SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section
14(a) of the Securities Exchange Act of 1934
(Amendment No. ___)
Filed by the Registrant
[X]
Filed by a Party other than the Registrant
[ _ ]
Check the appropriate box:
[ _ ] Preliminary Proxy
Statement
[ _ ] Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy
Statement
[ _ ] Definitive Additional Materials
[ _ ] Soliciting
Material Pursuant to Section 240.14a-12
Cirrus Logic, Inc.
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(Name of Registrant as Specified In Its
Charter)
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(Name of Person(s) Filing Proxy Statement if
other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
[ X ]
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No fee required.
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[ _ ]
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Fee computed on
table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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(1)
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Title of each class of
securities to which transaction applies:
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(2)
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Aggregate number of
securities to which transaction applies:
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(3)
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Per unit
price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)
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Proposed maximum
aggregate value of transaction:
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(5)
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Total fee
paid:
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Fee paid previously
with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount Previously
Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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JASON
P. RHODE
President and Chief Executive
Officer
May 30, 2012
To our Stockholders:
I am pleased
to invite you to attend the annual meeting of stockholders of Cirrus Logic, Inc.
to be held on Thursday, July 26, 2012, at 11:00 a.m. at Cirrus Logic, Inc., 800
West 6th Street, Austin, Texas 78701. Details regarding admission to the meeting
and the business to be conducted are more fully described in the accompanying
Notice of Annual Meeting of Stockholders and Proxy Statement.
We are also pleased to be furnishing proxy materials to our stockholders
using the Internet. We believe this process expedites stockholders receipt of
proxy materials and lowers the cost of our annual meeting. Instead of mailing a
paper copy of our proxy materials to our stockholders, we are mailing a notice
with instructions for accessing the proxy materials and voting via the Internet.
The notice also provides information on how stockholders may obtain paper copies
of our proxy materials if they so choose.
Your vote is important.
Whether or not you plan to attend the annual meeting, I hope you will vote as
soon as possible. Although you may vote in person at the annual meeting, you may
also vote over the Internet, as well as by telephone, or by mailing a proxy
card. Voting over the Internet, by telephone, or by written proxy will ensure
your representation at the annual meeting if you do not attend in person. Please
review the instructions on the Notice of Internet Availability or the proxy card
regarding each of these voting options.
Cirrus Logic values the participation of its stockholders. Your vote is
an important part of our system of corporate governance and I strongly encourage
you to participate.
Sincerely,
Jason P.
Rhode
President and Chief Executive
Officer
TABLE OF CONTENTS
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Page
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Notice of Annual Stockholders
Meeting
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1
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Questions and Answers about the Proxy
Materials, the Annual Meeting, and Voting Procedures
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2
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Corporate Governance
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7
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Director Compensation Arrangements
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11
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Proposals to be Voted on:
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Proposal No 1:
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Election of Directors
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14
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Proposal No 2:
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Ratification of Appointment of Independent
Registered Public Accounting Firm
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17
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Proposal No 3:
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Advisory Vote to Approve Named Executive
Officer Compensation
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17
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Other Matters
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18
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Security Ownership of Certain Beneficial
Owners and Management
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19
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Executive Officers
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21
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Compensation Discussion and
Analysis
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22
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Compensation Committee Report
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32
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Consideration of Risk Related to Compensation
Programs
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33
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Executive Compensation Tables
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34
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Equity Compensation Plan
Information
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44
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Report of the Audit Committee of the Board
of Directors
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45
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Audit and Non-Audit Fees and
Services
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46
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Certain Relationships and Related
Transactions
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47
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Section 16(a) Beneficial Ownership Reporting
Compliance
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47
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Householding
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48
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Communicating with Us
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48
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Annex
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51
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Exhibit A Charter of the Compensation
Committee of the Board of Directors
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A-1
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Exhibit B Corporate Governance
Guidelines
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B
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A copy of Cirrus Logic, Inc.s
Annual Report on Form 10-K is included with this Proxy Statement. Copies of
these documents are available on our Web site at
www.cirrus.com
. You also
may receive copies of these documents at no charge upon request directed
to:
Cirrus Logic Investor
Relations
800 West 6
th
Street,
Austin, Texas 78701
telephone: (512) 851-4125; email:
Investor.Relations@cirrus.com
Annual Stockholders
Meeting
July 26, 2012
YOUR VOTE IS
IMPORTANT
Notice
Cirrus Logic, Inc. (the Company, our,
or we) will hold its 2012 Annual Meeting of Stockholders as
follows:
Thursday, July 26,
2012
11:00 A.M. (Central Daylight
Time)
Cirrus Logic, Inc.
800 West
6
th
Street
Austin, Texas 78701
At the meeting, stockholders will vote on
the following matters:
(i)
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the election of six Company
directors for one-year terms;
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(ii)
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the ratification of the
appointment of Ernst &Young LLP (Ernst & Young) as our
independent registered public accounting firm;
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(iii)
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an advisory (non-binding) vote to
approve named executive officer compensation; and
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(iv)
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such other business as may
properly come before the meeting.
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You can vote four different ways. You can
vote by attending the meeting, by telephone, by the Internet, or by proxy card.
For specific voting information, please see Questions and Answers about the
Proxy Materials, the Annual Meeting, and Voting Procedures on page
2.
Stockholders of record at the close of
business on May 29, 2012 (the Record Date), are entitled to vote. On that day,
approximately 65 million shares of the Company common stock were outstanding.
