementation Africa. Mr. Clarke has over
25 years of Senior Executive, business development and
hands-on operational experience managing global companies in
major industries including Aerospace and Defense, Automotive and
Industrial. Mr. Clarke was educated as a Mechanical
Engineer at Bradford Polytechnic, England, with enhanced
professional development programs from University of Western
Ontario, Canada and Columbia University, USA.
Christopher Collier. Mr. Collier, our Principal
Accounting Officer since May 1, 2007, has served as our
Senior Vice President, Finance since December 2004. Prior to
his appointment as Senior Vice President, Finance in 2004,
Mr. Collier served as Vice President, Finance and Corporate
Controller since he joined us in April 2000. Mr. Collier
is a certified public accountant and he received a B.S. in
Accounting from State University of New York at Buffalo.
-38-
Carrie L. Schiff. Ms. Schiff has served as our
Senior Vice President and General Counsel since June 1,
2006. Prior to her appointment as Senior Vice President and
General Counsel, Ms. Schiff served as Vice President,
General Counsel from February 1, 2004 to June 1, 2006
and as Associate General Counsel from July 2001 through January
2004. Prior to joining us, Ms. Schiff was the Senior Vice
President, Corporate Development of USA.Net, Inc., from April
1999 until June 2001. Preceding USA.Net, Inc., Ms. Schiff
was a partner with the law firm of Cooley Godward.
Ms. Schiff received an A.B. from the University of Chicago
and her law degree from the University of California, Los
Angeles.
Werner Widmann. Mr. Widmann has served as
President, Multek since January 2004. Prior to his appointment,
he served as General Manager of Multek Germany beginning in
October 2002. Prior to joining Multek, Mr. Widmann was
Managing Director of Inboard from 1999 to 2002 and held various
technical and managerial positions with STP, Inboard-SSGI,
Siemens AG and IBM Sindelfingen throughout his
33 year-career in the PCB industry. Mr. Widmann
received his degree in mechanical/electrical engineering from
the University for Applied Sciences (Fachhochschule), Karlsruhe.
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 SEC, nor shall such information be incorporated by reference
into any filings under the Securities Act of 1933, as amended,
or under the Securities Exchange Act of 1934, as amended (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 the Board of Directors of the
company has reviewed and discussed with management the
Compensation Discussion and Analysis that follows this report.
Based on this review and discussion, the Committee recommended
to the Board of Directors that the Compensation Discussion and
Analysis be included in the companys proxy statement for
the 2010 annual general meeting of shareholders.
Submitted by the Compensation Committee of the Board of
Directors:
James A. Davidson
Daniel H. Schulman
COMPENSATION
DISCUSSION AND ANALYSIS
In this section, we discuss the material elements of our
compensation programs and policies, including program objectives
and reasons why we pay each element 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 the named executive officers or
NEOs. This discussion focuses principally on compensation and
practices relating to the named executive officers for our 2010
fiscal year. In addition, we discuss certain compensation
decisions made in fiscal 2009 that impacted our compensation
programs in fiscal 2010, as well as certain changes in our
compensation programs and policies that we have implemented
beginning with our 2011 fiscal year:
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Name
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Position
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Michael M. McNamara
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Chief Executive Officer
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Paul Read
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Chief Financial Officer
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Michael J. Clarke
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President, Infrastructure
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Francois Barbier
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President, Global Operations
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Werner Widmann
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President, Multek
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-39-
Executive
Summary
In response to the global economic crisis that continued through
the beginning of fiscal 2010, we froze base salaries, maintained
target incentive bonus levels and did not make any equity grants
in fiscal 2010. As a result, total target direct compensation
for all of our named executive officers for fiscal 2010 was
substantially below the 25th percentile of our peer
companies.
Based on strong operational performance in fiscal 2010, we
exceeded the target payout levels for various performance
metrics under our fiscal 2010 incentive bonus plan, including
adjusted operating profit percentage, return on invested capital
(ROIC), adjusted earnings per share (EPS) and free cash flow, as
well as target payout levels for performance metrics applicable
for business unit executives, with the exception of our Multek
business unit. As a result, incentive bonus payouts were 157.0%
of target for Messrs. McNamara and Read; 155.4% of target
for Mr. Clarke; 126.0% of target for Mr. Barbier; and
33.8% of target for Mr. Widmann.
For fiscal 2011, we have adopted various changes in our
compensation programs in order to better align our programs with
best practices. These include the following:
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base salary is now targeted at the
50th
percentile of peer companies (previously, we targeted the
75th
percentile);
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total direct compensation, comprised of base salary and short
and long-term incentive compensation, is now targeted at between
the 60th
and 65th
percentiles of peer companies (previously, we targeted the
75th
percentile);
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long-term incentive compensation will be comprised of
performance-based and service-based restricted stock units and
performance-funded contributions under a new deferred
compensation plan;
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we will use the companys total shareholder return relative
to the Standard and Poors 500 Index as the performance
measure for our performance-based restricted stock units;
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annual contributions under our deferred compensation plan will
be dependent on the companys performance and will only be
made if certain company performance metrics are achieved (using
the same performance metric categories as we use under our
incentive bonus plan). Any contributions will cliff vest four
years from the contribution date. Previously, contributions
were service-based;
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payout levels will be capped under both our short and long-term
incentive compensation arrangements;
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we have adopted stock ownership guidelines for our executives
and other senior officers; and
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we have adopted an incentive compensation recoupment policy.
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Compensation
Committee
The Compensation Committee of our Board of Directors (referred
to in this discussion as the Committee) periodically 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 practices. Based on its review and
assessment, the Committee from time to time recommends changes
in our compensation programs to our Board. The Committee is
responsible for recommending to our Board the compensation of
our Chief Executive Officer and all other executive officers.
The Committee also oversees managements decisions
concerning the compensation of other company officers,
administers our equity compensation plans, and evaluates the
effectiveness of our overall executive compensation programs.
-40-
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 Radford, an Aon Consulting Company (referred
to in this discussion as Radford), as its independent adviser
for certain executive compensation matters. Radford was
retained by the Committee to provide an independent review of
the companys executive compensation programs, including an
analysis of both the competitive market and the design of the
programs. More specifically, Radford furnished the Committee
with reports on peer company practices relating to the following
matters: short and long-term compensation program design; annual
share utilization and shareowner dilution levels resulting from
equity plans; executive stock ownership and retention values;
stock ownership guidelines; and incentive compensation
recoupment policies. As part of its reports to the Committee,
Radford 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 senior officers. Radford also assisted the
company with its risk assessment of our compensation programs.
Based on the Committees decision to freeze base salaries,
to maintain target incentive bonus levels and not to award any
equity grants in fiscal 2010, the Committee did not ask Radford
to prepare peer company benchmarking data in connection with
fiscal 2010 compensation decisions, other than limited total
target cash compensation data for the CEO and CFO positions.
Radford is owned by Aon Corporation, a multi-national,
multi-services insurance and consulting firm. For a discussion
of amounts paid to Radford for executive and director
compensation consulting services and amounts paid to Aon
Corporation and its affiliates for non-executive and
non-director
compensation consulting services, please see
Compensation Committee Relationship with
Compensation Consultant on page 12. The
Committee has determined that the provision by Aon of services
unrelated to executive and director compensation matters in
fiscal year 2010 was compatible with maintaining the objectivity
of Radford in its role as compensation consultant to the
Committee and that the consulting advice it received from
Radford was not influenced by Aons other relationships
with the company. The Committee has retained Radford as its
independent compensation consultant for fiscal year 2011 and
expects that it will continue to retain an independent
compensation consultant on future executive compensation matters.
Compensation
Philosophy and Objectives
We believe that the quality, skills and dedication of our
executive officers are critical factors affecting the
companys performance and shareholder 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 shareholder
value. 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, which are competitive with peer group companies,
allowing the company to attract and retain key executives;
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cash bonuses, earned quarterly with an annual
catch-up
provision and an annual cash flow measurement and payout, based
on pre-established performance goals related to the company and
business unit (in the cases of business unit executives);
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equity-based compensation, which aligns our executives
interests with those of our shareholders and promotes executive
retention;
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in response to the global economic crisis, we made a special
retentive grant in late fiscal year 2009, and therefore did not
make any equity grants in fiscal year 2010; our goal is to
maintain an average three-year burn rate towards the median of
our peer group;
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long-term cash bonuses and performance-based share bonus awards,
which are earned only if long-term (typically, three-year)
pre-established performance goals related to the company and
business unit (in the cases of business unit executives) are
achieved; and
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deferred cash bonus awards, which are designed to promote
executive retention, as these elements of compensation vest over
a period of years only if the executive remains in the
companys active employment;
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Ø
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beginning in fiscal year 2011, we have replaced our prior
deferred compensation programs with a new program for our named
executive officers and other executives and senior officers
which provides for company contributions only if the company
achieves pre-established performance measures and that cliff
vest after four years.
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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 and
at-risk. The Committee also generally seeks to allocate a
substantial portion of executive compensation to long-term cash
and 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. For example, in response to the global
economic crisis, the Committee recommended and our Board
approved additional equity grants for executives in December
2008 for retention and incentive purposes, but as a result of
these grants, the Committee did not recommend any executive
equity grants in fiscal 2010.
While compensation levels may differ among NEOs based on
competitive factors, and the role, responsibilities and
performance of each specific NEO, there are no material
differences in the compensation philosophies, objectives or
policies for our NEOs. We do not maintain a policy regarding
internal pay equity.
None of the named executive officers serves pursuant to an
employment agreement, and each serves at the will of the
companys Board of Directors (subject to severance
obligations under law). Similarly, we generally do not enter
into severance agreements or arrangements with our executive
officers as part of the terms of their employment. This enables
our Board to remove an executive officer, if necessary, prior to
retirement or resignation whenever it is in the companys
best interests. When an executive officer retires, resigns or
is terminated, our Board exercises its business judgment in
approving an appropriate separation or severance arrangement in
light of all relevant circumstances, including the
individuals term of employment, severance obligations
under applicable law, past accomplishments and reasons for
separation from the company.
Role of
Executive Officers in Compensation Decisions
The Committee makes recommendations to our Board on all
compensation actions relating to our executive officers. As
part of its process, the Committee meets with our Chief
Executive Officer, Chief Financial Officer, Executive Vice
President, Worldwide Human Resources and Management Systems and
our Vice President, Global Compensation and Benefits 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 Incentive Bonus Plan, our
Chief Executive Officer and Chief Financial Officer develop
recommendations for performance measures and target and payout
opportunities under our incentive bonus plan based on
managements business forecast both at the company and
business unit levels, which are reviewed and approved by our
Board. Our Chief Executive Officer and Chief Financial Officer
meet with our Executive Vice President, Worldwide Human
Resources and Management Systems and our Vice President, Global
Compensation and Benefits to obtain additional input on these
matters.
-42-
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, the Committee relies on
competitive compensation data prepared by its independent
compensation consultant, as follows:
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based on the Committees decision to freeze base salaries
and not to award any equity grants in fiscal 2010, Radford only
benchmarked total target cash compensation for our CEO and CFO;
for this benchmarking, Radford compiled publicly available data
for a peer group consisting of 24 high-profile technology
companies in the EMS (electronic manufacturing services), OEM
(original equipment manufacturer) and distribution sectors; this
was the same peer group used for benchmarking CEO and CFO
compensation in fiscal year 2009; and
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based on the Committees decision to freeze base salaries,
to maintain target incentive bonus levels and not to award any
equity grants in fiscal 2010, Radford did not benchmark
compensation for our other executives and senior officers;
previously, Radford matched the executives and senior officers
based on job responsibility to compensation data in a published
compensation survey prepared by Radford covering technology
companies with annual revenues greater than certain levels
($8 billion for fiscal 2009 compensation decisions). We
used the Radford survey data for our other NEOs, rather than the
peer group data, because the Radford survey data provided a
better match based upon job responsibility and are more
reflective of the market for talent for these positions.
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Peer companies are recommended by the Committees
independent consultant and approved by the Committee. In
selecting peer companies, the Committee seeks to select
companies that are comparable to us on the basis of various
criteria, including revenues, industry, global scope of
operations, and market capitalization, and that the Committee
believes would compete with us for executive talent.
In fiscal year 2009, Frederick W. Cook & Co., Inc.,
the Committees independent compensation consultant for
fiscal 2009, recommended and the Committee approved the CEO/CFO
peer group set forth below. F.W. Cook also recommended and the
Committee approved the use of the Radford survey data for
benchmarking other executive compensation in fiscal 2009. For
fiscal 2010, the Committee engaged Radford as its independent
compensation consultant. Radford did not recommend any changes
in the CEO/CFO peer group, and this peer group was used to
benchmark CEO and CFO total target cash compensation for fiscal
2010.
The CEO/CFO peer group consisted of the following companies:
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Advanced Micro Devices, Inc.
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Agilent Technologies, Inc.
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Anixter International Inc.
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Applied Materials, Inc.
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Arrow Electronics, Inc.
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Avnet, Inc.
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Celestica Inc.
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Cisco Systems, Inc.
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Dell Inc.
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Emerson Electric Co.
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Hewlett-Packard Company
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Honeywell International Inc.
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Ingram Micro Inc.
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Intel Corporation
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Jabil Circuit, Inc.
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Micron Technology, Inc.
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Motorola, Inc.
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Seagate Technology
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Sun Microsystems, Inc.
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Tech Data Corporation
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Tyco International Ltd.
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United Technologies Corporation
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Western Digital Corporation
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Xerox Corporation
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The companies included in the Radford survey data that were used
in fiscal 2009 are set forth in the following table. As noted
above, given the Committees decision to freeze base
salaries, to maintain target
-43-
incentive bonus levels and not to award equity grants in fiscal
2010, the Committee did not use the survey data for benchmarking
purposes in fiscal 2010:
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Alcatel-Lucent
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Amazon.com, Inc.
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Apple Inc.
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Applied Materials, Inc.
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Arrow Electronics, Inc.
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AT&T Inc.
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Cisco Systems, Inc.
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Comcast Corporation
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Computer Sciences Corporation
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Dell Inc.
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The DIRECTV Group, Inc.
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Eastman Kodak Company
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Electronic Data Systems Corporation
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EMC Corporation
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General Dynamics Corporation
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Google Inc.
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Intel Corporation
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Microsoft Corporation
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Motorola, Inc.
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Nokia Corporation
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Nortel Networks Corporation
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Oracle Corporation
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QUALCOMM Incorporated
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Qwest Communications International Inc.
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Seagate Technology
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Sprint Nextel Corporation
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Sun Microsystems, Inc.
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Texas Instruments Incorporated
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In connection with its compensation review process for fiscal
year 2011, and based upon the recommendation of Radford, the
Committee approved certain changes in the CEO/CFO peer group.
The peer group for fiscal 2011 was determined based on the
following criteria and market data as of February 1, 2010:
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global companies with a technology focus and with significant
manufacturing operations;
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companies with revenues between $10 billion and
$50 billion (approximately .5x to 2x Flextronicss
trailing 12 months revenues); and
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companies with a market capitalization between $3 billion
and $25 billion.
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The changes to the CEO/CFO peer group for fiscal 2011 generally
reflect the inclusion of companies with a greater focus on
global manufacturing operations, and the removal of companies
whose revenues or market capitalization did not fall within the
above criteria. The CEO/CFO peer group for fiscal 2011 will be
comprised of the following companies:
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Alcatel-Lucent
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Applied Materials, Inc.
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Arrow Electronics, Inc.
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Avnet, Inc.
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Danaher Corporation
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Dell Inc.
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Eaton Corporation
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Emerson Electric Co.
