CAMTEK LTD
___________________________________________
NOTICE OF AN ANNUAL GENERAL MEETING OF SHAREHOLDERS
___________________________________________
TO BE HELD SEPTEMBER 25, 2024
Dear Shareholder,
You are cordially invited to attend, and notice is hereby given of, an Annual General Meeting of Shareholders of Camtek Ltd (the “Company”),
to be held at the Company’s offices at Ramat Gavriel Industrial Zone, Migdal Ha’Emek, Israel (the “Company’s Offices”), on Wednesday, September 25, 2024, at 4:00 PM (Israel time) (the “Meeting”) for the following purposes:
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A) |
To re-elect each of Messrs. Rafi Amit, Yotam Stern, Moty Ben-Arie, I-Shih Tseng, Leo Huang and Ms. Orit Stav to serve as members of the Board of Directors of the Company;
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B) |
To re-elect each of Ms. Yael Andorn and Prof. Yosi Shacham-Diamand to serve on the Board of Directors of the Company as external directors, for a third three-year term;
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C) |
To approve certain amendments to the Company’s Compensation Policy;
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D) |
To approve the grant of equity awards to each of the Company’s non-controlling directors, subject to their respective re-election for service;
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E) |
To approve compensation to the Company’s Chief Executive Officer;
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F) |
To approve an amendment to the Company's Articles of Association; and
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G) |
To approve the re-appointment of Somekh Chaikin, a member firm of KPMG International, as the Company’s independent auditor for the fiscal year ending December 31, 2024, for the year commencing January 1, 2025 and until the next
annual general meeting of shareholders, and to authorize the Company’s Board of Directors, upon the recommendation of the Audit Committee, to set the annual compensation of the independent auditor in accordance with the volume and
nature of its services.
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At the Meeting, shareholders will also have an opportunity to discuss the independent auditor’s report and the audited consolidated financial statements of the Company for
the year ended December 31, 2023; this item will not involve a vote of the shareholders.
Should changes be made to any item on the agenda for the Meeting after the publication of this proxy statement, the Company will communicate the changes to its shareholders
through the publication of a press release, a copy of which will be submitted to the Securities and Exchange Commission (the “SEC”) on a Report on Form 6-K and with the Israeli Securities Authority (the “ISA”).
Only shareholders of record at the close of the business day on Tuesday, August 20, 2024, the record date for determining those shareholders eligible to vote at the
Meeting, are entitled to vote at the Meeting and at any postponements or adjournments thereof.
We intend to hold the Meeting in person and all shareholders are cordially invited to attend the Meeting in person. However, we might hold the Meeting virtually on the above date and time
instead of in person. If we determine that a change to a virtual meeting format is advisable or required, an announcement of such change will be submitted to the SEC on a Report on Form 6-K and with the ISA, as promptly as practicable.
Whether or not you plan to attend the Meeting in person, you are urged to promptly complete, date and sign the enclosed proxy and to mail it in the enclosed envelope, which requires no postage
if mailed in the United States. A beneficial shareholder who holds his, her or its shares through a member of the Tel-Aviv Stock Exchange Ltd. (“TASE”), and intends to vote his, her or its shares by
proxy, should deliver or mail (via registered mail) his, her or its completed proxy to the Company’s Offices, Attention: Chief Financial Officer, together with an ownership certificate confirming his, her or its ownership of the Company’s
shares as of the record date, which certificate must be approved by the TASE member through which he, she or it holds the shares, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General Meeting),
2000, as amended. Each such shareholder is entitled to receive the ownership certificate in a branch of the relevant TASE member or by mail to his, her or its address, if the shareholder so requests. Such a request must be made for a particular
securities account, in advance. Alternatively, beneficial shareholders who hold shares through TASE members may vote electronically via the electronic voting system of the ISA (the “Electronic Voting System”)
after receiving a personal identifying number, an access code and additional information regarding the Meeting from the TASE member through which he, she or it holds the shares and after carrying out a secured identification process, up to six
(6) hours before the time fixed for the Meeting (i.e., by no later than 10:00 AM (Israel time) on Wednesday, September 25, 2024). If applicable, a shareholder may request further instructions about such electronic voting from the TASE member
through which he, she or it holds Company shares.
Execution and return of a shareholder’s proxy will not deprive such shareholder of his, her or its right to attend the Meeting and vote in person, and any person giving a proxy has the right to
revoke it any time before it is exercised.
Joint owners of shares should take note that, pursuant to Article 18.10(a)(3) of the Articles of Association of the Company, the joint owner whose name appears first in the Company’s
Shareholders Register will be entitled to vote at the Meeting to the exclusion of any vote(s) of the other joint holder(s). If such joint owner does not vote, the joint owner whose name appears thereafter may vote, and so forth.
A proxy will be effective only if it is
received at the Company’s Offices no later than twenty four (24) hours prior to the time of the Meeting (i.e., 4:00 PM (Israel time) on Tuesday, September 24, 2024) or – in case of a shareholder voting electronically through the Electronic Voting System, no later than six (6) hours prior to the time of the Meeting (i.e., 10:00 AM (Israel time) on Wednesday,
September 25, 2024).
By Order of the Board of Directors,
Moty Ben-Arie
Chairman of the Board of Directors
August 15, 2024
PROXY STATEMENT
CAMTEK LTD
________________
AN ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 25, 2024
This Proxy Statement is being furnished to the holders of ordinary shares, New Israeli Shekels (“NIS”) 0.01 nominal (par) value per
share (the “Shares”), of Camtek Ltd (“we”, “Camtek” or the “Company”) in connection
with the solicitation by the Board of Directors of the Company (the “Board” or “Board of Directors”) of proxies for use at the Company’s Annual General Meeting of
Shareholders, or at any postponement or adjournment thereof (the “Meeting”).
PURPOSE OF THE ANNUAL GENERAL MEETING
The Meeting will be held on Wednesday, September 25, 2024, at 4:00 PM (Israel time), at the Company’s offices, Ramat Gavriel Industrial Zone, Migdal Ha’Emek, Israel (the “Company’s Offices”), for the following purposes:
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A) |
To re-elect each of Messrs. Rafi Amit, Yotam Stern, Moty Ben-Arie, I-Shih Tseng, Leo Huang and Ms. Orit Stav to serve as members of the Board of Directors of the Company;
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B) |
To re-elect each of Ms. Yael Andorn and Prof. Yosi Shacham-Diamand to serve on the Board of Directors of the Company as external directors, for a third three-year term;
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C) |
To approve certain amendments to the Company’s Compensation Policy;
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D) |
To approve the grant of equity awards to each of the Company’s non-controlling directors, subject to their respective re-election for service;
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E) |
To approve compensation to the Company’s Chief Executive Officer;
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F) |
To approve an amendment to the Company's Articles of Association; and
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G) |
To approve the re-appointment of Somekh Chaikin, a member firm of KPMG International, as the Company’s independent auditor for the fiscal year ending December 31, 2024, for the year commencing January 1, 2025 and until the next
annual general meeting of shareholders, and to authorize the Company’s Board of Directors, upon the recommendation of the Audit Committee, to set the annual compensation of the independent auditor in accordance with the volume and
nature of its services.
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At the Meeting, shareholders will also have an opportunity to discuss the independent auditor’s report and the audited consolidated financial statements of the Company for
the year ended December 31, 2023; this item will not involve a vote of the shareholders.
Should changes be made to any item on the agenda for the Meeting after the publication of this proxy statement, the Company will communicate the changes to its shareholders
through the publication of a press release, a copy of which will be submitted to the Securities and Exchange Commission (the “SEC”) on a Report on Form 6-K and with the Israeli Securities Authority (the “ISA”).
We intend to hold the Meeting in person and all shareholders are cordially invited to attend the Meeting in person. However, we
might hold the Meeting virtually on the above date and time instead of in person. If we determine that a change to a virtual meeting format is advisable or required, an announcement of such change will be submitted to the SEC on a Report on
Form 6-K and with the ISA, as promptly as practicable.
RECORD DATE AND VOTING RIGHTS
Only holders of record of Shares at the close of business on Tuesday, August 20, 2024, the record date for determining those shareholders eligible to vote at the Meeting, will be entitled to
notice of and to vote at the Meeting and any adjournment or postponement thereof. At such time, each issued and outstanding Share will be entitled to one vote upon the matter to be presented at the Meeting. All such shareholders are cordially
invited to attend the Meeting in person.
PROXY PROCEDURE
A form of proxy for use at the Meeting and a return envelope for the proxy are also enclosed.
If specified by a shareholder on the form of proxy, the Shares represented thereby will be voted in accordance with such specification. If a choice is not specified by a shareholder with
respect to any proposal, the form of proxy will be voted “FOR” any such proposal and in the discretion of the proxies with respect to all other matters which may properly come before the Meeting and any and all adjournments thereof. On all
matters considered at the Meeting, abstentions and broker non-votes will be treated as neither a vote “FOR” nor “AGAINST” the matter, although they will be counted in determining if a quorum is present. Broker non-votes are votes that brokers
holding shares of record for their clients are, pursuant to applicable stock exchange or other rules, precluded from casting in respect of certain non-routine proposals because such brokers have not received specific instructions from their
clients as to the manner in which such shares should be voted on those proposals and as to which the brokers have advised the Company that, accordingly, they lack voting authority.
A beneficial shareholder who holds his, her or its shares through a member of the Tel-Aviv Stock Exchange (“TASE”), and intends to
vote his, her or its shares by proxy, should deliver or mail (via registered mail) his, her or its completed proxy to the Company’s Offices, attention: Chief Financial Officer, together with an ownership certificate confirming his, her or its
share ownership as of the record date, which certificate must be approved by the TASE member through which he, she or it holds the shares, as required by the Israeli Companies Regulations (Proof of Ownership of Shares for Voting at General
Meeting), 2000, as amended. Each such shareholder is entitled to receive the ownership certificate in a branch of the relevant TASE member or by mail to his, her or its address, if the shareholder so requests. Such a request must be made for a
particular securities account, in advance. Alternatively, beneficial shareholders who hold shares through TASE members may vote electronically via the electronic voting system of the ISA (the “Electronic Voting
System”), after receiving a personal identifying number, an access code and additional information regarding the Meeting from the TASE member through which they hold shares and after carrying out a secured identification process, up to
six (6) hours before the time set for the Meeting (i.e., by no later than 10:00 AM (Israel time) on Wednesday, September 25, 2024). If applicable, a shareholder may request further instructions about such electronic voting from the TASE member
through which he, she or it holds Company shares.
Execution and return of a shareholder’s proxy will not deprive such shareholder of his, her or its right to attend the Meeting and vote in person, and any person giving a proxy has the right to
revoke it any time before it is exercised.
Joint owners of shares should take note that, pursuant to Article 18.10(a)(3) of the Articles of Association of the Company, the joint owner whose name appears first in the Company’s
Shareholders Register will be entitled to vote at the Meeting to the exclusion of any vote(s) of the other joint holder(s). If such joint owner does not vote, the joint owner whose name appears thereafter may vote, and so forth.
A proxy will be effective only if it is
received at the Company’s Offices no later than twenty-four (24) hours prior to the time of the Meeting (i.e., 4:00 PM (Israel time) on Tuesday, September 23, 2024), or – in case of a shareholder voting electronically through the Electronic Voting System, no later than six (6) hours prior to the time of the Meeting (i.e., 10:00 AM (Israel time) on Wednesday, September 25,
2024).