Each share entitles the holder to one vote.
The Board of Directors of the Company asks
you to vote in favor of these proposals. This proxy statement provides you with
detailed information about each proposal. We are also using this proxy statement
to discuss our corporate governance and compensation practices and philosophies.
We encourage you to read this proxy statement carefully. In addition, you may
obtain information about the Company from the Annual Report to Stockholders and
from other documents that we have filed with the Securities and Exchange
Commission.
PROXY STATEMENT
2012 ANNUAL MEETING OF
STOCKHOLDERS
To Be Held Thursday, July 26, 2012
Cirrus Logic, Inc.
800 West
6
th
Street
Austin, Texas
78701
www.cirrus.com
These proxy materials are furnished to you
in connection with the solicitation of proxies by the Board of Directors
(Board) of Cirrus Logic, Inc. (the Company, our, or we) for use at our
2012 Annual Meeting of Stockholders and any adjournments or postponements of the
meeting (the Annual Meeting). The Annual Meeting will be held on July 26,
2012, at 11:00 a.m., central time, at our principal executive offices, 800 West
6
th
Street, Austin, Texas 78701.
Beginning on or about June 13, 2012,
Cirrus has made available on the Internet or delivered paper copies of these
proxy materials by mail in connection with the solicitation of proxies by the
Board of Cirrus for proposals to be voted on at the Companys Annual
Meeting.
QUESTIONS AND ANSWERS ABOUT THE PROXY
MATERIALS,
THE ANNUAL MEETING, AND VOTING PROCEDURES
Q:
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Why am I receiving these
materials?
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A:
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Our Board, on behalf of the
Company, is soliciting your proxy for the annual meeting of stockholders
to take place on July 26, 2012. As a stockholder, you are invited to
attend the meeting and are entitled to and requested to vote on the
proposals described in this proxy statement.
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Q:
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What information is contained in these
materials?
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A:
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The information included in this
proxy statement relates to the proposals to be voted on at the meeting,
the voting process, the compensation of directors and our most highly paid
executive officers, and certain other required information. Our 2012
Annual Report to Stockholders on Form 10-K for the fiscal year ended March
31, 2012, is also included.
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If you requested and received a
copy of these materials by mail or e-mail, then the proxy materials also
include a proxy card or a voting instruction card for the Annual
Meeting.
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Q:
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Why did I receive a notice in the mail regarding the
Internet availability of the proxy materials instead of a paper copy of the proxy
materials?
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A:
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We are complying with the U.S.
Securities and Exchange Commission (the SEC) rule that allows companies
to furnish their proxy materials over the Internet. As a result, we are
mailing to our stockholders a notice about the Internet availability of
the proxy materials instead of a paper copy of the proxy materials. All
stockholders receiving the notice will have the ability to access the
proxy materials over the Internet, or alternatively, request to receive a
copy of the proxy materials by mail or e-mail.
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Q.
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How can I access the proxy
materials over the Internet?
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A:
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Your notice about the Internet
availability of the proxy materials contains instructions
regarding how to:
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view our proxy materials for the Annual Meeting on the Internet;
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request a paper copy of our proxy materials for the Annual Meeting;
and
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instruct us to send our future proxy materials to you electronically
by e-mail.
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Q:
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How may I obtain a paper copy of the proxy
materials?
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A:
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Stockholders receiving a notice
about the Internet availability of the proxy materials will find
instructions regarding how to obtain a paper copy of the proxy materials
in their notice.
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2
Q:
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What if I
receive more than one notice about the Internet availability of the proxy
materials or more than one paper copy of the proxy
materials?
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If you receive more
than one Notice or set of proxy materials, it means your shares are
registered differently or are in more than one account. To vote all your
shares by proxy, you must vote for all notices you receive, or for all
proxy cards and voting instruction cards you received upon
request.
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Q:
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What proposals
will be voted on at the meeting?
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A:
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There are three proposals
scheduled to be voted on at the meeting:
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the election of six directors;
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the ratification of the
appointment of Ernst & Young LLP (Ernst & Young) as our
independent registered public accounting firm; and
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an advisory (non-binding) vote
to approve named executive officer
compensation.
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Q:
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What is Cirrus
Logics voting recommendation?
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A:
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Our Board recommends
that you vote your shares as follows:
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FOR each of the director
nominees;
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FOR the ratification of the
appointment of Ernst & Young as our independent registered public
accounting firm; and
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FOR the approval, on a
non-binding, advisory basis, of our named executive officer compensation
as described in this Proxy Statement
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Q:
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Who is entitled
to vote at the Annual Meeting?
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A:
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Stockholders of
record at the close of business on May 29, 2012 (the Record Date) are
entitled to vote.
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Q:
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What shares
owned by me can be voted?
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All shares owned by
you as of the close of business on the Record Date may be voted by you.
These shares include (1) shares held directly in your name as the
stockholder of record, including shares purchased through the Companys
Employee Stock Purchase Plan, and (2) shares held for you as the
beneficial owner through a stockbroker or bank.
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Q:
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What is the
difference between holding shares as a stockholder of record and as a
beneficial owner?
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A:
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Most stockholders of
the Company hold their shares through a stockbroker, bank, or other
nominee rather than directly in their own name. As summarized below, there
are some distinctions between shares held of record and those owned
beneficially.
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Stockholder of
Record
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If your shares are
registered directly in your name with the Companys transfer agent,
Computershare Investor Services, you are considered, with respect to those
shares, the
stockholder of record,
and you have the right to
vote by proxy by following the instructions in the Notice of Internet
Availability of the proxy materials or to vote in person at the
meeting.