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General Dynamics Corporation
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Honeywell International Inc.
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Illinois Tool Works Inc.
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Jabil Circuit, Inc.
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Johnson Controls, Inc.
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Motorola, Inc.
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Northrop Grumman Corporation
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Raytheon Company
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Royal Philips Electronics
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Seagate Technology
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Tyco International Ltd.
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United Technologies Corporation
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Western Digital Corporation
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Xerox Corporation
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In addition, Radford recommended and the Committee approved
using data from Radfords published compensation survey for
technology companies for benchmarking compensation for our other
executives and senior officers, including our named executive
officers (other than the CEO and CFO). Radford recommended and
the Committee approved using survey data for technology
companies with annual revenues between $10 billion and
$50 billion and with significant manufacturing operations
in order to align the data more closely to the criteria selected
for the CEO/CFO peer group. Radford recommended and the
Committee
-44-
approved the use of this survey data because this survey data
provided a better match based upon job responsibility and are
more reflective of the market for talent for these positions.
The companies included in the Radford survey used for fiscal
2011 compensation benchmarking for our other executives and
senior officers are as follows:
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Apple Inc.
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Arrow Electronics, Inc.
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Cisco Systems, Inc.
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Comcast Corporation
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Covidien plc
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Dell Inc.
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The DIRECTV Group, Inc.
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E.I. Du Pont De Nemours and Company
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EMC Corporation
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General Dynamics Corporation
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Intel Corporation
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Jabil Circuit, Inc.
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Motorola, Inc.
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QUALCOMM Incorporated
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Qwest Communications International Inc.
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Research In Motion Limited
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SAIC, Inc.
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Sprint Nextel Corporation
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Sun Microsystems, Inc.
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Texas Instruments Incorporated
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Thermo Fisher Scientific Inc.
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Time Warner Cable Inc.
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In past years, the Committee generally sought to set total
target direct compensation for the companys executives at
or above the 75th 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 incentive awards. The Committee also sought to target
each component of total target direct compensation at these
levels. However, total target direct compensation, as well as
individual components, has in the past varied by executive based
on the executives experience, level of responsibility and
performance, as well as competitive market conditions. In the
second half of fiscal 2009, the Committee and our Board made
decisions outside the formal annual compensation review process
in response to the global economic crisis, and which therefore
were not part of the annual formal benchmarking process. In the
second half of fiscal 2009, the Committee recommended, and our
Board approved, modifications to our incentive bonus plan and
additional equity grants for our employees, including our
executives. The Committee and our Board took these additional
actions in order to better align our incentive bonus plan with
our business strategy and to retain and incentivize our
employees, including our executives. Based upon the additional
equity grants, total target direct compensation for our named
executive officers exceeded the
75th
percentile in fiscal 2009. The Committee considered its fiscal
2009 compensation decisions in arriving at its recommendation
for fiscal 2010 compensation and determined to recommend to our
Board that no equity grants be awarded to our executives in
fiscal 2010. As a result, total target direct compensation for
all of our named executive officers for fiscal 2010 was
substantially below the
25th
percentile of our peer companies.
As discussed below under Fiscal Year 2011 Changes in
Executive Compensation, the Committee has adopted
certain change in our compensation programs and practices.
Beginning with fiscal 2011, the Committee will seek to set base
salary at the
50th
percentile and total target direct compensation at between the
60th and
65th
percentiles of our peer companies. As in the past, total target
direct compensation, as well as individual components, may vary
by executive based on the executives experience, level of
responsibility and performance, as well as competitive market
conditions.
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 the following changes in our compensation
policies and practices:
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base salary is now targeted at the
50th percentile
of peer companies;
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incentive bonuses are now targeted at between the 60th and
65th percentiles
of peer companies;
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long-term incentive compensation is now targeted at between the
60th and
65th percentiles
of peer companies;
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-45-
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total direct compensation is now targeted at between the
60th and
65th
percentiles of peer companies;
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long-term incentive compensation will be comprised of
performance-based and service-based restricted stock units and
performance-funded contributions under a new deferred
compensation plan;
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Ø
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we will use the companys total shareholder return relative
to the Standard and Poors 500 Index as the performance
measure for our performance-based restricted stock units;
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Ø
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annual contributions under our deferred compensation plan will
be dependent on the companys performance and will only be
made if certain company performance metrics are achieved (using
the same performance metric categories as we use under our
incentive bonus plan). Any contributions will cliff vest four
years from the contribution date. Previously, contributions
were service-based;
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payout levels will be capped under both our short and long-term
incentive compensation arrangements;
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we have adopted stock ownership guidelines for our executives
and other senior officers (see Executive Stock Ownership
Guidelines below); and
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we have adopted an incentive compensation recoupment policy (see
Executive Incentive Compensation Recoupment Policy
below).
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Fiscal
Year 2010 Executive Compensation
Summary
of Fiscal Year 2010 Compensation Decisions
The companys improved operational performance during
difficult economic conditions was reflected in several key
measures. The company was able to continue to increase margin
expansion, generate substantial cash flow and maintain an
industry-leading cash conversion cycle. At the same time, the
company was able to de-lever its balance sheet and significantly
reduce its net debt. In addition, the company achieved its
annual performance measures under our incentive bonus plan at
the following levels: adjusted operating profit
percentage 125.0%; return on invested capital
(ROIC) 154.0%; adjusted EPS 156.3%; and
free cash flow 200%. During fiscal year 2010, the
companys share price increased 267%, as compared with
increases in the Dow Jones, Nasdaq and S&P 500 indices of
40%, 55% and 40%, respectively. Based on the foregoing, the
Committee believes that management executed well on the
companys business strategy in the current economic
environment.
Target awards (as a percentage of base salary) and payout
opportunities generally were maintained at the same levels as
prior years. Based on company and business unit performance in
fiscal 2010, incentive bonus payouts were 157.0% of target for
Messrs. McNamara and Read; 155.4% of target for
Mr. Clarke; 126.0% of target for Mr. Barbier; and
33.8% of target for Mr. Widmann. Based on company
performance, the Committee believes that compensation levels for
fiscal year 2010 were appropriate and consistent with the
philosophy and objectives of the companys compensation
programs.
As discussed above under Competitive Positioning,
the Committee recommended that no equity grants be awarded
to our executives in fiscal 2010. In addition, as part of the
companys response to the ongoing economic crisis, the
Committee froze base salary levels, did not recommend voluntary
contributions to our senior officers deferred compensation
plan, and suspended 401(k) matching contributions for salaried
employees in the U.S., including our executives. Based on these
decisions, the Committee did not ask Radford to prepare peer
company benchmarking data in connection with fiscal 2010
compensation decisions, other than to update total target cash
compensation data for the CEO and CFO positions, which was used
in setting incentive bonus targets.
-46-
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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cash incentive awards;
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multi-year cash and stock incentive awards;
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stock-based compensation;
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deferred compensation; and
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other benefits.
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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 2010, and the companys resulting focus on
controlling costs, the Committee did not recommend any base
salary adjustments for fiscal 2010. The Committee believed that
our executives base salaries continued to remain
competitive and did not ask Radford to analyze peer company base
salary data.
Mr. McNamaras base salary was maintained at
$1,250,000, which approximated the
75th percentile
of our peer companies when it was analyzed as part of the fiscal
2009 compensation review.
Mr. Reads base salary was last increased to $600,000
effective May 15, 2008 in connection with his promotion to
Chief Financial Officer and, at that time, was set at between
the median and
75th percentile
of the peer company data for his position.
Base salary levels for the other named executive officers
remained at the following levels: Mr. Clarke --
$550,000 (paid in Canadian dollars); Mr. Barbier --
$499,838 (paid in Euros); and Mr. Widmann -- $441,766
(paid in Euros).
Incentive
Bonus Plan
Through our incentive bonus plan, we seek to provide pay for
performance by linking incentive awards to company and business
unit performance. In designing the incentive bonus plan, our
Chief Executive Officer, Chief Financial Officer and Vice
President Global Compensation and Benefits 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 2010, target levels for performance were set
above the levels included in our business forecast in order to
challenge management. In setting target levels, the Committee
also considered consensus Street estimates and noted that the
threshold EPS level was higher than the consensus Street
estimate at the time the targets were set.
For the first half of fiscal 2009 and prior years, we generally
used
year-over-year
quarterly and annual adjusted EPS growth, and
year-over-year
quarterly and annual revenue growth and profit after interest
growth at the corporate and business unit levels as performance
measures under our incentive bonus plan. As a result of
macroeconomic conditions that impacted the company in the second
half of fiscal 2009 and which continued to impact the company in
fiscal 2010, we changed our business focus towards operational
efficiencies and cash flow. Accordingly, our performance
measures for the second half of fiscal 2009 emphasized inventory
reduction and free cash flow. For fiscal 2010, our performance
measures emphasized profitability, free cash flow and cost
reduction at the corporate level, and specific business unit
goals at the
-47-
business unit level. Performance measures were based on
quarterly targets rather than
year-over-year
growth rates.
Key features of the bonus plan in fiscal 2010 were as follows:
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performance targets were based on key company and business unit
financial metrics;
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performance targets were measured and paid out on a quarterly
basis, except that the free cash flow performance metric was
measured and paid out on an annual basis;
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the financial goals varied based on each executives
responsibilities, with a substantial weighting on business unit
financial metrics for business unit executives;
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performance measures under the plan were: quarterly earnings per
share, operating profit (as a percentage of sales), return on
invested capital and SG&A targets, and annual free cash
flow targets at the company level; and quarterly operating
profit (as a percentage of sales), inventory turnover, cash
conversion cycle and vertical integration targets at the
business unit level for certain executives;
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certain performance measures were calculated on a non-GAAP basis
and excluded after-tax intangible amortization, stock-based
compensation expense, and certain restructuring and other
charges;
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Ø
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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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bonuses were based entirely on achievement of financial
performance objectives; there was no individual performance
component;
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each executives target bonus was set at a percentage of
base salary, based on the level of the executives
responsibilities;
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Ø
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the CEOs target bonus was set at 150% of base salary and
the CFOs target bonus was set at 100% of base salary;
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Ø
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for executives other than the CEO and CFO, the target bonus was
set at a range of between 60% and 80% of base salary;
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payout opportunities for each bonus component ranged from 50% of
target to a maximum of 300% of target (200% in the cases of the
CEO and CFO);
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if the company failed to achieve the threshold level for any
performance measure, no payout was awarded for that
measure; and
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payout levels not achieved based on quarterly results were
subject to an annual
catch-up if
the annual payout level was greater than the cumulative
quarterly payouts.
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The Committee recommended and our Board approved different
performance metrics for our Chief Executive Officer and Chief
Financial Officer as compared with other executives, and
different performance metrics for corporate officers as compared
with business unit executives. In addition, we varied the
weightings for certain performance metrics among different
executives, in order to better align individual awards with our
business strategy. For example, we included revenue targets for
our Computing and Multek business units, but placed a greater
emphasis on profit after interest percentage for our
Infrastructure and Mobile/Consumer business units.
The incentive bonus plan award opportunities for each NEO are
shown in the Grants of Plan-Based Awards in Fiscal Year 2010
table on page 62. For fiscal 2010, the overall target
award and payout opportunities for each of the named executive
officers were consistent with the target and payout levels
established for their fiscal 2009 awards.
-48-
Non-GAAP Adjustments
We used adjusted non-GAAP performance measures for our incentive
bonus plan in fiscal 2010. We use adjusted measures 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 the
companys operating performance on a
period-to-period
basis because such items are not, in the Committees view,
related to the companys ongoing operational performance.
The non-GAAP measures are used to evaluate more accurately the
companys 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.
Incentive
Awards for the CEO and CFO
Messrs. McNamara and Read were eligible for a bonus award
based on achievement of quarterly adjusted operating profit
percentage, ROIC and adjusted EPS targets and an annual free
cash flow target for fiscal 2010. We refer to these performance
measures as the company performance metric. The
weightings for the performance measures were 30% for each of
adjusted operating profit percentage, ROIC and adjusted EPS, and
10% for annual free cash flow. Mr. McNamaras annual
target bonus was 150% of base salary and Mr. Reads
annual target bonus was 100% of base salary. In setting the
target amounts, the Committee noted that target total cash
compensation for our CEO was between the
50th and
75th
percentile of our peer companies and target total cash
compensation for our CFO was slightly above the
50th
percentile.
The following table sets forth the payout level opportunities
that were available for Messrs. McNamara and Read as a
percentage of the target award for each performance measure
based on different levels of performance. Payout levels for
each performance measure ranged from 50% to 200% of target based
on achievement of the performance measure, with no payout if the
threshold performance level was not achieved. For performance
levels between the levels presented in the table below, straight
line interpolation was used to arrive at the payout level:
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Payout (% Target)
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50%
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100%
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150%
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200%
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Q1 Adjusted OP%
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1.5%
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1.8%
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2.0%
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2.2%
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Q1 ROIC
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17.5%
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20.0%
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22.5%
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25.0%
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Q1 Adjusted EPS
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$0.05
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$0.07
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$0.09
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$0.11
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Q2 Adjusted OP%
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2.0%
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2.3%
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2.6%
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2.8%
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Q2 ROIC
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17.5%
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20.0%
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22.5%
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25.0%
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Q2 Adjusted EPS
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$0.08
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$0.10
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$0.12
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$0.14
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Q3 Adjusted OP%
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2.5%
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2.7%
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2.8%
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3.0%
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Q3 ROIC
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17.5%
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20.0%
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22.5%
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25.0%
|
Q3 Adjusted EPS
|
|
|
$0.12
|
|
|
$0.14
|
|
|
$0.16
|
|
|
$0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 Adjusted OP%
|
|
|
2.5%
|
|
|
2.7%
|
|
|
2.8%
|
|
|
3.0%
|
Q4 ROIC
|
|
|
17.5%
|
|
|
20.0%
|
|
|
22.5%
|
|
|
25.0%
|
Q4 Adjusted EPS
|
|
|
$0.11
|
|
|
$0.13
|
|
|
$0.15
|
|
|
$0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 10 Free Cash Flow
|
|
|
$(7.0)M
|
|
|
$44.5M
|
|
|
$80.5
|
|
|
$121.9M
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-49-
The following table sets forth the actual quarterly and annual
performance and the actual payout levels (as a percentage of the
target award) and amounts (as a percentage of base salary) for
Messrs. McNamara and Read.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CEO Actual
|
|
|
CFO Actual
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
Payout % (as
|
|
|
Payout % (as
|
|
|
|
Adjusted
|
|
|
Payout
|
|
|
|
|
|
Payout
|
|
|
Adjusted
|
|
|
Payout
|
|
|
Payout
|
|
|
a % of Base
|
|
|
a % of Base
|
Period
|
|
|
OP %
|
|
|
Level %
|
|
|
ROIC
|
|
|
Level %
|
|
|
EPS
|
|
|
Level %
|
|
|
Level %
|
|
|
Salary)
|
|
|
Salary)
|
Q1
|
|
|
1.6%
|
|
|
60.0%
|
|
|
14.2%
|
|
|
0%
|
|
|
$.08
|
|
|
125.0%
|
|
|
55.5%
|
|
|
20.8%
|
|
|
13.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2
|
|
|
2.6%
|
|
|
150.0%
|
|
|
22.2%
|
|
|
144.0%
|
|
|
$.13
|
|
|
175.0%
|
|
|
140.7%
|
|
|
52.8%
|
|
|
35.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3
|
|
|
2.9%
|
|
|
175.0%
|
|
|
30.1%
|
|
|
200.0%
|
|
|
$.17
|
|
|
175.0%
|
|
|
165.0%
|
|
|
61.9%
|
|
|
41.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4
|
|
|
2.9%
|
|
|
175.0%
|
|
|
28.8%
|
|
|
200.0%
|
|
|
$.16
|
|
|
175.0%
|
|
|
165.0%
|
|
|
61.9%
|
|
|
41.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual (1)
|
|
|
2.5%
|
|
|
125.0%
|
|
|
22.7%
|
|
|
154.0%
|
|
|
$.53
|
|
|
156.3%
|
|
|
5.4%
|
|
|
8.1%
|
|
|
5.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157.0% (2)
|
|
|
235.4% (2)
|
|
|
157.0% (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Annual figures for Total Payout Level % and CEO and CFO Actual
Payout % (as a % of Base Salary) represent annual
catch-up
payments for annual payout levels in excess of cumulative
quarterly payout percentages. |
|
(2) |
|
Fiscal year 2010 free cash flow was $622,453, representing a
maximum payout level percentage of 200% (20% Total Payout Level
%), and 30% of base salary for Mr. McNamara and 20% of base
salary for Mr. Read. Totals for Total Payout Level % and
CEO and CFO Actual Payout % (as a % of Base Salary) include such
amounts. |
For the first quarter, our operating profit percentage and ROIC
were below target and our adjusted EPS was above target. For the
second, third and fourth quarters, each of our operating profit
percentage, ROIC and adjusted EPS were substantially above
target. For the 2010 fiscal year, free cash flow was achieved
at a maximum 200% payout level. On an aggregate basis, bonus
payouts were 157.0% of target for Messrs. McNamara and Read.