A shareholder may revoke the authority granted by execution of his, her or its proxy at any time before the effective exercise thereof by: (i) filing with the Company a written notice of
revocation or duly executed proxy bearing a later date; (ii) electronically voting through the Electronic Votic System at a later date; or (iii) voting in person at the Meeting. However, attendance at the Meeting will not in and of itself
constitute revocation of proxy, and if a shareholder attends the Meeting and does not elect to vote in person, his, her or its proxy or electronic voting through the Electronic Voting System, will not be revoked.
Proxies for use at the Meeting are being solicited by the Board chiefly by mail; however, certain officers, directors, employees and agents of the Company, none of whom will receive additional
compensation for such solicitation, may solicit proxies by telephone, email or other personal contact. The Company will bear the cost for the solicitation of the proxies, including postage, printing and handling, and will reimburse the
reasonable expenses of brokerage firms and others for forwarding material to beneficial owners of Shares.
QUORUM
Two (2) or more shareholders, present in person, by proxy, or voting through the Electronic Voting System, and holding together Shares conferring in the aggregate twenty
five percent (25%) or more of the voting power of the Company, shall constitute a quorum at the Meeting. If within half an hour from the time set for the Meeting a quorum is not present, the Meeting shall stand adjourned to Wednesday, October 2, 2024, at the same time and place. At such adjourned meeting, if a quorum is not present within half an hour from the time set for the adjourned meeting, the adjourned meeting will take place
regardless of whether a quorum is present.
BENEFICIAL OWNERSHIP OF SECURITIES BY PRINCIPAL
SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information, as of July 31, 2024, regarding: (i) persons
or entities known to the Company to beneficially own more than five percent (5%) of the Company’s issued and outstanding Shares; (ii) each “office holder”1, as such term is
defined in the Israeli Companies Law, 1999 (the "Companies Law") of the Company (the “Office Holders”) known to the Company to beneficially own more than one
percent (1%) of the Company’s issued and outstanding Shares; and (iii) all Office Holders as a group.
The information contained in the table below has been obtained from the Company’s records or disclosed in public filings with the SEC.
1 The term “Office Holder” as defined in the Companies Law includes a director, the chief executive officer, the chief business officer, the vice chief executive
officer, the deputy chief executive officer, any other person fulfilling or assuming any of the foregoing positions without regard to such person's title, and any manager who is directly subordinated to the chief executive officer.
Except where otherwise indicated, and except pursuant to community property laws, we believe, based on information furnished by such owners, that the beneficial owners of the Shares listed
below have sole investment and voting power with respect to such Shares.
Total “Number of Shares Beneficially Owned” in the table below include Shares that may be acquired by an entity, individual or group upon the exercise of options that are either currently
exercisable or will become exercisable, and Restricted Share Units (“RSUs”) which have vested or will vest, within sixty (60) days of July 31, 2024. The Shares that
may be issued under these options and RSUs are deemed to be outstanding for purpose of determining the percentage of ownership of such individual or group but are not deemed to be outstanding for the purpose of determining the percentage of
ownership of any other individual or group shown in the table.
The shareholders listed below do not have any different voting rights from any of our other shareholders.
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Name of Beneficial Owner
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Number of
Shares
Beneficially Owned(1)
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Percent of
Shares
Beneficially
Owned(2)
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Priortech Ltd. (“Priortech”)(3)
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9,617,757
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21.20%
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Chroma ATE Inc. (“Chroma”)(4)
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7,817,440
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17.23%
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Yotam Stern(5)
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-
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-
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Rafi Amit(5)
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21,414
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0.05%
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Leo Huang(7)
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-
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-
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Office Holders as a Group (8)
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67,413
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0.15%
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| (1) |
The total number of options which are exercisable, or will become exercisable, and RSUs which will vest, within 60 days of July 31, 2024, held by the persons included in the above table is 814.
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| (2) |
Based upon 45,366,152 Shares issued and outstanding as of July 31, 2024.
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| (3) |
29.34% of the voting equity in Priortech is subject to a voting agreement. As a result of this agreement, and due to the fact that there are no other shareholders holding more than 50% of the voting
equity in Priortech, Messrs. Rafi Amit, Yotam Stern, David Kishon, and Hanoch Feldstien and the estates of Itzhak Krell (deceased), Zehava Wineberg (deceased) and Haim Langmas (deceased), may be deemed to control Priortech. The voting
agreement does not provide for different voting rights for Priortech than the voting rights of other holders of our Shares. Priortech’s principal executive offices are located at South Industrial Zone, Migdal Ha’Emek 23150, Israel.
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| (4) |
Based on the Schedule 13G filed by Chroma on August 5, 2019, which presented ownership as of June 19, 2019. The 7,817,440 Shares reported under such Schedule 13G by Chroma are beneficially owned by
Chroma. Chroma’s principal address is No. 88, Wenmao Rd., Guishan Dist., Taoyuan City 333001, Taiwan.
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| (5) |
Mr. Stern does not directly own any of our Shares. However, as Mr. Stern may be deemed to control Priortech, he may also be deemed to beneficially own the Shares of the Company held by Priortech. Mr. Amit
disclaims such beneficial ownership of such Shares.
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| (6) |
Mr. Amit directly owns 21,414 of our Shares. In addition, as a result of a voting agreement relating to a majority of Priortech’s voting equity, Mr. Amit may be deemed to control
Priortech, he may also be deemed to beneficially own the Shares of the Company held by Priortech. Mr. Amit disclaims such beneficial ownership of such Shares.
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| (7) |
Mr. Huang does not directly own any of our Shares. Based on information we received from Chroma Mr. Huang is considered a controlling person with regard to Chroma, accordingly Mr. Huang may be deemed to
beneficially own the Shares of the Company held by Chroma. Mr. Huang disclaims beneficial ownership of such Shares.
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| (8) |
Our Office Holders as a group directly own 47,373 of our Shares (and 20,040 options, which are exercisable or will become
exercisable, and RSUs which will vest, within 60 days as of July 31, 2024). Each of our Office Holders, other than Messrs. Amit and Stern (as a result of their beneficial interest in Shares
owned by Priortech) and Mr. Huang (as a result of his beneficial interest in the Shares owned by Chroma), beneficially owns less than 1% of our outstanding Shares (including options held by each such person which have vested or will
vest, and RSUs that will vest, within 60 days as of July 31 2024) and have therefore not been listed separately.
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For information relating to the compensation of our five most highly compensated Office Holders with respect to the year ended December 31, 2023, please see “Item 6. Directors,
Senior Management and Employees – B. Compensation - b) Individual Compensation of Office Holders” in our Annual Report for 2023, which was filed on Form 20-F with the SEC on March 21, 2024.
ITEM A
RE-ELECTION OF SIX (6) DIRECTORS
Background
The Company’s Amended and Restated Articles of Association (the “Articles”) provide that the number of directors to serve on our
Board shall be no less than five (5) and no more than ten (10) directors. The Board is currently comprised of eight (8) members, all of whom are serving terms that expire at the conclusion of the Meeting.
Each director (other than external directors, whose tenure is determined in accordance with the provisions of the Companies Law) is elected at each annual general meeting
for a term of approximately one year, commencing upon his or her appointment by our shareholders and ending at the conclusion of the next annual general meeting of shareholders and until his or her respective successor has been elected, or
until his or her office is vacated earlier in accordance with the provisions of the Companies Law and the Articles.
In addition, Priortech and Chroma entered
into a voting agreement pursuant to which they vote together in the Company’s shareholders meetings and have joint control over the Company (the “Voting Agreement”). Under the Voting Agreement, Chroma is entitled to nominate up to two (2) individuals for service on the Board and Priortech is entitled to nominate up to three (3) individuals for service on the Board.
Further, in general, according to the Companies Law, compensation paid to our directors require, in general, the approval of our Compensation Committee, Board of
Directors and shareholders, in that order, unless otherwise stated pursuant to the regulations promogulated under the Companies Law.
Re-election of Currently Serving Directors
Pursuant to the recommendation of our Nomination Committee, it is proposed that each of Messrs. Rafi Amit, Yotam Stern, Moty Ben-Arie, I-Shih Tseng, Leo Huang and Ms. Orit
Stav be re-elected to serve as our directors, for a term of approximately one year, until the conclusion of the 2024 annual general meeting of the Company’s shareholders and until his or her respective successor has been elected, or until his
or her office is vacated earlier in accordance with the provisions of the Companies Law and the Articles.
In accordance with Israeli law, a nominee for service as a director must submit a declaration to the Company, prior to his or her election, specifying that he or she has
the requisite qualifications to serve as a director, and the ability to devote the appropriate time to performing his or her duties as such. The Company has received a declaration in writing from each of the nominees for re-election, confirming
that he or she possesses the requisite skills and expertise, as well as sufficient time, to perform his or her duties as a director of the Company. The Company is not aware of any reason why any of the six nominees, if re-elected, would be
unable to serve as a director. Except for the Voting Agreement, the Company is not aware of any other understanding or agreement with respect to the future election of any of the proposed nominees.
The following are brief biographies of each of the six nominees, based upon the records of the Company and information furnished by each nominee:
Rafi Amit has served on our Board since 1987. Between 2010 to March 2017, and June 2019 to January 2023, Mr. Amit also served as our Active
Chairman of the Board of Directors. Previously, Mr. Amit served as our Chief Executive Officer from January 1998 until August 2010 and as Chairman of the Board of Directors from 1987 until April 2009. Since 1981, Mr. Amit has also served as
the President and director of Priortech and has been the Chairman of the Board of Directors of Priortech since 1988. From 1981 until 2004, Mr. Amit served as Priortech’s Chief Executive Officer. Mr. Amit holds a B.Sc. in Industrial
Engineering and Management from Technion - Israel Institute of Technology.
Yotam Stern has served on our Board since 1987. Mr. Stern also served as the Chairman of our Board of Directors from May 2009 until August 2010. From 2001 until 2012, Mr. Stern served
as our Executive Vice President, Business & Strategy. From 1998 until 2001, Mr. Stern served as our Chief Financial Officer. Mr. Stern served in the past as the Chief Financial Officer of Priortech and has been serving as a director of
Priortech since 1985 and as its Chief Executive Officer since 2004. Mr. Stern holds a B.A. in Economics from Hebrew University of Jerusalem.
Moty Ben-Arie has served on our Board of Directors since March 2017, and as our Chairman of the Board since January 2023. From March 2017 until the 2019 annual general meeting, Mr.
Ben-Arie also served as the Chairman of the Board of Directors. Mr. Ben-Arie is the co-founder and serves as the chairman of the board of directors of Invisicare Ltd. Mr. Ben-Arie has served as a consultant to entrepreneurs and investors
since 2014. Previously, Mr. Ben-Arie served as the chief executive officer of Sital Technology from 2012 until 2014. From 2006 until 2011, Mr. Ben-Arie also served as a managing partner of Vertex Ventures, where he focused on investments in
Israeli-related hi-tech companies and evaluation of companies in the field of telecommunication, IT, test equipment, medical equipment and multidisciplinary systems. During these years, Mr. Ben-Arie served as a member of the fund investment
committee, managed investments in several companies and served as a board member in companies in their early stages, including Color Chip Inc., Multiphi, Expand Networks, Comability and Ethos Networks. From 2000 until 2006, Mr. Ben-Arie also
served as a partner of Walden Israel Ventures, where he focused on investments in Israeli-related hi-tech companies. During these years, Mr. Ben-Arie managed investments in several companies and served as a board member in companies from
early stage, including Color Chip Inc. and Passave. From 1998 until 2000, Mr. Ben-Arie served as a director in Radcom Ltd., as a consultant in Walden Israel, and financed seed phases for new startups. From 1991 until 1998, Mr. Ben-Arie served
as the co-founder and chief executive officer of Radcom Ltd., Israel. From 1978 until 1982, Mr. Ben-Arie served as an electronic engineer and a project manager in Elisra Ltd. Mr. Ben-Arie holds a Masters in Business Administration from Tel
Aviv University, and a B.Sc. in Electrical Engineering from the Technion - Israel Institute of Technology.