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Beneficial
Owner
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If your shares are
held in a stock brokerage account or by a bank or other nominee, you are
considered the
beneficial
owner
of shares held
in
street
name
, and your broker or
nominee is considered, with respect to those shares, the
stockholder of record
. As the beneficial owner, you have the
right to direct your broker or nominee how to vote and are also invited to
attend the meeting. However, since you are not the
stockholder of record
, you may not vote these shares at the
meeting unless you obtain a signed proxy from your broker or nominee
giving you the right to vote the shares.
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Q:
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How can I vote
my shares in person at the meeting?
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A:
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Shares held directly
in your name as the stockholder of record may be voted in person at the
annual meeting. If you choose to do so, please bring the enclosed proxy
card or proof of identification.
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Even if you currently plan to
attend the annual meeting, we recommend that you also submit your proxy in
advance of the meeting so that your vote will be counted if you later
decide not to attend the meeting. Shares held in street name may be voted
in person by you only if you obtain a signed proxy from your broker or
nominee giving you the right to vote the shares.
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Q:
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How can I vote my shares
without attending the meeting?
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A:
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Whether you hold shares directly
as the
stockholder of record
or beneficially in street name, you may
direct your vote without attending the meeting. You may vote by granting a
proxy or by submitting voting instructions to your broker or other nominee
for shares held in street name. In most instances, you will be able to do
this over the Internet, by telephone, or by mail. If you are the
stockholder of record, please refer to the summary instructions below and
those included on your Notice of Internet Availability of the proxy
materials. If you hold shares in street name, you should refer to the
voting instruction card provided to you by your broker or nominee.
Stockholders who have requested and received a paper copy of a proxy card
or voting instruction card by mail may also vote over the Internet by
following the instructions included with those materials.
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BY
INTERNET
If you have Internet
access, you may vote by following the instructions on the Notice of
Internet Availability of the proxy materials. If you have requested and
received a paper copy of a proxy card or voting instruction card, you may
also vote over the Internet by following the instructions included with
those materials.
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BY
TELEPHONE
If you have requested
and received a paper copy of a proxy card or voting instruction card, you
may vote by telephone by following the instructions on the proxy card. You
will need to have the control number that appears on your Notice of
Internet Availability of the proxy materials available when voting by
telephone.
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BY MAIL
If you have requested and received a paper copy of a
proxy card or voting instruction card by mail, you may submit a proxy by
signing your proxy card and mailing it in the enclosed, postage prepaid
and addressed envelope. If you sign but do not provide instructions, your
shares will be voted as described in
How Are Votes Counted?
below.
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Q:
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What if I hold shares in
street name and do not transmit voting instructions before the stockholder
meeting to my broker or nominee?
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A:
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Effective January 1, 2010, your
broker is no longer permitted to vote on your behalf on non-routine
matters if you are a beneficial owner of shares held in street name and
you do not transmit your voting instructions before the stockholder
meeting to your broker or nominee. The election of directors (Proposal 1)
and the advisory vote to approve named executive officer compensation
(Proposal 3) are considered non-routine matters. Therefore, if you do not
transmit your voting instructions to your broker or other nominee, then
they cannot vote on these non-routine matters and your vote will be
counted as broker non-votes as further described in the response to
How are abstentions and broker
non-votes counted?
below.
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Q:
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Can I revoke my
proxy?
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A:
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You may revoke your proxy
instructions at any time prior to the vote at the annual meeting. For
shares held directly in your name, you may revoke your proxy instructions
by granting a new proxy bearing a later date (that automatically revokes
the earlier proxy) or by attending the annual meeting and voting in
person. Attendance at the annual meeting will not cause your previously
granted proxy to be revoked unless you specifically request it to be
revoked. For shares held beneficially by you, you may revoke your proxy by
submitting a new proxy to your broker or nominee.
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Q:
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What is the quorum
requirement for the meeting?
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A:
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The quorum requirement for
holding the meeting and transacting business is the presence, either in
person or represented by proxy, of the holders of a majority of the
outstanding shares entitled to be voted at the Annual Meeting. For this
years annual meeting, both abstentions and broker non-votes are counted
as present for the purpose of determining the presence of a
quorum.
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Q:
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How are votes
counted?
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A:
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In the election of
directors, you may vote FOR all of the nominees or your vote may be
WITHHELD with respect to one or more of the nominees. For the proposal
to ratify the selection of Ernst & Young and the advisory vote on
named executive officer compensation, you may vote FOR, AGAINST, or
ABSTAIN. If you ABSTAIN on these matters, it has the same effect as a
vote AGAINST.
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If you sign your proxy
card with no further instructions, your shares will be voted in accordance
with the recommendations of the Board.
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Q:
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What is the
voting requirement to approve each of the proposals?
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A:
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In the election of
directors, the six persons receiving the highest number of FOR votes
will be elected. All other proposals require the affirmative FOR vote of
a majority of those shares present, either in person or represented by
proxy, and entitled to vote. If you are a beneficial owner and do not
provide your broker or nominee with voting instructions on a non-routine
matter such as a director election, your shares may constitute broker
non-votes, as described in
How are
abstentions and broker non-votes counted?
below. In tabulating the voting results for any particular
proposal, shares that constitute broker non-votes are not considered
entitled to vote on that proposal.
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Q:
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How are
abstentions and broker non-votes counted?