Incentive
Awards for NEOs other than the CEO and CFO
Mr. Clarke, President of our Infrastructure business unit,
was eligible for a bonus based on achievement of the quarterly
and annual company performance metric (i.e., the performance
measures that applied to Messrs. McNamara and Read), as
well as operating profit percentage, profit after interest
percentage, inventory turns and vertical integration targets at
the business unit level. Vertical integration is a measure of
our vertical integration sales as a percentage of our revenues.
Mr. Clarkes annual target bonus was 80% of base
salary. Actual payout level opportunities ranged from 50% to
300% of target. The weightings of the performance metrics for
Mr. Clarke were 20% for the company performance metric, 30%
for business unit operating profit percentage, 20% for profit
after interest percentage at his business unit, 20% for
inventory turns at his business unit, and 10% for vertical
integration at the corporate level. Business unit operating
profit percentage and profit after interest were calculated on
an adjusted non-GAAP basis consistent with the company
performance metric and included a 15% annual cost of capital
charge based on the average three month working capital
balances. We treat the business unit performance measures as
confidential. We set these measures at levels designed to
motivate Mr. Clarke to achieve operating results at his
business unit in alignment with our business strategy with
payout opportunities at levels of difficulty consistent with our
company performance metric. Payout levels for each performance
measure ranged from 50% to 200% of target based on achievement
of the performance measure, with no payout if the threshold
performance level was not achieved. For performance levels
between the 50% and 200% payout levels, straight line
interpolation was used to arrive at the payout level. In
addition, Mr. Clarke was eligible for a 300% payout level
on his operating profit target if his business unit achieved a
maximum level of performance for this metric. For other
metrics, payouts at 300% could be achieved if the maximum
operating profit performance was achieved and performance at the
200% level was achieved for the other metric. The 300%
achievement levels were
-50-
established based on setting difficult financial goals and
intended to only provide a payout for outstanding performance.
Mr. Barbier, President of Flextronics Global Operations,
was eligible for a bonus based on achievement of the quarterly
and annual company performance metric (i.e., the performance
measures that applied to Messrs. McNamara and Read), as
well as various business unit performance metrics, including
reduction in operating costs and vertical integration.
Mr. Barbiers annual target bonus was 80% of base
salary. Actual payout level opportunities ranged from 50% to
300% of target. The weightings of the performance metrics for
Mr. Barbier were 20% for the company performance metric and
80% for the business unit metrics. For performance levels
between the 50% and 200% payout levels, straight line
interpolation was used to arrive at the payout level.
Mr. Barbier only was eligible for a 300% payout level for
any of the performance measures if his business unit achieved a
maximum level of performance for the metric. Certain business
unit metrics were calculated on an adjusted non-GAAP basis
consistent with the company performance metric and included a
15% cost of capital charge based on the average three month
working capital balances of the business units. We treat the
business unit performance measure as confidential. We set these
measures at levels designed to motivate Mr. Barbier to
achieve operating results at his business unit in alignment with
our business strategy with payout opportunities at levels of
difficulty consistent with our company performance metric.
Mr. Widmann, President of Multek, was eligible for a bonus
based on achievement of the quarterly and annual company
performance metric (i.e., the performance measures that applied
to Messrs. McNamara and Read), as well as operating profit
percentage and revenue targets at the business unit level.
Mr. Widmanns annual target bonus was 70% of base
salary. Actual payout level opportunities ranged from 50% to
300% of target. The weightings of the performance metrics for
Mr. Widmann were 20% for the company performance metric,
30% for business unit operating profit percentage and 50% for
business unit revenue. For performance levels between the 50%
and 200% payout levels, straight line interpolation was used to
arrive at the payout level. Mr. Widmann only was eligible
for a 300% payout level for any of the performance measures if
his business unit achieved a maximum level of performance for
the metric. Business unit operating profit percentage was
calculated on an adjusted non-GAAP basis consistent with the
company performance metric and included a 15% cost of capital
charge based on the average three month working capital balances
of the business unit. We treat the business unit performance
measure as confidential. We set these measures at levels
designed to motivate Mr. Widmann to achieve operating
results at his business unit in alignment with our business
strategy with payout opportunities at levels of difficulty
consistent with our company performance metric.
The following table sets forth the actual quarterly and total
payout levels, both as a percentage of target and of base
salary, for Messrs. Clarke, Barbier and Widmann:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M. Clarke
|
|
|
|
|
|
|
|
|
|
|
|
W. Widmann
|
|
|
|
M. Clarke
|
|
|
Actual Payout %
|
|
|
F. Barbier
|
|
|
F. Barbier
|
|
|
W. Widmann
|
|
|
Actual Payout %
|
|
|
|
Payout
|
|
|
(as a % of Base
|
|
|
Payout
|
|
|
Actual Payout %
|
|
|
Payout
|
|
|
(as a % of Base
|
Period
|
|
|
(% Target)
|
|
|
Salary)
|
|
|
(% Target)
|
|
|
(as a % of Base
Salary)
|
|
|
(% of Target)
|
|
|
Salary)
|
Q1
|
|
|
79.7%
|
|
|
16.0%
|
|
|
73.9%
|
|
|
14.8%
|
|
|
11.1%
|
|
|
1.9%
|
Q2
|
|
|
151.5%
|
|
|
30.3%
|
|
|
124.1%
|
|
|
24.8%
|
|
|
28.1%
|
|
|
4.9%
|
Q3
|
|
|
169.5%
|
|
|
33.9%
|
|
|
132.4%
|
|
|
26.5%
|
|
|
39.0%
|
|
|
6.8%
|
Q4
|
|
|
155.4%
|
|
|
31.1%
|
|
|
114.2%
|
|
|
22.8%
|
|
|
33.0%
|
|
|
5.8%
|
Annual (1)
|
|
|
10.3%
|
|
|
8.3%
|
|
|
8.9%
|
|
|
7.1%
|
|
|
0%
|
|
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
155.4% (2)
|
|
|
124.3% (2)
|
|
|
126.0% (2)
|
|
|
100.9% (2)
|
|
|
33.8% (2)
|
|
|
23.7% (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Annual figures for Actual Payout % (as a % of Base Salary)
represent annual
catch-up
payments for annual payout levels in excess of cumulative
quarterly payout percentages. |
-51-
|
|
|
(2) |
|
Fiscal year 2010 free cash flow (a component of the company
performance metric) was $622,453, representing a maximum payout
level percentage of 300%, and 4.8%, 4.8% and 4.2% of base salary
for Messrs. Clarke, Barbier and Widmann, respectively.
Totals include such amounts. |
The Committee believes that bonuses awarded under our incentive
bonus plan appropriately reflected the companys
performance and appropriately rewarded the performance of the
named executive officers.
Long-Term
Incentive Programs
Long-Term
Cash Incentive Awards
In prior years, the Committee has recommended and the Board has
approved long-term cash incentive awards that allowed for named
executive officers and certain other senior officers to earn
cash bonuses based upon the achievement by the company of
certain three-year performance targets. The Committee did not
recommend any long-term cash incentive awards for our named
executive officers in fiscal 2010. Commencing with fiscal 2011,
the company has adopted a new performance-based deferred
compensation plan which replaces the senior executive and senior
management plans (see discussion below under Deferred
Compensation) under which the company may make
contributions in amounts up to 30% of each participants
base salary (subject to offsets for
non-U.S. executives
pension and other benefits), subject to the company meeting
pre-established performance criteria. The contributions will
cliff vest after four years.
Stock-Based
Compensation
Stock
Options and Share Bonus Awards
The Committee grants stock options and share bonus awards (the
equivalent of restricted stock units), which are designed to
align the interests of the named executive officers with those
of our shareholders 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 executive retention, as unvested
stock options and share bonus awards generally are 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 seven to ten years, thus providing a return to the
officer only if the market price of the shares appreciates over
the option term. Share bonus awards are structured as either
service-based awards, which vest if the executive remains
employed through the vesting period, or performance-based
awards, which vest only if pre-established performance measures
are achieved. Before the share bonus award vests, the executive
has no ownership rights in our ordinary shares. The payouts are
made in shares, so the value of the award goes up or down based
on share price performance from the beginning of the grant,
further aligning the interests of the executive to long-term
shareholder value creation.
The size of the option grant or share bonus 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 options and share bonus 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 in relation to our peer
companies, subject to individual variances. The Committee and
Board also consider annual share usage and overall shareholder
dilution when determining the size of equity awards.
Commencing with fiscal year 2011, the Committees policy is
to set long-term incentive compensation (which is deemed to
include contributions to the deferred compensation plan) at
between the
60th and
65th
percentiles of our peer companies, subject to individual
variances. For fiscal 2011, the Committee has determined that
equity awards for executives and other senior officers generally
will be allocated 50% performance-based share bonus awards and
50% service-based share bonus awards. The Committee determined
to use this mix of equity awards for fiscal 2011, given that the
executives received significant option grants in fiscal 2009 and
to limit the dilutive effect of equity awards. In addition, the
Committee
-52-
believed that the relative total shareholder return metric used
for the performance-based awards was a more appropriate
performance measure and furthered the performance-based
philosophy of our compensation programs. Service-based share
bonus awards will cliff vest 50% after three years and 50% after
four years, and performance-based share bonus awards will vest
50% after three years and 50% after four years, depending on
performance. Vesting of the performance-based awards will
depend on the company achieving levels of total shareholder
return relative to the average of the Standard &
Poors 500 Index total shareholder return as follows:
|
|
|
|
|
|
|
|
|
|
Flextronics TSR as a % of S&P
|
|
|
Awards Earned as a % of
|
|
|
|
500 Index Average TSR
|
|
|
Target Awards
|
Maximum
|
|
|
Above 150% of S&P Average
|
|
|
150%
|
|
|
|
125% of S&P Average
|
|
|
125%
|
Target
|
|
|
100% of S&P Average
|
|
|
100%
|
|
|
|
50% of S&P Average
|
|
|
50%
|
Threshold
|
|
|
Below 50% of S&P Average
|
|
|
0%
|
|
|
|
|
|
|
|
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 policy is that options and share bonus
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 policy provides
that grants to non-executive new hires and follow on grants to
non-executives are made on pre-determined dates in each fiscal
quarter.
Grants
During Fiscal Year 2010
As discussed above under Competitive Positioning,
the Committee recommended and our Board approved additional
equity grants during the second half of fiscal 2009 in response
to the global economic crisis for retention and incentive
purposes. As a result of these equity grants, the Committee
determined that it was not appropriate to grant equity awards in
fiscal 2010. The Committee determined that our named executive
officers and other executives and senior officers held
sufficient unvested equity awards and also wanted to moderate
shareholder dilution and reduce the companys average
three-year burn rate to bring it closer to the three-year
average burn rate for companies in our peer group.
Option
Exchange Program
On July 14, 2009, we launched an exchange offer under which
eligible employees had the opportunity to voluntarily exchange
their eligible stock options granted under certain of our equity
compensation plans for a lesser amount of replacement stock
options granted under one of our current equity incentive plans
with new exercise prices equal to the closing price of our
ordinary shares on the date of exchange (the
Exchange). The Exchange offer generally was open to
all of our active U.S. and international employees, but was
not open to our directors or our executive officers. To be
eligible for exchange an option must: (i) have had an
exercise price of at least $10.00 per share, (ii) have been
outstanding, and (iii) have been granted at least
12 months prior to the commencement date of the Exchange
offer. All replacement option grants were subject to a vesting
schedule of two, three or four years from the date of grant of
the replacement options depending on the remaining vesting
period of the option grants surrendered for cancellation in the
Exchange. The number of replacement options an eligible
employee received in exchange for an eligible option grant was
determined by an exchange ratio applicable to that option.
Stock options with exercise prices between $10.00 and $11.99
were exchangeable for new options at a rate of 1.5 existing
options per new option grant, and stock options with exercise
prices of $12.00 or more were exchangeable at a rate of 2.4
existing options per new option grant. The Exchange was
completed on August 11, 2009. Approximately
27.9 million stock options were tendered in the Exchange,
and approximately 16.9 million replacement options were
granted with an exercise price of $5.57, a weighted average
vesting term of 1.58 years, and a contractual life of seven
years. The Exchange was accounted for as a modification of the
existing option awards tendered in the Exchange. As a
-53-
result of the Exchange, we will recognize approximately
$1.8 million in incremental compensation expense over the
expected service period of the replacement options vesting terms.
Mr. Barbier was eligible to participate in the Exchange, as
he was not then an executive officer (he was designated an
executive officer in December 2009). In connection with the
Exchange, Mr. Barbier tendered 738,542 options and was
granted 457,724 replacement options with an exercise price of
$5.57. The incremental compensation expense associated with
Mr. Barbiers replacement options was $6,106.
Deferred
Compensation
Each of the named executive officers participates in a deferred
compensation plan or arrangement. These plans and arrangements
are intended to promote retention by providing a long-term
savings opportunity on a tax-efficient basis. Mr. McNamara
participates in the companys senior executive deferred
compensation plan (referred to as the senior executive plan).
Following his appointment as Chief Financial Officer,
Mr. Read also became a participant in the senior executive
plan effective January 1, 2009. Mr. Read participated
in the companys senior management deferred compensation
plan (referred to as the senior management plan) prior to his
appointment as Chief Financial Officer. Messrs. Clarke and
Barbier participate in the senior management plan, and
Mr. Widmann participates in an individual deferral
arrangement. As discussed below, we have made deferred
long-term incentive bonuses so that a significant component of
the named executive officers compensation serves a
retentive purpose, as the bonuses only will vest if the
executive remains in the companys active employment. In
structuring the executive deferred compensation arrangements,
the Committee and the Board also sought to provide an additional
long-term savings plan for the executives in recognition that we
do not otherwise provide these executives with a pension plan or
any supplemental executive retirement benefits. Beginning in
fiscal 2011, we have replaced the senior executive and senior
management plans with a new deferred compensation plan that will
allow for U.S. participants to defer salary and bonus
without any company match. We also plan to make
performance-based annual contributions, subject to the company
meeting pre-established business performance criteria, in
amounts up to 30% of each participants base salary
(subject to offsets for
non-U.S. executives
pension and other benefits), which will cliff vest after four
years.