Orit Stav is an experienced investment manager with 20 years of experience in the Sield of Venture Capital & Private Equity, as well as in the technology sector. Ms. Stav is a
co-founder and serves as a managing partner at Israel Innovation Partners, a business advisory Sirm that specializes in building business relationship between global companies and Israeli technology start-ups. Currently, Ms. Stav serves as a
board member in Menora Mivtachim Holdings Ltd., Doral Group Renewable Energy Resources Ltd., Innovize Technologies Ltd., IBI – Underwriting & Issuing Ltd., EFI Capital Real Estate Ltd. From 2014 until 2015, Ms. Stav served as a managing
partner of EVA Ventures venture capital. From 2010 until 2012, Ms. Stav served as a country manager in Wimdu GmbH, an international internet company. From 2006 until 2009 she served as an investment manager in Siemens Venture Capital, and
from 1998 until 2005 served as an investment partner in Platinum Neurone Ventures, PNV, an Israeli venture capital fund.
Leo Huang has served on our Board as a representative of Chroma since June 2019. Mr. Huang co-founded Chroma in 1984 and has been serving
as chairman of the board of directors of Chroma since October 1984. Mr. Huang was the QA Engineer of TIMEX Corp. from 1975 to 1977 and served as the Sales Manager of Philips Electronics Industries (Taiwan) Ltd. from 1978 to 1984. Mr. Huang
holds a Bachelor’s degree in Electronics Engineering from National Chiao Tung University.
I-Shih Tseng has served on our Board as a representative of Chroma since June 2019. Mr. Tseng joined Chroma in 1998, serving as a director
since June 2012 and as Business Unit President of Chroma since July 2007. Mr. Tseng was a Research Assistant at Pennsylvania State University from 1986 to 1992 and served as the Project Manager of Institute for Information Industry from 1992
to 1998. Mr. Tseng holds a PhD degree in Mechanical Engineering from Pennsylvania State University.
Directors’ Independency
Under the Nasdaq Listing Rules, a majority of our directors is required to be independent. Our Board determined that seven of our directors, i.e.
each of Messrs. Shacham Diamand, Stern, Ben-Arie, Tseng and Huang, Ms. Stav, and Ms. Andorn qualifies as an independent director as defined in the Nasdaq Listing Rules. Further, our Audit Committee has classified each of Mr. Ben-Arie and Ms.
Stav as an “Independent Director” in accordance with the Companies Law, based on their declarations that they comply with the independence criteria set under the Companies Law (in addition to our two external directors, who also qualify as
such).
Directors’ Compensation
Pursuant to Israeli law, any arrangement between the Company and a director regarding such director’s terms of office and employment (as a director or in other capacities
in which he or she is engaged with the Company) must generally be consistent with the Company’s compensation policy, which was last approved by the Company’s shareholders on December 21, 2023 (the “Compensation
Policy” and the “2023 AGM”), and generally requires the approval of the Company’s Compensation Committee (the “Compensation Committee”), Board and
shareholders, in that order.
As Messrs. Amit, Stern and Huang are nominated pursuant to the Voting Agreement and are deemed to control the Company through their controlling interest in Priortech
(Messrs. Amit and Stern) and Chroma (Mr. Huang), and Mr. Tseng is also nominated pursuant to the Voting Agreement, they do not and shall not receive any compensation (either in cash or equity) in consideration for their service as directors.
For clarification purposes, Mr. Amit will continue to receive compensation for his service as our CEO.
Cash
Subject to the approval of their re-election for service as directors of the Company, each of Mr. Ben-Arie and Ms. Stav will receive cash remuneration in the same amounts as paid to our two
(2) external directors, Messrs. Yael Andorn and Yossi Shacham-Diamand, to the extent re-elected by this Meeting (see Item B below). These amounts include an annual fee, per-meeting participation fee for participation in meetings of the Board
and its committees, and reimbursement of travel expenses for participation in a meeting which is held outside of their place of residence, in the following amounts: NIS 145,770 (approximately US$38,955 based on the representative NIS/USD
exchange rate published by the Bank of Israel on August 9, 2024 (the “Exchange Rate”)) as annual fee, NIS 4,380 (approximately US$1,170, based on the
Exchange Rate) as participation fee, per meeting, for participation in meetings of the Board and its committees in person, NIS 2,628 (approximately US$702, based on the Exchange Rate) as participation fee, per meeting, for participation in
meetings of the Board and its committees by electronic means and NIS 2,190 (approximately US$585, based on the Exchange Rate) for each written resolution.
The above-mentioned cash remuneration is in line with the Compensation Policy, according to which each of the Company’s non-executive (non-controlling) directors is
entitled to receive cash fees that include annual and participation fees.
As these amounts are in the range between the fixed amounts of the annual and participation fees, as set forth in regulations promulgated under the Companies Law in
connection with compensation to external directors (the “Remuneration Regulations”), based on the amount of the Company’s capital, and the maximum amounts of such fees set forth in the Companies
Regulations (Alleviation for Public Companies Whose Shares are Traded on a Stock Exchange Outside of Israel), 2000 (the “Alleviation Regulations”), they are exempt from shareholder approval, in accordance
with the Israeli Companies Regulations (Relief From Related Party Transactions), 2000 (the “Relief Regulations”).
Equity
Subject to their re-election, and subject to shareholder approval for the grant of equity awards to each of our non-controlling directors, each of Ms. Stav and Mr. Ben-Arie
shall be entitled to a yearly grant of equity (see Item D below).
Indemnification, Exemption and Insurance
In addition to the above, each of the six (6) nominees for re-election for service as a director shall be entitled to continue to be a party to the same indemnification and
exemption agreements as entered into by the Company with all Office Holders serving from time to time (the “Indemnification and Exemption Agreement”), provided that with respect to Messrs. Amit, Stern and
Huang, such Indemnification and Exemption Agreements were last approved by our shareholders at the 2023 AGM. In addition, each of the six (6) nominees for re-election for service as director, will also continue to be insured under the Company’s
directors and officers insurance policies, as all other Office Holders of the Company.
Board Diversity Matrix (As of August 15, 2024)
|
Country of Principal Executive Offices
|
Israel
|
|
Foreign Private Issuer
|
Yes
|
|
Disclosure Prohibited under Home Country Law
|
No
|
|
Total Number of Directors
|
8
|
|
Part I: Gender Identity
|
Female
|
Male
|
Non-Binary
|
Did Not Disclose
Gender
|
|
Directors
|
2
|
6
|
0
|
0
|
|
Part II: Demographic Background
|
|
|
Underrepresented Individual in Home Country Jurisdiction
|
0
|
|
LGBTQ+
|
0
|
|
Did Not Disclose Demographic Background
|
8
|
Required Vote
The affirmative vote of the holders of the Shares representing a majority of the voting power present at the Meeting, in person, by proxy, or through the Electronic Voting
System, and voting thereon, is required for the re-election of each of Messrs. Rafi Amit, Yotam Stern, Moty Ben-Arie, I-Shih Tseng, Leo Huang and Ms. Orit Stav to serve on our Board.
The re-election of each of these six (6) nominees will be voted upon separately at the Meeting.
It is proposed that at the Meeting the following resolutions be adopted:
“RESOLVED, that Mr. Rafi Amit be, and he hereby is, re-elected for service as a director for a
term of approximately one year, until the conclusion of the 2025 annual general meeting of the Company’s shareholders and until his successor has been elected, or until his office is vacated earlier in accordance with the provisions of the
Companies Law and the Articles;
FURTHER RESOLVED, that Mr. Yotam Stern be, and he hereby is, re-elected for service as a director for a
term of approximately one year, until the conclusion of the 2025 annual general meeting of the Company’s shareholders and until his respective successor has been elected, or until his office is vacated earlier in accordance with the
provisions of the Companies Law and the Articles;
FURTHER RESOLVED, that Ms. Orit Stav be, and she hereby is, re-elected for service as a director for a
term of approximately one year, until the conclusion of the 2025 annual general meeting of the Company’s shareholders and until her respective successor has been elected, or until her office is vacated earlier in accordance with the
provisions of the Companies Law and the Articles;
FURTHER RESOLVED, that Mr. Leo Huang be, and he hereby is, re-elected for service as a director
for a term of approximately one year, until the conclusion of the 2025 annual general meeting of the Company’s shareholders and until his respective successor has been elected, or until his office is vacated earlier in accordance with the
provisions of the Companies Law and the Articles;
FURTHER RESOLVED, that Mr. I-Shih Tseng be, and he hereby is, re-elected for service as a director for a term of approximately one year, until the
conclusion of the 2025 annual general meeting of the Company’s shareholders and until his respective successor has been elected, or until his office is vacated earlier in accordance with the provisions of the Companies Law and the Articles;
and
FURTHER RESOLVED, that Mr. Moty Ben-Arie be, and he hereby is, re-elected for service as a director for a term of approximately one year, until the
conclusion of the 2025 annual general meeting of the Company’s shareholders and until his respective successor has been elected, or until his office is vacated earlier in accordance with the provisions of the Companies Law and the Articles.
The Board recommends a vote FOR the approval of the proposed resolutions.
As each of the nominees for re-election has a personal interest in the foregoing proposed resolutions regarding his or her
respective re-election, each of them refrained from making a recommendation with respect to his or her own re-election.
In addition, as a result of the Voting Agreement, Messrs. Amit, Stern, Tseng and Huang have refrained from making a recommendation with respect to the
re-election of each other.
ITEM B
RE-ELECTION OF TWO (2) EXTERNAL DIRECTORS
Background
Under the Companies Law, companies incorporated under the laws of Israel are generally required to appoint at least two external directors. Each committee of a company’s
board of directors empowered to exercise the board of directors authorities is required to include at least one external director, except for the audit committee and the compensation committee, which must be comprised of at least three
directors, including all of the external directors, and the external directors must comprise the majority of the members of the compensation committee.
Re-Election of Currently Serving External Directors
Qualification
A person may not be appointed as an external director if he or she or his or her relative, partner, employer, any person to whom such person is directly or indirectly
subject to, or any entity under his or her control has, as of the date of the person’s appointment to serve as an external director, or had, during the two (2) years preceding that date, any affiliation (as such term is defined in the Companies
Law) with the company; any controlling shareholder of the company at the date of such person’s appointment; a relative of a controlling shareholder; or any entity controlled, at the date of such person’s
appointment or during the two (2) years preceding that date, by the company or by a controlling shareholder of the company.
A “relative” is defined in the Companies Law as spouse, sibling, parent, grandparent, descendant, spouse’s descendant, sibling or parent and the spouse of any of the
foregoing. The term “affiliation” includes an employment relationship; a business or professional relationship maintained on a regular basis; control; and service as an office holder.
In addition, no person can serve as an external director if the person’s position or other business creates, or may create, conflicts of interest with the person’s
responsibilities as an external director, or may otherwise interfere with such person’s ability to serve as an external director.
The Companies Law provides that prior to a shareholders meeting in which the appointment of an external director is to be considered, the nominee must declare that he or
she meets the qualification criteria for being appointed as an external director. The Company has received such declarations from each of Ms. Yael Andorn and Prof. Yosi Shacham-Diamand, who are
nominated for service as external directors of the Company, confirming that they meet the qualification criteria for service as external directors of the Company.