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A:
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Abstentions are counted
as present for purposes of determining the shares present and entitled to
vote. However, an abstention is not a vote cast for purposes of counting
votes, and therefore the effect of an abstention will be the same effect
as a vote against a proposal as described in
How are votes counted?
above.
Broker non-votes are not counted as shares present and entitled to be
voted with respect to a matter on which the beneficial owner has expressly
not voted. Generally, broker non-votes occur when shares held by a broker
for a beneficial owner are not voted with respect to a particular proposal
because the broker has not received voting instructions from the
beneficial owner and the broker lacks discretionary voting power to vote
the shares.
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Q:
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How can I obtain
an admission ticket for the meeting?
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A:
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Two cut-out admission
tickets are included on the back of this proxy statement. A limited number
of tickets are available for additional joint owners. To request
additional tickets, please contact the Companys Corporate Secretary at
our headquarters. If you forget to bring an admission ticket, you will be
admitted to the meeting only if you are listed as a
stockholder of record
as of the close of business on the Record Date, and you bring proof
of identification. If you hold your shares through a broker or other
nominee and fail to bring an admission ticket, you will need to provide
proof of ownership by bringing either a copy of the Notice of Internet
Availability of the proxy materials or a copy of a brokerage statement
showing your share ownership as of the Record Date.
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Q:
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Where can I find
the voting results of the meeting?
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A:
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We will announce
preliminary voting results at the meeting and will file with the
Securities and Exchange Commission via EDGAR a Current Report on Form 8-K
within four business days of the meeting with the final voting results. If
final voting results are not available at the time of such filing, the
Company intends to disclose preliminary vote results at the time of the
filing and file an amended Form 8-K within four business days after
obtaining the final results.
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Q:
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What happens if
additional proposals are presented at the meeting?
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A:
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Other than the
proposals described in this proxy statement, we do not expect any matters
to be presented for a vote at the annual meeting. If you grant a proxy,
the persons named as proxy holders, Scott Thomas, our Corporate Secretary,
and Thurman Case, our Chief Financial Officer, will have the discretion to
vote your shares on any additional matters properly presented for a vote
at the meeting. If for any unforeseen reason any of our nominees is not
available as a candidate for director, the persons named as proxy holders
will vote your shares for such other candidate or candidates as may be
nominated by the Board.
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5
Q:
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What classes of shares are
entitled to be voted?
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A:
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Each share of our common stock
outstanding as of the Record Date is entitled to one vote on each item
being voted upon at the annual meeting. On the Record Date, we had
approximately 64.5 million shares of common stock
outstanding.
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Q:
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Is cumulative voting
permitted for the election of directors?
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A:
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No.
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Q:
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Who will count the
votes?
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A:
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A representative of Broadridge
Investor Communications Solutions will tabulate the votes. A
representative of the Company will act as the inspector of the
election.
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Q:
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Is my vote
confidential?
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A:
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Proxy instructions, ballots, and
voting tabulations that identify individual stockholders are handled in a
manner that protects your voting privacy. Your vote will not be disclosed
either within the Company or to third parties except (1) as necessary to
meet applicable legal requirements, (2) to allow for the tabulation of
votes and certification of the vote, or (3) to facilitate a successful
proxy solicitation by our Board.
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Q:
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Who will bear the cost of
soliciting votes for the meeting?
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A:
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The Company will pay the entire
cost of soliciting proxies to be voted, along with the costs of preparing,
assembling, printing, mailing, and distributing these proxy materials. If
you choose to access the proxy materials and/or submit your proxy over the
Internet or by telephone, however, you are responsible for Internet access
or telephone charges you may incur. In addition to the mailing of these
proxy materials, the solicitation of proxies or votes may be made by our
directors, officers, and employees, either in person, by telephone, or by
electronic communication. Our directors, officers and employees will not
receive any additional compensation for the solicitation activities. We
will also reimburse brokerage houses and other custodians, nominees, and
fiduciaries for their reasonable out-of-pocket expenses for forwarding
proxy and solicitation materials to our stockholders.
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Q:
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May I propose actions for
consideration at next years annual meeting of stockholders or nominate
individuals to serve as directors?
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A:
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You may make nominations and
submit proposals for consideration at future stockholder meetings. Any
proposal that a stockholder wishes to include in the Companys proxy
materials for the 2013 annual meeting of stockholders, in accordance with
the regulations of the SEC, must be received by no later than 120 calendar
days prior to the anniversary date that the Company released this proxy
statement for this years annual meeting. The written proposal will need
to comply with the regulations of the SEC under Rule 14a-8 regarding the
inclusion of stockholder proposals in company-sponsored proxy materials.
Any proposal or nomination for election of directors that a stockholder
wishes to propose for consideration at the 2013 annual meeting of
stockholders, whether or not the stockholder wishes to include such
proposal or nomination in our proxy statement under the applicable SEC
rules, must be submitted in accordance with our Bylaws. To be considered
timely, our Bylaws provide that such notice must be received at our
principal executive offices no later than 120 calendar days prior to the
anniversary date that the Company released this proxy statement for this
years annual meeting. Proposals and nominations should be addressed to:
Corporate Secretary, Cirrus Logic, Inc., 800 West 6
th
Street,
Austin, Texas 78701.
|
|
|
|
Copy of Bylaw
Provisions
: You may contact the
Companys Corporate Secretary at our headquarters for a copy of the
relevant Bylaw provisions regarding the requirements for making
stockholder proposals and nominating director
candidates.
|
6
CORPORATE GOVERNANCE
Board Meetings and
Committees
During the fiscal year ended
March 31, 2012, the Board held 7 meetings. Each director is expected to attend
each meeting of the Board and the committees on which he or she serves. No
director attended less than 75% of the aggregate of (i) the total number of
board meetings; and (ii) the total number of meetings held by all committees of
the Board on which he or she served. Directors are also expected to attend the
Companys annual meeting of stockholders absent a valid reason. All of the
directors attended the Companys 2011 annual meeting of stockholders.