Deferred Compensation for Messrs. McNamara and
Read. Under the senior executive plan, a participant
may defer up to 50% of his salary and up to 100% of his cash
bonuses. In addition, at the Committees and the
Boards discretion, awards for deferred long-term incentive
bonuses may be awarded in return for services to be performed in
the future. During fiscal year 2006, the Committee recommended
and the Board approved a deferred bonus for Mr. McNamara of
$5,000,000. The deferred bonus (together with earnings) for
Mr. McNamara vested as follows: (i) 10% vested on
April 1, 2006; (ii) 15% vested on April 1, 2007;
(iii) 20% vested on April 1, 2008; (iv) 25%
vested on April 1, 2009; and (v) 30% vested on
April 1, 2010.
During fiscal year 2009, in recognition of his appointment as
Chief Financial Officer, the Committee recommended and the Board
approved an initial one-time funding payment of $2,000,000 for
Mr. Read in the senior executive plan. The deferred bonus
(together with earnings) for Mr. Read will vest as follows:
(i) 10% vested on January 1, 2010; (ii) 15% will
vest on January 1, 2011; (iii) 20% will vest on
January 1, 2012; (iv) 25% will vest on January 1,
2013; and (v) 30% will vest on January 1, 2014. Prior
to his appointment as Chief Financial Officer, Mr. Read was
a participant in the senior management plan. As part of the
annual contribution, Mr. Read was eligible to receive a
contribution equal to 30% of his base salary. Past
contributions (together with earnings) will vest as follows:
(i) one-third will vest on July 1, 2012;
(ii) one-half of the remaining balance will vest on
July 1, 2013; and (iii) the remaining balance will
vest on July 1, 2014.
Any unvested portions of the deferred bonus for Mr. Read
(with respect to his senior executive plan account) will become
100% vested upon a change of control (as defined in the senior
executive plan) if he is employed at that time or if his
employment is terminated as a result of death or disability.
Other than in cases of death or disability or a change of
control, any unvested amounts will be forfeited if the
executives employment is terminated, unless otherwise
provided in a separation agreement. With respect to
Mr. Reads senior management plan account, 100% will
become vested in the case of his death and a percentage of the
unvested portion of Mr. Reads senior management
account will become vested in the event of a change of
-54-
control (as defined in the senior management plan), in an amount
equal to the number of months of completed service from
July 1, 2005 through July 1, 2014, divided by 108.
Any portion of his senior management plan account that remains
unvested after a change of control shall continue to vest in
accordance with the original vesting schedule.
Deferred Compensation for Mr. Clarke. During
fiscal year 2008, the Committee recommended and the Board
approved an initial one-time funding payment of $366,355 for
Mr. Clarke in the senior management plan. Mr. Clarke
also received a contribution equal to 15% of his base salary in
fiscal 2009. The percentage of deferred compensation for
Mr. Clarke has been revised to reflect his participation in
the companys Canadian defined contribution pension program
as well as other benefits provided to him as part of his
expatriate assignment package. During fiscal year 2010, the
Committee did not recommend and the Board did not approve any
contribution under the senior management plan. Past
contributions (together with earnings) under the senior
management plan will vest as follows: (i) one-third will
vest on July 1, 2012; (ii) one-half of the remaining
balance will vest on July 1, 2013; and (iii) the
remaining balance will vest on July 1, 2014.
Deferred Compensation for Mr. Barbier. During
fiscal year 2005, the Committee recommended and the Board
approved an initial one-time funding payment of $250,000 for
Mr. Barbier in the senior management plan. Beginning with
July 2005, Mr. Barbier has received and may continue to
receive a contribution equal to 30% of his base salary. During
fiscal year 2010, the Committee recommended that no contribution
be made under the senior management plan. Past contributions
(together with earnings) will vest as follows:
(i) one-third will vest on July 1, 2011;
(ii) one-half of the remaining balance will vest on
July 1, 2012; and (iii) the remaining balance will
vest on July 1, 2013.
Any unvested portions of the deferral accounts of
Messrs. Clarke and Barbier will become 100% vested if their
employment is terminated as a result of death. In the event of
a change of control (as defined in the senior management plan),
a portion of the deferral account will vest, calculated as a
percentage equal to the number of service months from
July 1, 2007 to July 1, 2014, divided by 84 for
Mr. Clarke, and the number of months from July 1, 2005
to July 1, 2013, divided by 96 for Mr. Barbier. Any
portion of their deferral accounts that remains unvested after a
change of control shall continue to vest in accordance with the
original vesting schedule. Other than in cases of death or a
change of control, any unvested amounts will be forfeited if the
executives employment is terminated, unless otherwise
provided in a separation agreement.
Deferred Compensation for Mr. Widmann. In
fiscal years 2006 and 2007, Mr. Widmann was awarded
aggregate deferred bonuses of $3,000,000 in return for services
to be performed in the future. These deferred bonuses were
credited to a brokerage account. The deferred bonuses (together
with earnings) for Mr. Widmann vest as follows:
(i) 10% vested on July 1, 2007; (ii) an
additional 15% vested on July 1, 2008; (iii) an
additional 20% vested on July 1, 2009; (iv) an
additional 25% will vest on July 1, 2010; and (v) an
additional 30% will vest on July 1, 2011, provided
Mr. Widmann continues to be employed by the company. 100%
of the deferred bonus will be paid to Mr. Widmann if his
employment is terminated as a result of his death. In the event
of a change of control of the company, any unvested deferred
bonus will vest based on the percentage of his completed months
of service with the company during the six-year period from
July 1, 2005 through July 1, 2011.
For additional information about (i) executive
contributions to the named executive officers deferral
accounts, (ii) company contributions to the deferral
accounts, (iii) earnings on the deferral accounts, and
(iv) deferral account balances as of the end of fiscal year
2010, see the section entitled Executive
Compensation Nonqualified Deferred Compensation in
Fiscal Year 2010. The deferral accounts are
unfunded and unsecured obligations of the company, receive no
preferential standing, and are subject to the same risks as any
of the companys other general obligations.
Benefits
Executive
Perquisites
Perquisites represent a small part of the overall compensation
program for the named executive officers. In fiscal year 2010,
we paid the premiums on long-term disability insurance for
Messrs. McNamara and Read, and reimbursed Mr. Clarke
for costs associated with his international assignment. In
addition, we reimbursed
-55-
Messrs. McNamara and Read for FICA and Medicare taxes due
upon the partial vesting of their deferred bonuses. We also
provide a company vehicle for Messrs. Barbier, Clarke and
Widmann. These and certain other benefits are quantified under
the All Other Compensation column in the Summary
Compensation Table.
While company aircraft are generally used for company business
only, our Chief Executive Officer and Chief Financial Officer
and their spouses and guests may be permitted to use company
aircraft for personal travel. We calculate the incremental cost
to the company for use of the company aircraft by using an
hourly rate for each flight hour. The hourly rate is based on
the variable operational costs of each flight, including fuel,
maintenance, flight crew travel expense, catering,
communications and fees, including flight planning, ground
handling and landing permits. To the extent any travel on
company aircraft resulted in imputed income to the executive
officer in fiscal year 2010, the company provided
gross-up
payments to cover the executive officers personal income
tax due on such imputed income. These benefits are quantified
under the All Other Compensation column in the
Summary Compensation Table.
401(k)
Plan; Canadian and French Defined Contribution Pension
Plans
Under our 401(k) Plan, all of our employees are eligible to
receive matching contributions. We do not provide an excess
401(k) plan for our executive officers. Mr. McNamara
participated in the program in fiscal year 2010.
In response to the global economic downturn, we reviewed all
employee-related expenses and explored ways to control these
expenses. Effective March 15, 2009, the company suspended
the matching pre-tax 401(k) contributions made to the 401(k)
Plan for all U.S. employees classified by the company as
salaried (exempt) employees. The match was not suspended for
employees participating in the plan who are classified by the
company as hourly (non-exempt) employees. The match for
Mr. McNamara was also suspended as a result of this
action. Effective January 1, 2010, 401(k) matching
contributions were re-instated. In addition, the company has
instituted a new discretionary matching contribution. The
amount of any discretionary contribution will be based on
company performance and other economic factors as determined at
the end of the following corporate fiscal year.
Mr. Clarke participates in the companys Canadian
Defined Contribution pension plan. The Canadian plan is made up
of three components, as follows: (i) the Defined
Contribution (DC) Pension Plan, where Flextronics makes
monthly contributions equal to 2% of an employees
earnings; (ii) a Group Registered Retirement Savings Plan
(RRSP)/After Tax Savings Vehicle (ATSV), where employees can
make optional contributions to a Group RRSP/ATSV; and
(iii) a Deferred Profit Sharing Plan (DPSP), where
Flextronics will match any contributions made to the Group
RRSP/ATSV. The company will match 50% of the first 6% of the
earnings contributed by an employee.
Mr. Barbier participates in defined contribution pension
schemes mandated under French law, under which the company makes
contributions currently aggregating approximately 12.4% of his
base salary.
Mr. Widmann participates in the Multek pension plan. These
benefits are described in the section entitled
Executive Compensation Pension Benefits
in Fiscal Year 2010.
Other
Benefits
Executive officers are eligible to participate in all of the
companys employee benefit plans, such as medical, dental,
vision, group life, disability, and accidental death and
dismemberment insurance, in each case on the same basis as other
employees, subject to applicable law.
Termination
and Change of Control Arrangements
The named executive officers are entitled to certain termination
and change of control benefits under their deferred compensation
plans and under certain of their equity awards. These benefits
are described and quantified under the section entitled
Executive CompensationPotential Payments Upon
Termination or Change of Control. As described in
that section, if there is a change of control of the company,
the entire unvested portion of the deferred compensation account
of Mr. Read under the senior executive plan will
accelerate, and a percentage of the unvested portion of
Messrs. Reads, Clarkes, Barbiers and
Widmanns
-56-
deferred compensation accounts under the senior management plan
will accelerate based on their respective periods of service. As
of April 2010, Mr. McNamara was fully vested under the
senior executive plan. Under the terms of certain of our equity
incentive plans and the form of share bonus award agreement used
for certain of our grants of share bonus awards to our employees
(including our executives), in the event of a change of control,
each outstanding stock option and each unvested share bonus
award with such a provision shall automatically accelerate,
provided that vesting shall not so accelerate if, and to the
extent, such award is either to be assumed or replaced. Under
the terms of certain of our equity plans, the Committee has the
discretion to provide that certain awards may automatically
accelerate upon an involuntary termination of service within a
designated time period, even if such awards are assumed or
replaced. In addition, certain of Mr. McNamaras
options are subject to acceleration if there is a change of
control and his employment is terminated or his duties are
substantially changed. These arrangements are intended to
attract and retain qualified executives who could have other job
alternatives that might offer greater security absent these
arrangements. The Committee determined that a single trigger
for acceleration of the executives deferred compensation
accounts was appropriate in order to provide certainty of
vesting for benefits that represent the executives primary
source of retirement benefits. With respect to the acceleration
provisions under the companys stock incentive plans, the
Committee believes that these provisions provide our Board with
appropriate flexibility to address the treatment of options and
share bonus awards in a merger or similar transaction that is
approved by our Board, while providing appropriate protections
to our executives and other employees in transactions which are
not approved by our Board. With respect to certain of
Mr. McNamaras options, the acceleration of vesting of
options only occurs if Mr. McNamara remains with the
company through the change of control and is terminated or his
duties are substantially changed, commonly referred to as a
double trigger.
In addition to the foregoing arrangements, Mr. Barbier and
Mr. Clarke are entitled to certain severance benefits upon
their termination. Pursuant to a collective bargaining
agreement, Mr. Barbier would be entitled to severance
benefits in the event his employment is terminated, consisting
of a lump sum cash payment equal to 18 months of his base
salary. Pursuant to the terms of Mr. Clarkes
original offer of employment, in the event of termination of his
employment without cause, the company is obligated to pay
Mr. Clarke 12 months of severance in accordance with
applicable law.
Executive
Stock Ownership Guidelines
To more closely align the interests of our management with those
of our shareholders, our Board of Directors, upon the
recommendation of the Committee, adopted stock ownership
guidelines for all of our executive officers and direct reports
of the chief executive officer. The ownership guidelines
provide for our executive officers to own a minimum number of
our ordinary shares, which (i) for our CEO, is the number
of shares having a value equal to at least four times his annual
base salary, (ii) for our CFO, is the number of shares
having a value equal to at least two and one-half times his
annual base salary and (iii) for all of our other executive
officers and CEO direct reports, is the number of shares having
a value equal to at least one and one-half times his or her
annual base salary. All ordinary shares held by our executives,
as well as the value of fully-vested stock options (net of the
value of taxes), count toward these goals. The guidelines
provide for our executives to reach these goals within five
years of the date that the Board approved the guidelines or the
date they joined the company, whichever is later, and to hold
such a minimum number of shares for as long as he or she is an
officer.
Executive
Incentive Compensation Recoupment Policy
In May 2010, the Committee recommended and our Board adopted an
Executive Incentive Compensation Recoupment Policy. The policy
covers our executive officers and direct reports of our chief
executive officer, and applies to bonuses or awards under the
companys short and long-term incentive bonus plans, awards
under our equity incentive plans, and contributions under our
deferred compensation plans where the contributions are based on
the achievement of financial results. In the event of a material
restatement of financial results where a covered officer engaged
in fraud or misconduct that caused the need for the restatement,
the Board will have discretion to recoup incentive compensation
of any covered officer if
-57-
and to the extent the amount of compensation which was paid or
which vested would have been lower if the financial results had
been properly reported. In the case of equity awards that
vested based on the achievement of financial results that were
subsequently reduced, the Board also may seek to recover gains
from the sale or disposition of vested shares (including shares
purchased upon the exercise of options that vested based on the
achievement of financial results). In addition, the Board will
have discretion to cancel outstanding equity awards where the
financial results which were later restated were considered in
granting such awards. The Board only may seek recoupment in
cases where the restatement shall have occurred within
36 months of the publication of the audited financial
statements that have been restated.
Compensation
Risk Assessment
With the assistance of Radford, 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 executive and senior officers to focus on the
creation of long-term shareholder value. In its review, the
Committee noted the following features:
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our incentive bonus plan uses several performance measures at
the corporate level, as well as different performance measures
for our business unit executives;
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payout levels are capped under our incentive bonus plan and
payout opportunities may be achieved on a straight line
interpolation basis between threshold and target levels, and
generally between the target and maximum levels;
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non-GAAP adjustments are made to align achievement of
performance measures with our business strategy; 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 (both equity and cash)
constitute a significant portion of executives and senior
officers compensation, thereby focusing such individuals
on enhancing long-term shareholder value.
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Based on its review of market trends and best practices, the
Committee recommended and our Board approved certain changes to
our compensation policies and practices, which became effective
in fiscal year 2011. See Compensation Discussion
and Analysis Fiscal Year 2011 Changes in Executive
Compensation above. The Committee believes that
the adoption of stock ownership guidelines and an incentive
compensation recoupment policy will further align
executives and senior officers interests with our
shareholders and mitigate risk relating to our compensation
programs.
-58-
EXECUTIVE
COMPENSATION
The following table sets forth the fiscal year 2008, 2009 and
2010 compensation for:
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Michael M. McNamara, our chief executive officer;
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Paul Read, our current chief financial officer; and
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Michael J. Clarke, Francois Barbier and Werner Widmann, the
three other most highly compensated executive officers serving
as executive officers at the end of our 2010 fiscal year.