Term
In general, external directors serve a three (3) year term, which may then be extended for two (2) additional three (3) year periods, provided that each such external
director was nominated by the Board of Directors for each such additional term, and such additional term was approved in accordance with the approvals required under the Companies Law for election of external directors. Thereafter, in
accordance with the Relief Regulations, an external director may be appointed for additional terms of service of not more than three (3) years each, provided that: (a) the company’s audit committee, followed by the board of directors, have
approved that, considering the expertise and special contribution of the external director to the work of the board of directors and its committees, the appointment of such external director for an additional term of service is beneficial to
the company; (b) the appointment of such external director for an additional term of service is approved in accordance with the requirements of the Companies Law; and (c) the prior service periods of such external director, as well as the
reasons of the audit committee and board of directors for the approval of the extension of the term of service, were presented to the shareholders prior to their approval.
The initial three-year terms of service of Ms. Andorn and Prof. Shacham-Diamand are scheduled to expire on September 19, 2024
(the “Expiration Date”). Since our Nomination Committee is comprised of Ms. Andorn and Prof. Shacham-Diamand, the recommendation and resolution regarding their
re-election as external directors was made by our Board. In accordance with the Nasdaq Listing Rules, their re-election was recommended by a majority of the
Company’s independent directors. Pursuant to such recommendation, it is proposed that each of Ms. Andorn and Prof. Shacham-Diamand be re-elected for a third three-year term of service as
external director, beginning on the Expiration Date and ending three (3) years thereafter.
Financial and Accounting Expertise
Under the Companies Law, generally at least one of the external directors must have “accounting and financial expertise” and each external director must have either
“accounting and financial expertise” or “professional qualifications” (as such terms are defined in regulations promulgated under the Companies Law); The board of directors is required to determine (based on criteria set forth in regulations
promulgated under the Companies Law) whether the external directors have “accounting and financial expertise” or “professional qualifications”. Our Board has determined that Ms. Yael Andorn has the requisite “accounting and financial expertise”
and that Prof. Yossi Shacham-Diamand has the requisite “professional qualifications” to serve as external directors.
The following are brief biographies of Ms. Andorn and Prof. Shacham-Diamand, based upon the records of the Company and
information furnished to it by each of them:
Yael Andorn has served on our Board of Directors since October 3, 2018, and she is currently the Chairperson of our Audit Committee. Ms. Andorn is the founder and
CEO of CapitalA, and serves on the Boards of Directors of Israeli public companies such as El-Al Airlines and Castro. Ms. Andorn previously served on private and public boards, including Midroog-Moody’s Rating, Oil Refineries (Bazan),
Retalix, The National Lottery, Clal Health Insurance and Clal Credit Insurance, and as head of the Investment Committee of the Teacher’s Saving Fund. Ms. Andorn served as director general of Israel’s Ministry of Finance between 2013 and 2015
and as Partner at Viola Credit between 2012 and 2013. Between 2005 and 2011, Ms. Andorn served as CEO at Amitim and also served on its investment committee. Ms. Andorn held several positions at Israel’s Ministry of Finance Budget Department,
Bank of Israel and IDF 8200 Intelligence Unit. Ms. Andorn holds a Bachelor of Economics and a Master in Business Administration from the Hebrew University of Jerusalem.
Yosi
Shacham-Diamand has served on our Board of Directors since October 3, 2018. Since 2001, Prof. Shacham-Diamand serves as The Bernard L.
Schwartz Academic Chair for nano scale information technologies in the Department of Electrical Engineering - Physical Electronics, and in the Department of Material Science and Technology, Faculty of Engineering, Tel Aviv University. Prof.
Shacham-Diamand currently serves on the advisory board of CartaSense Ltd. and SolChip Ltd., and previously served as consultant to numerous manufacturing companies such as: Zoran Inc., Intel Inc., Applied Materials Inc., Nova Instruments
Inc., as well as to numerous investment and holding companies in Israel and abroad. Prof. Shacham-Diamand previously served on the board of directors of PCB Ltd. (today, Priortech Ltd.) and “RAMOT” by Tel Aviv University. He is a visiting
professor at Waseda University, Tokyo, Japan (Since 2004) and a visiting professor at the Department of Electronics and Telecommunication, The Politecnico di Torino, Torino, Italy (Since 2018), and serves as a distinguished international
Chair Professor in Feng Chia University, Taichung, Taiwan (since 2012). Since 2014, Prof Shacham-Diamand serves as a member of the MAGNET committee, Ministry of Trade and Industry. Prof. Shacham-Diamand holds a D.Sc. EE, M.Sc. EE, and B.Sc.
EE (Summa-cum Laude), all from the Technion- Israel Institute of Technology, Haifa, Israel, and also completed postdoctoral research at U.C. Berkeley, CA, USA.
Each of Ms. Andorn and Prof. Shacham-Diamand qualifies as an independent director as defined in the Nasdaq Listing rules, and
also in accordance with the Companies Law.
The Company is not aware of any reason why any of the two (2) nominees, if re-elected, would be unable or unwilling to serve as external director. If elected, the external
directors will receive cash remuneration as described below.
Compensation to our External Directors
According to the Remuneration Regulations, external directors are generally entitled to an annual fee, a participation fee for each meeting of the board of directors or any
committee of the board on which he or she serves as a member, and reimbursement of travel expenses for participation in a meeting which is held outside of the external director’s place of residence. The minimum, fixed and maximum amounts of the
annual and participation fees are set forth in the Remuneration Regulations, as supplemented by the Alleviation Regulations, based on the classification of a company according to the amount of its capital. In addition, a company may compensate
an external director in equity awards, other than convertible debentures which may be converted into shares, subject to certain limitations as set forth in the Remuneration Regulations.
A nominee for service as external director must be notified of his or her compensation prior to his or her appointment and, subject to certain exceptions, his or her
compensation will not be amended throughout the three-year term during which he or she is in office.
Cash
Subject to the approval of their re-election for service as external directors of the Company, Ms. Andorn and Prof. Shacham-Diamand shall receive cash consideration in the following amounts: NIS 145,770 (approximately US$38,955 based on the Exchange Rate) as annual fee, NIS 4,380 (approximately US$1,170, based on the
Exchange Rate) as participation fee, per meeting, for participation in meetings of the Board and its committees in person, NIS 2,628 (approximately US$702, based on the Exchange Rate) as participation fee, per meeting, for participation in
meetings of the Board and its committees by electronic means and NIS 2,190 (approximately US$585, based on the Exchange Rate) for each written resolution.
The above-mentioned cash remuneration is in line with the Compensation Policy, according to which each of the Company’s non-executive (non-controlling) directors is
entitled to receive cash fees that include annual and participation fees.
As explained under Item A above, since these amounts are included in the range between the fixed amounts of the annual and participation fees as set forth in the
Remuneration Regulations, based on the amount of the Company’s capital, and the maximum amounts of such fees set forth in the Alleviation Regulations, they are exempt from shareholder approval, in accordance with the Relief Regulations.
Subject to their re-election, and subject to shareholder approval for the grant of equity awards to each of our non-controlling directors, each of Ms. Andorn and Prof. Shacham-Diamand shall be entitled to a yearly grant of equity (see Item D below).
Indemnification, Exemption and Insurance
In addition to the above, each of Ms. Andorn and Prof. Shacham-Diamand shall be entitled to continue to be a party to the
Indemnification and Exemption Agreement and will also continue to be insured under the Company’s directors and officers insurance policies, as all Office Holders of the Company.
The affirmative vote of holders of the
majority of the Shares represented and voting on this proposal at the Meeting in person, by proxy or by electronic voting, is required for the approval of the foregoing resolution, provided that, the majority of the shares voted in favor of this proposal are not held by “controlling shareholders” or shareholders with “personal interest” in the approval of such proposal, not taking
into account any abstention, or that the total number of shares referred to above that voted against this proposal, does not exceed two percent of the aggregate voting rights in the Company (“Disinterested
Majority”), as described below in more detail.
The Companies Law, as supplemented by the Relief Regulations, requires that each shareholder voting on a proposed resolution requiring a Disinterested Majority inform the Company whether or not
he or she is a controlling shareholder or has a personal interest in the proposed resolutions. Under the Companies Law, in general, a person will be deemed to be a controlling shareholder if that person has the power to direct the activities of
the company, otherwise than by reason of being a director or other office holder of the company, and a person is deemed to have a personal interest if any member of the shareholder’s immediate family, or the immediate family of a shareholder’s
spouse, has a personal interest in the adoption of the proposals. In addition, you are deemed to have a personal interest if a company, other than Camtek, which is affiliated with you, has a personal interest in the adoption of the proposals.
Such company is a company in which you or a member of your immediate family serves as a director or CEO, has the right to appoint a director or the CEO, or owns five percent (5%) or more of the outstanding shares. However, you are not deemed to
have a personal interest in the adoption of the proposals if your interest in such proposal arises solely from your ownership of our shares, or to a matter that is not related to a relationship with a controlling shareholder.
Please note that we
consider it highly unlikely that any of our shareholders (other than Chroma, Priortech, Messrs. Amit and Stern, who are deemed to control Priortech, and Mr. Huang who is deemed to control Chroma) is a controlling shareholder or has a
personal interest in the approval of the above-mentioned proposal. However, as required under the Companies law, as supplemented by the Relief Regulations,
you should actively inform Camtek whether you are a controlling shareholder or have a personal interest in this proposal.
It is proposed that at the Meeting the following resolutions be adopted:
“RESOLVED, that Ms. Yael Andorn be,
and she hereby is, re-elected to serve as an external director of the Company, for a third three-year term, commencing as of September 20, 2024 and until September 19, 2027”; and
“FURTHER RESOLVED, that Prof. Yosi Shacham-Diamand be, and he hereby is, re-elected to serve as an external director of the Company, for a third three-year
term, commencing as of September 20, 2024 and until September 19, 2027”.
The Board of Directors recommends a vote FOR approval of the proposed resolutions.
As
each of Ms. Yael Andorn and Prof. Yosi Shacham-Diamand has a personal interest in the foregoing proposed resolutions regarding his or her respective re-election, each of them refrained from making a recommendation with respect to his or her
own re-election.
ITEM C
AMENDMENT TO THE COMPANY’S COMPENSATION POLICY
Terms and definitions used hereunder are in accordance with the terms and definitions as appear in the Compensation Policy.
Background
Our Board’s authority to grant equity to our executives is subject to the Company’s Executives and Directors Compensation Policy, which was adopted as required pursuant to
the Companies Law. The Compensation Policy defines the principles, guidelines, and rules in accordance with the Company’s compensation philosophy for its executive officers and sets the boundaries for executive compensation, including certain
limitations (caps) on the maximum value of equity-based compensation.
The current equity caps were last set four years ago under our Compensation Policy as adopted in 2020. Since then, the Company has significantly grown in all aspects,
consummated substantial M&A transaction, and further established its position as a global leader developing and manufacturing high-end inspection and metrology equipment for the semiconductor industry.
At the same time with the updates described above, the Company wishes to also move forward with an increase in the alignment of executives’ long-term interests with those
of the Company and its shareholders as further detailed below.
Given the Company’s growth over the last four years and the compensation levels that are appropriate for executives at comparable companies today, our Compensation
Committee and Board have determined that certain provisions of the Compensation Policy relating to executive equity awards as adopted back in 2020, are no longer adequate for the Company’s current and near future needs and should be revised to
enable the Company to execute on its strategic plan and to compete for talent with peer companies of comparable size in the markets in which the Company operates.
Company’s Growth Over the last 4 Years
Over the last four years, Camtek has grown its total revenues by 235%, and its operating income by 298%. In addition, the Company grew from approximately 322 employees at
the end of 2019 to approximately 565 employees at the end of 2023. As of the end of 2023, the non-GAAP gross margin has grown to 48.0%, non-GAAP operating margin is 16.3% and non-GAAP EPS is at 1.96%, leading to a record cash generation.