We have three Board committees: Audit,
Compensation, and Governance and Nominating. Each member of the Audit,
Compensation, and Governance and Nominating Committees is independent in
accordance with the applicable SEC rules and applicable The Nasdaq Stock Market,
Inc. (the Nasdaq) listing standards. Each committee has a written charter that
has been approved by the Board. The current members of each committee are
identified in the following table, and the function of each committee is
described below.
On occasion, the Board may appoint special
committees or designate directors to undertake special assignments on behalf of
the Board.
|
|
|
|
Governance
and
|
Name of
Director
|
Independent
|
Audit
|
Compensation
|
Nominating
|
John C.
Carter
|
Yes
|
X
|
X
|
|
Timothy R.
Dehne
|
Yes
|
|
Chair
|
X
|
Jason P.
Rhode
|
No
|
|
|
|
William D.
Sherman
|
Yes
|
|
|
Chair
|
Alan R.
Schuele
|
Yes
|
|
X
|
|
Robert H.
Smith
|
Yes
|
Chair
|
|
X
|
Susan
Wang
|
Yes
|
X
|
|
|
Number of Meetings
|
|
|
|
|
Held in Fiscal Year
|
|
|
|
|
Ended
March 31, 2012
|
|
8
|
6
|
4
|
Audit Committee
The Audit Committee is currently composed of three directors.
The responsibilities of the Committee include:
-
selecting, retaining, compensating, overseeing,
evaluating and, where appropriate, terminating the Companys independent
auditors;
-
resolving any disagreements between management and
the independent auditors regarding financial reporting;
-
adopting and implementing pre-approval policies
and procedures for audit and non-audit services to be rendered by the
independent auditors;
-
reviewing with management and the independent
auditors the financial information and the Managements Discussion and
Analysis proposed to be included in each of the Companys Quarterly Reports on
Form 10-Q prior to their filing;
-
reviewing before release the unaudited interim
financial results in the Companys quarterly earnings
release;
-
reviewing with management and the independent
auditors, at the completion of the annual audit, the audited financial
statements and the Managements Discussion and Analysis proposed to be
included in the Companys Annual Report on Form 10-K prior to its filing and
provide or review
7
judgments about the quality, not only the
acceptability, of accounting principles, and such other matters required to be
discussed with the independent auditors under generally accepted auditing
standards;
-
reviewing and approving, if appropriate, material
changes to the Companys auditing and accounting principles and practices as
suggested by the independent auditors or management;
-
establishing procedures for (i) the receipt,
retention, and treatment of complaints received by the Company regarding
accounting, internal accounting controls, or auditing matters, and (ii) the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters; and
-
evaluating the professional competency of the
financial staff and the internal auditors, as well as the quality of their
performance in discharging their respective responsibilities.
The Board has determined that each of the
members of the Audit Committee is able to read and understand fundamental
financial statements and is independent under applicable Securities and Exchange
Commission rules and applicable Nasdaq listing standards. The Board has
determined that Susan Wang is an audit committee financial expert as defined
under applicable Securities and Exchange Commission rules.
For additional information relating to the
Audit Committee, see the Report of the Audit Committee of the Board on page 45
of this proxy statement and the Audit Committee Charter, which is available
under the Corporate Governance section of our Investors page on our Web site
at
investor.cirrus.com
.
Compensation
Committee
The Compensation Committee is
composed of three directors, each of whom is independent under applicable Nasdaq
listing standards. The Committee reviews and approves salaries and other matters
relating to executive compensation, and administers the Companys stock
incentive plans, including reviewing and granting stock incentive awards to
executive officers and other employees and reviewing and approving policies and
procedures for awarding grants under these plans. The Compensation Committee
also reviews and recommends to the Board for approval various other Company
compensation plans, policies, and matters related to the Companys non-employee
directors. For additional information relating to the Compensation Committee,
see the Compensation Committee Charter, which is included as an Exhibit to this
proxy statement. The charter is also available under the Corporate Governance
section of our Investors page on our Web site at
investor.cirrus.com
.
Governance and Nominating
Committee
The Governance and Nominating
Committee is composed of three directors, each of whom is independent under the
applicable Nasdaq listing standards. This Committee provides counsel to the
Board with respect to Board organization, membership, and function, as well as
committee structure and membership. The Committee is also responsible for
defining the qualifications for candidates for director positions, evaluating
qualified candidates, recommending candidates to the Board for election as
directors, and proposing a slate of directors for election by stockholders at
each annual meeting. For more information relating to the Governance and
Nominating Committee, see the Governance and Nominating Committee Charter, which
is available under the Corporate Governance section of our Investors page on
our Web site at
investor.cirrus.com
.