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The executive officers included in the Summary Compensation
Table are referred to in this joint proxy statement as our named
executive officers. A detailed description of the plans and
programs under which our named executive officers received the
following compensation can be found in the section entitled
Compensation Discussion and Analysis
beginning on page 39 of this joint proxy statement.
Additional information about these plans and programs is
included in the additional tables and discussions which follow
the Summary Compensation Table.
Summary
Compensation Table
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Change in
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Pension Value
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and
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Nonqualified
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Non-Equity
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Deferred
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Stock
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Option
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Incentive Plan
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Compensation
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All Other
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Name and Principal
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Earnings
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Compensation
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Total
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Position (1)(2)
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Year
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($) (3)
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($) (4)
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($) (5)
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($) (6) (7)
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($) (8)
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($) (9)
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($) (10)
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($)
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Michael M. McNamara
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2010
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$
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1,250,000
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$
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1,820,925
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$
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2,942,814
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$
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1,686,577
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$
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55,452
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$
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7,755,768
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Chief Executive Officer
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2009
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$
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1,250,000
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$
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812,895
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$
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5,206,000
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$
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20,849,600
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$
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2,062,500
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$
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83,183
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$
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30,264,178
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2008
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$
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1,250,000
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$
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2,200,000
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$
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6,762,000
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$
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3,750,000
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$
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23,522
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$
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13,985,522
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Paul Read
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2010
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$
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600,000
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$
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217,361
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$
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941,701
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$
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208,733
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$
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52,251
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$
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2,020,046
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Chief Financial Officer
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2009
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$
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584,375
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$
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1,588,500
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$
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8,106,400
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$
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655,050
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$
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31,390
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$
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10,965,715
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Michael J. Clarke
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2010
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$
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550,000
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$
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683,660
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$
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375,018
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$
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1,608,678
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President, Infrastructure
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2009
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$
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550,000
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$
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898,400
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$
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3,092,400
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$
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511,422
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$
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341,686
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$
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5,393,908
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Francois Barbier
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2010
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$
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499,838
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$
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6,106
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$
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504,301
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$
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111,924
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$
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70,001
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$
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1,192,170
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President, Global Operations
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Werner Widmann
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2010
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$
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441,766
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$
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674,721
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$
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104,538
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$
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378,049
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$
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24,098
|
|
|
$
|
1,623,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President, Multek
|
|
|
2009
|
|
|
$
|
418,604
|
|
|
$
|
240,754
|
|
|
$
|
898,400
|
|
|
$
|
2,061,600
|
|
|
$
|
240,723
|
|
|
|
|
|
|
$
|
23,200
|
|
|
$
|
3,883,281
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
$
|
464,753
|
|
|
$
|
343,529
|
|
|
$
|
1,127,000
|
|
|
|
|
|
|
$
|
487,345
|
|
|
$
|
124,816
|
|
|
$
|
183,593
|
|
|
$
|
2,731,036
|
|
|
|
|
(1) |
|
Information for fiscal years 2008 and 2009 is not included for
Mr. Barbier, who was appointed an executive officer during
fiscal year 2010. Information for fiscal year 2008 is not
included for Messrs. Read and Clarke, each of whom was
appointed an executive officer during fiscal year 2009. |
|
(2) |
|
All compensation paid to and benefits for Mr. Widmann and
Mr. Barbier, other than stock awards and option awards,
were paid in Euros. For fiscal years 2010 and 2009,
Mr. Widmanns base salary in Euros was 327,349
and for fiscal year 2008, his base salary in Euros was
312,000. For fiscal year 2010, Mr. Barbiers
base salary in Euros was 370,370. The amounts have been
converted into dollars based on the prevailing exchange rates at
the end of the 2010, 2009 and 2008 fiscal years, respectively.
Mr. Clarkes salary and non-equity incentive plan
bonus are denominated in United States dollars and
converted to Canadian dollars immediately prior to payout using
the prevailing exchange rate on the effective date of the
beginning of the pay periods beginning in January and July of
each year. |
|
(3) |
|
Mr. McNamara contributed a portion of his fiscal year 2010
salary to his 401(k) savings plan account. All amounts
contributed are included under this column. |
-59-
|
|
|
(4) |
|
For fiscal year 2010, this column shows the unvested portion of
Mr. McNamaras deferred compensation account that
vested on April 1, 2010, Mr. Reads deferred
compensation account that vested on January 1, 2010 and
Mr. Widmanns deferred compensation account that
vested on July 1, 2009. For additional information about
the companys deferred compensation arrangements, see the
section entitled Compensation Discussion and
Analysis Fiscal Year 2010 Executive
Compensation Deferred Compensation
beginning on page 54 of this joint proxy statement and the
discussion under the section entitled Nonqualified
Deferred Compensation in Fiscal Year 2010
beginning on page 66 of this joint proxy statement. |
|
(5) |
|
Stock awards consist of service-based and performance-based
share bonus awards. The amounts in this column do not reflect
compensation actually received by the named executive officers
nor do they reflect the actual value that will be recognized by
the named executive officers. Instead, the amounts reflect the
grant date fair value for grants made by us in fiscal years 2009
and 2008, calculated in accordance with FASB ASC Topic 718.
There were no stock awards granted to the named executive
officers in fiscal year 2010. For additional information
regarding the assumptions made in calculating the amounts
reflected in this column, see the section entitled
Stock-Based Compensation under Note 2 to our
audited consolidated financial statements for the fiscal year
ended March 31, 2010, included in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010.
Performance-based awards granted in fiscal year 2009 were valued
based on the probability of achievement. Additional
compensation of $1,059,000 for Mr. McNamara, $529,500 for
Mr. Read, and $112,300 for Messrs. Clarke and Widmann
would be recognized if the maximum payout was achieved. |
|
(6) |
|
The amounts in this column do not reflect compensation actually
received by the named executive officers nor do they reflect the
actual value that will be recognized by the named executive
officers. Instead, the amounts reflect the grant date fair
value for grants made by us in fiscal year 2009, calculated in
accordance with FASB ASC Topic 718. There were no option grants
to the named executive officers in fiscal years 2010 and 2008,
except as described in the next sentence. The amounts in this
column for Mr. Barbier for fiscal year 2010 reflects the
incremental fair value resulting from the modification of
certain of Mr. Barbiers options pursuant to the
companys 2009 option exchange program. |
|
(7) |
|
Our executive officers were not eligible to participate in the
companys 2009 option exchange program, which expired on
August 11, 2009. Mr. Barbier, however, was appointed
an executive officer on December 7, 2009, and was therefore
eligible to participate in the program. In connection with the
option exchange, Mr. Barbier tendered 738,542 options with
a weighted average exercise price of $11.01 and was granted
457,724 replacement options with an exercise price of $5.57.
The option exchange was accounted for as a modification of the
existing option awards tendered in the exchange, and as a result
the incremental fair value associated with
Mr. Barbiers options was $6,106. No other named
executive officers were eligible to participate in the
exchange. Information regarding the assumptions made in
calculating the amounts reflected in this column for the option
exchange and grants made in fiscal year 2009, are included in
the section entitled Stock-Based Compensation under
Note 2 to our audited consolidated financial statements for
the fiscal year ended March 31, 2010, included in our
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010. |
|
(8) |
|
The amounts in this column represent incentive cash bonuses
earned in fiscal year 2010. For additional information, see the
section entitled Compensation Discussion and
Analysis Fiscal Year 2010 Executive
Compensation Incentive Bonus Plan. |
|
(9) |
|
The amounts in this column represent, in the case of
Mr. Widmann, the sum of (A) the increase in the
actuarial present value of his accrued pension benefits and
(B) above market earnings on his nonqualified deferred
compensation account. In the cases of Messrs. McNamara,
Read, Clarke and Barbier, the amounts in this column represent
the above-market earnings on their nonqualified deferred
compensation accounts in each respective fiscal year. As
discussed under the section |
-60-
|
|
|
|
|
entitled Pension Benefits in Fiscal Year
2010 beginning on page 65 of this joint proxy
statement, Mr. Widmann participates in the Multek
Multilayer Technology Gmbh & Co., KG Pension Plan.
During fiscal years 2010, 2009 and 2008, the actuarial present
value of Mr. Widmanns pension benefits increased by
$46,688, $505 and $28,564, respectively. None of our other
named executive officers participates in any defined benefit or
actuarial pension plans. The Pension Benefits in Fiscal Year
2010 table on page 65 of this joint proxy statement
includes the assumptions used to calculate the increase in the
actuarial present value of pension benefits for
Mr. Widmann. Above-market earnings represent the
difference between market interest rates determined pursuant to
SEC rules and earnings credited to the named executive
officers deferred compensation accounts. See the
Nonqualified Deferred Compensation in Fiscal Year 2010 table on
page 66 of this joint proxy statement for additional
information. |
|
(10) |
|
The following table provides a breakdown of the compensation
included in the All Other Compensation column for
fiscal year 2010: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Medical/
|
|
|
|
|
|
Relocation/
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
|
|
|
Enhanced
|
|
|
Personal
|
|
|
Expatriate
|
|
|
|
|
|
|
|
|
|
|
|
|
Match
|
|
|
Long-Term
|
|
|
Aircraft
|
|
|
Assignment
|
|
|
Tax
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
Disability
|
|
|
Usage
|
|
|
Expenses
|
|
|
Reimbursements
|
|
|
Miscellaneous
|
|
|
|
|
Name
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)(5)
|
|
|
($)(6)
|
|
|
Total ($)
|
|
|
Michael M. McNamara
|
|
$
|
9,200
|
|
|
$
|
1,261
|
|
|
$
|
25,954
|
|
|
|
|
|
|
$
|
19,037
|
|
|
|
|
|
|
$
|
55,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Read
|
|
|
|
|
|
$
|
956
|
|
|
$
|
25,023
|
|
|
|
|
|
|
$
|
25,772
|
|
|
$
|
500
|
|
|
$
|
52,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Clarke
|
|
$
|
60,706
|
(7)
|
|
|
|
|
|
|
|
|
|
$
|
123,402
|
|
|
$
|
165,000
|
|
|
$
|
25,910
|
|
|
$
|
375,018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francois Barbier
|
|
$
|
49,984
|
|
|
$
|
1,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
18,138
|
|
|
$
|
70,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Werner Widmann
|
|
|
|
|
|
$
|
3,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
21,053
|
|
|
$
|
24,098
|
|
|
|
|
(1) |
|
The amounts in this column represent company matching
contributions to the 401(k) saving plan accounts for
Mr. McNamara. In the case of Mr. Clarke, it
represents the company matching contribution to
Mr. Clarkes after-tax savings account in the
companys Canadian retirement program. In the case of
Mr. Barbier, it represents company contributions to the
mandatory pension programs under applicable French law. |
|
(2) |
|
For Mr. McNamara and Mr. Read, the amounts in this
column represent the companys contribution to the
executive long-term disability program which provides additional
benefits beyond the basic employee long-term disability
program. For Mr. Widmann and Mr. Barbier, the amounts
represent reimbursements for health care costs. |
|
(3) |
|
The amounts in this column represent the aggregate incremental
costs resulting from the personal use of the company aircraft.
Costs include a portion of ongoing maintenance and repairs,
aircraft fuel, satellite communications and travel expenses for
the flight crew. It excludes non-variable costs which would
have been incurred regardless of whether there was any personal
use of aircraft. |
|
(4) |
|
For fiscal year 2010, this amount represents the costs
associated with Mr. Clarkes international assignment
and includes rent and home management costs of $68,158 while on
assignment in the United States, education reimbursement of
$52,008 and $3,236 of other related costs. |
|
(5) |
|
For Mr. McNamara, this amount represents the sum of
(A) $13,327 for the reimbursement of taxes with respect to
Medicare taxes due on Mr. McNamaras vested deferred
compensation amounts for the 2010 fiscal year and
(B) $5,710 related to taxes due as a result of the personal
use of the company aircraft. For Mr. Read, this amount
represents the sum of (A) $13,384 related to taxes with
respect to |
-61-
|
|
|
|
|
the personal use of company aircraft, (B) $2,972 related to
foreign taxes paid in fiscal 2010 relating to tax amounts owing
with respect to fiscal year 2007 and (C) $9,416 for
reimbursement taxes with respect to Medicare, social security
and state disability insurance taxes due on Mr. Reads
vested deferred compensation amounts for the 2010 fiscal year.
For Mr. Clarke, this amount represents reimbursement for
the incremental taxes estimated to be due as a result of his
international assignment. Amounts in this column for
Mr. Clarke are estimates. Actual tax amounts will only be
known upon completion of tax filings in both the United States
and Canada. |
|
(6) |
|
The amount disclosed for Mr. Read represents $500 paid for
tax filing assistance. For Messrs. Barbier Clarke, and
Widmann, the amounts represent payments associated with the
provision of a company car. |
|
(7) |
|
All company contributions to Mr. Clarkes after-tax
savings account in the companys Canadian retirement
program were paid in Canadian dollars and have been converted
into United States dollars based on the prevailing exchange rate
at the end of the 2010 fiscal year. Amounts for
Messrs. Barbier and Widmann have been converted into
dollars from the Euro based on the prevailing exchange rate at
the end of the 2010 fiscal year. |
Grants of
Plan-Based Awards in Fiscal Year 2010
The following table presents information about non-equity awards
we granted in our 2010 fiscal year to our named executive
officers. We did not grant any stock options or share bonus
awards to our named executive officers during our 2010 fiscal
year, other than options granted to Mr. Barbier pursuant to
the companys 2009 option exchange program. The awards
included in this table consist of awards under our annual
incentive cash bonus program.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
Exercise or
|
|
Grant Date
|
|
|
|
|
Estimated Future Payouts Under
|
|
Securities
|
|
Base Price of
|
|
Fair Value of
|
|
|
|
|
Non-Equity Incentive Plan Awards
|
|
Underlying
|
|
Option
|
|
Option
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Options
|
|
Awards
|
|
Awards
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
|
Michael M. McNamara
|
|
|
|
|
|
$
|
937,500 (1
|
)
|
|
$
|
1,875,000 (1
|
)
|
|
$
|
3,750,000 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Read
|
|
|
|
|
|
$
|
300,000 (1
|
)
|
|
$
|
600,000 (1
|
)
|
|
$
|
1,200,000 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Clarke
|
|
|
|
|
|
$
|
220,000 (1
|
)
|
|
$
|
440,000 (1
|
)
|
|
$
|
1,320,000 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francois Barbier
|
|
|
|
|
|
$
|
199,930 (1
|
)
|
|
$
|
399,860 (1
|
)
|
|
$
|
1,199,580 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/11/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
457,724 (2
|
)
|
|
$
|
5.57 (2
|
)
|
|
$
|
6,106 (2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Werner Widmann
|
|
|
|
|
|
$
|
154,618 (1
|
)
|
|
$
|
309,236 (1
|
)
|
|
$
|
927,708 (1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
These amounts show the range of possible payouts under our
incentive cash bonus program for fiscal year 2010. The maximum
payment for Messrs. McNamara and Read represents 200% of
the target payment. The maximum payment for our other named
executive officers is approximately 300%. The threshold payment
for each named executive officer represents 50% of target payout
levels. Amounts actually earned in fiscal year 2010 are reported
as Non-Equity Incentive Plan Compensation in the Summary
Compensation Table. For additional information, see the section
entitled Compensation Discussion and
Analysis Fiscal Year 2010 Executive
Compensation Incentive Bonus Plan
beginning on page 47 of this joint proxy statement. |
|
(2) |
|
In connection with the companys 2009 option exchange
program, Mr. Barbier tendered 738,542 options with a
weighted average exercise price of $11.01 and was granted
457,724 replacement options with an exercise price of $5.57.
The option exchange was accounted for as a modification of the
existing option awards tendered in the exchange, and as a result
the incremental fair value associated with
Mr. Barbiers options was $6,106. No other named
executive officers were eligible to participate in the
exchange. Information regarding the assumptions made in
calculating the amounts reflected in this column for the |
-62-
|
|
|
|
|
option exchange are included in the section entitled
Stock-Based Compensation under Note 2 to our
audited consolidated financial statements, included in our
Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010. |
Outstanding
Equity Awards at 2010 Fiscal Year-End
The following table presents information about outstanding
options and stock awards held by our named executive officers as
of March 31, 2010. The table shows information about:
|
|
|
stock options,
|
|
|
service-based share bonus awards, and
|
|
|
performance-based share bonus awards.
|
The market value of the stock awards is based on the closing
price of our ordinary shares as of March 31, 2010, which
was $7.84. Market values shown assume all performance criteria
are met and the maximum value is paid. For additional
information, see the section entitled Compensation
Discussion and Analysis Fiscal Year 2010 Executive
Compensation Stock-Based Compensation
beginning on page 52 of this joint proxy statement.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive Plan
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
Awards:
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Market or
|
|
|
Number of
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Payout Value
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
|
|
Value of
|
|
Unearned
|
|
of Unearned
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
Shares, Units
|
|
Shares, Units
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
or Other
|
|
or Other
|
|
|
Options
|
|
Options
|
|
Unexercised
|
|
Option
|
|
|
|
Units of Stock
|
|
Stock That
|
|
Rights That
|
|
Rights That
|
|
|
(#)
|
|
(#)
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
That Have
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
|
|
|
|
|
Options
|
|
Price
|
|
Expiration
|
|
Not Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#) (1)
|
|
($)
|
|
Michael M. McNamara
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
$
|
13.98
|
|
|
|
09/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,000,000
|
|
|
|
|
|
|
|
|
|
|
$
|
7.90
|
|
|
|
07/01/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
|
|
|
|
|
|
|
$
|
8.84
|
|
|
|
09/03/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
$
|
11.53
|
|
|
|
08/23/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,000,000
|
|
|
|
|
|
|
|
|
|
|
$
|
12.37
|
|
|
|
05/13/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
685,416
|
|
|
|
14,584
|
(2)
|
|
|
|
|
|
$
|
11.23
|
|
|
|
04/17/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
874,999
|
|
|
|
1,125,001
|
(3)
|
|
|
|
|
|
$
|
10.59
|
|
|
|
06/02/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
874,999
|
(4)
|
|
|
1,125,001
|
(5)
|
|
$
|
10.59
|
|
|
|
06/02/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
1,500,000
|
(6)
|
|
|
|
|
|
$
|
2.26
|
|
|
|
12/05/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
1,500,000
|
(6)
|
|
|
|
|
|
$
|
1.94
|
|
|
|
03/02/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
483,333
|
(7)
|
|
$
|
3,789,331
|
|
|
|
725,000
|
|
|
$
|
5,684,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Read
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
$
|
23.19
|
|
|
|
12/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
623
|
|
|
|
|
|
|
|
|
|
|
$
|
23.02
|
|
|
|
07/06/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
|
|
|
|
|
|
|
$
|
15.90
|
|
|
|
10/01/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
|
|
|
|
|
|
|
|
|
|
$
|
16.57
|
|
|
|
01/09/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
$
|
10.34
|
|
|
|
07/01/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
$
|
13.18
|
|
|
|
09/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
125,000
|
|
|
|
|
|
|
|
|
|
|
$
|
12.05
|
|
|
|
10/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
306,249
|
|
|
|
393,751
|
(8)
|
|
|
|
|
|
$
|
10.59
|
|
|
|
06/02/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
306,249
|
(9)
|
|
|
393,751
|
(10)
|
|
$
|
10.59
|
|
|
|
06/02/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
|
|
1,500,000
|
(11)
|
|
|
|
|
|
$
|
2.26
|
|
|
|
12/05/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(12)
|
|
$
|
548,800
|
|
|
|
280,000
|
|
|
$
|
2,195,200
|
|
-63-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Incentive Plan
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
Incentive Plan
|
|
Awards:
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Market or
|
|
|
Number of
|
|
Number of
|
|
Awards:
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Payout Value
|
|
|
Securities
|
|
Securities
|
|
Number of
|
|
|
|
|
|
|
|
Value of
|
|
Unearned
|
|
of Unearned
|
|
|
Underlying
|
|
Underlying
|
|
Securities
|
|
|
|
|
|
Number of
|
|
Shares or
|
|
Shares, Units
|
|
Shares, Units
|
|
|
Unexercised
|
|
Unexercised
|
|
Underlying
|
|
|
|
|
|
Shares or
|
|
Units of
|
|
or Other
|
|
or Other
|
|
|
Options
|
|
Options
|
|
Unexercised
|
|
Option
|
|
|
|
Units of Stock
|
|
Stock That
|
|
Rights That
|
|
Rights That
|
|
|
(#)
|
|
(#)
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
That Have
|
|
Have Not
|
|
Have Not
|
|
Have Not
|
|
|
|
|
|
|
Options
|
|
Price
|
|
Expiration
|
|
Not Vested
|
|
Vested
|
|
Vested
|
|
Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
Date
|
|
(#)
|
|
($)
|
|
(#) (1)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Clarke
|
|
|
244,791
|
|
|
|
5,209
|
(13)
|
|
|
|
|
|
$
|
10.78
|
|
|
|
04/13/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
262,499
|
|
|
|
337,501
|
(14)
|
|
|
|
|
|
$
|
10.59
|
|
|
|
06/02/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
(15)
|
|
|
|
|
|
$
|
2.26
|
|
|
|
12/05/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
(16)
|
|
$
|
705,600
|
|
|
|
140,000
|
|
|
$
|
1,097,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francois Barbier
|
|
|
|
|
|
|
457,724
|
(17)
|
|
|
|
|
|
$
|
5.57
|
|
|
|
08/11/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
450,000
|
(18)
|
|
|
|
|
|
$
|
2.26
|
|
|
|
12/05/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(19)
|
|
$
|
548,800
|
|
|
|
170,000
|
|
|
$
|
1,332,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Werner Widmann
|
|
|
3,000
|
|
|
|
|
|
|
|
|
|
|
$
|
5.87
|
|
|
|
10/08/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
|
|
|
|
|
|
|
|
$
|
10.34
|
|
|
|
07/01/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
16.57
|
|
|
|
01/09/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
$
|
13.18
|
|
|
|
09/28/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
$
|
12.05
|
|
|
|
10/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,999
|
|
|
|
225,001
|
(20)
|
|
|
|
|
|
$
|
10.59
|
|
|
|
06/02/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
(21)
|
|
|
|
|
|
$
|
2.26
|
|
|
|
12/05/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(22)
|
|
$
|
548,800
|
|
|
|
170,000
|
|
|
$
|
1,332,800
|
|
|
|
|
(1) |
|
This column shows performance-based share bonus awards that vest
annually or cliff vest over three, four or five years if we
achieve pre-determined
year-over-year
adjusted EPS growth rates or adjusted operating profit growth
rates, provided that if one or more of the annual adjusted EPS
growth targets or adjusted operating profit targets is not met,
the unvested portion may be recouped if the subsequent
periods cumulative target is met. Awards for
Mr. McNamara vest over four years or cliff vest after three
years, subject to achievement of the performance conditions.
Awards for Messrs. Read, Widmann and Barbier vest over five
years or cliff vest after three years, and awards for
Mr. Clarke cliff vest after three years, in each case
subject to the achievement of performance conditions. The
amounts disclosed in this column represent the maximum number of
shares that could vest under each performance-based share bonus
award. |
|
(2) |
|
These stock options vest on April 17, 2010. |
|
(3) |
|
These stock options vest monthly from April 2, 2010 through
June 2, 2012. |
|
(4) |
|
These options have vested but may only be exercised if the
trading price of our ordinary shares is at least $12.50 per
share. |
|
(5) |
|
1,125,001 options will vest monthly from April 2, 2010
through June 2, 2012, provided that these options may only
be exercised if the trading price of our ordinary shares is at
least $12.50 per share. |
|
(6) |
|
500,000 of these stock options vest annually on June 2,
2010, 2011 and 2012. |
|
(7) |
|
75,000 shares vest annually on May 1, 2010 and 2011,
166,667 shares vest on March 2, 2011, and
166,666 shares vest on March 2, 2012. |
|
(8) |
|
These stock options vest monthly from April 2, 2010 through
June 2, 2012. |
|
(9) |
|
These options have vested but may only be exercised if the
trading price of our ordinary shares is at least $12.50 per
share. |
-64-
|
|
|
(10) |
|
393,751 options will vest monthly from April 2, 2010
through June 2, 2012, provided that these options may only
be exercised if the trading price of our ordinary shares is at
least $12.50 per share. |
|
(11) |
|
500,000 stock options vest annually on June 2, 2010, 2011
and 2012. |
|
(12) |
|
10,000 shares vest annually on April 3, 2010 and 2011,
and 50,000 shares cliff vest on May 1, 2010. |
|
(13) |
|
These stock options vest on April 13, 2010. |
|
(14) |
|
These stock options vest monthly from April 2, 2010 through
June 2, 2012. |
|
(15) |
|
150,000 stock options vest annually on June 2, 2010, 2011
and 2012. |
|
(16) |
|
20,000 shares vest annually on April 13, 2010 and
2011, and 50,000 shares cliff vest on May 1, 2010. |
|
(17) |
|
These stock options were issued in connection with the
companys 2009 option exchange program. 114,429 of these
stock options vest on August 11, 2010, 43,295 options vest
monthly from September 11, 2010 through August 11,
2011, and 300,000 options vest monthly from September 11,
2010 through August 11, 2012. |
|
(18) |
|
150,000 stock options vest annually on June 2, 2010, 2011
and 2012. |
|
(19) |
|
10,000 shares vest annually on April 3, 2010 and 2011,
and 50,000 shares cliff vest on May 1, 2010. |
|
(20) |
|
These options vest monthly from April 2, 2010 through
June 2, 2012. |
|
(21) |
|
100,000 stock options vest annually on June 2, 2010, 2011
and 2012. |
|
(22) |
|
10,000 shares vest annually on April 17, 2010 and
2011; 50,000 of these shares cliff vest on May 1, 2010. |
Option
Exercises and Stock Vested in Fiscal Year 2010
The following table presents information, for each of our named
executive officers, on (1) stock option exercises during
fiscal year 2010, including the number of shares acquired upon
exercise and the value realized and (2) the number of
shares acquired upon the vesting of stock awards in the form of
share bonus awards during fiscal year 2010 and the value
realized, in each case before payment of any applicable
withholding tax and broker commissions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
Number of Shares
|
|
Value Realized on
|
|
Acquired on
|
|
Value Realized
|
|
|
Acquired on Exercise
|
|
Exercise
|
|
Vesting
|
|
on Vesting
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
Michael M. McNamara
|
|
|
|
|
|
|
|
|
|
|
275,000
|
|
|
$
|
1,617,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul Read
|
|
|
200,000
|
|
|
$
|
1,028,858
|
|
|
|
10,000
|
|
|
$
|
33,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Clarke
|
|
|
150,000
|
|
|
$
|
795,188
|
|
|
|
20,000
|
|
|
$
|
69,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Francois Barbier
|
|
|
150,000
|
|
|
$
|
292,944
|
|
|
|
10,000
|
|
|
$
|
33,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Werner Widmann
|
|
|
100,000
|
|
|
$
|
517,822
|
|
|
|
10,000
|
|
|
$
|
41,000
|
|
Pension
Benefits in Fiscal Year 2010
The following table sets forth information on the pension
benefits for Mr. Widmann. No other named executive officer
participated in a defined benefit or actuarial pension plan
during fiscal year 2010.
The Multek Multilayer Technology GmbH & Co. KG Pension
Plan, or the Multek Plan, is a funded and tax qualified
retirement program that covers, as of March 31, 2010, 474
current employees, 105 former employees with vested benefits and
37 retirees. The Multek Plan provides benefits based primarily
on a formula that takes into account Mr. Widmanns
base salary for each fiscal year and equals 1.5% of his base
-65-
salary up to a German parliament-prescribed limit applicable to
German defined benefit plans (66,000 for 2010), and 4.5%
of his base salary over this limit.
Employees of Multek Germany are eligible to participate in the
Multek Plan after completion of one year of service with
Multek. The accumulated benefit an employee earns over his or
her career with Multek is payable monthly beginning after
retirement or upon disability if earlier. The normal retirement
age as defined in the Multek Plan is 62. If an employee retires
before the normal retirement age, his or her benefits will be
reduced by 0.5% per month. Employees vest in their benefits
after five years of continuous service.
No pension benefits were paid to Mr. Widmann in the last
fiscal year.
The amount reported in the table below equals the present value
of the accumulated benefit as of March 31, 2010 for
Mr. Widmann under the Multek Plan based upon the
assumptions described in note 2 below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Present Value of
|
|
|
|
|
Number of Years
|
|
Accumulated
|
|
|
|
|
Credited Service
|
|
Benefit
|
Name
|
|
Plan Name
|
|
(#)
|
|
($)
|
|
Werner Widmann
|
|
Multek Multilayer Technology GmbH & Co. KG Pension Plan
|
|
|
6.5
|
(1)
|
|
$
|
146,013
|
(2)
|
|
|
|
(1) |
|
Mr. Widmanns number of years of credited service
under the Multek Plan is 6.5 years, which differs from his
actual years of service with us of 7.5 years, as a result
of the eligibility requirements that an employee needs to
complete one year of service with Multek before being eligible
to participate in the Multek Plan. |
|
(2) |
|
The accumulated benefit is based on Mr. Widmanns
service and base salary through March 31, 2010. The
present value assumes a discount rate of 5.25% and has been
calculated assuming Mr. Widmann will remain in service
until age 62, the age at which retirement may occur without
any reduction in benefits. |
Nonqualified
Deferred Compensation in Fiscal Year 2010
Each of our named executive officers participates in a deferred
compensation plan, except for Mr. Widmann who participates
in an individual arrangement. Our deferred compensation program
is intended to promote retention by providing a long-term
savings opportunity on a tax-efficient basis. Messrs. McNamara
and Read participate in our Senior Executive Deferred
Compensation Plan, which we refer to as the senior executive
plan. Participants in the senior executive plan may receive
long-term deferred bonuses, which are subject to vesting
requirements. In addition, a participant may defer up to 80% of
his salary and up to 100% of his cash bonuses. The deferred
compensation is credited to a deferral account established under
the senior executive plan for recordkeeping purposes. Amounts
credited to a deferral account are deemed to be invested in
hypothetical investments selected by an investment manager on
behalf of each participant. Under the senior executive plan, we
have entered into a trust agreement providing for the
establishment of an irrevocable trust into which we are required
to deposit cash or other assets as specified in the applicable
deferral agreement, equal to the aggregate amount required to be
credited to the participants deferral account, less any
applicable taxes to be withheld. The deferred account balances
of the participants in the senior executive plan are unfunded
and unsecured obligations of the company, receive no
preferential standing, and are subject to the same risks as any
of our other general obligations. Participants in the senior
executive plan may receive their vested deferred compensation
balances upon termination of employment either through a lump
sum payment or in installments over a period of up to
10 years.