The Company’s growth and success during this period has generated significant shareholder value and led to the Company significantly increasing
its market cap since the filing of its proxy for the 2020 special shareholders meeting, when its’ market cap was approx. US$0.5 billion, to today’s market cap of approx. US$4.6 billion (based on the average closing price of the Company’s
Shares during the last 90 days).
Corporate Governance
The Company maintains a high level of corporate governance standards in all respects, both in relation to the full independence of its Compensation Committee and Board as
well as in relation to its compensation practices. The Company has adopted best practices in relation to executive compensation, including the adoption of a clawback policy for our directors and executives that is compliant with the updated
NASDAQ rules. The Company stresses long term incentives and pay for performance, and maintains very reasonable compensation levels, which are generally below the Peer Group median levels, in alignment
with shareholders’ interests.
General
The Company believes that strong, effective leadership is fundamental to its continued growth and success in the future. This requires the ability to attract, retain,
reward and motivate highly skilled executives, with the competencies needed to excel in a rapidly changing marketplace and to continually motivate the Company’s management and employees.
Our Compensation Committee and Board of Directors have determined, in separate resolutions dated August 13 and 15, 2024, respectively, that, subject to shareholder
approval: (i) the limitations set forth in the Compensation Policy with respect to the total yearly equity value for Executives (including the CEO) should be amended as follows; (ii) in line with market practice, taking into account the
importance of motivating our Executives as well as our shareholders’ interest in limiting dilution, increasing the minimal threshold for equity based components that are subject to performance-based vesting; and (iii) to replace the Board of
Director’s chairman’s (the “Chairman”) equity compensation ratio with a hard cap; all as detailed below:
Section C.9.7:
The cap for total yearly equity value granted to our Executives shall be increased, such that it shall not exceed (i) with respect to the CEO – 400% of his annual Base
Salary; and (ii) with respect to all other Executives, 300% of such Executive’s annual Base Salary.
Section C.9.8:
Under this Section, the Company is required to balance the mixture of Equity Based Components, taking into account the importance of motivating its Executives, as well as
its shareholders’ interest in limiting dilution. In order to increase alignment of the interests of its Executives with shareholders’ interests, the Company has decided to increase the minimal threshold of the Equity Based Components that are
subject to performance based vesting from at least 40% to at least 50% of the Equity Based Components granted to an Executive in each calendar year.
The performance criteria and general framework of the performance-based equity compensation shall be determined by the Compensation Committee and Board, based on one or
more measurable criteria, and will be evaluated following the publication of the financial statements for each fiscal year with respect to which such criteria was determined. Examples of measurable criteria include:
|
b) |
increase in gross margin;
|
|
c) |
increase in Non-GAAP operating income;
|
|
d) |
product development and improvement;
|
|
f) |
return on capital and assets;
|
|
h) |
balance of cash equivalents and marketable securities;
|
|
i) |
research and development expenses;
|
|
j) |
total shareholder return ; and
|
|
k) |
completion of identified special projects.
|
Section D.2.2:
Under this Section, the equity-based compensation ratio which governs the equity-based compensation to which our non-executive Chairman of the Board of Directors is
entitled shall be replaced such that he may be entitled to receive equity based compensation per year, which shall be approved by the shareholders of the Company, in accordance with applicable law in a value not to exceed US$150,000.
Section D.2.3:
This Section, which sets forth a pre-determined vesting schedule with respect to equity awards to the Company’s directors. The Company is willing to remove this Section
from the Amended Policy to allow it to design suitable equity award framework to its directors; for the avoidance of doubt, this will not impede shareholders’ supervision and governance over equity awards granted to our directors, as under the
Israeli Companies Law director equity compensation must be approved, in advance, by the Company’s Compensation Committee, Board of Directors, and shareholders. Thus, the terms and conditions of every equity grant to our directors, including its
vesting schedule, will be subject to shareholder approval.
The Compensation Committee and Board shall further determine appropriate safeguard mechanisms, such as performance thresholds levels, under which no performance-based
equity shall vest.
The Compensation Committee and Board believe that the proposed amendments incorporated in the Amended Policy, in accordance with the
aforementioned principles, are better aligned to prevailing market practices while remaining below the median levels of our peer group companies with respect to the amended parameters, and being balanced by new limitations in connection with
the type and terms of the equity granted, thus ensuring a proper correlation between the Company’s success and the value of the Executive’s holdings.
It should be further noted that under the Company’s 2018 Share Incentive Plan, the annual equity granted to the Company’s Executives and other
employees, as a group, may not exceed three and a half percent (3.5%) of the Company’s total issued and outstanding share capital, and – as already mentioned above - in no event shall the total dilution, when considering all outstanding share
awards under all share plans, exceed 10% of the Company’s total issued and outstanding share capital. As of the date hereof, the total equity granted to the Company’s Executives and other employees
constitutes approximately 2 percent (2%) of the Company’s total issued and outstanding share capital. When determining grants of equity-based components to Executives, the Compensation Committee and the Board are obliged to take into account
the interests of the Company’s shareholders and to consider the effect of such grants on the dilution of such shareholders. The Compensation Committee and the Board will assure that proper levels of dilution are maintained at all times,
including the above-mentioned annual dilution limitation.
The proposed amendments to the Compensation Policy, for which we now seek shareholder approval, is marked in the revised version of the Compensation Policy attached to this Proxy Statement as Exhibit A (the “Amended Policy”). Other than the foregoing changes, all other terms of the Compensation Policy remain unchanged.
If the above-mentioned amendment to the Compensation Policy is adopted by our shareholders, then the date of such adoption shall be deemed to be the date of the adoption of the Amended Policy
in its entirety, so that the Amended Policy shall be in full force and effect for a period of three years thereafter.
The affirmative vote of holders of the
majority of the Shares represented and voting on this proposal at the Meeting in person, by proxy or by electronic voting, is required for the approval of the foregoing resolution. In addition, the shareholder approval must also include the Disinterested Majority (as defined above). The Companies Law, as supplemented by the Relief Regulations, requires that each
shareholder voting on a proposed resolution requiring a Disinterested Majority inform the Company whether or not he or she is a controlling shareholder or has a personal interest in the proposed resolutions. Under the Companies Law, in
general, a person will be deemed to be a controlling shareholder if that person has the power to direct the activities of the company, otherwise than by reason of being a director or other office holder of the company, and a person is deemed
to have a personal interest if any member of the shareholder’s immediate family, or the immediate family of a shareholder’s spouse, has a personal interest in the adoption of the proposals. In addition, you are deemed to have a personal
interest if a company, other than Camtek, which is affiliated with you, has a personal interest in the adoption of the proposals. Such company is a company in which you or a member of your immediate family serves as a director or CEO, has the
right to appoint a director or the CEO, or owns five percent (5%) or more of the outstanding shares. However, you are not deemed to have a personal interest in the adoption of the proposals if your interest in such proposal arises solely from
your ownership of our shares, or to a matter that is not related to a relationship with a controlling shareholder.
Please note that we
consider it highly unlikely that any of our shareholders (other than Chroma, Priortech, Messrs. Amit and Stern, who are deemed to control Priortech, and Mr. Huang who is deemed to control Chroma) is a controlling shareholder or has a
personal interest in the approval of the above-mentioned proposal. However, as required under the Companies law, as supplemented by the Relief Regulations,
you should actively inform Camtek whether you are a controlling shareholder or have a personal interest in this proposal.
It is proposed that at the Meeting, the following resolution be adopted:
“RESOLVED, that the Amended Policy, in the form attached as Exhibit A to the Proxy Statement for the 2024 Annual General Meeting of Shareholders, be, and it
hereby is, approved for a term of three (3) years as of the date hereof”.
The Board of Directors recommends a vote FOR the approval of the proposed resolution.
As Mr. Amit has a
personal interest in the foregoing proposed resolution, he refrained from making a recommendation with respect to
the proposed resolution.
ITEM D
APPROVAL OF EQUITY
AWARDS TO THE COMPANY’S NON-CONTROLLING
DIRECTORS
Background
According to the Companies Law, compensation paid to our directors require, in general, the approval of our Compensation Committee, Board and shareholders, in that order.
General
In addition to the cash fees set forth under Items A and B above, as remuneration for their contribution and efforts as directors of the Company, and in line with the limitations set forth in
our Compensation Policy with respect to equity-based compensation for directors, following the approval of our Compensation Committee, our Board approved on August 15, 2024, subject to shareholder approval, a new equity award mechanism.
According to such mechanism, our directors who are not classified as controlling shareholders, including our external directors (but not including Mr. Tseng, who himself is not a controlling shareholder but serves as our director pursuant to
the Voting Agreement and therefore does not receive any compensation for such service), either currently serving or as shall be appointed from time to time (“Non-Controlling Directors”), will be entitled
to a fixed annual equity award.
Hence, commencing as of this Meeting, subject to shareholder approval, each of the Company’s Non-Controlling Directors shall, on the date of each annual general meeting of shareholders of the
Company and subject to his or her election, re-election or continuous service, be granted an annual equity award based on the mechanism and under the terms detailed below, without the need for further approval.
|
(a) |
Each of our Non-Controlling Directors shall be granted an equal mix of options to purchase Shares at an exercise price equal to the “Market Value” (as defined below) (the “Market-Value Options”)
and Restricted Share Units (“RSUs”) (the Market-Value Options and the RSUs together, the “Annual Equity Award”);
|
|
(b) |
The value of the Annual Equity Award to our Non-Controlling Directors, except for shall be US$75,000; the value of the Annual Equity
Award to our Chairman shall be US$100,000.
|
|
(c) |
The actual number of Market-Value Options and RSUs to be granted each year, bearing the foregoing value, shall be determined based on the average closing price per Share as quoted on the NASDAQ Stock Market during the 30 consecutive
calendar days preceding the date of grant (the “Market Value”); and
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|
(d) |
In case a Non-Controlling Director is appointed in between annual general meetings, in accordance with our Articles – the Annual Equity Award will be pro-rated according to the part of the year that has passed since the previous
annual general meeting of shareholders.
|
|
(a) |
Date of Grant: The Annual Equity Award will be granted on the date of each annual general meeting of shareholders (including this Meeting); provided that in case a Non-Controlling Director is appointed in
between annual general meetings, in accordance with our Articles, the Annual Equity Award will be granted on the date of his or her appointment (the “Date of Grant”);
|
| |
(b) |
Exercise Price: The exercise price of the Market-Value Options will be equal to the Market Value, and the RSUs shall have an
exercise price of NIS 0.01 per share, which is the par value of each Share;
|
|
(c) |
Vesting Schedule: The Annual Equity Award shall be subject to time-based vesting and will vest in one installment
on the date of the annual general meeting of shareholders following the Date of Grant, provided that at such time the applicable grantee is still a director of the Company;
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(d) |
Exercise Period: The exercise period of the Market-Value Options shall be seven (7) years from the Date of Grant; and
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(e) |
The rest of the terms of the Annual Equity Awards shall be in accordance with the Company’s 2018 Share Incentive Plan (the “Plan”), or under the terms of any other share incentive plan of the
Company, as shall be in effect from time to time.
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Considerations Taken into Account by our Compensation Committee and Board
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• |
Compensation Policy: The proposed Annual Equity Award is in line with the Compensation Policy, according to which each of our directors may be entitled to receive equity-based compensation, the annual value of which
shall not exceed 100,000 USD. Also, the Compensation Policy includes a provision according to which the equity based compensation of each of the Company’s directors shall vest in quarterly installments; however, our Compensation
Committee and Board decided that the Annual Equity Award shall only vest after an approximately one-year cliff, thus ensuring that in case a director’s service is terminated prior to the end of his or her term, for any reason, any
unvested equity shall be forfeited upon such termination date.