The Governance and Nominating Committee
annually reviews the needs of the Board for various skills, experience, expected
contributions, and other characteristics in determining the director candidates
to be nominated at the annual meeting. The Governance and Nominating Committee
will evaluate candidates for directors proposed by directors, stockholders, or
management in light of the Committees views of the current needs of the Board
for certain skills; the candidates background, skills, experience, or other
characteristics; and the expected contributions and the qualification standards
established from time to time by the Governance and Nominating Committee. If the
8
Committee believes that the Board requires
additional candidates for nomination, the Committee may engage a third-party
search firm to assist in identifying qualified candidates. All directors and
nominees will submit a completed form of directors and officers questionnaire
as part of the nominating process. The process may also include interviews and
additional background and reference checks for non-incumbent nominees, at the
discretion of the Governance and Nominating Committee. Although the Board does
not have a formal policy specifying how diversity should be considered in making
determinations regarding nominations of directors, the Governance and Nominating
Committee does take into account the benefits of diverse backgrounds,
viewpoints, and experiences, as well as the benefits of a constructive working
relationship among directors, when evaluating candidates for the Board.
The Governance and Nominating Committee
believes that members of the Board should possess certain basic personal and
professional qualities in order to properly discharge their fiduciary duties to
stockholders, provide effective oversight of the management of the Company, and
monitor the Companys adherence to principles of sound corporate governance.
Therefore, the Committee has determined that nominees for election as director
should have the following qualifications: (i) possess the highest personal and
professional ethics, integrity and values; (ii) be committed to representing the
long-term interests of the Companys stockholders; (iii) have an inquisitive and
objective perspective and mature judgment; (iv) possess strong business and
financial acumen and judgment acquired through education, training or
experience; (v) possess experience at policy-making levels in business,
government, education or technology, and in areas that are relevant to the
Companys global business activities; (vi) have experience in matters of
corporate governance; (vii) have experience in positions with a high degree of
responsibility in the companies or institutions with which they are affiliated;
and (viii) be prepared to devote appropriate time and attention to the Board and
Committee duties required of a public company board member. Additionally, for
non-employee director candidates, the nominees should have personal and business
circumstances that permit them to serve on one or more of the various Committees
of the Board.
These are not meant to be the exclusive
criteria, however, and the Committee will also consider the contributions that a
candidate can be expected to make to the collective functioning of the Board
based upon the totality of the candidates credentials, experience, and
expertise; the composition of the Board at the time; and other relevant
circumstances.
Stockholders are able to recommend
individuals to the Governance and Nominating Committee for consideration as
potential director nominees by submitting their names, together with appropriate
biographical information and background materials, and a statement as to whether
the stockholder or group of stockholders making the recommendation has
beneficially owned more than 5% of the Companys common stock for at least one
year as of the date such recommendation is made. An eligible stockholder wishing
to recommend a candidate must submit the following not less than 120 calendar
days prior to the anniversary of the date the proxy was released to the
stockholders in connection with the previous years annual meeting: (A) a
recommendation that identifies the candidate and provides contact information;
(B) the written consent of the candidate to serve as a director of the Company,
if elected; and (C) documentation establishing that the stockholder making the
recommendation is an eligible stockholder.
Recommendations should be submitted
to:
Governance and Nominating Committee
c/o Corporate Secretary
Cirrus Logic,
Inc.
800 West 6
th
Street
Austin,
Texas 78701
The Committee will consider
stockholder-recommended candidates pursuant to the Nominations Process outlined
in the Companys Corporate Governance Guidelines.
9
Stockholders also have the right under the
Companys Bylaws to nominate candidates for election as directors by following
the procedures, providing the information and conforming to the submission
deadlines specified in the Companys Bylaws. Please see
Questions and Answers about the Proxy Materials, the Annual
Meeting and Voting Procedures May I propose actions for consideration at next
years annual meeting of stockholders or nominate individuals to serve as
directors?
for further
information.
Determination of
Independence
The Board, which currently
consists of seven directors, has determined that five of the six nominated
directors are independent as defined by (the Nasdaq) applicable listing
standards. Specifically, the Governance and Nominating Committee has reviewed
the independence of each director and determined that Messrs. Carter, Dehne,
Schuele, and Sherman, and Ms. Wang qualify as independent directors under this
standard.
Corporate Governance
Guidelines
On an annual basis, the Company
reviews its corporate governance practices in light of any changes to applicable
law, the rules of the SEC, and the Nasdaq listing standards. Among other
matters, the Corporate Governance Guidelines include the following:
-
Two-thirds of the members of the Board must be
independent directors as defined in the Companys Corporate Governance
Guidelines.
-
If the Chairman of the Board is not an independent
director, the Board will designate a lead independent
director.
-
Directors shall retire at the age of
75.
-
The Board will have an Audit Committee,
Compensation Committee, and Governance and Nominating Committee, each of which
shall consist solely of independent directors.
-
The independent directors shall meet in executive
session either before or after each regularly scheduled Board
meeting.
-
In considering stockholder proposals and
candidates recommended by stockholders for the Board, the Governance and
Nominating Committee will follow the procedures outlined in the Corporate
Governance Guidelines.
In 2012, the Board amended the Corporate
Governance Guidelines to include a director expense reimbursement policy, which
provides that a director will be reimbursed for any ordinary and necessary
business and professional expense incurred on behalf of the Company. The Board
adopted this policy with the intent that this reimbursement policy be classified
as an accountable reimbursement plan.
For additional details, see the Companys
Corporate Governance Guidelines, which are available as an Exhibit to this proxy
and under the Corporate Governance section of our Investors page on our Web
site at
investor.cirrus.com
.