Messrs. Clarke and Barbier participate in the
companys Senior Management Deferred Compensation Plan
(referred to as the senior management plan). Mr. Read
participated in the senior management plan until
December 1, 2008, when our Board approved his participation
in the senior executive plan. Under the senior management plan,
a participant may receive a deferred discretionary contribution,
which is subject to vesting requirements. Deferred balances
under the senior management plan are deemed to be invested in
hypothetical investments selected by the participant or the
participants investment manager. Participants in the
senior management plan will receive their vested deferred
compensation balances upon termination of employment through a
lump sum payment on the later of January
15th of
the year following termination and six months following
termination. In addition, any unvested portions of the deferral
accounts will become 100% vested if
-66-
the executives employment is terminated as a result of his
or her death. Under the senior management plan, we have entered
into a trust agreement providing for the establishment of an
irrevocable trust into which we are required to deposit cash or
other assets as specified in the applicable deferral agreement,
equal to the aggregate amount required to be credited to the
participants deferral account, less any applicable taxes
to be withheld. The deferred account balances of the
participants in the senior management plan are unfunded and
unsecured obligations of the company, receive no preferential
standing, and are subject to the same risks as any of our other
general obligations.
Under Mr. Widmanns arrangement, we granted
Mr. Widmann long-term deferred bonuses in 2006 and 2007,
which are subject to vesting requirements.
Mr. Widmanns account balance is invested as directed
by his investment manager and his entire vested account balance
amount will be distributed following termination of employment.
For a discussion of the deferred bonuses granted to each of the
named executive officers and their vesting terms, including
vesting upon the executives termination or a change in
control of the company, see the sections entitled
Compensation Discussion and Analysis
Fiscal Year 2010 Executive Compensation Deferred
Compensation beginning on page 54 of this
joint proxy statement and Executive
Compensation Potential Payments Upon Termination or
Change of Control below.
The following table presents information for fiscal year 2010
about: (i) earnings on the deferred compensation plan
accounts and (ii) the deferred compensation plan account
balances as of the end of the fiscal year. No contributions
were made by the company or any of the named executive officers
to their respective deferred compensation plan accounts in
fiscal year 2010, nor were there any withdrawals or
distributions from such accounts.
|
|
|
|
|
|
|
|
|
|
|
Aggregate Earnings
|
|
Aggregate Balance at Fiscal
|
|
|
in Last Fiscal Year
|
|
Year-End
|
Name
|
|
($) (1)
|
|
($) (2)
|
|
Michael M. McNamara
|
|
$
|
2,102,939
|
|
|
$
|
9,012,494
|
|
Paul Read
|
|
$
|
362,453
|
|
|
$
|
3,120,423
|
|
Michael J. Clarke
|
|
$
|
4,146
|
|
|
$
|
462,077
|
|
Francois Barbier
|
|
$
|
146,851
|
|
|
$
|
741,237
|
|
Werner Widmann
|
|
$
|
454,159
|
|
|
$
|
2,575,035
|
|
|
|
|
(1) |
|
Reflects earnings for each named executive officer. The
above-market portion of these earnings is included under the
Change in Pension Value and Nonqualified Deferred
Compensation Earnings column in the Summary Compensation
Table. For Mr. Read, $173,610 was earned under his senior
executive plan account and $188,843 was earned under his senior
management plan account. |
|
(2) |
|
The amounts in this column have previously been reported in the
Summary Compensation Table for this and prior fiscal years,
except for the following amounts: Paul Read
$2,911,690; Michael J. Clarke $462,077; Francois
Barbier $629,313; and Werner Widmann
$1,958,441. The amounts in this column include the following
unvested balances for the named executive officers: Paul
Read $2,901,510; Michael J. Clarke
$462,077; Francois Barbier $741,237; and Werner
Widmann $1,416,269. For Mr. Read, the amount
includes a $1,970,218 unvested balance in his senior executive
plan account and a $931,292 unvested balance held in his senior
management plan account. |
Potential
Payments Upon Termination or Change of Control
As described in the section entitled Compensation
Discussion and Analysis beginning on page 39
of this joint proxy statement, our named executive officers do
not have employment or severance agreements with us except as
set forth below. However, our named executive officers are
entitled to certain termination and change of control benefits
under each executives deferred compensation plan and under
certain equity awards. In addition, Mr. Barbier has
severance benefits under a collective bargaining agreement and
Mr. Clarke is entitled to receive severance benefits
pursuant to his offer of employment in lieu of benefits mandated
under Ontario law. These benefits are described below and
quantified in the table below.
-67-
Acceleration
of Vesting of Deferred Compensation
|
|
|
|
|
If the employment of Mr. McNamara or Mr. Read (with
respect to his account under the senior executive plan) is
terminated as a result of his death or disability, or the
employment of Messrs. Read (with respect to his account
under the senior management plan), Clarke, Barbier or Widmann is
terminated as a result of his death, the entire unvested portion
of the executives deferred compensation account will vest.
Mr. McNamaras deferred compensation account was fully
vested as of March 31, 2010.
|
|
|
|
If there is a change of control (as defined in the senior
executive plan), the entire unvested portion of the deferred
compensation account of each of Messrs. McNamara and Read
(with respect to his account under the senior executive plan)
will vest. As noted above, Mr. McNamaras deferred
compensation account was fully vested as of March 31, 2010.
|
|
|
|
If there is a change of control (as defined in the senior
management plan), a percentage of the unvested portion of the
deferral account of each of Messrs. Read (with respect to
his account under the senior management plan), Clarke and
Barbier will vest based on the executives completed months
of service with the company as follows: Mr. Read --
number of months from July 1, 2005 to July 1, 2014,
divided by 108; Mr. Clarke -- number of months from
July 1, 2007 to July 1, 2017, divided by 84; and
Mr. Barbier -- number of months from July 1, 2005
to July 1, 2013, divided by 96.
|
|
|
|
If there is a change of control (as defined in
Mr. Widmanns award agreement), a percentage of the
unvested potion of the deferral account for Mr. Widmann
will vest based on the executives completed months of
service with the company during the six-year period from
July 1, 2005 through July 1, 2011, divided by 72.
|
Acceleration
of Vesting of Equity Awards
The number of unvested equity awards held by each named
executive officer as of March 31, 2010 is listed above in
the Outstanding Equity Awards at 2010 Fiscal Year-End table.
All unvested outstanding equity awards held by our named
executive officers at the end of fiscal year 2010 were granted
under the 2001 Plan or the 2002 Plan, which provide certain
benefits to plan participants in the event of the termination of
such participants employment or a change in control of the
company. The terms of these benefits are described below.
Under the terms of the 2001 Equity Incentive Plan and the 2002
Equity Incentive Plan, if a plan participant ceases to provide
services to the company for any reason other than death, cause
(as defined in the plan) or disability (as defined in the plan),
then the participant may exercise any options which have vested
by the date of such termination within three months of the
termination date or such other period not exceeding five years
or the term of the option, as determined by the Compensation
Committee. If a participant ceases to provide services to the
company because of death or disability, then the participant may
exercise any options which have vested by the date of such
termination within 12 months of the termination date or
such other period not exceeding five years or the term of the
option, as determined by the Compensation Committee. All stock
options held by a plan participant who is terminated for cause
expire on the termination date, unless otherwise determined by
the Compensation Committee. In addition, subject to any waiver
by the Compensation Committee, all unvested share bonus awards
and unvested stock options held by a plan participant will be
forfeited if the participant ceases to provide services to the
company for any reason.
Except for grants to our non-employee directors made under the
automatic option grant program of the 2001 Plan, under the terms
of the 2001 Plan and the 2002 Plan and the form of share bonus
award agreement used for certain of our grants of share bonus
awards to our employees (including our executives), in the event
of a dissolution or liquidation of the company or if we are
acquired by merger or asset sale or in the event of other change
of control events, each outstanding stock option issued under
the 2001 Plan or the 2002 Plan and each unvested share bonus
award with such a provision shall automatically accelerate so
that each such award shall, immediately prior to the effective
date of such transaction, become fully vested with respect to
the total number of shares then subject to such award. However,
subject to the specific terms of a given award, vesting shall
not so accelerate if, and to the extent, such award is either to
be assumed or replaced with a comparable right covering
-68-
shares of the capital stock of the successor corporation or
parent thereof or is replaced with a cash incentive program of
the successor corporation which preserves the inherent value
existing at the time of such transaction.
All of our named executive officers stock options with
exercise prices less than $7.84 per share, the closing price of
our ordinary shares on the last business day of our 2010 fiscal
year, were granted under and are subject to the change of
control provisions of one of these plans. In addition, 780,333
of Mr. McNamaras unvested share bonus awards, 200,000
of Mr. Reads unvested share bonus awards, 90,000 of
Mr. Clarkes unvested share bonus awards and 190,000
of Mr. Widmanns unvested share bonus awards include
such a change of control provision. In addition to the rights
described above, 14,584 of Mr. McNamaras unvested
stock options provide that if he is terminated or his duties are
substantially reduced or changed during the
18-month
period following a change of control, the vesting of the options
will accelerate.
Severance
Benefits
In addition to the foregoing arrangements, Mr. Barbier and
Mr. Clarke are entitled under
non-U.S. law
to certain severance benefits upon their termination. Pursuant
to a collective bargaining agreement, Mr. Barbier would be
entitled to severance benefits in the event his employment is
terminated, consisting of a lump sum cash payment equal to
18 months of his base salary. Pursuant to the terms of
Mr. Clarkes original offer of employment, in the
event of termination of his employment without cause, the
company is obligated to pay Mr. Clarke 12 months of
severance in accordance with applicable law.
Potential
Payments Upon Termination or Change of Control
as of March 31, 2010
The following table shows the estimated payments and benefits
that would be provided to each named executive officer as a
result of (i) the accelerated vesting of deferred
compensation in the case of his or her death, disability or a
change of control and (ii) the accelerated vesting of
unvested equity awards in the event of a change of control. The
following table also shows severance benefits that would be
payable to Messrs. Barbier and Clarke pursuant to their
arrangements under
non-U.S. law.
For benefits payable to Mr. Widmann under the Multek
Pension Plan, please see the discussion above under the caption
Pension Benefits in Fiscal Year 2010.
Calculations for this table assume that the triggering event
took place on March 31, 2010, the last business day of our
2010 fiscal year, and are based on the price per share of our
ordinary shares on such date, which was $7.84. The following
table does not include potential payouts under our named
executive officers nonqualified deferred compensation
plans relating to vested benefits.
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Accelerated
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Accelerated
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|
|
|
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Vesting of
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Vesting of
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Accelerated
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Deferred
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Share Bonus
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Vesting of
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Severance Benefits
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Compensation
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Awards
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Stock Options
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Name
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(1)
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(2)
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(3)
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(4)
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Total
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Michael M. McNamara
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$
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$
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|
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$
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5,553,331
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$
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22,960,000
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|
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$
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28,513,331
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Paul Read
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$
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|
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$
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2,461,733
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|
|
$
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1,568,000
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$
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10,044,000
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|
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$
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14,073,733
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Michael J. Clarke
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$
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550,000
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|
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$
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181,530
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|
|
$
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705,600
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$
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2,511,000
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$
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3,948,130
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Francois Barbier
|
|
$
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749,736
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|
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$
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440,109
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$
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|
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$
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3,550,033
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|
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$
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4,739,878
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Werner Widmann
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$
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|
|
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$
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1,121,213
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|
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$
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1,489,600
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|
|
$
|
1,679,910
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|
|
$
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4,290,723
|
|
|
|
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(1) |
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For Mr. Barbier, the amount represents 555,555 in
severance payable under a collective bargaining agreement. The
amount has been converted to U.S. dollars at the prevailing
exchange rate on March 31, 2010. For Mr. Clarke, the
amount represents 12 months severance payable in
accordance with applicable law. The amount is denominated in
United States dollars and would be converted to Canadian dollars
immediately prior to payout using the prevailing exchange rate
on the effective date of the beginning of the most recent pay
period beginning in January or July of the year of termination. |
-69-
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(2) |
|
The amount shown for Mr. Read represents the portion of the
unvested portion of his deferred compensation account that would
vest in the event of a change of control. The portion of
Mr. Reads deferred compensation account that would
vest in the event of his disability is $1,970,218. The entire
portion of the unvested portion of Mr. Reads deferred
compensation account, or $2,901,510, would vest in the event of
his death. The amounts shown for each of Messrs. Clarke
and Barbier represent the portion of the unvested portion of his
or her deferred compensation account that would vest in the
event of a change of control. The entire amount of each of
Messrs. Clarkes, Barbiers and Widmanns
deferred compensation account, or $462,077, $741,237, and
$1,416,269, respectively, would vest in the event of his death. |
|
(3) |
|
The amounts shown represents the estimated value of the
accelerated vesting of share bonus awards following a change of
control under the terms of his or her award agreement, which
assumes that such share bonus awards are not assumed or replaced
by the successor corporation or its parent. If such awards are
assumed or replaced in a change of control transaction, the
vesting of such awards will not accelerate. All amounts shown
in this column represent the intrinsic value of the awards based
on the closing price of our ordinary shares on March 31,
2010, the assumed date of the triggering event. |
|
(4) |
|
The estimated values shown represent the acceleration of stock
options following a change of control of the company or similar
corporate transaction, assuming that such stock options are not
assumed or replaced by the successor corporation or its parent.
If such options are assumed or replaced in a change of control
transaction, the vesting of such awards will not accelerate,
except in the case of options for 14,584 options held by
Mr. McNamara which would vest upon his termination or a
substantial reduction of his duties during the
18-month
period following a change of control. The amounts shown
represent the intrinsic value of the awards based on the closing
price of our ordinary shares on March 31, 2010, the assumed
date of the triggering event. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of March 31,
2010, except as otherwise indicated, regarding the beneficial
ownership of our ordinary shares by:
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each shareholder known to us to be the beneficial owner of more
than 5% of our outstanding ordinary shares;
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each of our named executive officers;
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each director; and
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all executive officers and directors as a group.
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Unless otherwise indicated, the address of each of the
individuals named below is:
c/o Flextronics
International Ltd., No. 2 Changi South Lane, Singapore
486123.
Information in this table as to our directors, named executive
officers and all directors and executive officers as a group is
based upon information supplied by these individuals.
Information in this table as to our greater than 5% shareholders
is based solely upon the Schedules 13G filed by these
shareholders with the SEC. Where information regarding
shareholders is based on Schedules 13G, the number of shares
owned is as of the date for which information was provided in
such schedules.
Beneficial ownership is determined in accordance with the rules
of the SEC that deem shares to be beneficially owned by any
person who has voting or investment power with respect to such
shares. Ordinary shares subject to options that are currently
exercisable or are exercisable within 60 days of
March 31, 2010, and ordinary shares subject to share bonus
awards that vest within 60 days of March 31, 2010 are
deemed to be outstanding and to be beneficially owned by the
person holding such awards for the purpose of computing the
percentage ownership of such person, but are not treated as
outstanding for the purpose of computing the percentage
ownership of any other person. Unless otherwise indicated
below, the persons and entities named in the table have sole
voting and sole investment power with respect to all the shares
beneficially owned, subject to community property laws where
applicable.
-70-
In the table below, percentage ownership is based on 813,429,154
ordinary shares outstanding as of March 31, 2010.
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Shares Beneficially Owned
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|
|
Number of
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|
|
|
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Name and Address of Beneficial Owner
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Shares
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|
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Percent
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5% Shareholders:
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Capital Research Global Investors, a division of Capital
Research and Management Company
333 South Hope Street, Los Angeles, CA 90071 (1)
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83,374,762
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10.25
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%
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Franklin Resources, Inc. (2)
One Franklin Parkway, San Mateo, CA 94403
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73,683,470
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9.06
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%
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Entities associated with FMR LLC (3)
82 Devonshire Street, Boston, MA 02109
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70,086,172
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8.62
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%
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Named Executive Officers and Directors:
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|
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|
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|
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Michael M. McNamara (4)
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|
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9,122,803
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1.11
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%
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Paul Read (5)
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|
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1,013,539
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|
*
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Francois Barbier (6)
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|
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60,000
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|
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|
*
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Michael J. Clarke (7)
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|
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607,499
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|
*
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Werner Widmann (8)
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|
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504,666
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*
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James A. Davidson (9)
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|
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164,618
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|
|
*
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Lip-Bu Tan (10)
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|
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118,784
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|
|
*
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H. Raymond Bingham (11)
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|
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123,870
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|
|
|
*
|
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Willy C. Shih (12)
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|
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46,952
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|
|
|
*
|
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Robert L. Edwards (13)
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|
|
23,193
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|
|
|
*
|
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William D. Watkins (14)
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|
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20,068
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|
|
|
*
|
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Daniel H. Schulman
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|
|
13,298
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|
|
|
*
|
|
All executive officers and directors as a group
(16 persons) (15)
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|
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13,841,632
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|
|
|
1.67
|
%
|
|
|
|
(1) |
|
Based on information supplied by Capital Research Global
Investors, a division of Capital Research and Management
Company, or CRMC, in a Schedule 13G filed with the SEC on
February 11, 2010. As a result of CRMC acting as an
investment adviser to various investment companies, Capital
Research Global Investors is deemed to beneficially own all of
these shares. Capital Research Global Investors is deemed to
have sole voting power for 29,669,298 of these shares and sole
dispositive power for 83,374,762 of these shares. |
|
(2) |
|
Based on information supplied by Franklin Resources, Inc. in an
amended Schedule 13G filed with the SEC on February 2,
2010. Templeton Global Advisors Limited is deemed to have sole
voting power for 43,793,668 of these shares, sole dispositive
power for 44,941,707 of these shares and shared dispositive
power for 1,876,590 of these shares. Templeton Investment
Counsel, LLC is deemed to have sole voting power for 14,124,011
of these shares and sole dispositive power for 14,203,681 of
these shares. Franklin Templeton Investments Corp. is deemed to
have sole voting and dispositive power for 7,110,080 of these
shares. Franklin Templeton Investments Australia Limited is
deemed to have sole voting power for 306,000 of these shares,
sole dispositive power for 179,890 of these shares and shared
dispositive power for 126,110 of these shares. Franklin
Templeton Portfolio Advisors, Inc. is deemed to have sole voting
and dispositive power for 129 of these shares. Franklin
Advisers, Inc. is deemed to have sole voting and dispositive
power for 163,730 of these shares. Franklin Templeton
Investments (Asia) Limited is deemed to have sole voting power
for 592,770 of these shares and sole dispositive power for
1,671,170 of these shares. Franklin Templeton Investment
Management Limited |
-71-
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|
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|
|
is deemed to have sole voting power for 508,766 of these shares
and sole dispositive power for 3,132,686 of these shares.
Fiduciary Trust Company International is deemed to have
sole voting and dispositive power for 38,907 of these shares.
Franklin Templeton Investments Japan Limited is deemed to have
sole voting and dispositive power for 8,610 of these shares.
Templeton Asset Management Ltd. is deemed to have sole
dispositive power for 230,180 of these shares. The securities
are beneficially owned by investment management clients of
investment managers that are direct and indirect subsidiaries of
Franklin Resources, Inc., including the investment management
subsidiaries listed above. |
|
(3) |
|
Based on information supplied by FMR LLC in an amended
Schedule 13G filed with the SEC on February 16, 2010.
FMR LLC and Edward C. Johnson 3d each have sole voting power
over 851,300 of these shares and sole dispositive power over
70,086,172 of these shares. |
|
(4) |
|
Includes 8,608,333 shares subject to options exercisable
and 75,000 shares subject to share bonus awards that vest
within 60 days of March 31, 2010. |
|
(5) |
|
Includes 953,539 shares subject to options exercisable
within 60 days of March 31, 2010 and
60,000 shares subject to share bonus awards that vest
within 60 days of March 31, 2010. |
|
(6) |
|
Includes 60,000 shares subject to share bonus awards that
vest within 60 days of March 31, 2010. |
|
(7) |
|
Includes 537,499 shares subject to options exercisable and
70,000 shares subject to share bonus awards that vest
within 60 days of March 31, 2010. |
|
(8) |
|
Includes 444,666 shares subject to options exercisable and
60,000 shares subject to share bonus awards that vest
within 60 days of March 31, 2010. |
|
(9) |
|
Includes 45,740 shares held by the Davidson Living Trust of
which Mr. Davidson is a trustee. Also includes
51,807 shares held by Silver Lake Technology Management,
L.L.C. of which Mr. Davidson is Managing Director.
Mr. Davidson disclaims beneficial ownership in the shares
owned by Silver Lake Technology Management, L.L.C. except to the
extent of his pecuniary interest arising from his interest
therein. Also includes 5,000 shares held directly by
Mr. Davidson, 94 shares held by the John Alexander
Davidson 2000 Irrevocable Trust of which Mr. Davidson is a
trustee and 61,977 shares subject to options exercisable
within 60 days of March 31, 2010. Mr. Davidson
received these options in connection with his service as a
member of our Board of Directors. Under
Mr. Davidsons arrangements with respect to director
compensation, these 61,977 shares issuable upon exercise of
options are expected to be assigned by Mr. Davidson to
Silver Lake Technology Management, L.L.C. |
|
(10) |
|
Includes 61,977 shares subject to options exercisable
within 60 days of March 31, 2010. Also includes
56,807 shares held by the Lip-Bu Tan and Ysa Loo, TTEE, of
which Mr. Tan is a co-trustee. Of the shares held by
trust, Mr. Tan shares voting and dispositive power over
56,807 of these shares and disclaims beneficial ownership of all
of these shares. |
|
(11) |
|
Includes 49,477 shares subject to options exercisable
within 60 days of March 31, 2010. |
|
(12) |
|
Includes 19,530 shares subject to options exercisable
within 60 days of March 31, 2010. |
|
(13) |
|
Includes 9,895 shares subject to options exercisable within
60 days of March 31, 2010. |
|
(14) |
|
Includes 6,770 shares subject to options exercisable within
60 days of March 31, 2010. |
|
(15) |
|
Includes 12,569,893 shares subject to options exercisable
within 60 days of March 31, 2010 and
487,500 shares subject to share bonus awards that vest
within 60 days of March 31, 2010. |
-72-
CERTAIN
RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Review
of Related Person Transactions
Our Code of Business Conduct and Ethics provides guidance for
addressing actual or potential conflicts of interests, including
those that may arise from transactions and relationships between
us and our executive officers or directors. In addition, in
order to formalize our policies and procedures for the review,
approval or ratification, and disclosure of related person
transactions, our Board of Directors adopted a Statement of
Policy with Respect to Related Person Transactions. The policy
generally provides that the Nominating and Corporate Governance
Committee (or another committee comprised solely of independent
directors) will review, approve in advance or ratify, all
related person transactions between us and any director, any
nominee for director, any executive officer, any beneficial
owners of more than 5% of our ordinary shares or any immediate
family member of any of the foregoing individuals. Under the
policy, some ordinary course transactions or relationships are
not required to be reviewed, approved or ratified by the
applicable Board committee, including, among other things, the
following transactions:
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|
transactions involving less than $25,000 for any individual
related person;
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|
compensation arrangements with directors and executive officers
resulting solely from their service on the Board or as executive
officers, so long as such arrangements are disclosed in our
filings with the SEC or, if not required to be disclosed, are
approved by our Compensation Committee; and
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|
indirect interests arising solely from a related persons
service as a director
and/or
owning, together with all other related persons, directly or
indirectly, less than a 10% beneficial ownership interest in a
third party (other than a partnership) which has entered into or
proposes to enter into a transaction with us.
|
We have various procedures in place to identify potential
related person transactions, and the Nominating and Corporate
Governance Committee works with our management and our Office of
General Counsel in reviewing and considering whether any
identified transactions or relationships are covered by the
policy. Our Statement of Policy with Respect to Related Person
Transactions is included in our Guidelines with Regard to
Certain Governance Matters, a copy of which is available along
with a copy of the companys Code of Business Conduct and
Ethics on the Corporate Governance page of our website at
www.flextronics.com.
Transactions
with Related Persons
Other than compensation agreements and other arrangements
described under the sections entitled Executive
Compensation beginning on page 59 of this
joint proxy statement and Non-Management
Directors Compensation for Fiscal Year 2010
beginning on page 13 of this joint proxy statement and the
transactions described below, during fiscal year 2010, there was
not, nor is there currently proposed, any transaction or series
of similar transactions to which we are or will be a party:
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|
|
in which the amount involved exceeded or will exceed $120,000;
and
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|
in which any director, nominee, executive officer, holder of
more than 5% of our ordinary shares or any member of their
immediate family had or will have a direct or indirect material
interest.
|
Investment
by Silver Lake
In March 2003, we issued $195.0 million aggregate principal
amount of our Zero Coupon Convertible Junior Subordinated Notes
due 2008 to funds affiliated with Silver Lake. In connection
with the issuance of the notes, we appointed James A. Davidson,
a co-founder and managing director of Silver Lake, to our Board
of Directors. In July 2006, we entered into an agreement with
the Silver Lake noteholders to, among other things
(i) extend the maturity date of the notes to July 31,
2009 and (ii) provide for net share settlement of the notes
upon maturity. The terms of the transaction were based on
arms-length negotiations between us and Silver Lake, and were
approved by our Board of Directors as well as by the Audit
Committee. On July 31, 2009, we paid $195.0 million to
pay off the notes at their maturity.
-73-
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors
and executive officers, and persons who own more than 10% of our
ordinary shares to file initial reports of ownership and reports
of changes in ownership with the SEC. Such persons are required
by SEC regulations to furnish us with copies of all
Section 16(a) forms that they file. Based solely on our
review of the copies of such forms furnished to us and written
representations from our executive officers and directors, we
believe that all Section 16(a) filing requirements for the
fiscal year ended March 31, 2010 were met.
SHAREHOLDER
PROPOSALS FOR THE 2011 ANNUAL GENERAL MEETING
Shareholder proposals submitted under SEC
Rule 14a-8
and intended for inclusion in the proxy statement for our 2011
annual general meeting of shareholders must be received by us no
later than February 7, 2011. Any such shareholder
proposals must be mailed to our U.S. corporate offices
located at 847 Gibraltar Drive, Milpitas, California, 95035,
U.S.A., Attention: Chief Executive Officer. Any such
shareholder proposals may be included in our proxy statement for
the 2011 annual general meeting so long as they are provided to
us on a timely basis and satisfy the other conditions set forth
in applicable rules and regulations promulgated by the SEC.
Shareholder proposals submitted outside the processes of SEC
Rule 14a-8
are subject to the requirements of the Companies Act, as
described in the following paragraph, and applicable rules and
regulations promulgated by the SEC. The proxy designated by us
will have discretionary authority to vote on any matter properly
presented by a shareholder for consideration at the 2011 annual
general meeting of shareholders unless notice of such proposal
is received by the applicable deadlines prescribed by the
Singapore Companies Act.
Under Section 183 of the Companies Act, registered
shareholders representing at least 5% of the total outstanding
voting rights or registered shareholders representing not fewer
than 100 registered shareholders having an average paid up sum
of at least S$500 each may, at their expense, requisition that
we include and give notice of their proposal for the 2011 annual
general meeting. Any such requisition must satisfy the
requirements of Section 183 of the Singapore Companies Act,
be signed by all the requisitionists and be deposited at our
registered office in Singapore, No. 2 Changi South Lane,
Singapore 486123, at least six weeks prior to the date of the
2011 annual general meeting in the case of a requisition
requiring notice of a resolution, or at least one week prior to
the date of the 2011 annual general meeting in the case of any
other requisition.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
Flextronics incorporates by reference the following sections of
our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010:
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Item 8, Financial Statements and Supplementary
Data;
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|
|
Item 7, Managements Discussion and Analysis of
Financial Condition and Results of Operations; and
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|
|
|
Item 7A, Quantitative and Qualitative Disclosures
About Market Risk.
|
SINGAPORE
STATUTORY FINANCIAL STATEMENTS
Our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010, which was filed
with the SEC on May 24, 2010, includes our audited
consolidated financial statements, prepared in conformity with
accounting principles generally accepted in the United States of
America, or U.S. GAAP, together with the Independent
Registered Public Accounting Firms Report of
Deloitte & Touche LLP, our independent auditors for
the fiscal year ended March 31, 2010. We publish our
U.S. GAAP financial statements in U.S. dollars, which
is the principal currency in which we conduct our business.
-74-
Our Singapore statutory financial statements, prepared in
conformity with the provisions of the Companies Act will be
included with the annual report which will be delivered to our
shareholders prior to the date of the 2010 annual general
meeting, as required under Singapore law.
Our Singapore statutory financial statements include:
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our consolidated financial statements (which are identical to
those included in the Annual Report on
Form 10-K,
described above);
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supplementary financial statements (which reflect solely the
companys standalone financial results, with our
subsidiaries accounted for under the equity method rather than
consolidated);
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a Directors Report; and
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the Independent Auditors Report of Deloitte &
Touche, our Singapore statutory auditors for the fiscal year
ended March 31, 2010.
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OTHER
MATTERS
Our management does not know of any matters to be presented at
the 2010 annual general meeting other than those set forth
herein and in the notice accompanying this joint proxy
statement. If any other matters are properly presented for a
vote at either the 2010 annual general meeting or the
extraordinary general meeting, the applicable enclosed proxy
confers discretionary authority to the individuals named as
proxies to vote the shares represented by proxy, as to those
matters.
It is important that your shares be represented at each of the
2001 annual general meeting and the extraordinary general
meeting, regardless of the number of shares which you hold.
We urge you to promptly execute and return the accompanying
proxy cards in the envelope which has been enclosed for your
convenience.
Shareholders who are present at each of the 2001 annual general
meeting and the extraordinary general meeting may revoke their
proxies and vote in person or, if they prefer, may abstain from
voting in person and allow their proxies to be voted.
We incorporate by reference information from the section
entitled Stock-Based Compensation under Note 2
to our audited consolidated financial statements for the fiscal
year ended March 31, 2010, included in our Annual Report on
Form 10-K
and the sections entitled Financial Statements and
Supplementary Data, Managements Discussion and
Analysis of Financial Condition and Results of Operations
and Quantitative and Qualitative Disclosures About Market Risk.
Upon request, we will furnish without charge by first class mail
or other equally prompt means within one business day of receipt
of such request, to each person to whom a proxy statement is
delivered a copy of our Annual Report on
Form 10-K
(not including exhibits). You may request a copy of such
information, at no cost, by writing or telephoning us at our
U.S. corporate offices at:
Flextronics
International Ltd.
847 Gibraltar Dr.
Milpitas, California 95035 U.S.A.
Telephone:
(408) 576-7722
By order of the Board of Directors,
Bernard Liew Jin Yang
Company Secretary
,
2010
Singapore
Upon request, we will furnish without charge to each person
to whom this joint proxy statement is delivered a copy of any
exhibit listed in our Annual Report on
Form 10-K
for the fiscal year ended March 31, 2010. You may request
a copy of this information at no cost, by writing or telephoning
us at our U.S. corporate offices at:
Flextronics International Ltd.
847 Gibraltar Dr.
Milpitas, California 95035 U.S.A.
Telephone:
(408) 576-7722
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