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Benchmark Information: The proposed value of the Annual Equity Award for each of our Non-Controlling Directors was examined and evaluated by our Compensation Committee and Board in accordance with a peer group study,
taking into account the type and value of equity awards, as well as the full compensation packages, granted to directors serving in companies included in the peer group. Following due consideration, our Compensation Committee and
Board have determined that the value of the total compensation paid to Camtek’s directors, including the value of the proposed Annual Equity Award, is well below the median range of total director compensation provided by our peer
companies included in such study. Further, our Compensation Committee and Board noted the market practice for international companies to grant equity awards in a mixture of Market-Value Options
and RSUs, as suggested under the Annual Equity Award plan.
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Dilution Effect: In accordance with the Plan, the maximum number of shares underlying all equity awards granted under it in any calendar year (commencing as of the 2018), shall not exceed three and a half
percent (3.5%) of the Company’s total issued and outstanding share capital as of December 31 of the preceding calendar year, subject to customary adjustments as provided under the Plan. Accordingly, the grant of the Annual Equity
Award to each of our Non-Controlling Directors shall in no event cause an annual dilution in excess of the allowed percentage under the Plan. Moreover, the Company has historically been very conservative and cautious with respect to
maintaining low levels of dilution in relation to its share-based compensation plans and has ensured that the level of dilution on a fully diluted basis (i.e., including all outstanding awards granted to employees, along with any
authorized pool for equity based compensation), be less than 10% of the Company’s issued and outstanding share capital. Our Compensation Committee and Board remain committed to maintaining such low levels of dilution, well below such
10% threshold, with respect to the Company’s equity-based compensation plans (currently at approximately 2%).
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General Considerations: When considering the proposed Annual Equity Award, our Compensation Committee and Board analyzed all factors and considerations required under our Compensation Policy and the Companies Law,
including, inter alia, the responsibilities and duties of our Non-Controlling Directors (including the increased scope of responsibilities and duties of our Chairman; For the avoidance of
doubt, the amendment in Section D.2.2. of our Amended Policy, as detailed under Item C above, supports such increased chairman grant value, to the extent the Amended Policy is approved by our shareholders), the estimation of such Non-Controlling Directors’ expected contribution and the importance of the Non-Controlling Directors to the future growth and success of the Company. Our Compensation Committee and Board
further noted that the Annual Equity Award is not subject to performance conditions, thus ensuring that the Non-Controlling Directors’ independence is not jeopardized and encouraging balanced risk management, and that it is identical
for each of our Non-Controlling Directors, as required under the applicable provisions of the Companies Law, requiring all members of our Compensation Committee to receive equal compensation.
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To conclude, our Compensation Committee
and Board believe that the proposed Annual Equity Awards to our Non-Controlling Directors are in the Company’s best interests
and are in line with the compensation philosophy and objectives set forth in the Compensation Policy, and that, along with the cash component payable to each of them, will: (i) provide an adequate recognition for the time, attention and
expertise required by our directors; (ii) will set the foundation for attracting the most qualified and experienced directors in our industry, through the grant of a compensation element having a long term incentive value, while taking into
account the interests of the Company’s shareholders and the effect of such grant on the dilution level of our shareholders; and (iii) will provide our directors with compensation which is more aligned with the common practice implemented by
our global peers.
Required Vote
The affirmative vote of holders of the majority of the Shares represented and voting on this proposal at the Meeting in person, by proxy or by
electronic voting, is required for the approval of the foregoing resolution.
It is proposed that at the Meeting, the following resolutions be adopted:
“RESOLVED, to approve the grant of the Annual Equity Award to each of our Non-Controlling Directors, currently serving or as shall serve from time to time - all
upon the terms described in this Item D of the Proxy Statement for the 2024 Annual General Meeting of Shareholders”.
The Board of Directors recommends a vote FOR the approval of the proposed resolution.
As Messrs. Andorn, Shacham-Diamand, Stav and Ben-Arie have a personal interest in the foregoing proposed resolution, they each refrained from making a
recommendation with respect to such resolution.
ITEM E
APPROVAL OF COMPENSATION FOR THE COMPANY’S CHIEF EXECUTIVE OFFICER
Background
Under the Companies
Law, arrangements regarding the compensation of a chief executive officer of a publicly traded company require approval by the compensation committee, board of
directors and company’s shareholders, in that order. Further, if the chief executive officer is a controlling shareholder of the company, his or her compensation terms should be brought for shareholder approval not less than every three (3)
years. In general, such compensation should be consistent with the company’s compensation policy.
Mr. Amit may be deemed, together with a third party, to control the Company, as a result of a voting agreement relating to a majority of the voting equity of the Company’s
parent company, Priortech, pursuant to which Mr. Amit may be deemed to control Priortech, and indirectly control the Company (for an explanation of such controlling interest see BENEFICIAL OWNERSHIP OF SECURITIES BY PRINCIPAL SHAREHOLDERS AND MANAGEMENT).
The compensation terms of Mr. Amit were last approved by our shareholders on August 18, 2021.
We now seek our shareholder approval for the renewal of these terms, as well as for certain amendments to the compensation paid to Mr. Amit in consideration for his
services as our CEO, effective as of the date of the Meeting and for a period of three (3) years thereafter, all as detailed below.
General
The Company believes that strong, effective leadership is fundamental to its continued growth and success in the future. This requires the ability to attract, retain, reward and motivate highly
skilled executives, with the competencies needed to excel in a rapidly changing marketplace and to continually motivate the Company’s management and employees.
Annual Base Salary and Related Benefits
In accordance with his current employment terms, Mr. Amit dedicates ninety percent (90%) of his time to his role as our CEO and is entitled to a gross annual base salary
of US$313,133 (including social benefits). He is also entitled to accumulate up to five (5) annual vacation quotas (in case those days have not been used by him). Upon termination of employment, any unused accumulated vacation days will be
redeemed in payment. In addition, as Mr. Amit resides in Asia, close to the Company’s primary markets, he is entitled to receive benefits granted to employees of the Company who relocated to Asia, such as flights, housing and health
insurance.
The Company is willing to update Mr. Amit’s annual base salary, effective as of January 2024 by US$62,627, to an annual base salary of US$375,760 (the “CEO Base Salary”).
Cash Bonus Plan for the Years 2024, 2025 and 2026
In order to streamline the annual-bonus process, and following the approval of our Compensation Committee, on August 15, 2024, our Board adopted, subject to shareholder
approval, a three-year cash bonus plan for our CEO. According to such plan, the “On-Target” bonus amount shall be equal to not more than the CEO annual Base Salary (the “On-Target Bonus”).
Further, for each of the years 2024, 2025 and 2026, the cash bonus plan shall include the following parameters and weights, calculated
in accordance with the following principles (altogether, the “CEO Cash Bonus Plan”):
At least eighty percent (80%) of the targets forming part of the CEO Cash Bonus Plan will be measurable targets, and will include financial and non-financial targets.
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Financial measurable targets (the “Financial Measurable Targets”):
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At least two (2) different financial measurable targets, weighting together at least fifty percent (50%) of the CEO Cash Bonus Plan (such as, for
example, Revenues, Operating Margin, Operating Profit, Net Income, Gross Margin, Cash flow and Operating Income).
For the year 2024, the proposed Financial Measurable Targets shall include the Company’s revenues and Non-GAAP Operating Income targets, both to be
determined based on the Company’s financial results for the year 2024.
For each of the years 2025 and 2026, our Compensation Committee and Board of Directors may decide to change the weight of the Financial Measurable
Targets (but not reduce it below the 50% minimum weight), elect different appropriate Financial Measurable Targets or add additional appropriate Financial Measurable Targets, as shall be the case, by implementing a similar methodology as
described in this Section a.
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Non-financial measurable targets (the “Non-Financial Measurable Targets”, and
together with the Financial Measurable Targets, the “Measurable Targets”).
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At least one different Non-Financial Measurable Target, weighting together no more than fifty percent (50%) of the CEO Cash Bonus Plan (such as, for
example, achievement by the Company of a certain business milestone).
For the year 2024, the Non-Financial Measurable Target shall consist of a target relating to the Company’s strategic roadmap and M&A integration.
For each of the years 2025 and 2026, our Compensation Committee and Board may decide to change the weight of the Non-Financial Measurable Targets (but
not increase it above the 50% maximum weight), elect different appropriate Non-Financial Measurable Targets or add additional Non-Financial Measurable Targets, as shall be the case, by implementing a similar methodology as described in this
Section
b.
Following the end of each calendar year, the actual achievements of the Company for that year shall be measured as follows:
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(i) |
Achievement of one hundred percent (100%) of the Measurable Targets, will entitle the CEO to receive an annual cash bonus payment equal to the percentage of the Measurable Targets in the On-Target Bonus;
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(ii) |
Achievement above one hundred percent (100%) of any of the Measurable Targets will increase the cash bonus for such Measurable Target in accordance with its applicable mechanism as shall be pre-determined by our Compensation
Committee and Board for each year (provided that in no event shall the annual CEO Cash Bonus Plan payment exceed the Payment Cap as defined below); and
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(iii) |
Achievement below one hundred percent (100%) of any of the Measurable Targets (but above the Payment Threshold as defined below) will decrease the cash bonus for such Measurable Target in accordance with its applicable mechanism, as
shall be pre-determined by our Compensation Committee and Board for each year.
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Non-Measurable Targets: No more than twenty percent (20%) of the targets for the annual CEO Cash Bonus Plan will be non-measurable targets, which may include one or more objectives, as shall be pre-determined by
our Compensation Committee and Board. There are no non-measurable targets under the 2024 CEO Cash Bonus Plan. Our Compensation Committee and Board may determine such targets for the CEO Cash Bonus Plan of each of the years 2025 and
2026.
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Threshold and Cap
In accordance with our Compensation Policy, in the event that in a given year the Company’s Non-GAAP Net Profit shall be less than US$6,000,000 (or a higher amount in the event so determined by
our Compensation Committee and Board in a given year) (the “Payment Threshold”), no CEO Cash Bonus Plan payment shall be paid to our CEO. For the year 2024, our Compensation Committee and Board increased
the Payment Threshold to 50% of annual budgeted Non-GAAP (after bonus) net income to address the increased business volume in 2024.
Further, it is proposed that the aggregate amount of the annual cash bonus actually paid to our CEO, with respect to each of the years 2024, 2025 and 2026, shall not
exceed 200% of the CEO Base Salary, as allowed under the Compensation Policy.
Equity Grant Plan for the Years 2024, 2025 and 2026
Following the approval of our Compensation Committee, our Board resolved on August 15, 2024, subject to shareholder approval, that for each of the years 2024, 2025 and
2026, our CEO shall be entitled to an annual grant of equity. At least 40% of the 2024 annual CEO equity grant shall be subject to performance-based vesting,
as required under the current Compensation Policy. At least 50% of the annual grants of equity for the years 2025 and 2026 shall be subject to
performance-based vesting, as required under the Amended Policy (the “Performance Threshold”). The value of the annual grant of equity shall not exceed the cap set under our Amended Policy, which is 400% of the CEO Base Salary (the “Equity Cap” and collectively the “Annual CEO Equity Grant”).
Notwithstanding anything to the contrary herein, in the event the Amended Policy is not approved by our shareholders, meaning that the amendment to the
Performance Threshold and Equity Cap as set forth in Item C above is not approved by the requisite shareholder vote, the Performance Threshold and Equity Cap shall remain at the levels set forth in the Company's current Compensation Policy
(i.e., 40% and 300%, respectively).