Board Leadership
Structure
The Board of Directors is
committed to maintaining an independent Board comprised primarily of independent
directors. Prior to the passing of our Chairman of the Board, Michael Hackworth,
on April 21, 2012, we separated the roles of our Chief Executive Officer and
Chairman of the Board. In addition, we have appointed a Lead Independent
Director, Robert H. Smith, who is responsible for coordinating the activities of
the independent directors of the Board. We believed that this leadership
structure demonstrated our commitment to good corporate governance and benefited
our stockholders by enhancing the oversight of management by the Board,
balancing power on our Board, and encouraging balanced decision making. After
the passing of Mr. Hackworth, Mr. Smith continued
10
in his role as Lead Independent Director.
In light of Mr. Hackworths passing, and the current characteristics and
circumstances of the Company, the Board is in the process of evaluating its
current leadership structure and expects to finalize its board leadership
structure after the Annual Meeting in July.
Boards Role in Risk
Oversight
Although management is
responsible for identifying, assessing, and managing the material risks facing
the Company, our Board plays an ongoing and active role in the oversight of the
Companys risk management processes, along with the oversight of the most
significant strategic and operational risks faced by the Company and
managements efforts to mitigate those risks. Our Board is involved in the
setting of the Companys business strategy, which necessarily entails a
determination of what constitutes an appropriate level of risk for the Company.
In addition, at least annually, the Board discusses material risks related to
the Companys overall business strategy. Further, the management team reports to
the Board on a quarterly basis the status of its efforts to manage what it
believes are the Companys most material risks.
Each of our Board committees also
considers risk within the committees area of responsibility. Our Audit
Committee regularly reviews with management the Companys major financial and
regulatory risk exposures and the steps management has taken to monitor and
control such exposures. Also, in designing our compensation programs and
structuring awards, the Compensation Committee considers whether such
compensation programs may lead to undue risk taking.
Code of Conduct
The Company has adopted a Code of Conduct that applies to all
of its directors, officers, and employees (including its principal executive
officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions). A copy of the Code of
Conduct is incorporated as Exhibit 14 to the Companys Annual Report on Form
10-K and is accessible on its Web site at
www.cirrus.com
. The Code of Conduct,
as applied to the Companys senior financial officers, constitutes the Companys
code of ethics within the meaning of Section 406 of the Sarbanes-Oxley Act of
2002 (the Sarbanes-Oxley Act) and constitutes the Companys code of conduct
under the Nasdaq listing standards.
DIRECTOR COMPENSATION
ARRANGEMENTS
Non-employee directors receive a
combination of cash and equity-based compensation. Directors who are employed by
the Company do not receive any additional compensation for their Board
activities. Independent directors may not receive consulting, advisory, or other
compensatory fees from the Company in addition to their Board compensation.
The following table sets forth the
quarterly cash payments paid to non-employee directors for Board service during
the fiscal year ended March 31, 2012:
Director
Compensation Retainers
|
|
|
Quarterly Director
Retainer
|
$
|
11,250
|
Board Chairman Quarterly
Retainer
|
$
|
8,750
|
Audit Chair Quarterly
Retainer
|
$
|
5,000
|
Audit Committee Member Quarterly
Retainer
|
$
|
2,000
|
Compensation
Committee Chair Quarterly Retainer
|
$
|
3,500
|
Compensation Committee Member Quarterly
Retainer
|
$
|
1,750
|
Governance and
Nominating Committee Chair Quarterly Retainer
|
$
|
1,500
|
Governance and Nominating Committee
Quarterly Retainer
|
$
|
750
|
Lead Independent
Director Quarterly Retainer
|
$
|
2,500
|
11
The Company also reimburses directors for
all reasonable out of pocket expenses incurred for attending Board and committee
meetings.
In addition to cash compensation, each
non-employee director receives equity-based compensation. Upon re-election, each
non-employee director receives a full value stock award that vests immediately
upon re-election to the Board. In fiscal year 2012, the total number of shares
granted to each non-employee director had a fair market value equal to
$150,000.00 on the date of grant. For newly elected non-employee directors, the
Company awards an option to purchase shares of common stock of the Company at an
exercise price equal to the fair market value of one share of the Companys
common stock on the date of grant upon becoming a director, with 25% vesting
after one year and the remainder vesting ratably each month over the following
36 months. In fiscal year 2012, the total number of options granted to each
newly elected non-employee director had a fair market value equal to $225,000.00
on the date of grant.
12
The following table sets forth the
information regarding the cash fees and equity compensation paid to our
non-employee directors for services as members of the Board or any committee of
the Board during fiscal year 2012.
DIRECTOR COMPENSATION TABLE FOR
FISCAL YEAR 2012
|
Name
|
|
|
Fees
|
|
|
Option
Awards
|
|
|
Total
|
|
|
|
|
|
Earned or
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
Paid in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
(2)
|
|
|
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(d)
|
|
|
(h)
|
|
|
Michael L.
|
|
|
$
|
80,000
|
|
|
$149,992
|
(3)
|
|
|
$
|
229,992
|
|
|
Hackworth
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John C. Carter
|
|
|
$
|
59,000
|
|
|
$149,992
|
(4)
|
|
|
$
|
208,992
|
|
|
Timothy R.
|
|
|
$
|
66,000
|
|
|
$149,992
|
(5)
|
|
|
$
|
215,992
|
|
|
Dehne
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William D.
|
|
|
$
|
54,000
|
|
|
$149,992
|
(6)
|
|
|
$
|
203,992
|
|
|
Sherman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert H. Smith
|
|
|
$
|
87,333
|
|
|
$149,992
|
(7)
|
|
|
$
|
237,325
|
|
|
Al Schuele
|
|
|
$
|
34,667
|
|
|
$197,081
|
(8)
|
|
|
$
|
231,748
|
|
|
Susan Wang
|
|
|
$
|
35,333
|
|
|
$197,081
|
(9)
|
|
|
$
|
232,414
|
|
|
(1)
|
|
Represents fees earned
or paid in cash for services as a director during the fiscal year ended
March 31, 2012, including quarterly retainer fees and committee
chairmanship and membership retainer fees.
|
|
(2)
|
|
On July 28, 2011, upon
their re-election as directors at the Companys 2011 Annual Meeting,
Messrs. Hackworth, Carter, Dehne, Smith, and Sherman received a full value
stock award that vested immediately upon re-election to the Board having a
fair market value equal to $150,000.00 on the date of grant. In addition,
upon their initial election as a director, Mr. Schuele and Ms. Wang
received an option to purchase shares of common stock of the Company at an
exercise price equal to the fair market value of one share of the
Companys common stock on the date of grant, with 25% vesting after one
year and the remainder vesting ratably each month over the following 36
months. The total number of options granted to each newly elected
non-employee director had a fair market value equal to $225,000.00 on the
date of grant based on an aggregate grant date fair value of the options
calculated as of the end of the Companys first fiscal quarter of 2012 in
accordance with FASB ASC718. The value disclosed for the option awards in
this column represents the aggregate grant date fair value of the options
calculated in accordance with FASB ASC 718 as of the end of the Companys
second fiscal quarter of 2012.
|
|
(3)
|
|
At the end of fiscal
year 2012, Mr. Hackworth had 25,000 options outstanding.
|
|
(4)
|
|
At the end of fiscal
year 2012, Mr. Carter had 55,000 options outstanding.
|
|
(5)
|
|
At the end of fiscal
year 2012, Mr. Dehne had 50,000 options outstanding.
|
|
(6)
|
|
At the end of fiscal
year 2012, Mr. Sherman had 20,000 options outstanding.
|
|
(7)
|
|
At the end of fiscal
year 2012, Mr. Smith had 25,000 options outstanding.
|
|
(8)
|
|
At the end of fiscal
year 2012, Mr. Schuele had 25,929 options outstanding.
|
|
(9)
|
|
At the end of fiscal
year 2012, Ms. Wang had 25,929 options
outstanding.
|
13
PROPOSALS TO BE VOTED
ON
Proposal No. 1
ELECTION OF DIRECTORS
The Board has approved six nominees for
election to the Board this year. All of the nominees have served as a director
since the last annual meeting, including Mr. Carter, Mr. Dehne, Dr. Rhode, Mr.
Sherman, Mr. Schuele, and Ms. Wang. Mr. Smith is retiring and will not stand for
re-election to the Board at the Companys 2012 Annual Meeting of Stockholders.
Information regarding the business experience of each nominee and the particular
experience, qualifications, attributes, or skills that qualify that person to
serve as a director of the Company is provided below. All directors are elected
annually to serve until the next annual meeting and until their respective
successors are elected, or until their earlier resignation or removal. There are
no family relationships among the Companys executive officers and
directors.
Vote Required
In the election of directors, the six persons receiving the
highest number of FOR votes will be elected.
Information About
Nominees
JOHN C. CARTER
Director since 2009
Mr.
Carter,
age 57, is currently a Principal at
TCGen, which is a management consulting and advisory services firm that Mr.
Carter founded in 2002 and is located in Menlo Park, California. Between
November 2007 and January 2008, Mr. Carter was an Executive in Residence at
Vantage Point Venture Partners, a venture capital firm in San Bruno, California,
where he assisted in the management of several portfolio companies. Mr. Carter
also served as Chief Technical Officer at Klipsch Group, a manufacturer of
speakers in Indianapolis, Indiana, between February 2005 and October 2007. Mr.
Carter began his career as an engineer at Bose Corporation in 1978, later
becoming its Chief Engineer. Mr. Carter holds a B.S. in Engineering from Harvey
Mudd College in Claremont, CA, and a Masters in Electrical Engineering from the
Massachusetts Institute of Technology.
The Governance and Nominating Committee
believes that Mr. Carters extensive management experience with companies in the
consumer audio market along with his knowledge of that market, in addition to
his background in venture and private equity investment transactions, make him
well qualified to be on our Board of Directors. Mr. Carter also has relevant
prior engineering and technical experiences in the markets we serve.
TIMOTHY R. DEHNE
Director since 2009
Mr.
Dehne,
age 46, is currently the Vice
President, Global Marketing, at Luminex Corporation, an Austin-based company
that develops, manufactures, and markets innovative biological testing
technologies with applications throughout the life science and diagnostic
industries. Prior to his appointment to Vice President, Global Marketing, Mr.
Dehne held the position of Vice President of Systems Research and Development, a
position he held between July 2009 and May 2012. He previously worked at
National Instruments Corporation, an Austin-based supplier of measurement and
automation products used by engineers and scientists in a wide range of
industries. Mr. Dehne spent over 21 years at National Instruments Corporation
where he held many leadership positions while helping to significantly grow the
Company to more than 4,000 employees and over $800 million in annual revenue. He
most recently held the position of Senior Vice President, Research &
Development. