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Definitive Proxy Statement
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RICHARDSON
ELECTRONICS, LTD.
(Name of Registrant
as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement,
if other than Registrant)
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RICHARDSON ELECTRONICS, LTD.
40W267 Keslinger Road
P.O. Box 393
LaFox, Illinois 60147-0393
NOTICE OF ANNUAL
MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 4, 2016
Dear Stockholders:
On behalf of the Board of Directors and Management of
Richardson Electronics, Ltd., I invite you to attend the 2016 Annual Meeting of Stockholders. The Annual Meeting will be held on
Tuesday, October 4, 2016, at 2:00 p.m. Central Time, at our corporate headquarters at 40W267 Keslinger Road, LaFox, Illinois 60147-0393.
The purpose of the Annual Meeting is to consider and vote
on the following matters:
1.
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To elect five directors nominated by Richardson’s Board of Directors for a term expiring
at the 2017 Annual Meeting (Proposal 1);
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2.
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To ratify the selection of BDO USA, LLP as the Company’s independent registered public
accounting firm for fiscal year 2017 (Proposal 2);
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3.
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To approve, on an advisory basis, the compensation of our Named Executive Officers (Proposal 3); and
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4.
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To act upon any other business that may properly come before the meeting or at any adjournment
or postponement thereof.
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We currently are not aware of any other matters scheduled
to come before the Annual Meeting. All stockholders are invited to attend the meeting, although only stockholders of record at
the close of business as of August 11, 2016, are entitled to notice of, and to vote at, the Annual Meeting or at any adjournment
or postponement thereof.
Whether or not you plan to attend the Annual Meeting,
it is important that your shares be represented and voted. You may vote by telephone, via the Internet, or by mail before the Annual
Meeting or in person at the Annual Meeting. For specific instructions, please refer to the accompanying proxy card.
This year we are again taking advantage of Securities
and Exchange Commission rules that allow us to furnish proxy materials to stockholders via the Internet. On or about August 19,
2016, we sent notices of Internet availability of proxy materials to holders of our common stock as of the record date. The notice
describes how you can access our proxy materials beginning on August 19, 2016.
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By Order of the Board of Directors,
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EDWARD J. RICHARDSON
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Chairman of the Board, Chief Executive Officer and President
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PROXY
STATEMENT
TABLE OF CONTENTS
RICHARDSON ELECTRONICS, LTD.
PROXY
STATEMENT
ANNUAL
MEETING INFORMATION
General
The Board of Directors of Richardson Electronics, Ltd.
(the “Company,” “we,” “our” or “us”) is soliciting your proxy for the Annual Meeting
of Stockholders to be held at our corporate headquarters located at 40W267 Keslinger Road, LaFox, Illinois 60147-0393, on Tuesday,
October 4, 2016, at 2:00 p.m. Central Time, and at any and all adjourned or postponed sessions of the Annual Meeting. On or about
August 19, 2016, we mailed our stockholders of record a notice of Internet availability of proxy materials, including this proxy
statement and our Annual Report on Form 10-K for the fiscal year ended May 28, 2016. All stockholders receiving the notice will
have the ability to access the proxy materials over the Internet and to request a paper copy by mail by following the instructions
in the notice.
Record Date and Quorum
Stockholders of record at the close of business on August
11, 2016, the record date, are entitled to notice of and to vote their shares at the Annual Meeting. At the record date, 10,702,932
shares of our common stock, and 2,140,631 shares of our Class B common stock were issued and outstanding. The common stock is listed
for trading on the NASDAQ Global Market under the symbol RELL. The presence in person or by proxy of the holders of record of a
majority of the combined voting power of the outstanding shares of common stock and Class B common stock entitled to vote is required
to constitute a quorum to transact business at the Annual Meeting. Abstentions and broker non-votes (which occur when a broker
indicates on a proxy card that it is not voting on a matter) are considered as shares present at the Annual Meeting for the purpose
of determining a quorum.
How to Vote
Stockholders can simplify their voting and reduce
Company expenses by voting by telephone or via the Internet. If you vote by telephone or via the Internet, you do not need to mail
back your proxy card.
Telephone and Internet voting information is provided on your proxy card. A control number located on
the proxy card is designed to verify your identity, allow you to vote your shares and confirm that your voting instructions have
been properly recorded.
If your shares are held in the name of a bank or broker,
you should follow the voting instructions you receive from the bank or broker. The availability of telephone or Internet voting
will depend on your bank or broker’s voting process. If you choose not to vote by telephone or Internet, please return your
proxy card properly signed, and the shares represented will be voted in accordance with your directions. You can specify your choices
by marking the appropriate boxes on the proxy card.
The election of directors (Proposal 1) and the non-binding
advisory vote on executive compensation (Proposal 3) are “non-discretionary” matters. Therefore, your broker may not
vote your shares with respect to these items unless it receives your voting instructions, and if it does not, those votes will
be counted as “broker non-votes.” “Broker non-votes” are shares that are held in street name by a bank
or broker that indicates on its proxy that it does not have or did not exercise discretionary authority to vote on a particular
matter.
If your proxy card is signed and returned without specifying
choices, the persons named as proxies will vote in accordance with the recommendations of the Board of Directors. The Board’s
recommendations are set forth together with the description of each matter in this Proxy Statement.
The Board of Directors recommends that you vote:
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FOR the election of each director nominee (Proposal 1);
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FOR the ratification of the selection of BDO USA, LLP as our independent registered public accounting
firm for fiscal year 2017 (Proposal 2); and
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FOR the approval, on an advisory basis, of the compensation of our Named Executive Officers
(Proposal 3).
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The Company knows of no other matters scheduled to come
before the meeting. If any other matters properly come before the meeting, the proxies solicited hereby will be voted on such matters
at the discretion of the persons named as proxies, except proxies that are marked to deny discretionary authority.
We encourage you to vote your shares in advance of the
Annual Meeting date even if you plan to attend the Annual Meeting.
Vote Required, Abstentions and Broker Non-Votes
Holders of common stock are entitled to one vote for
each share of common stock held on the record date, and holders of the Class B common stock are entitled to ten votes for each
share of Class B common stock held on the record date.
If a quorum is present at the Annual Meeting, the five
candidates for director who receive the highest number of affirmative votes will be elected. A proxy marked to withhold authority
for the election of one or more directors will not be voted with respect to the director or directors indicated.
The affirmative vote of shares representing a majority
in voting power of the Company’s common stock present in person or represented by proxy at the meeting and entitled to vote
is necessary for approval of Proposals 2 and 3. Proxy cards marked as abstentions on Proposals 2 and 3 will not be voted and will
have the effect of a negative vote. Please note that a broker or other nominee will not be permitted to vote your shares on Proposals
1 (election of directors) or 3 (advisory approval of executive compensation) absent specific instructions from you. Broker non-votes
on Proposal 1 will have no effect; broker non-votes on Proposal 3 will have the effect of a negative vote on the proposal. Because
Proposal 2 is a routine proposal on which a broker or other nominee generally has discretionary authority to vote, we do not expect
any broker non-votes on Proposal 2.
Revocability of Proxies
You may revoke your proxy at any time before it is voted
(in the case of proxy cards) by giving notice to the Secretary of the Company or by executing and mailing a later-dated proxy.
To revoke a proxy given or change your vote cast, by telephone or via the Internet, you must do so by telephone or via the Internet,
respectively (following the directions on your proxy card), by 11:59 p.m. Eastern Time on October 3, 2016.
Proxy Solicitation
We will bear the expense of soliciting proxies. Our
officers and certain other employees, without additional remuneration, may also solicit proxies personally or by telephone, e-mail
or other means.
PROPOSAL 1 - ELECTION OF DIRECTORS
At the Annual Meeting, stockholders will elect five
directors to serve on our Board of Directors until the next annual meeting, or until their successors are elected and shall have
qualified, subject to their earlier death, resignation or removal as permitted by law. Directors will be elected by a plurality
of the votes cast at the meeting by the holders of shares represented in person or by proxy. Thus, assuming a quorum is present,
the five persons receiving the greatest number of votes will be elected as directors and votes that are withheld will have no effect.
Our Board of Directors, acting through
our Nominating Committee, is responsible for nominating a slate of directors that collectively have the complementary experience,
qualifications, skills and attributes to guide the Company and function effectively as a Board.
The Nominating Committee has recommended Edward Richardson,
Jacques Belin, James Benham, Kenneth Halverson and Paul Plante as nominees for election at the Annual Meeting.
We believe that each of our nominees has professional
experience in areas relevant to our strategy and operations. All of our directors have managerial experience and are accustomed
to dealing with complex problems. We also believe each of our nominees has other attributes necessary to create an effective Board,
including high personal and professional ethics, the willingness to engage management and each other in a constructive and collaborative
fashion, the ability to devote significant time to serve on our Board and its committees, and a commitment to representing the
long-term interests of all our stockholders. In addition to these attributes, in each individual’s biography set forth below,
we have highlighted specific experience, qualifications, and skills that led the Nominating Committee and the Board to conclude
that each individual should be nominated to serve as a director of the Company.
Jacques Belin
, age 65, has been a director of
the Company since October 2013. He served as Managing Director of Thales Components and Subsystems from 2000 to 2011. He retired
from Thales in October 2011. Prior to 2000 he served in multiple capacities including Quality and Production Engineer, Operations
Manager and Factories Manager. In addition, Mr. Belin was heavily involved at Thales in areas including strategy, sales and marketing,
and administration. Mr. Belin holds an engineering degree from Ecole Centrale in Paris. His entire career has been devoted to the
electron tube and subsystems business. We believe Mr. Belin’s vast experience in the industry and knowledge of other advanced
power generation, microwave, healthcare and detection technologies will be highly beneficial to the Company.
James Benham
, age 71, has been a director of
the Company since October 2013. He has served as a Technical and Marketing Consultant to the Night Vision and Microwave Devices
Industries since March 2013. He retired in March 2013 after 46 years in the Defense Electronics industry. Prior to his retirement,
Mr. Benham was the President of L-3 Communications Narda West Division in Folsom, California from 2011 to 2013. For the previous
16 years, he was President of the Electron Devices Division of L-3 Communications. Mr. Benham received his BS in Chemistry from
the State University of New York, and an MBA from Lynchburg College in Lynchburg, Virginia. He has also completed executive development
programs at The Wharton School of the University of Pennsylvania, Harvard Business School and Stanford University. Additionally,
Mr. Benham holds a patent in the night vision field. We believe Mr. Benham’s 45+ years of technology development, engineering
and management experience will be a major asset to the future of the Company. Mr. Benham also serves as a director of Intevac Inc.
Kenneth Halverson
, age 65, has been a director
of the Company since October 2013. He has been a consultant with Halverson Consulting, LLC since 2009. Previously, he was Senior
Vice President from 1999 to 2009 with MedAssets, Inc., one of the largest Group Purchasing Organizations in the country. MedAssets
provides service to thousands of hospitals helping them to reduce their overall expenses. Mr. Halverson was with Comdisco Inc.
from 1984 to 1999, acting as Senior Vice President and President of the Healthcare Group, which leased imaging and clinical equipment
as well as refurbished and remarketed imaging equipment. Mr. Halverson holds an MBA in Finance from Northwestern University’s
Kellogg School of Management and has held various executive positions with technology and healthcare companies throughout his career.
We believe Mr. Halverson’s extensive experience with healthcare companies as well as his background in technology and finance
will enable him to provide valuable insight into the Company’s strategy.
Paul J. Plante
, age 58, has been a director since
October 2011. From December 2008 to present, Mr. Plante has been the President and owner of Florida Fresh Vending, LLC., a privately
held company, with vending machines throughout Central Florida. He has provided business consulting services to the electronics
industry since 2008. Prior to that time he was Vice President, Medical Industry Solutions, for the Kimball Electronics Group from
February 2007 until May 2008, after the purchase by Kimball Electronics of Reptron Electronics, Inc. From February 2004 to February
2007, Mr. Plante was President and Chief Executive Officer and a member of the Board of Directors of Reptron Electronics, Inc.,
a publicly held provider of electronics manufacturing services with a focus on the medical industry. From 1994 until 2004 he served
as the President and Chief Operating Officer of Reptron. Mr. Plante negotiated and led Reptron Electronics, Inc. through a successful
pre-arranged Chapter 11 reorganization period that strengthened the company’s balance sheet and liquidity with no significant
loss of customers, employees, or suppliers. Prior to 1994, he was the Chief Financial Officer at Reptron and at K-Byte, Inc., a
Michigan based software developer and electronics manufacturer. Mr. Plante has a degree in accounting and has been a licensed certified
public accountant. We believe Mr. Plante is financially literate and qualifies as an “audit committee financial expert”
under SEC rules. Mr. Plante’s qualifications to serve on our Board of Directors include his significant experience in the
electronics industry, his experience managing electronics manufacturing companies and his extensive financial knowledge. Mr. Plante
also serves as a director of SigmaTron International, Inc.
Edward J. Richardson
, age 74, has been a director
of the Company since 1965. He is currently the Chairman of the Board, Chief Executive Officer, and President of the Company. Mr.
Richardson has been employed by the Company in various capacities since 1961. We believe Mr. Richardson’s qualifications
to serve on our Board of Directors include his position as our Chief Executive Officer for over 38 years and his unique ability
to bring historic knowledge and continuity to the Board.
The Company knows of no reason why any of the nominees
for director would be unable to serve. In the event, however, that any nominee named should, prior to the election, become unable
to serve as a director, your proxy (unless designated to the contrary) will be voted for such other person or persons as the Board
of Directors may recommend.
Our
Board of Directors recommends that you vote “FOR” the election of each director nominee.
CORPORATE GOVERNANCE
Independence of Directors
The Board of Directors has determined that Messrs. Benham,
Halverson, Belin, and Plante, are independent as defined by NASDAQ listing standards. All members of the Audit, Compensation &
Governance, and Nominating Committees are independent in accordance with applicable laws and NASDAQ rules for members of such committees.
Board Leadership Structure
The Company has no fixed policy on whether the roles
of Chairman of the Board and Chief Executive Officer should be separate or combined, with this decision being made based on the
best interests of the Company and its stockholders considering the circumstances at the time. Currently, these roles are combined
with Mr. Richardson serving as both the Chairman of the Board and the Chief Executive Officer. Mr. Richardson possesses detailed
and in-depth knowledge of the issues, opportunities and challenges facing the Company and its business, and is responsible for
the day-to-day operations of the Company. Therefore, the Board believes that Mr. Richardson is best positioned to efficiently develop
agendas that ensure that the Board’s time and attention are focused on the most critical matters and to execute strategic plans
effectively, especially given the relatively small size of the Company’s Board.
At the selection of the Board, Mr. Plante serves as
lead director. The lead director acts as a key liaison with the Chief Executive Officer, assists the Chairman of the Board in setting
the Board agenda, chairs executive sessions of the Board, and communicates Board member feedback to the Chief Executive Officer.
In addition, the Company’s non-management directors meet in regularly scheduled executive sessions without any members of management
present. The purpose of these executive sessions is to promote open and candid discussion among the non-management directors. The
Board believes this approach appropriately and effectively complements the combined role of Chairman of the Board and Chief Executive
Officer.
Board and Committee Information
During our last fiscal year, the Board of Directors held
ten meetings, of which six were teleconference meetings. Each director attended at least 75% of the aggregate number of such meetings
and meetings of the committees on which he served. Although we have no formal policy about attendance at the Annual Meeting of
Stockholders by our directors, it is encouraged. Last year, all directors attended the Annual Meeting.
During our last fiscal year, the Board of Directors
had four standing committees: the Audit Committee, Compensation & Governance Committee, Executive Committee, and Nominating
Committee.
During our last fiscal year, the members and chair of each
committee were as follows:
Director
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Audit*
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Compensation*
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Executive
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Nominating
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Kenneth Halverson
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James Benham
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Paul Plante
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(Chair)
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(Chair)
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(Chair)
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Edward Richardson
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(Chair)
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* In July 2016, the Board of Directors appointed
Jacques Belin to the Audit Committee and Compensation & Governance Committee.
Executive Committee.
The Executive Committee
did not meet during the last fiscal year. This committee may exercise all authority of the Board of Directors in the management
of the Company during the interval between meetings of the Board of Directors, except as otherwise provided in our by-laws or by
applicable law.
Audit Committee.
The Audit Committee held four
meetings during the last fiscal year. This committee meets for the purpose of engaging and discharging the independent auditors
(or recommending such actions); directing and supervising special investigations; reviewing with the independent auditors the plan
and results of the auditing engagement; reviewing the scope and results of our procedures for internal auditing; approving each
professional service provided by the independent auditors prior to the performance of such services; reviewing the independence
of the independent auditors; considering the range of audit and non-audit fees for the independent auditors; reviewing the adequacy
of the issuer’s system of internal accounting controls; and such other matters relating to our financial affairs and accounts
as required by law or regulation or as it deems desirable or as the Board of Directors may assign to it. The Board of Directors
has determined that the composition and functioning of the committee complies with the rules of the SEC and NASDAQ, including that
each of its members is independent, as that term is defined in NASDAQ rules, and that one of its members, Mr. Plante, qualifies
as an “Audit Committee Financial Expert,” as that term is defined in SEC rules. The Audit Committee has adopted a written
charter approved by the Board of Directors. A copy of the charter is available on our website at www.rell.com.
The Audit Committee’s report begins on page 13.
Compensation & Governance Committee.
The
Compensation & Governance Committee (the “Compensation Committee”) held six meetings in the last fiscal year, of
which two were teleconference meetings. The committee is comprised of three independent directors, and the Board of Directors has
determined that the composition and functioning of this committee complies with the applicable NASDAQ and SEC requirements.
The committee’s responsibilities include:
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Establishing, reviewing, and approving the base salary, non-equity incentive compensation, perquisites,
and any other forms of non-equity compensation for our Chairman and Chief Executive Officer and for our executive officers;
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Reviewing and monitoring our incentive compensation and retirement plans and performing the
duties imposed on the Committee by the terms of those plans;
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Administering our incentive compensation plans, including determining the employees to whom
stock options and stock awards are granted, the number of shares subject to each option or award, and the date or dates upon which
each option or award may be exercised;
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Developing and reviewing the Company’s Corporate Governance Guidelines; and
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Performing other duties deemed appropriate by the Board of Directors.
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The Compensation Committee chairman reports the committee’s
recommendations on executive compensation to the Board of Directors. The Compensation Committee has authority to retain, approve
fees for, and terminate consultants as it deems necessary to assist in the fulfillment of its duties and responsibilities. The
committee has adopted a written charter which is available on our website at www.rell.com.
The Compensation Committee report is on page 21.
Nominating Committee.
The Nominating Committee
met once during the last fiscal year. In considering whether to recommend any particular candidate for inclusion on the Board of
Directors’ slate of recommended director nominees, the Nominating Committee applies the criteria set forth in our corporate
governance guidelines. These criteria include the candidate’s integrity, business acumen, knowledge of our business and industry,
experience, diligence, and the ability to act in the interests of all stockholders. The committee does not assign specific weights
to particular criteria and no particular criterion is a prerequisite for each prospective nominee. The committee believes that
the background and qualifications of our directors, considered as a group, should provide a composite mix of experience, knowledge,
and abilities that will best allow the Board of Directors to fulfill its responsibilities.
Management and the Directors submit candidates for
nomination for election to the Board of Directors for committee consideration. With respect to the election of director nominees
at the Annual Meeting, the Nominating Committee recommended the Board nominate each of the directors currently serving on the Board.
Stockholders may also submit names of candidates for
consideration by the Nominating Committee, provided that such submissions have been received by the Board of Directors no later
than July 12, 2016. Stockholders may also nominate a candidate or candidates for election as a director during the annual meeting
at which directors are elected.
The Company does not have a policy regarding the consideration
of diversity in identifying director nominees. The committee has not adopted a written charter. The Company is utilizing the “Controlled
Company” exemption pursuant to Nasdaq Rule 5615(c) for purposes of the Nominating Committee Charter Requirement. The determination
is based on the fact that Mr. Richardson has close to 70% of the voting rights as of the record date.
Board Role in Risk Oversight
Non-management Directors meet regularly in executive sessions
without management. Executive sessions are held during each regularly scheduled Board meeting and the Company’s lead director
presides over these sessions.
The Board and each of the Audit, Nominating, and Compensation
& Governance Committees conduct annual self-evaluations, as contemplated by the Company’s Corporate Governance Guidelines
and the charters of such Board Committees.
While the Company’s management is responsible for day-to-day
management of various risks facing the Company, the Board of Directors is responsible for evaluating the Company’s exposure to
risk and monitoring the steps management has taken to assess and control risk. In addition, the Board has delegated oversight of
certain categories of risk to the Audit Committee and the Compensation Committee. The Audit Committee oversees risks related to
the integrity of the Company’s financial statements and financial reporting, and the Compensation Committee oversees risks
related to the Company’s compensation plans and practices. In performing its oversight responsibilities, the Board receives
periodic reports from the Chief Executive Officer and other members of senior management on areas of risk facing the Company. The
Audit and Compensation Committees report to the Board regularly on matters relating to the specific areas of risk the committees
oversee.
Compensation of Directors
Non-employee directors receive
a quarterly retainer of $4,500, meeting fees of $1,000 for each Audit Committee meeting, and $750 for other Board and committee
meetings. The Chairman of the Audit Committee receives an additional quarterly retainer of $1,500.
Upon joining the Board, new directors receive a grant
of 25,000 stock options that vest over five years. After the five-year period, directors receive an annual grant of 5,000 stock
options that are fully vested on the date of grant.
Employee directors receive no additional compensation related
to their service on our Board of Directors.
COMPENSATION OF DIRECTORS
Director Compensation
Table
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Fees Earned
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or Paid in
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Option
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All Other
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Cash
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Awards
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Compensation
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Total
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Name of Director
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($)
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($)
(1)
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($)
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($)
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Edward J. Richardson
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$
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—
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$
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—
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$
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—
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$
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—
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Scott Hodes
(2)
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18,500
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—
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—
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18,500
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Jacques Belin
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25,500
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22,663
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—
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48,163
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James Benham
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30,500
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22,663
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—
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53,163
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Kenneth Halverson
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34,750
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22,663
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—
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57,413
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Paul Plante
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40,750
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31,208
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—
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71,958
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(1)
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Amounts represent the dollar amount recognized for financial statement reporting purposes with respect to fiscal 2016 for the
fair value of stock options granted to each director, in accordance with Financial Accounting Standards Board Accounting Standards
Codification (ASC) 718, and do not correspond to the actual value that will be recognized by each director. For the relevant assumptions
used in determining the fair value of stock option awards, refer to Note 3, Significant Accounting Policies - Share-Based Compensation,
in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended May
28, 2016, filed with the SEC on July 29, 2016.
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(2)
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Mr. Hodes did not stand for re-election at the 2015 Annual Meeting of Stockholders in October.
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EXECUTIVE OFFICERS
The following are our executive officers as of August 11,
2016:
Name
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Age
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Position
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Edward J. Richardson
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74
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Chairman, Chief Executive Officer, and President
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Wendy S. Diddell
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51
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Executive Vice President, Chief Operating Officer
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Gregory J. Peloquin
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52
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Executive Vice President, Power and Microwave Technologies Group
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Robert J. Ben
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51
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Executive Vice President, Chief Financial Officer and Corporate Secretary
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James M. Dudek, Jr.
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44
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Corporate Controller, Chief Accounting Officer
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Kathleen M. McNally
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56
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Senior Vice President, Global Supply Chain
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Mr. Richardson has been employed by the Company
since 1961, holding several positions during this time. He was Chairman of the Board, Chief Executive Officer and President from
September 1989 until November 1996. Since that time, Mr. Richardson has continued to hold the offices of Chairman of the Board
and Chief Executive Officer. He also served as President/Chief Operating Officer from April 2006 until December 2015, and as the
General Manager of the Electron Device Group from June 2009 to June 2014.
Ms. Diddell has been Executive Vice President since
June 2007 and as of December 23, 2015 Ms. Diddell has assumed the role of Chief Operating Officer. From June 2007 through December
2015, she held the role of Executive Vice President, Corporate Development. From June 2009 through June 2015, she also assumed
the role of General Manager of our Canvys business. Prior to June 2007, Ms. Diddell was Executive Vice President and General Manager
of our Security Systems Division since February 2006. Prior to that, Ms. Diddell was employed as Vice President and General Manager
of the Security Systems Division since June 2004 and as a management consultant for the Security Systems Division since July 2003.
Mr. Peloquin has been Executive Vice President, Power
and Microwave Technologies Group since June 2015. In June 2014, he re-joined the Company as Executive Vice President, Electron
Device Group. From March 2011 to June 2014 Mr. Peloquin was President of Richardson RFPD, a division of Arrow Electronics. Prior
to that, Mr. Peloquin was Executive Vice President of the RF Power & Wireless Division of the Company which was sold to Arrow
Electronics in 2011.
Mr. Ben has been Executive Vice President, Chief Financial
Officer and Corporate Secretary since August 17, 2015. Prior to joining Richardson Electronics, Mr. Ben was employed by Cobra Electronics
Corporation as their Senior Vice President, Chief Financial Officer from 2011 to 2014, Vice President and Corporate Controller
from 2008 to 2011, Senior Corporate Controller from 2006 to 2008 and Corporate Controller from 2000 to 2006.
Mr. Dudek has been Corporate Controller and Chief
Accounting Officer since December 2007. Prior to joining Richardson Electronics, Mr. Dudek was employed by Career Education Corporation
as their Senior Director, Financial Reporting from September 2006 to November 2007, and as their Director of Accounting from February
2004 to August 2006. Prior to that, Mr. Dudek was with ConAgra Refrigerated Foods Group from September 1999 to February 2004. He
served as Retail Sales Controller from May 2002 to February 2004 and various other positions within the Corporate Financial Planning
department.
Ms. McNally has been Senior Vice President, Global
Supply Chain, since 2009. Previously she served as Senior Vice President of Marketing Operations and Customer Support from 2000
to 2009 and as Vice President and Corporate Officer of Marketing Operations from 1989 until 2000. Prior to that, she held various
positions within the marketing department since joining the Company in 1979.
Executive officers are elected annually by the Board of
Directors at the time of the annual stockholders meeting and serve until their earlier resignation, death or removal.
PRINCIPAL STOCKHOLDERS
The following table shows the number of
shares of common stock and Class B common stock beneficially owned by (1) each director, (2) each of our Named Executive
Officers, (3) all directors and executive officers of the Company as a group, and (4) each other person who is known by us to
beneficially own more than 5% of our common shares. Percent of Class and Percent of Total Voting Rights are based on
12,843,563 shares outstanding as of August 11, 2016.
|
|
Shares of
Common
Stock (1)
|
|
|
Percent of
Class
|
|
|
Shares of
Class B
Common
Stock (2)
|
|
|
Percent of
Class B
Common
Stock
|
|
|
Percent of
Total Voting
Rights
|
|
Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jacques Belin
|
|
|
15,000
|
(3)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
James Benham
|
|
|
20,000
|
(4)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
Kenneth Halverson
|
|
|
15,000
|
(5)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
Paul J. Plante
|
|
|
25,000
|
(6)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
Edward J. Richardson
|
|
|
2,159,966
|
(7)
|
|
|
16.8
|
%
|
|
|
2,109,966
|
|
|
|
98.6
|
%
|
|
|
65.9
|
%
|
Non-Director Named Executive Officers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wendy S. Diddell
|
|
|
103,000
|
(8)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
Gregory J. Peloquin
|
|
|
15,020
|
(9)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
Robert J. Ben
|
|
|
5,500
|
(10)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
Kathleen Dvorak
|
|
|
—
|
(11)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
James M. Dudek, Jr.
|
|
|
29,103
|
(12)
|
|
|
*
|
|
|
|
—
|
|
|
|
*
|
|
|
|
*
|
|
All Executive Officers and Directors
as a Group of 11 people
|
|
|
2,448,167
|
(13)
|
|
|
19.1
|
%
|
|
|
2,109,966
|
|
|
|
98.8
|
%
|
|
|
66.9
|
%
|
Other Beneficial Owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dimensional Fund Advisors LP
|
|
|
1,017,696
|
(14)
|
|
|
9.5
|
%
|
|
|
—
|
|
|
|
*
|
|
|
|
3.2
|
%
|
Ariel Investments, LLC
|
|
|
1,072,760
|
(15)
|
|
|
10.0
|
%
|
|
|
—
|
|
|
|
*
|
|
|
|
3.3
|
%
|
Royce & Associates LLC
|
|
|
1,088,849
|
(16)
|
|
|
10.2
|
%
|
|
|
—
|
|
|
|
*
|
|
|
|
3.4
|
%
|
Renaissance Technologies LLC
|
|
|
860,499
|
(17)
|
|
|
8.0
|
%
|
|
|
—
|
|
|
|
*
|
|
|
|
2.7
|
%
|
Mutual of America Capital
Management Corp
|
|
|
674,835
|
(18)
|
|
|
6.3
|
%
|
|
|
—
|
|
|
|
*
|
|
|
|
2.1
|
%
|
(1)
|
Except as noted, beneficial ownership of each of the shares listed is comprised of both sole investment and sole voting power, or investment power and voting power that is shared with the spouse of the director or officer.
|
(2)
|
Common stock is entitled to one vote per share, and Class B common stock is entitled to ten votes per share.
|
(3)
|
Includes 15,000 shares of common stock to which Mr. Belin holds stock options exercisable within 60 days of August 11, 2016.
|
(4)
|
Includes 15,000 shares of common stock to which Mr. Benham holds stock options exercisable within 60 days of August 11, 2016.
|
(5)
|
Includes 15,000 shares of common stock to which Mr. Halverson holds stock options exercisable within 60 days of August 11, 2016.
|
(6)
|
Includes 25,000 shares of common stock to which Mr. Plante holds stock options exercisable within 60 days of August 11, 2016.
|
(7)
|
Includes 2,159,966 shares of common stock which would be issued upon conversion of Mr. Richardson’s Class B common stock and 50,000 shares of common stock to which Mr. Richardson holds stock options exercisable within 60 days of August 11, 2016.
|
(8)
|
Includes 103,000 shares of common stock to which Ms. Diddell holds stock options exercisable within 60 days of August 11, 2016.
|
(9)
|
Includes 13,000 shares of common stock to which Mr. Peloquin holds stock options exercisable within 60 days of August 11, 2016.
|
(10)
|
Includes 3,000 shares of common stock to which Mr. Ben holds stock options exercisable within 60 days of August 11, 2016.
|
(11)
|
Kathleen Dvorak is the former Executive Vice President, Chief Financial Officer. Ms. Dvorak resigned from the Company on August 28, 2015.
|
(12)
|
Includes 28,100 shares of common stock to which Mr. Dudek holds stock options exercisable within 60 days of August 11, 2016.
|
(13)
|
Includes 2,109,966 shares of common stock issuable on conversion of Class B common stock and 324,100 shares of common stock issuable upon options exercisable within 60 days of August 11, 2016.
|
(14)
|
Information disclosed in this table is as of December 31, 2015, and was obtained from a Schedule 13G/A filed with the SEC on February 9, 2016. The address for Dimensional Fund Advisors LP is 6300 Bee Cave Road, Building One, Austin, Texas, 78746.
|
(15)
|
Information disclosed in this table is as of December 31, 2015, and was obtained from a Schedule 13G/A filed with the SEC on February 12, 2016. The address for Ariel Investments, LLC is 200 East Randolph Street, Suite 2900, Chicago, IL 60601.
|
(16)
|
Information disclosed in this table is as of December 31, 2015 and was obtained from a Schedule 13G/A filed with the SEC on January 27, 2016. The address for Royce & Associates LLC is 745 Fifth Avenue, New York, NY, 10151.
|
(17)
|
Information disclosed in this table is as of December 31, 2015, and was obtained from a Schedule 13G/A filed with the SEC on February 11, 2016. The address for Renaissance Technologies is 800 Third Avenue, New York, NY 10022.
|
(18)
|
Information disclosed in this table is as of June 30, 2016, and was obtained from a Schedule 13F filed with the SEC on August 3, 2016. The address for Mutual of America Capital Management Corp is 320 Park Ave F5, New York, NY 10022.
|
PROPOSAL 2 - RATIFICATION
OF THE SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee expects to engage BDO USA, LLP (“BDO”)
to serve as our independent registered public accounting firm for the fiscal year ending May 27, 2017.
Although the Audit Committee is not required to do so, it
is submitting its expected selection of our independent registered public accounting firm for ratification at the Annual Meeting
in order to ascertain the views of our stockholders. The Audit Committee will not be bound by the vote of the stockholders; however,
if the proposed selection is not ratified, the Audit Committee would reconsider its selection.
One or more representatives of BDO are expected to
be present at the Annual Meeting. The representatives will have an opportunity to make a statement if they desire and will be available
to respond to questions from stockholders.
Information Regarding Change in Accountants
On January 22, 2015, we dismissed our independent registered
public accounting firm, Ernst & Young, LLP (“EY”). The Audit Committee of the Board of Directors made the decision
to dismiss EY and engage BDO, as our independent registered public accounting firm for the fiscal year ending May 30, 2015.
The reports of EY on our financial statements for the
fiscal year ended May 31, 2014, did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified
as to uncertainty, audit scope, or accounting principles.
During the fiscal year ended May 31, 2014, and the subsequent
interim periods through the date of the filing of our Form 8-K on January 29, 2015, there were (i) no “disagreements”
as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, between the Company and EY on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure, any of which that, if not resolved to EY’s satisfaction,
would have caused EY to make reference to the subject matter of any such disagreement in connection with its reports for such years
and interim period and (ii) no reportable events within the meaning of Item 304(a)(1)(iv) of Regulation S-K during the two most
recent fiscal years or the subsequent interim period.
The Company has provided each of EY and BDO with a
copy of the foregoing disclosures prior to the filing of this proxy statement with the SEC.
Our Board of Directors
recommends that you vote “FOR” the selection of BDO USA, LLP as our
independent registered public accounting firm for
fiscal 2017.
AUDIT MATTERS
Audit Committee Report
The Audit Committee of the Board of Directors is comprised
of directors that are “independent” as defined under the current NASDAQ listing standards and Rule 10A-3 under the
Exchange Act. The Audit Committee has a written charter that has been approved by the Board of Directors. A copy of the charter
is available on our website at www.rell.com.
The Audit Committee’s members are not professionally
engaged in the practice of accounting or auditing, and they necessarily rely on the work and assurances of the Company’s
management and the independent registered public accounting firm. Management has the primary responsibility for the financial statements
and the reporting process, including the process of internal control over financial reporting. The independent registered public
accounting firm of BDO USA, LLP (“BDO”) is responsible for performing an independent audit of the Company’s consolidated
financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”)
and expressing an opinion on the conformity of such audited financial statements with United States generally accepted accounting
principles. In addition, the Company’s independent registered public accounting firm is responsible for auditing as well
as expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. The Audit Committee
has reviewed and discussed with management the audited financial statements of the Company for the fiscal year ended May 28, 2016
(the “Audited Financial Statements”). In addition, the Audit Committee has discussed with BDO the matters required
to be discussed by PCAOB Auditing Standard No. 16.
The Audit Committee has received the written disclosures
and the letter from BDO required by applicable requirements of the Public Company Accounting Oversight Board, regarding communications
concerning independence and has discussed with BDO its independence from the Company. The Audit Committee further considered whether
the provision of non-audit related services by BDO to the Company is compatible with maintaining the independence of BDO with the
Company. The Audit Committee has also discussed with management of the Company and BDO such other matters and received assurances
from them as it deemed appropriate.
The Company’s internal auditors and BDO discussed
with the Audit Committee the overall scope and plans for their respective audits. The Audit Committee meets regularly with the
internal auditors and BDO, with and without management present, to discuss the results of their reviews, the evaluation of the
Company’s internal control over financial reporting, and the overall quality of the Company’s accounting.
Based on the above review and discussions, the Audit
Committee recommended to the Board of Directors, and the Board approved, that the Audited Financial Statements of the Company be
included in the Annual Report on Form 10-K for the fiscal year ended May 28, 2016, for filing with the SEC.
|
|
Audit Committee of the Board of Directors
|
|
|
|
|
|
Paul Plante,
Chairman
|
|
|
Kenneth Halverson
James Benham
|
|
|
|
Independent Auditor’s Fees
The following table sets forth the aggregate fees billed
for each of the last two years for professional services rendered by our principal registered public accounting firms BDO and EY
for the respective years.
|
|
2016
(BDO)
|
|
|
2015
(BDO)
|
|
|
2015
(EY)
|
|
Audit Fees
(1)
|
|
|
650,170
|
|
|
|
445,000
|
|
|
|
274,200
|
|
Audit -Related Fees
|
|
|
163,886
|
(2)
|
|
|
25,000
|
(3)
|
|
|
—
|
|
Total
|
|
|
814,056
|
|
|
|
470,000
|
|
|
|
274,200
|
|
|
(1)
|
Audit
Fees were for professional services rendered for the audits of our annual financial statements included in our Forms 10-K for
the fiscal years ended May 28, 2016 and May 30, 2015 and for the reviews of the financial statements included in our quarterly
reports on Forms 10-Q during such fiscal years, statutory audits for certain of our non-U.S. subsidiaries, and audits of our internal
controls over financial reporting.
|
|
(2)
|
BDO
assisted the Company with audited historical financial statements in connection with the acquisition of International Medical
Equipment and Service (“IMES”) that were included in the Form 8-K/A that was filed.
|
|
(3)
|
BDO
assisted the Company in providing due diligence services.
|
Audit Fees are reviewed and specifically approved by the
Audit Committee on an annual basis. The Audit Committee has established formal policies and procedures for the pre-approval of
audit-related, tax and other fees. These procedures include a review and pre-approval of an annual budget covering the nature of
an amount to be expended for auditor services by specific categories of services to be provided.
RELATED PARTY TRANSACTIONS
Pursuant to our Code of Conduct and our Audit Committee
Charter, related party transactions involving directors, executive officers or their immediate family members must be reviewed
and approved by our Audit Committee prior to the Company entering into such transactions. Our Code of Conduct generally describes
a prohibited related party transaction as one that would adversely influence an employee or director in the performance of his
or her duties to the Company or one that is inconsistent with or opposed to the best interests of the Company. The Code of Conduct
contains many standards and examples of potentially prohibited related party transactions, but the Board of Directors retains the
discretion to determine whether each potential transaction is consistent with the standards described in the Code of Conduct. Other
than the broad standards outlined in the Code of Conduct, we do not have written standards for reviewing and evaluating potential
related party transactions. However, Directors may consider any factors that they deem consistent with their fiduciary duties to
stockholders.
On June 15, 2015, the Company entered into a lease
agreement for the IMES facility with LDL, LLC. The Executive Vice President of IMES, Lee A. McIntyre III (former owner of IMES),
has an ownership interest in LDL, LLC. The lease agreement provides for monthly payments over five years with total future minimum
lease payments of $0.6 million. Rental expense related to this lease amounted to $0.1 million for the fiscal year ended May 28,
2016. The Company shall be entitled to extend the term of the lease for a period of an additional five years by notifying the landlord
in writing of its intention to do so within nine months of the expiration of the initial term.
COMPENSATION DISCUSSION AND ANALYSIS
We believe that the performance and contribution of
our executive officers are critical to the success of our long-term strategy. To attract, retain and motivate our executives to
accomplish our business strategies, we have implemented executive compensation programs providing executives with the opportunity
to earn compensation that reward performance.
Objectives
The fundamental objectives of our executive compensation
programs are to:
|
·
|
Attract and retain highly qualified executives by providing total compensation that is internally
equitable and externally competitive;
|
|
·
|
Motivate executives by providing performance-based incentives to achieve our annual financial
goals and long-term business strategies; and
|
|
·
|
Align the interests of executives with those of stockholders by rewarding our executives for
individual and corporate performance measured against our goals and plans, and by granting stock options and other equity-based
compensation.
|
To achieve our compensation objectives, we use both annual
cash compensation, which includes a base salary and an annual cash incentive plan, and time-based equity awards. When making compensation
decisions, the various components of compensation are evaluated together, and the level of compensation opportunity provided for
one component may impact the level and design of other components. We attempt to balance the total executive compensation program
to promote the achievement of both current and long-term goals.
The Compensation Committee reviews and analyzes our executive
compensation policies, programs, and practices regularly in light of these objectives and our financial performance to ensure that
our compensation practices are appropriately configured to achieve these objectives.
Say on Pay Feedback from Stockholders
A primary focus of our Compensation Committee is whether
the Company’s executive compensation program serves the best interests of the Company’s stockholders. As part of its
ongoing review of our executive compensation program, the Compensation Committee considered the affirmative stockholder advisory
vote on executive compensation (“Say on Pay”) at the Company’s 2015 Annual Meeting, where a majority of our stockholders
approved the compensation program described in the proxy statement for that meeting.
Named Executive Officers
For fiscal 2016, our Named Executive Officers were as follows:
Executive Name
|
|
Title
|
Edward J. Richardson
|
|
Chairman, Chief Executive Officer and President
|
Wendy S. Diddell
|
|
Executive Vice President, Chief Operating Officer
|
Gregory J. Peloquin
|
|
Executive Vice President, Power and Microwave Technologies Group
|
Robert J. Ben
|
|
Executive Vice President, Chief Financial Officer, and Corporate Secretary
|
Kathleen S. Dvorak
*
|
|
Former Executive Vice President, Chief Financial Officer, and Chief Strategy Officer
|
James M. Dudek, Jr.
|
|
Corporate Controller, Chief Accounting Officer
|
* Resigned August 28, 2015
Establishing Executive Compensation
Role of the Compensation Committee
. The Compensation
Committee is responsible for discharging the responsibilities of the Board of Directors with respect to executive compensation.
Its role is to review and approve the Company’s compensation programs, policies and practices with respect to its executive
officers. The Compensation Committee assists the Board in evaluating the performance of the Chief Executive Officer, which is generally
conducted during executive sessions of the Board. The committee also reviews the Chief Executive Officer’s evaluation of
the performance of the other executive officers in order to determine the base compensation and annual cash bonus opportunities
for the executive officers.
The committee also administers the Company’s
equity compensation plans and, in such capacity, determines equity compensation for its executive officers in the form of awards
of stock, restricted stock, and stock options to support the objectives of its compensation programs. The Compensation Committee
did not retain a compensation consultant during fiscal 2016.
Role of Management
. The Chief Executive Officer
(CEO) assists the Compensation Committee in reaching compensation decisions by developing recommended compensation for the executive
officers. The CEO also develops performance objectives for each executive officer. The CEO meets with each executive officer formally
on an annual basis to review past performance and to discuss performance objectives for the following year.
Role of Employment Agreements
. The Company considers
employment agreements to be an important part of recruiting and retaining qualified executive officers. All of the Named Executive
Officers, other than Mr. Richardson, have entered into employment agreements. The employment agreements with each of the Named
Executive Officers establish initial base compensation and ongoing annual cash bonus opportunity as a percentage of base compensation.
These employment agreements are described in further detail on page 24. Due to his substantial equity stake in the Company, the
Compensation Committee does not believe that an employment agreement with Mr. Richardson is necessary to achieve the retention
goals served by employment agreements with the other Named Executive Officers.
Role of Compensation Benchmarking
. One of the
fundamental objectives of the Company’s compensation program is that total compensation be externally competitive. To achieve
this objective, the CEO and the Compensation Committee rely on publicly available information related to competitive compensation,
internal equity, and general market trends in executive compensation.
Generally, the Compensation Committee uses data from public
sources to determine whether the market for executive compensation has changed significantly. If the Compensation Committee believed
the market had changed significantly, then it would instruct the CEO to commission a study of executive compensation at certain
comparable companies for purposes of evaluating the Company’s compensation arrangements. If the Compensation Committee does
not believe the market has changed significantly, then the Committee recommends a fixed percentage merit increase for executives.
The Committee’s evaluation of competitive compensation and market trends is based on publicly available information. The
Committee generally does not independently analyze executive compensation at any group of peer companies except when recruiting
for new executives.
During fiscal 2016 the committee analyzed executive
compensation at a group of peer companies. The 3% merit increase given to all Named Executive Officers was within the range of
base salary increases given to executive officers of the peer companies in the study.
Role of Compensation Consultants
. The Compensation
Committee has the authority under its charter to retain compensation consultants to assist in the evaluation of executive officer
compensation and benefits, and to approve the consultants’ fees and other retention terms. However, the Company and the Compensation
Committee have not historically engaged compensation consultants in determining Named Executive Officer compensation. Instead,
the Compensation Committee utilizes publicly available information and informal surveys from professional human resource organizations
when determining executive compensation.
Elements of Executive Compensation
Most of the Company’s compensation elements fulfill
one or more of its compensation objectives. The elements of total compensation for its Named Executive Officers are:
|
·
|
annual cash bonus compensation;
|
|
·
|
equity-based compensation;
|
|
·
|
profit sharing/401(k) plan; and
|
Base
Compensatio
n
. The
Compensation
Committee
alone
determines
the
CEO
’
s base
compensation.
In
each of
fiscal
2014, fiscal 2015, and fiscal 2016 the
Compensation
Committee
approved
a
3%
increase
in
base
compensation
for
M
r
. Richardson.
In fiscal 2016, Ms.
Diddell received a 10% increase in base salary related to her promotion to Chief Operating Officer for a base compensation increase
to $391,000.
In each
of fiscal
2014
and fiscal
2015
all executive
o
f
ficers
received
a
3%
merit
increase. In fiscal 2016, the other executive officers, except Ms. Diddell also received a 3% increase in base salary.
Ms. Dvorak terminated her employment with Richardson before becoming eligible for an increase in compensation during fiscal year
2016. Mr. Ben joined the Company on August 17, 2016, as Executive Vice President, Chief Financial Officer and Corporate Secretary
at a base salary of $270,000 pursuant to his employment agreement and did not receive an increase during the fiscal year.
The
amount
of base
compensation
for
each
of
the
Named
Executive
O
f
ficers, other than the CEO,
is
initially
set upon
the commencement
of his
or
her
employment
as
an
executive
o
f
ficer
with
the
Company
and
is
stated
in
the
Named Executive
O
f
fice
r
’
s
employment
agreement.
This
initial
amount
is
established
with
a
goal
of attracting
talented
executive
o
f
ficers
to the Company
and
is
recommended
by
the
CEO and
approved
by
the
Compensation
Committee.
Thereafte
r
, each
of the Named
Executive
O
f
ficers’
base
compensation
is
reviewed
annually
by
the
CEO
and
the
Compensation
Committee.
In
determining
appropriate
levels
of
base
compensation
for
executive
o
f
ficers,
the
CEO
considers
the
executive o
f
fice
r
’
s
individual
performance,
the
financial
performance
of
the
Compan
y
, and
a
base
compensation
that
is externally
competitive.
The
Compensation
Committee
annually
reviews
the
base
compensation
of the
executive o
f
ficers
set
by
the
CEO.
The
Compensation
Committee
reports
its
findings
and
opinions
with
respect
to base compensation
to
the
Board
for
further
discussion
so
that
the
Board
may
provide
feedback
to
the
CEO
regarding
its perception
of how
well
the
base
compensation
of the
executive
o
f
ficers
achieves
the
Company
’
s compensation
objectives.
Annual
Cash
Bonus
Compensation.
In October
2012,
the
Compensation
Committee
recommended
and
the
Board and
stockholders
approved
the
Amended
and
Restated
Edward
J. Richardson
Incentive
Compensation
Plan whereby
M
r
. Richardson
would
be
eligible
to
receive
bonus
compensation
based
on
the
greater
of 2%
of
annual
net income
after
tax or
a
bonus
based
upon
achieving
pre-established
financial
objectives
that
support
the
Company
’
s profitabilit
y
.
Pursuant
to the
terms of
the
Edward
J.
Richardson
Incentive
Compensation
Plan,
M
r
. Richardson
is
entitled
to
the greater
of 2%
of annual
net
income
or
a
bonus
of
up
to
70%
of
base
compensation
based
upon
levels
of achievement
of his
goals.
The
Compensation
Committee
evaluated
M
r
. Richardson
’
s
performance
relative
to measurement
criteria
for
fiscal
2014
based
on
the
level
of
achievement
of
the
established
goals.
In
fiscal
2014,
M
r
.
Richardson
received
a
bonus
payout
of $364,439.
In
2015,
the
Committee
determined
that
the
most important
initiative
for
the
entire
C
ompany
was
the
implementation of
the
new
IT
system.
As
a
result,
the
Committee
determined
that
the
fiscal
2015
incentive
program
for
executive management
other
than
M
r
.
Richardson
would
be
based
solely
on
the
successful
implementation
of
the
system. M
r
.
Richardson’s
incentive
was
tied
to
three
criteria:
implementation
of
the
IT
system;
attainment
of
the
fiscal
2015 operating
income
goal;
and
generating
positive
cash
flo
w
.
The
Compensation
Committee
determined
that M
r
. Richardson
had
achieved
the
goal
of
successful
IT
implementation
and
his
bonus
payment
for
fiscal
2015
was $161,817.
In
2016, the Committee selected three metrics to evaluate Mr. Richardson’s performance: achieving revenue growth targets; achieving
profitability goals from the Company’s most recent acquisition of IMES; and controlling SG&A expense as a percent of
sales. In fiscal 2016, Mr. Richardson received a bonus payment of $160,000.
On
an
annual
basis,
management
presents
specific
recommendations
to
the
Compensation
Committee
regarding
the
financial
metrics
and
other
components
to be
included
in
the
annual
incentive
plan,
which
are
those
metrics
and components
that management
believes
will
provide
the
best
incentive
to achieve
desired
operating
results.
These recommendations
were
developed
in
light
of achievement
under
prior
plans
and
through
consultation
with
the
CEO. The
Compensation
Committee
considers
management
’
s
recommendation
and
then
determines
the
final components
and
structure
of our
incentive
compensation
plans
based
on
the
objectives
of
our
compensation program.
The
target
bonus
opportunity
for M
r
.
Richardson
is
equal
to 70%
of his
base
compensation,
which
excludes
car allowance,
bonus,
equity
award
and
perquisites.
T
arget
bonus
opportunities
for
Ms.
Diddell, M
r
.
Peloquin, Mr. Ben and Mr. Dudek
are
equal
to 50%
of their
base
compensation,
which
excludes
car
allowance,
bonus, equity
awards
and
perquisites.
The
target
bonus
percentages
were
initially
set
by
the
Compensation
Committee with
a
goal
of
attracting
talented
executive
o
f
ficers
to the
Compan
y
, and
are
stated
in
the
Named
Executive
O
f
ficers’ employment
agreement,
if we
have
an
employment
agreement
with
the
named
executive
o
f
fice
r
. If we
do
not
have an
employment
agreement
with
the
named
executive
o
f
fice
r
, then
the
target
bonus
percentage
is
recommended
by the
CEO and
approved
by
the
Compensation
Committee
on
an
annual
basis.
For
fiscal
2016,
the
Named
Executive
O
f
ficers
were
eligible
for cash
bonuses
based
on the following
metrics.
|
|
|
|
|
Fiscal
2016 Incentive Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richardson
|
|
|
|
Diddell
|
|
|
|
Peloquin
|
|
|
|
Ben
|
|
|
|
Dvorak
|
|
|
|
Dudek
|
|
Revenue
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
|
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
|
|
IMES Profitability
|
|
|
33
|
%
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
|
|
33
|
%
|
|
|
|
|
SG & A Expense
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
|
|
34
|
%
|
|
|
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
50
|
%
|
Gross Margin
|
|
|
|
|
|
|
|
|
|
|
60
|
%
|
|
|
|
|
|
|
|
|
|
|
25
|
%
|
PMT Operating Income
|
|
|
|
|
|
|
|
|
|
|
20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Department Specific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
|
%
|
Financial Reporting & Controls for IMES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33
|
%
|
|
|
|
|
|
|
|
|
Complete Audit of Historical Financial Results for IMES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34
|
%
|
|
|
|
|
|
|
|
|
Total
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
T
argets
for each
of the
financial
metrics
are
established
by
the
Compensation
Committee
for
each
fiscal
year
and correspond
with
the
annual
financial
plan
for the
Company
approved
by
the
Board
of Directors.
Payments
for all metrics are capped at 100%, except for the gross margin metric for Mr. Peloquin, which is uncapped.
The
table
below
sets
forth
the
bonus
targets
and
percentage
achievement
for
each
of
the
Named
Executive
O
f
ficers for
fiscal
2016. In addition, the Committee awarded Ms. Diddell a discretionary
bonus of $50,000 for securing a sizable sales contract.
Fiscal
2016 Incentive Actual Performance
|
|
|
Richardson
(1)
|
|
|
|
|
Diddell
|
|
|
|
|
Peloquin
|
|
|
|
|
Ben
|
|
|
|
|
Dvorak
(2)
|
|
|
|
Dudek
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
46.2
|
%
|
|
|
|
64.0
|
%
|
|
|
|
n/a
|
|
|
|
|
91.4
|
%
|
|
|
|
99.4
|
%
|
|
|
n/a
|
|
Eligible
|
|
$
|
166,638
|
|
|
|
$
|
60,891
|
|
|
|
|
|
|
|
|
$
|
35,480
|
|
|
|
$
|
17,481
|
|
|
|
|
|
Earned
|
|
$
|
77,036
|
|
|
|
$
|
38,982
|
|
|
|
|
|
|
|
|
$
|
32,428
|
|
|
|
$
|
17,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IMES Profitability
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
17.1
|
%
|
|
|
|
23.6
|
%
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
100.0
|
%
|
|
|
n/a
|
|
Eligible
|
|
$
|
166,638
|
|
|
|
$
|
60,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,481
|
|
|
|
|
|
Earned
|
|
$
|
28,412
|
|
|
|
$
|
14,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
32.7
|
%
|
|
|
|
45.3
|
%
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
100.0
|
%
|
|
|
n/a
|
|
Eligible
|
|
$
|
166,638
|
|
|
|
$
|
60,891
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,481
|
|
|
|
|
|
Earned
|
|
$
|
54,552
|
|
|
|
$
|
27,605
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,481
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
35.8
|
%
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
35.8
|
%
|
Eligible
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,900
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
55,439
|
|
Earned
|
|
|
|
|
|
|
|
|
|
|
|
$
|
11,062
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
19,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
83.9
|
%
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
84.7
|
%
|
Eligible
|
|
|
|
|
|
|
|
|
|
|
|
$
|
92,700
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,719
|
|
Earned
|
|
|
|
|
|
|
|
|
|
|
|
$
|
77,775
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23,478
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PMT DOC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
76.9
|
%
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Eligible
|
|
|
|
|
|
|
|
|
|
|
|
$
|
30,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
|
|
|
$
|
23,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Department Specific
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
81.8
|
%
|
Eligible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
27,719
|
|
Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
22,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Reporting & Controls for IMES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
100.0
|
%
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Eligible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
35,480
|
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
35,480
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Complete Audit of Historical Financial Results for IMES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Achievement
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
n/a
|
|
|
|
|
98.5
|
%
|
|
|
|
n/a
|
|
|
|
n/a
|
|
Eligible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
35,480
|
|
|
|
|
|
|
|
|
|
|
Earned
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
34,962
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Richardson’s
incentive is based on the greater of 2% of net income or the payout earned from the annual Executive Incentive Plan.
|
(2)
|
The figures reported
reflect that Ms. Dvorak was only paid for the first quarter of fiscal 2016.
|
Clawback
Provision.
The
Compensation
Committee
approved
a
clawback
policy
allowing
the
Committee
to clawback
bonuses
for
the
Named
Executive
O
f
ficers
in
the
event
of
fraud
or
illegal
conduct.
In
addition,
if the Company
was
required
to
prepare
an
accounting
restatement
due
to material
non-compliance
with
financial reporting
requirements,
the
Committee
has
the
right
to recover
incentive
based
compensation
that was
awarded based
on
the
erroneous
data.
Equity
Based
Compensation.
Our
20
1
1
Long-term
Incentive
Compensation
Plan
(the “2011 Plan”)
provides
for
grants
of
equity
awards
to our executive
o
f
ficers
to encourage
them
to focus
on
long-term
Company
performance.
The
plan
is
administered
by
the Compensation
Committee
of
the
Board.
Consistent
with
our
policy
of providing
a
total
compensation
package
that includes
equity
based
components,
the Compensation
Committee
makes
periodic
decisions
(normally
on
an
annual
basis)
regarding
appropriate
equity grants
based
on
the
Company
’
s achievement
of its financial
and
strategic
goals
and
the
participants’
individual performance,
based
on
recommendations
from our
CEO.