The additional terms under which the Annual CEO Equity Grant shall be provided to our CEO are as follows:
Date of Grant
For the year 2024, the date of grant of the Annual CEO Equity Grant shall be the date of this Meeting. For each of the years 2025 and 2026, the date of grant of the
Annual CEO Equity Grant shall be the date of the Board’s approval of the respective Annual CEO Equity Grant.
Time-Based Vesting
Each Annual CEO Equity Grant shall vest as follows: (a) the performance-based portion of the Annual CEO Equity Grant shall vest over a period of four (4) years, in four
equal installments, such that one fourth (1/4) of the total grant shall vest each year, beginning upon the first anniversary of the Board’s approval of the respective Annual CEO Equity Grant and then on each of the three (3) subsequent
anniversaries thereafter, and (b) the time-based portion of the Annual CEO Equity Grant shall vest over a period of four (4) years, such that one fourth (1/4) of the total grant shall vest beginning upon the first anniversary of the Board’s
approval of the respective Annual CEO Equity Grant and then on each of the twelve (12) subsequent quarters thereafter.
Performance-Based Vesting
The performance criteria for equity including performance-based vesting shall be determined in advance by the Compensation Committee and Board and shall include targets
that the Compensation Committee and Board consider commercially challenging to achieve at the applicable four (4) years vesting period. The achievement of the performance targets shall be evaluated on March 31, following each performance
year, so that each such date shall be a performance criteria measurement date.
Upon the achievement of the applicable performance-based vesting criteria, the applicable portion of the Annual CEO Equity Grant shall remain subject to the time-based
vesting. That portion of the Annual CEO Equity Grant that has not met the performance-based vesting criteria shall expire and terminate and become null and void.
The equity including performance-based vesting shall be subject to a cumulative achievement mechanism for the entire period, whereby, for example, in the event that on
the second performance criteria measurement date the targets for both the first and second performance years have been cumulatively met, then the CEO shall be entitled to a performance-based vesting on the second vesting date for both years
(even if the performance criteria for the first performance year was not met on the first performance criteria measurement date).
In addition, the equity including performance-based vesting shall be subject to an overachievement opportunity; e.g., when the next performance year’s target has been
achieved during a certain performance year, then, in addition to the vesting of the applicable portion of the equity subject to such year’s performance-based vesting, that portion of the equity subject to the next performance year’s target
shall be released from the relevant performance criteria, and continue to be subject only to the fulfillment of any remaining time-based vesting (without the need to further evaluate performance with respect to the performance years for which
the targets have been fulfilled).
Last, upon the closing of a Corporate Transaction (as such term is defined under the Plan), the performance-based vesting shall no longer be applicable, such that any
equity which was originally subject to such performance-based vesting shall only remain subject to time-based vesting.
Exercise Period
The Annual CEO Equity Grant shall be granted under the Plan, and any vested portion thereof may be exercised for a term of seven (7) years from its Date of Grant, after
which it shall expire and terminate and become null and void.
Acceleration
The Annual CEO Equity Grant shall be subject to a double trigger acceleration mechanism, such that under certain Double Trigger Circumstances (as such term is defined in
the Plan) our CEO shall be entitled to acceleration of the time-based vesting. It being clarified that under circumstances of a Corporate Transaction (as such term is defined under the Plan) that do not constitute Double Trigger
Circumstances, there shall be no such acceleration.
Change of Control
Upon an event of change in control of the Company (a “Change of Control”), as shall be defined in the CEO’s option agreement or notice of grant, fifty
percent (50%) of the outstanding unvested Annual CEO Equity Grant (subject to time-based vesting) shall be accelerated, and the remaining fifty percent (50%) of such outstanding unvested Annual CEO Equity Grant shall be subject to a double
trigger acceleration mechanism, as described above.
Dilution
The Annual CEO Equity Grant shall not cause an annual dilution in excess of the allowed percentage under the Plan (which is three and a half percent (3.5%) of the
Company’s total issued and outstanding share capital as of December 31 of the preceding calendar year, subject to customary adjustments as provided for under the Plan). Our Compensation Committee and Board remain committed to maintaining such
low levels of dilution, well below the 10% threshold recommended by the ISS (Institutional Shareholder Services) in its Israeli Proxy Voting Guidelines, with respect to any proposed and/or outstanding equity-based compensation plans
(currently at approximately 2 %).
The 2024 Equity Grant
The 2024 Annual CEO Equity Grant is comprised of RSUs, 40% of which are subject to performance-based vesting, at a value of approximately
US$1,300,190 as of the date of this Proxy Statement. This equity grant value is well below the median value of equity grants provided to CEOs of our peer companies. Our Compensation Committee and Board determined that the performance criteria
for the 2024 Annual CEO Equity Grant shall be comprised of the following targets:
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Revenue-growth target, according to which each year the percentage of Company’s revenue-growth as compared to previous year shall be at least the same as the Company’s market growth, based on a pre-determined formula which weighs
publicly available market indexes (“Revenues Target”); and
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Profitability-related target, determining a minimal Company’s annual Non-GAAP operating margin (“Profitability Target”).
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Since the specific targets forming part of such performance criteria are considered commercially sensitive information, the disclosure thereof would be detrimental to the
interests of the Company and its shareholders.
Special Cash Bonus
During the fourth quarter of 2023, we completed the acquisition of FormFactor, Inc.’s FRT Metrology (“FRT”) for US$100 million in cash (the “FRT Transaction”). FRT, headquartered in Bergisch Gladbach, Germany, is a leading supplier of high-precision metrology solutions for the Advanced Packaging and Silicon Carbide markets. This acquisition is intended to leverage
Camtek’s and FRT’s advanced technologies of Advanced Packaging and Silicon Carbide that require new inspection and metrology steps in the semiconductor manufacturing processes. The FRT Transaction was of high importance for the Company; from
a strategic perspective the Company gained an important and valuable footprint in an emerging market segment and is now able to offer its customers with a wider, synergetic products’ portfolio.
The FRT Transaction was a result of extensive and relentless efforts invested by Company’s management, led by the Company’s CEO, Mr. Rafi Amit. Mr. Amit, invested great efforts in establishing
and fostering the business relationship that led to the consummation of the FRT Transaction, and such efforts materially extending the scope and complexity of his role as CEO. His outstanding efforts have brought to the successful conclusion of
the FRT Transaction on terms that would allow the Company to improve its position in the market it serves, expand its business and increase shareholders’ value.
Accordingly, the Committee and the Board believe that it would be appropriate to reward Mr. Amit for his fruitful efforts in connection with the consummation of the
Chroma Transaction, by granting him a one-time special cash bonus in an amount of US$52,172 (the “Special Cash Bonus”), a sum which, in the opinion of the
Committee and the Board, is modest considering the benefits to the Company associated with the completion of the FRT Transaction, while reflecting the appreciation for his special contribution. In approving the Special Cash Bonus to Mr. Amit
in their respective resolutions dated August 13 and 15, 2024, the Committee and Board reviewed Mr. Amit’s terms of employment, and concluded that the Special Cash Bonus is reasonable and appropriate when taking into account his central role
in pursuing and consummating the FRT Transaction, thereby securing long-term sustainability of the Company and increasing its shareholders’ value, and also when considering the terms of the Company’s current compensation policy, which allows
the grant of a special cash bonus under special circumstances or in case of an exceptional contribution to the Company, in an amount that may be up to 50% of the executive’s annual base salary. The Special Cash Bonus constitutes
approximately one-sixth of Mr. Amit’s annual base salary.
Following the approval of the Committee and the Board, the approval of our shareholders is now being sought for the grant of the Special Cash Bonus to Mr. Amit.
Considerations Taken into Account by our Compensation Committee and Board of Directors
Our Compensation Committee and Board believe that the proposed CEO Annual Base Salary and related benefits, Special Cash Bonus, CEO Cash Bonus Plan and the Annual CEO
Equity Grant (Collectively, the “CEO Compensation Package”) are in the Company’s best interests and are in line with the Compensation Policy, including the compensation philosophy and objectives set forth
therein. With respect to the Annual CEO Equity Grant, our Compensation Committee and Board considered, among other things, the importance of motivating and incentivizing our CEO through the grant of equity, a compensation element which includes
vesting over a total of four (4) years, thus having a long term incentive value, while taking into account the interests of the Company’s shareholders and the effect of such equity grant on the dilution level of our shareholders.
Further, the Compensation Committee and Board believe that the grant of RSUs under the Annual CEO Equity Grant is more beneficial to the Company, in light of, among other
things, a market practice for international companies to grant equity awards in the form of RSUs, which are less sensitive to market fluctuations and maintain an interest in the Company’s success also when the company’s market price declines.
In addition, the Compensation Committee and Board determined that the proposed Annual CEO Equity Grant suitably links pay to performance, especially in light of the inclusion of performance targets thereunder, aligns the CEO’s interests with
those of the Company and its shareholders over the long term and encourages balanced risk management.
When considering the proposed CEO Compensation Package and reaching their conclusion, the Compensation Committee and Board analyzed all factors and considerations required under our
Compensation Policy and the Companies Law, including the responsibilities and duties of Mr. Amit in his capacity as the Company’s CEO, the importance of providing competitive compensation in order to retain talented and essential executives
such as Mr. Amit, the estimation of Mr. Amit’s expected continued contribution and the importance of Mr. Amit to the future growth and success of the Company.
In addition, our Compensation Committee and Board reviewed and considered benchmark information and data of peer companies which operate
globally in the semiconductor industry as well as Israeli hi-tech companies, including companies that are based in the United States and companies that do business in the same geographical locations as the Company, in order to understand the
compensation practices and compensation levels of our global competitors, with whom we compete for talent. Such benchmark information indicated that the value of each component of the CEO Compensation Package is below the median level
of the value of each such compensation component of CEOs in our peer group. Based on this evaluation and on the above-mentioned considerations, the Compensation Committee and Board have resolved to approve,
and are recommending that shareholders approve, the CEO Compensation Package.
Required Vote
The affirmative
vote of holders of the majority of the Shares represented and voting on this proposal at the Meeting in person, by proxy or by electronic voting, is required for the approval of the foregoing resolution. In addition, the shareholder
approval must also include the Disinterested Majority (as defined above).
The Companies Law, as supplemented by the Relief Regulations, requires that each shareholder voting on a proposed resolution requiring a Disinterested Majority inform the Company whether or not
he or she is a controlling shareholder or has a personal interest in the proposed resolutions. Under the Companies Law, in general, a person will be deemed to be a controlling shareholder if that person has the power to direct the activities of
the company, otherwise than by reason of being a director or other office holder of the company, and a person is deemed to have a personal interest if any member of the shareholder’s immediate family, or the immediate family of a shareholder’s
spouse, has a personal interest in the adoption of the proposals. In addition, you are deemed to have a personal interest if a company, other than Camtek, which is affiliated with you, has a personal interest in the adoption of the proposals.
Such company is a company in which you or a member of your immediate family serves as a director or CEO, has the right to appoint a director or the CEO, or owns five percent (5%) or more of the outstanding shares. However, you are not deemed to
have a personal interest in the adoption of the proposals if your interest in such proposal arises solely from your ownership of our shares, or to a matter that is not related to a relationship with a controlling shareholder.
Please note that we
consider it highly unlikely that any of our shareholders (other than Chroma, Priortech, Messrs. Amit and Stern, who are deemed to control Priortech, and Mr. Huang who is deemed to control Chroma) is a controlling shareholder or has a
personal interest in the approval of the above-mentioned proposal. However, as required under the Companies law, as supplemented by the Relief Regulations,
you should actively inform Camtek whether you are a controlling shareholder or have a personal interest in this proposal
It is proposed that at the Meeting, the following resolutions be adopted:
“RESOLVED, to approve the CEO Compensation Package - all upon the terms described in this Item D of the Proxy Statement for the 2024 Annual General Meeting of
Shareholders”.
The Board of Directors recommends a vote FOR the approval of the proposed resolutions.
As Mr. Amit has a personal interest in the foregoing proposed resolution, he refrained from making a recommendation with respect thereto.
Further, as a result of the Voting Agreement, Messrs. Stern, Tseng and Huang have also refrained from making a recommendation with respect to such
resolution.
ITEM F
AMENDMENT TO THE COMPANY'S ARTICLES OF ASSOCIATION
Background
Under the Companies Law, any amendment to a public company’s articles of association requires approval by the company’s shareholders. Under the
Company’s existing Articles of Association (the “Current Articles”), a resolution adopted in a General Meeting by a simple majority of the voting power represented at the meeting in person or by proxy and
voting thereon is required to approve any amendment to the Current Articles.
As part of our ongoing commitment to maintain corporate governance best practices, and adhere to changing market practices and regulatory environment,
as well as gained experience with our Current Articles, we propose to amend selected articles within our Current Articles. These modifications aim to benchmark our corporate framework against market standards, enhance procedural efficiency
established under our Current Articles, and address miscellaneous administrative updates for the purposes of corporate “housekeeping”, such as the correction of outdated references, clarification of ambiguous language, and the incorporation of
various administrative updates that will improve the cogency and functionality of our Articles of Association, reflecting the ways in which our Company and market practice have evolved.
Further, on March
13, 2024, the 10th amendment to the Relief Regulations became effective (the “Regulations Amendment”). This amendment designed to ease the regulatory burden on Israeli companies listed for trading on certain foreign
stock exchanges detailed in the Israeli Securities Law, including Israeli companies that are dually listed for trading on the Tel-Aviv Stock Exchange and such foreign stock exchanges. It is also proposed to amend the Current Articles to
align with key developments made available by the Regulations Amendment.
General
The proposed main amendments to the Current Articles are described below and are marked in the revised version of the Current Articles attached to this Proxy Statement as Exhibit B (the “Amended Articles”).
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The definition of the Companies Law, which includes a reference to the Regulations, shall be amended to clarify that the Companies Law will be read to be as supplemented by the Regulations.
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Section 18.3(b)(iv) shall be amended to reflect the recent development
imposed by the Regulations Amendment, implying that a shareholder proposal that concerns a board nominee proposal may be suggested by a shareholder holding at least 5% of the voting rights of the Company.
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Section 18.3(c) shall be added
to the Amended Articles and will regulate the procedure by which a shareholder is allowed to request the Board to add items to the agenda of a shareholders general meeting, or to demand the convening of a shareholders general meeting
(collectively, a “Proposing Shareholder”). In such an event, a Proposing Shareholder will provide, among other things, share holdings’ data, and
describe arrangements and transactions relating to the matter and/or between the Proposing Shareholder and other Proposing Shareholders. This clarification is designed to establish clear guidelines by which the Board may reasonably
articulate specific expectations or requirements of shareholders as we wish to clarify that the procedures relating to the convening of a shareholders’ meeting, including but not limited to the legal entity entitled to demand the
convening of a general meeting, or issue an applicable notice or proxy card, will be in line with the Companies Law, as supplemented by the Foreign Listed Regulations. We believe that the establishment of certain Israeli law
provisions in our Amended Articles serves our shareholders that will be provided with clearer view of the legal framework governing the Company’s corporate procedures.
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Section 18.4(a)(1) shall be amended to require the Board to convene a
Special Meeting in accordance with the Companies Law (as supplemented by the Relief Regulations).
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Section 18.4(c) shall be added to our Amended Articles, as we wish to
clarify that the procedures relating to the convening of a shareholders’ meeting, including general meeting notice publication timeframe, and the legal entity entitled to demand the convening of a general meeting, or issue an
applicable notice or proxy card, will be in line with the Companies Law, as supplemented by the Foreign Listed Regulations. We believe that the establishment of certain Israeli law provisions in our Amended Articles serves our
shareholders that will be provided with clearer view of the legal framework governing the Company’s corporate procedures
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Section 18.6(b) of our Current Articles requires the presence, in
person or by proxy, of two or more shareholders holding shares conferring in the aggregate twenty-five percent (25%) of the voting power in our Company for a quorum to be deemed present at a general meeting of our shareholders. As we
currently experience high shareholder participation and engagement, we propose to reinstate the quorum requirement to thirty-three-point three percent (33.3%).
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Our Amended Articles will further establish, under Sections 19.3 and 19.5(d) that the appointment and removal of Directors from office will be held at annual general meetings of our shareholders. We
believe that this amendment well balance between the ability to remove directors and the interest of keeping the Company and Board focused during the year on the Company’s business, as our directors are appointed to a short one-year
term of service. A removal in between annual general meetings, in an extraordinary general meeting of our shareholders, will be available in connection with removal for Cause (“Cause” shall mean the circumstances listed under Sections
226-226A to the Companies Law).
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The Amended Articles further add clarity, under Section 19.4, to the procedure of nomination to our Board of Directors of nominees proposed by our shareholders, including establishing clear
guidelines to the disclosure requirements from director nominees proposed by a Proposing Shareholder (an “Additional Nominee”). We believe that adding clarity to such procedures will allow for an increased visibility for our
shareholders and potential director nominees.
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It is clarified that in case the Amended Articles are not approved - the Current Articles will remain in full force and effect.
Required Vote
The affirmative vote
of the holders of Shares representing a majority of the voting power present at the Meeting, in person, by proxy or by electronic voting, and voting thereon, is required for the approval of the Amended Articles.
It is proposed that at the Meeting the following resolution be adopted:
“RESOLVED, that the Amended Articles, in the form attached as Exhibit B to the Proxy Statement for the 2024 Annual General Meeting of Shareholders, be approved, and the
Company's Articles of Association be reinstated and replaced by such Amended Articles".
The Board recommends a vote “FOR" approval of the proposed resolution.
ITEM G
RE-APPOINTMENT OF INDEPENDENT AUDITOR
Background
The Companies Law and our Articles provide that a certified accountant be appointed as an independent auditor of the Company at the annual general meeting of the
shareholders of the Company, and that the independent auditor serve in this position until immediately following the date of the next annual general meeting, or until such later time as determined at the annual general meeting, provided that
the auditor shall serve no longer than until the end of the third annual general meeting after the annual general meeting in which such auditor was appointed. An independent auditor who has completed a period of appointment as aforesaid may be
reappointed. The Company may appoint several auditors to conduct the audit jointly. In the event the position of an auditor has become vacant, and the Company does not have an additional auditor, the Board shall convene a special meeting of
shareholders as soon as possible to appoint an auditor.
General
At the Meeting, shareholders will be asked to re-appoint Somekh Chaikin, a member firm of KPMG International (“Somekh Chaikin”), as
independent auditor of the Company, for the fiscal year ending December 31, 2024, for the year commencing January 1, 2024 and until the next annual general meeting of shareholders, and to authorize the Company’s Board, upon the recommendation
of the Audit Committee, to set the annual compensation of the independent auditor in accordance with the volume and nature of its services.
Somekh Chaikin was first appointed as the Company’s independent auditor at the 2006 annual general meeting of shareholders. Over the years, and until 2022, Somekh Chaikin
served as joint independent auditor of the Company, but as a sole auditor for all SEC filings.
The Company’s Audit Committee and Board of Directors have reviewed and are satisfied with the performance of Somekh Chaikin. Accordingly, the Board of Directors recommended
the re-appointment of Somekh Chaikin as the Company’s sole independent auditor for the fiscal year ending December 31, 2024, for the year commencing January 1, 2025 and until the next annual general meeting of shareholders, and to authorize the
Company’s Board, upon the recommendation of the Audit Committee, to set the annual compensation of the independent auditor in accordance with the volume and nature of its services.
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by the Company’s independent auditor, Somekh Chaikin. These services may include
audit services, tax services and other consulting services. Additional services may be pre-approved by the Audit Committee on an individual basis. Once services have been pre-approved, the Company’s independent auditor and management then
report to the Audit Committee on a periodic basis regarding the extent of services actually provided in accordance with the applicable pre-approval, and regarding the fees for the services performed.
According to the Articles, the Board is authorized to determine, following the recommendation of the Audit Committee, the basis of the Company’s independent auditor’s
compensation in accordance with the volume and nature of the services rendered by him. The following table presents information regarding the aggregate amount of fees paid by the Company to Somekh Chaikin for their services to the Company for
the fiscal year ended December 31, 2023:
|
Services Rendered
|
|
Fees
|
|
|
|
|
|
|
|
Audit fees[1]
|
US
|
$
|
365,300
|
|
|
Audit-Related Fees[2]
|
US |
$
|
134,000
|
|
|
Tax Fees[3]
|
US |
$
|
69,000
|
|
| |
|
|
|
|
|
Total
|
US |
$
|
568,300
|
|
Approval of the re-appointment of Somekh Chaikin as the Company’s independent auditor is now being sought from the Company’s shareholders.
Required Vote
The affirmative vote of holders of Shares representing a majority of the Ordinary Shares present at the Meeting, in person, by proxy or through the Electronic Voting
System, is required for the re-appointment of Somekh Chaikin as independent auditor of the Company for the fiscal year ending December 31, 2024, for the year commencing January 1, 2025 and until immediately following the next annual general
meeting of shareholders, and for authorizing the Board, following the Audit Committee’s recommendation, to determine the independent auditor’s fees for the term of his appointment.
It is proposed that at the Meeting the following resolution be adopted:
“RESOLVED, that: (i) Somekh Chaikin, a member firm of KPMG International, be re-appointed as the
independent auditor of the Company, for the fiscal year ending December 31, 2024, for the year commencing January 1, 2025 and until immediately following the 2025 annual general meeting of
shareholders; and (ii) the Board shall be authorized to determine the fees for Somekh Chaikin, at the Audit Committee’s recommendation, for the term of their service, according to the nature and volume
of their services.”
The Board recommends a vote FOR the approval of the proposed resolution.
| [1] |
Audit Fees: the audit fees for the year ended December 31, 2023 and 2022 were for professional services rendered for the integrated audit of Camtek’s annual consolidated financial statements and its internal controls over financial
reporting and services that are normally provided by independent registered public accounting firm in connection with statutory and regulatory filings or engagements, including consultancy and consents with respect to an underwritten
public offering and related prospectus supplements filed with the SEC.
|
| [2] |
Audit-Related Fees rendered during 2023 by our auditor included financial due diligence in connection with the FRT transaction.
|
| [3] |
Tax Fees rendered during 2023 and 2022 by our auditor were for tax compliance, tax planning and tax advice.
|
DISCUSSION OF THE AUDITOR’S REPORT AND
THE COMPANY’S AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR 2023
At the Meeting, shareholders will also have an opportunity to discuss the consolidated financial statements of the Company for the fiscal year ended December 31, 2023, as
required by the Companies Law. This item will not involve a vote of the shareholders.
The Company’s 2023 audited consolidated financial statements and auditor’s report, as well as the Company’s annual report on Form 20-F for the year ended December 31, 2023
(filed with the SEC on March 21, 2024), may be viewed on the Company’s website: http://www.camtek.com, through the EDGAR website of the SEC at www.sec.gov, through the ISA’s electronic filing system at: http://www.magna.isa.gov.il, or
through the website of the TASE at: http://maya.tase.co.il. None of the independent auditors’ report, audited consolidated financial statements, Form 20-F or the contents of our website form part of the proxy solicitation material.
|
|
By Order of the Board,
Moty Ben-Arie
Chairman of the Board of Directors
August 15, 2024
|