The
Compensation
Committee
has
the
discretion
to determine
whether
equity
awards
will
be
granted
to the
Named
Executive
O
f
ficers
and,
if
so, the
number
of
shares subject
to
each
award.
The
CEO
submits
to
the
Compensation
Committee,
on
at
least
an
annual
basis,
his
recommendation
for the amount
and
type
of equity
award
to grant
to
each
Named
Executive
O
f
ficer
other
than
himself.
Annual
equity recommendations
and
grants
are
typically
made
after the
completion
of
our
first
quarter
and
are
based
on
the Company
’
s
and
the
grant
recipients’
performance
in
the
prior
fiscal
yea
r
. In determining
whether
to approve
or adjust
the
recommended
grants,
the
Compensation
Committee
considers
our
financial
performance
in
the
prior fiscal
yea
r
, the
executive
’
s
level
of
responsibilit
y
,
and
historical
award
data.
The
Compensation
Committee
does
not assign
a
specific
weight
to
any
of
these
factors, but
rather
these
factors
are
evaluated
on
an
aggregate
and qualitative
basis.
When
awarded,
stock
options
are
granted
at
the
fair
market
value
of
our
common
stock on
the
date
of
the
grant. Under
the
terms of
the
20
1
1
Plan,
the
fair
market
value
of the
stock is
the
closing
sale
price
of the
stock on
the
date
of grant.
Our
stock
options,
therefore,
have
value
only
if the
stock
price
appreciates
following
the
date the
options
are
granted.
Stock
option
awards
to
the
Named
Executive
O
f
ficers
under
the
20
1
1
Plan
vest over
a
five-year
period
with
20%
of
the
stock option
grant
becoming
exercisable
12
months
after
the
date
of grant. The
remaining
options
vest
and
are
exercisable
in
20%
increments
over
the
next
four
years.
In
fiscal
2016,
each
of the
Named
Executive
O
f
ficers, other
than
M
r
.
Richardson and Mr. Peloquin,
received
a
grant
of options
to purchase
the
Company
’
s
common
stock
under
the
20
1
1
Long-term
Incentive
Plan,
as
reported
in
the
table
for Grants
of
Plan-Based
A
wards
on
page
22.
With
respect
to
these
awards,
the
CEO
recommended
to
the Compensation
Committee
a
number
of
option
shares
to be
granted
to the
Named
Executive
O
f
ficers.
Profit
Sharing/401(k)
Plan.
W
e
o
f
fer retirement
benefits
to
our
employees,
including
all
of
the
Named
Executive O
f
ficers,
through
a
tax-qualified
Profit
Sharing/401(k)
Plan,
which
is
a
defined
contribution
plan
designed
to accumulate
retirement
funds
for participating
employees
through
individual
and
Company
contributions. Participants
are
provided
the
opportunity
to make
salary
reduction
contributions
to
the
plan
on
a
pre-tax
basis.
In general,
we
match
50%
of
the
first
4%
of
salary
and
bonus
contributed
by
participants.
Perquisites.
W
e
o
f
fer
very
few
perquisites
to
our
Named
Executive
O
f
ficers,
primarily
including
a
car allowance.
The
perquisites
provided
to each
Named
Executive
O
f
ficer
in
fiscal
2016
totaled
less
than
$15,000
and less
than
10%
of total
annual
salary
and
bonus
reported
for
each
Named
Executive
O
f
fice
r
.
Compensation Policies and Practices as They
Relate to Risk Management.
As stated above under “Corporate Governance—Board
Role in Risk Oversight,” as part of its responsibilities, the Compensation Committee reviews the Company’s compensation
plans and practices for all employees, including executive officers, to determine whether, in its judgment, our compensation programs
encourage risk-taking likely to have a material adverse effect on the Company. The Compensation Committee determined that the
performance measures and goals under our compensation programs were tied to our business, financial, and strategic objectives
and, as such, that the programs do not encourage inappropriate or excessive risk-taking.
REPORT
OF THE COMPENSATION COMMITTEE
The
Compensation Committee has reviewed the foregoing Compensation Discussion and Analysis (the “CD&A”) for the year
ended May 28, 2016, and discussed the CD&A with management. In reliance on the reviews and discussions referred to above,
the Compensation Committee has recommended to the Board that the CD&A be included in the proxy statement for the year ended
May 28, 2016, for filing with the Securities and Exchange Commission.
Compensation
Committee of the Board of Directors
Paul
Plante (Chairman)
Ken
Halverson
James Benham
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The
functions and members of the Compensation Committee are set forth above under “Corporate Governance - Board and Committee
Information - Compensation Committee.” All Committee members are independent and none of the Committee members has served
as an officer or employee of the Company or a subsidiary of the Company. None of our executive officers currently serves, or served
during fiscal 2016, on the compensation committee or board of directors of any other entity that has one or more executive officers
serving as a member of our Board or Compensation Committee.
COMPENSATION
OF EXECUTIVE OFFICERS
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
(1)
|
|
|
($)
(2)
|
|
|
($)
(3)
|
|
|
($)
|
|
Edward J. Richardson
|
|
|
2016
|
|
|
|
727,349
|
|
|
|
—
|
|
|
|
—
|
|
|
|
160,000
|
|
|
|
27,950
|
|
|
|
915,299
|
|
Chairman of the Board, President, and
|
|
|
2015
|
|
|
|
706,164
|
|
|
|
—
|
|
|
|
—
|
|
|
|
161,817
|
|
|
|
23,958
|
|
|
|
891,939
|
|
Chief Executive Officer
|
|
|
2014
|
|
|
|
685,985
|
|
|
|
—
|
|
|
|
—
|
|
|
|
364,439
|
|
|
|
23,858
|
|
|
|
1,074,282
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wendy S. Diddell
|
|
|
2016
|
|
|
|
367,538
|
|
|
|
50,000
|
|
|
|
30,500
|
|
|
|
80,964
|
|
|
|
63,836
|
|
|
|
542,838
|
|
Executive Vice President,
|
|
|
2015
|
|
|
|
340,743
|
|
|
|
—
|
|
|
|
92,250
|
|
|
|
167,501
|
|
|
|
27,479
|
|
|
|
627,973
|
|
and Chief Operating Officer
|
|
|
2014
|
|
|
|
306,809
|
|
|
|
—
|
|
|
|
113,750
|
|
|
|
116,062
|
|
|
|
73,336
|
|
|
|
609,957
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory J. Peloquin
|
|
|
2016
|
|
|
|
317,557
|
|
|
|
—
|
|
|
|
—
|
|
|
|
112,599
|
|
|
|
15,655
|
|
|
|
445,811
|
|
Executive Vice President
|
|
|
2015
|
|
|
|
285,231
|
|
|
|
—
|
|
|
|
97,250
|
|
|
|
136,260
|
|
|
|
17,782
|
|
|
|
536,523
|
|
Power and Microwave Technologies Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert J. Ben
(4)
|
|
|
2016
|
|
|
|
212,885
|
|
|
|
—
|
|
|
|
17,700
|
|
|
|
102,870
|
|
|
|
13,132
|
|
|
|
346,587
|
|
Executive Vice President, Chief Financial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officer, and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kathleen S. Dvorak
(5)
|
|
|
2016
|
|
|
|
104,883
|
|
|
|
—
|
|
|
|
—
|
|
|
|
52,338
|
|
|
|
3,170
|
|
|
|
160,391
|
|
Former Executive Vice President, Chief
|
|
|
2015
|
|
|
|
410,134
|
|
|
|
—
|
|
|
|
55,350
|
|
|
|
203,657
|
|
|
|
17,860
|
|
|
|
687,001
|
|
Financial Officer, and Chief Strategy Officer
|
|
|
2014
|
|
|
|
398,416
|
|
|
|
—
|
|
|
|
68,250
|
|
|
|
161,483
|
|
|
|
17,682
|
|
|
|
645,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James M. Dudek, Jr.
|
|
|
2016
|
|
|
|
222,521
|
|
|
|
—
|
|
|
|
9,150
|
|
|
|
66,000
|
|
|
|
15,727
|
|
|
|
313,398
|
|
Corporate Controller,
|
|
|
2015
|
|
|
|
216,040
|
|
|
|
—
|
|
|
|
27,675
|
|
|
|
75,353
|
|
|
|
17,380
|
|
|
|
336,448
|
|
Chief Accounting Officer
|
|
|
2014
|
|
|
|
209,868
|
|
|
|
—
|
|
|
|
34,125
|
|
|
|
59,750
|
|
|
|
17,266
|
|
|
|
321,009
|
|
(1)
|
Amounts
in this column represent the aggregate grant date fair value of stock awards calculated in accordance with Financial Accounting
Standards Board ASC topic 718. The amounts reflect our accounting expenses for these awards and do not correspond to the actual
value that will be recognized by each named executive officer. For the relevant assumptions used in determining the fair value
of stock option awards, refer to Note 3, Significant Accounting Policies - Share-Based Compensation, in the Notes to the Consolidated
Financial Statements included in our Annual Report on Form 10-K filed with the SEC on July 29, 2016.
|
|
|
(2)
|
Amounts
in this column represent annual incentive payments earned for fiscal 2016, 2015, and 2014 based on pre-set incentive goals
established at the beginning of each fiscal year and tied to the Company’s financial goals and personal performance
measures. Additional details regarding annual incentive payments made in 2016 are set forth in the Compensation Discussion
and Analysis under “Annual Cash Bonus Compensation.”
|
|
|
(3)
|
All
Other Compensation for each Named Executive Officer includes: (a) $12,000 annually for car allowance; (b) matching contributions
made to the 401(k) plan; and (c) imputed income for each Named Executive Officer’s group term life insurance in excess
of a $50,000 death benefit. For Ms. Diddell, All Other Compensation also includes: (i) $47,826 accrued, but not paid, in fiscal
2016 (ii) $10,196 accrued, but not paid, in fiscal 2015 and (iii) $56,153 accrued, but not paid, in fiscal 2014, in connection
with termination payments payable to her. Ms. Diddell’s termination payments are discussed below under the heading “Employment
Agreements.” The amounts accrued in fiscal 2016 represent an additional accrual due to an increase in her base salary.
|
|
|
(4)
|
Mr.
Ben joined the Company on August 17, 2015.
|
|
|
(5)
|
Ms.
Dvorak terminated her employment on August 28, 2015.
|
Grants
of Plan-Based Awards for Fiscal 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards:
|
|
|
|
|
|
|
|
|
|
Estimated Future Payments Incentive
|
|
|
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
Plan Awards
|
|
|
|
|
|
Securities
|
|
|
Base Price
|
|
|
Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
of Option
|
|
|
of Option
|
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Grant
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($/Sh)
(1)
|
|
|
($)
(2)
|
|
Edward J. Richardson
|
|
$
|
349,940
|
|
|
|
499,914
|
|
|
$
|
749,871
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Wendy S. Diddell
|
|
|
127,934
|
|
|
|
182,763
|
|
|
|
274,145
|
|
|
|
10/5/2015
|
|
|
|
25,000
|
|
|
|
5.98
|
|
|
|
30,500
|
|
Gregory Peloquin
|
|
|
108,150
|
|
|
|
154,500
|
|
|
|
231,750
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Robert J. Ben
|
|
|
74,508
|
|
|
|
106,440
|
|
|
|
159,660
|
|
|
|
8/17/2015
|
|
|
|
15,000
|
|
|
|
5.49
|
|
|
|
17,700
|
|
Kathleen S. Dvorak
|
|
|
36,710
|
|
|
|
52,443
|
|
|
|
78,665
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
James M. Dudek, Jr.
|
|
|
77,614
|
|
|
|
110,877
|
|
|
|
166,316
|
|
|
|
10/5/2015
|
|
|
|
7,500
|
|
|
|
5.98
|
|
|
|
9,150
|
|
|
(1)
|
The
exercise price of stock option awards is equal to the closing price of our common stock
on the date of grant, as reported on NASDAQ.
|
|
(2)
|
Option
awards is the amount that the Company would expense in our financial statements over
the award’s vesting schedule. The fair value of stock option awards is calculated
using the Black Scholes value. The fair value for the grants on August 17, 2015, was
$1.18 and on October 5, 2015, it was $1.22. The amounts reflect our accounting expense
for these awards and do not correspond to the actual value that will be recognized by
each named executive officer. For the relevant assumptions used in determining the fair
value of stock option awards, refer to Note 3. “Significant Accounting Policies,”
in the Notes to the Consolidated Financial Statements included in our Annual Report on
Form 10-K filed with the SEC on July 29, 2016.
|
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth information on the holdings of stock option and restricted stock awards by the Named Executive Officers
as of the end of fiscal 2016.
|
|
Option
Awards
|
Name
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
(1)
|
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
(#)
(1)
|
|
|
Option
Exercise
Price
($)
|
|
|
|
Option
Expiration
Date
(2)
|
|
Edward
J. Richardson
|
|
|
50,000
|
|
|
|
—
|
|
|
$
|
5.67
|
|
|
|
10/13/2019
|
|
Wendy S. Diddell
|
|
|
2,000
|
|
|
|
—
|
|
|
|
8.58
|
|
|
|
10/17/2016
|
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
7.24
|
|
|
|
10/9/2017
|
|
|
|
|
9,000
|
|
|
|
—
|
|
|
|
5.03
|
|
|
|
10/21/2018
|
|
|
|
|
12,000
|
|
|
|
—
|
|
|
|
5.67
|
|
|
|
10/13/2019
|
|
|
|
|
25,000
|
|
|
|
—
|
|
|
|
13.47
|
|
|
|
4/12/2021
|
|
|
|
|
15,000
|
|
|
|
10,000
|
|
|
|
11.77
|
|
|
|
10/9/2022
|
|
|
|
|
10,000
|
|
|
|
15,000
|
|
|
|
11.14
|
|
|
|
10/8/2023
|
|
|
|
|
5,000
|
|
|
|
20,000
|
|
|
|
9.89
|
|
|
|
10/6/2024
|
|
|
|
|
—
|
|
|
|
25,000
|
|
|
|
5.98
|
|
|
|
10/5/2025
|
|
Gregory J. Peloquin
|
|
|
5,000
|
|
|
|
20,000
|
|
|
|
9.99
|
|
|
|
6/26/2024
|
|
Robert J. Ben
|
|
|
—
|
|
|
|
15,000
|
|
|
|
5.49
|
|
|
|
8/17/2025
|
|
James M. Dudek,
Jr.
|
|
|
1,100
|
|
|
|
—
|
|
|
|
5.67
|
|
|
|
10/13/2019
|
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
13.47
|
|
|
|
4/12/2021
|
|
|
|
|
6,000
|
|
|
|
4,000
|
|
|
|
11.77
|
|
|
|
10/9/2022
|
|
|
|
|
3,000
|
|
|
|
4,500
|
|
|
|
11.14
|
|
|
|
10/8/2023
|
|
|
|
|
1,500
|
|
|
|
6,000
|
|
|
|
9.89
|
|
|
|
10/6/2024
|
|
|
|
|
—
|
|
|
|
7,500
|
|
|
|
5.98
|
|
|
|
10/5/2025
|
|
|
(1)
|
Options
vest on the anniversary of the grant date and become exercisable in annual increments
of 20%.
|
|
(2)
|
The
expiration date of each option occurs ten years after the date of grant of each option.
The table below provides the grant date for each outstanding equity award at the end
of fiscal 2016 and the respective vesting schedule.
|
The
table below provides the grant date for each outstanding equity award at the end of fiscal 2016, vested shares, and remaining
vesting schedule.
|
|
|
|
|
Number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
Stock
|
|
|
|
|
|
|
|
|
Remaining
Vesting Period
|
|
|
|
Grant
|
|
|
Options
|
|
|
Vesting
|
|
|
Vested
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
|
Fiscal
|
|
Name
|
|
Date
(1)
|
|
|
Granted
|
|
|
Years
|
|
|
Shares
|
|
|
2017
|
|
|
2018
|
|
|
2019
|
|
|
2020
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward J. Richardson
|
|
10/13/2009
|
|
|
50,000
|
|
|
5
|
|
|
50,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Wendy
S. Diddell
|
|
|
10/17/2006
|
|
|
|
10,000
|
|
|
|
5
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/9/2007
|
|
|
|
12,500
|
|
|
|
5
|
|
|
|
12,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/21/2008
|
|
|
|
15,000
|
|
|
|
5
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/13/2009
|
|
|
|
15,000
|
|
|
|
5
|
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
4/12/2011
|
|
|
|
25,000
|
|
|
|
5
|
|
|
|
25,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/9/2012
|
|
|
|
25,000
|
|
|
|
5
|
|
|
|
15,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/8/2013
|
|
|
|
25,000
|
|
|
|
5
|
|
|
|
10,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/6/2014
|
|
|
|
25,000
|
|
|
|
5
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
|
10/5/2015
|
|
|
|
25,000
|
|
|
|
5
|
|
|
|
—
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
Robert J. Ben
|
|
|
8/17/2015
|
|
|
|
15,000
|
|
|
|
5
|
|
|
|
—
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
3,000
|
|
|
|
3,000
|
|
Gregory J. Peloquin
|
|
|
6/26/2014
|
|
|
|
25,000
|
|
|
|
5
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
—
|
|
James M. Dudek,
Jr.
|
|
|
12/17/2007
|
|
|
|
5,000
|
|
|
|
5
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/21/2008
|
|
|
|
5,000
|
|
|
|
5
|
|
|
|
5,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/13/2009
|
|
|
|
5,500
|
|
|
|
5
|
|
|
|
5,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
4/12/2011
|
|
|
|
10,000
|
|
|
|
5
|
|
|
|
10,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/9/2012
|
|
|
|
10,000
|
|
|
|
5
|
|
|
|
6,000
|
|
|
|
2,000
|
|
|
|
2,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/8/2013
|
|
|
|
7,500
|
|
|
|
5
|
|
|
|
3,000
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
10/6/2014
|
|
|
|
7,500
|
|
|
|
5
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
—
|
|
|
|
|
10/5/2015
|
|
|
|
7,500
|
|
|
|
5
|
|
|
|
—
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
|
1,500
|
|
|
(1)
|
Shares
vest over the vesting period on the anniversary of the grant date.
|
Option
Exercises and Stock Vested
The
following table provides information for fiscal 2016 for our Named Executive Officers on stock option exercises during fiscal
2016, including the number of shares acquired on exercise, and the vesting of restricted stock, and, in each case, the values
realized there from.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
Number
of Shares
|
|
Value
Realized
|
|
Number
of Shares
|
|
Value
Realized
|
|
|
|
Acquired
on Exercise
|
|
on
Exercise
|
|
Acquired
at Vesting
|
|
on
Vesting
|
|
Name
|
|
(#)
|
|
($)
|
|
(#)
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Edward J. Richardson
|
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Wendy S. Diddell
|
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Gregory J. Peloquin
|
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Robert J. Ben
|
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Kathleen S. Dvorak
|
|
|
22,500
|
|
$
|
14,102
|
|
|
—
|
|
$
|
—
|
|
James M. Dudek, Jr.
|
|
|
—
|
|
$
|
—
|
|
|
—
|
|
$
|
—
|
|
Employment
Agreements
Pursuant
to the terms of her employment agreement dated June 1, 2004, as amended December 23, 2015, Wendy Diddell is employed as Executive
Vice President, Chief Operating Officer. Under the terms of the employment agreement, Ms. Diddell received an initial base salary
of $185,000 and a bonus opportunity of up to 50% of her then current base salary. Either the Company or Ms. Diddell may terminate
her employment at any time for any reason, and upon any such a termination, the Company will be obligated to pay Ms. Diddell her
then annual base salary for twelve months following such termination. During her employment term and for one year after termination
for any reason, Ms. Diddell is prohibited from competing against the Company. Ms. Diddell’s employment with the Company
is for an indefinite term, during which she is employed on an at-will basis.
Gregory
J. Peloquin is employed as Executive Vice President, Power and Microwave Technologies Group under an employment agreement dated
June 26, 2014, pursuant to which he received an initial base salary of $309,000 and a bonus opportunity of up to 50% of his then
current base salary. Pursuant to the terms of his employment agreement, Mr. Peloquin’s employment may be terminated by Mr.
Peloquin by providing sixty-day written notice to the Company. If the Company terminates Mr. Peloquin for any reason other than
for cause, disability or death, the Company will be obligated to pay Mr. Peloquin his then annual base salary for twelve months
following such termination. During his employment term and for one year after termination for any reason, Mr. Peloquin is prohibited
from competing against the Company. Mr. Peloquin’s employment with the Company is for a five year term, during which he
is employed on an at-will basis.
Robert
J. Ben is employed as Executive Vice President, Chief Financial Officer and Corporate Secretary under an employment agreement
dated August 4, 2015, pursuant to which he received an initial base salary of $270,000 and a bonus opportunity of up to 50% of
his then current base salary. Pursuant to the terms of his employment agreement, Mr. Ben’s employment may be terminated
by Mr. Ben by providing sixty-day written notice to the company. If the Company terminates Mr. Ben for any reason other than for
cause, disability or death, the Company will be obligated to pay Mr. Ben his then annual base salary for twelve months following
such termination. During his employment term and for one year after termination for any reason, Mr. Ben is prohibited from competing
against the Company. Mr. Ben’s employment with the Company is for a three year term, during which he is employed on an at-will
basis. The term shall be extended automatically for successive one-year periods unless written notice of nonrenewal is provided
to Mr. Ben or the Company within 60 days prior to the expiration of the Employment Term.
On
May 30, 2015 the Company announced the retirement of Kathleen S. Dvorak, effective upon the naming of her successor, and entered
into an agreement whereby she will be paid under the terms of her employment agreement. Ms. Dvorak’s severance is equal
to her current annual base salary plus her annual bonus opportunity at target and will be paid in substantially equal installments
on the Company’s regular payroll dates over a period of one year. Ms. Dvorak terminated her employment with Richardson on
August 28, 2015.
Pursuant
to the terms of his employment agreement dated December 17, 2007, Mr. Dudek is employed as Corporate Controller and Chief Accounting
Officer. Under the terms of his employment agreement, Mr. Dudek received an initial base salary of $185,000 and an initial bonus
opportunity of up to 35% of his then current base salary. The company may terminate his employment at any time for any reason,
other than cause, and upon such a termination, the Company will be obligated to pay Mr. Dudek his then annual base salary and
earned bonus over a six-month period following such termination. During his employment term and for one year after termination
for any reason, Mr. Dudek is prohibited from competing against the Company. The agreement is for an indefinite term, during which
Mr. Dudek is employed on an at-will basis.
Mr.
Richardson does not have an employment agreement with the Company.
Potential
Payment upon Termination or Change in Control
The
following table shows potential payments to our Named Executive Officers under existing contracts, agreements, plans or arrangements
for various scenarios under termination or a change in control, assuming a May 28, 2016, termination date or change in control.
Name
|
|
Termination for Cause or Voluntary Termination without Good Reason
|
|
|
Voluntary Termination for Good Reason by Executive
|
|
|
Death
|
|
|
Disability
|
|
|
Termination without Cause by Company
|
|
|
Change in Control
|
|
|
Termination by Executive for any Reason
|
|
Edward J. Richardson
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Wendy S. Diddell
(1)
|
|
|
390,942
|
|
|
|
390,942
|
|
|
|
—
|
|
|
|
—
|
|
|
|
390,942
|
|
|
|
390,942
|
|
|
|
390,942
|
|
Gregory J. Peloquin
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
318,270
|
|
|
|
—
|
|
|
|
—
|
|
Robert J. Ben
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
270,000
|
|
|
|
270,000
|
|
|
|
—
|
|
Kathleen S. Dvorak
(2)
|
|
|
|
|
|
|
610,971
|
|
|
|
|
|
|
|
|
|
|
|
610,971
|
|
|
|
610,971
|
|
|
|
610,971
|
|
James M. Dudek, Jr.
(3)
|
|
|
—
|
|
|
|
294,406
|
|
|
|
—
|
|
|
|
—
|
|
|
|
294,406
|
|
|
|
—
|
|
|
|
—
|
|
|
(1)
|
Ms.
Diddell’s severance would be an amount equal to her current base salary and would be paid in substantially equal installments
on the Company’s regular payroll dates over a period of one year.
|
|
(2)
|
Represents
amounts actually payable to Ms. Dvorak in connection with her termination of employment on August 28, 2015. Ms. Dvorak’s
severance is equal to her current annual base salary plus her annual bonus opportunity at target and will be paid in substantially
equal installments on the Company’s regular payroll dates over a period of one year.
|
|
(3)
|
Mr.
Dudek’s severance would be an amount equal to his current annual base salary and earned annual bonus paid in substantially
equal installments on the Company’s regular payroll dates over a period of six months.
|
PROPOSAL
3 - ADVISORY VOTE REGARDING COMPENSATION OF NAMED EXECUTIVE OFFICERS
The
Company’s stockholders have the opportunity to approve, by means of a non-binding advisory vote, the compensation of its
Named Executive Officers as disclosed in this proxy statement.
This
proposal, popularly known as “say-on-pay,” enables stockholders to express or withhold their approval of the Company’s
executive compensation program in general. The vote is intended to provide an assessment by the Company’s stockholders of
its overall executive compensation program and not of any one or more particular elements of that program. The Compensation Committee
and the full Board intend to consider and take into account the outcome of this non-binding advisory vote in making future executive
compensation decisions. Because this vote is advisory and non-binding, it will not necessarily affect or otherwise limit any future
compensation of any of the Named Executive Officers.
The
Company’s executive compensation program is described in the “Compensation Discussion and Analysis” section
of this proxy statement and the related tables and narrative discussion. Stockholders are strongly urged to read this material
in its entirety to obtain an informed understanding of the compensation programs for our executives.
The
Company believes that its executive compensation program is aligned with the long-term interests of its stockholders. In addition
to enabling the Company to attract and retain executive officers of the necessary caliber, its executive compensation program
has as its objectives (i) motivating executives by providing performance-based incentives to achieve the Company’s annual
financial goals and long-term business strategies; and (ii) aligning the interests of executives with those of stockholders by
rewarding its executives for individual and corporate performance measured against its goals and plans and by granting stock options
and other equity-based compensation.
The
Company believes that its executive compensation program satisfies these objectives and does so in a straightforward manner. The
Company’s executive compensation program consists of cash compensation and long-term incentive compensation. Cash compensation
is paid in the form of a base salary and a performance bonus based on financial and personal performance, and long-term incentive
compensation is paid in the form of stock options.
For
these reasons and the reasons elaborated more fully in the “Compensation Discussion and Analysis” section and the
related tables and narrative discussion, the Board of Directors requests stockholders to approve the following resolution:
Resolved,
that the stockholders approve the compensation paid to the Company’s Named Executive Officers, as disclosed in this proxy
statement, including the “Compensation Discussion and Analysis” section and the related compensation tables and narrative
discussion.
The
Board of Directors has adopted a policy providing for annual “say-on-pay” advisory votes. Accordingly, the next “say-on-pay”
vote will occur in 2017.
Our
Board of Directors recommends that you vote “FOR” the approval of the compensation of our Named Executive Officers.
STOCKHOLDER
PROPOSALS FOR 2017 ANNUAL MEETING
Any
stockholder proposal intended to be considered for inclusion in the proxy statement for presentation at the 2017 Annual Meeting
must be received by the Company by April 21, 2017. The proposal must be in accordance with the provisions of Rule 14a-8 promulgated
by the Securities and Exchange Commission. It is suggested that the proposal be submitted by certified mail, return receipt requested.
Stockholders who intend to present a proposal at the 2017 Annual Meeting without including such proposal in the Company’s
proxy statement must provide the Company notice of such proposal no later than July 5, 2017. The Company reserves the right to
reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with these and other
applicable requirements.
OTHER
MATTERS
Annual
Report
Our
Annual Report on Form 10-K for the 2016 fiscal year accompanies this proxy statement, but is not deemed a part of the proxy soliciting
material.
A
copy of the 2016 Form 10-K report as required to be filed with the Securities and Exchange Commission, excluding exhibits, will
be mailed to stockholders without charge upon written request to: Richardson Electronics, Ltd., 40W267 Keslinger Road, P.O. Box
393, LaFox, Illinois 60147-0393, Attention: Secretary. Exhibits to the Form 10-K will be mailed upon similar request and payment
of specified fees. The 2016 Form 10-K is also available through the Securities and Exchange Commission’s Internet web site
(www.sec.gov).
Householding
Information
Some
banks, brokers and other nominee record holders may be participating in the practice of “householding.” This means
that only one copy of either the notice of Internet availability of the proxy statement or of this proxy statement and Annual
Report on Form 10-K may have been sent to multiple stockholders sharing an address unless the stockholders provide contrary instructions.
We will promptly deliver a separate copy of these documents to you if you call or write us at: Richardson Electronics, Ltd., 40W267
Keslinger Road, P.O. Box 393, LaFox, Illinois 60147-0393, Attention: Secretary; telephone (630) 208-2200.
If
you want to receive separate copies of our proxy statements and annual reports to stockholders in the future, or if you are receiving
multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee
record holder, or you may contact us at the above address or telephone number.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who may be deemed to own
beneficially more than 10 percent of our stock to file initial reports of ownership and reports of changes in ownership with the
SEC and NASDAQ. Executive officers, directors and greater than 10 percent beneficial owners are required by SEC regulations to
furnish us with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to
us and written representations from our executive officers and directors, we believe that during fiscal 2016, all Section 16(a)
filing requirements applicable to our executive officers, directors and greater than 10 percent beneficial owners were complied
with on a timely basis.
Code
of Conduct and Ethics
We
have adopted a written code of conduct and ethics that applies to all directors, officers and employees, including the Chief Executive
Officer and Chief Financial Officer. A current copy of the code is posted on our website, which is located at www.rell.com under
“Investor Relations” and may be obtained without charge from our Legal Department, Richardson Electronics, Ltd., 40W267
Keslinger Road, P.O. Box 393, LaFox, Illinois 60147-0393. In addition, we intend to post on our website all disclosures that are
required by law or NASDAQ listing standards concerning any amendments to, or waivers from, any provision of the code.
Our
policies and practices include ethical and legal standards which must be followed by employees in conducting our business. Compliance
with laws and regulations is specifically required. Every employee has the right and duty to report to the Company, to the extent
not contrary to local law, any conduct which does not conform to these ethical and legal standards. We established the Richardson
Hot Line to receive reports of possible wrongdoing and to answer questions about business conduct. Calls go directly to our Internal
Audit Representative, or Audit Committee Representative.
Also,
employees may report violations directly to appropriate government officials. Hotline posters explaining the procedure for making
and handling Hot Line/Open Line calls are posted in our facilities and on our intranet for all employees to review. Employees
at any level can call directly when they have a business conduct issue, without fear of reprisal.
Stockholder
Communications
Stockholders
may communicate with our Board of Directors by writing to Richardson Electronics, Ltd., Board of Directors, 40W267 Keslinger Road,
P.O. Box 393, LaFox, Illinois 60147-0393.
Other
Matters before the Annual Meeting
As
of the date of this proxy statement, we know of no other business likely to be brought before the meeting. If other matters do
come before the meeting, the persons named in the form of proxy or their substitute will vote said proxy according to their best
judgment.
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C/O
BROADRIDGE
P.O. BOX 1342
BRENTWOOD, NY 11717
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VOTE
BY INTERNET - www.proxyvote.com
Use
the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern
Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow
the instructions to obtain your records and to create an electronic voting instruction form.
ELECTRONIC
DELIVERY OF FUTURE PROXY MATERIALS
If
you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic
delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree
to receive or access proxy materials electronically in future years.
VOTE
BY PHONE - 1-800-690-6903
Use
any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
VOTE
BY MAIL
Mark,
sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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TO
VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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KEEP
THIS PORTION FOR YOUR RECORDS
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THIS
PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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DETACH AND RETURN THIS
PORTION ONLY
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To withhold authority
to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the
line below.
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For
All
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Withhold
All
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For
All
Except
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The Board of Directors recommends
you vote
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☐
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☐
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☐
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FOR the following:
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1.
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Election of Directors
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Nominees
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01
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Edward J. Richardson 02 Paul J. Plante 03 Jacques Belin 04 James Benham 05 Kenneth Halverson
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The Board of Directors recommends
you vote FOR proposals 2 and 3.
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For
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Against
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Abstain
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2.
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To ratify the selection of BDO USA,
LLP as the Company’s independent registered public accounting firm for fiscal 2017.
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☐
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☐
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☐
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3.
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To approve, on an advisory basis,
the compensation of the Company’s Named Executive Officers.
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☐
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☐
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NOTE:
In their discretion the Proxies are authorized to vote upon such other business as may properly come before the meeting.
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For address change/comments, mark
here.
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☐
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(see reverse for instructions)
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Yes
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No
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Please indicate if you plan to attend
this meeting
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☐
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☐
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Please sign exactly as your name(s)
appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate
or partnership name, by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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Date
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Signature (Joint Owners)
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Date
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Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting:
The Notice & Proxy Statement, Form 10-K is/ are available at www.proxyvote.com.
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RICHARDSON
ELECTRONICS, LTD.
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Annual Meeting
of Stockholders
October 4, 2016 2:00 PM
This proxy is solicited by the Board of Directors
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The undersigned hereby appoints Edward J.
Richardson and Kathleen M. McNally as Proxies, each with the power to appoint his/her substitute, and hereby authorizes each
of them to represent and to vote, as designated below, all the shares of Common Stock and Class B Common Stock of Richardson
Electronics, Ltd. held of record by the undersigned at the close of business on August 11, 2016 at the Annual Meeting of Stockholders
to be held on October 4, 2016 or any adjournment thereof.
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This proxy, when properly executed, will
be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board
of Directors’ recommendations.
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Address
change/comments:
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(If you noted any Address Changes and/or Comments above, please
mark corresponding box on the reverse side.)
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Continued and
to be signed on reverse side
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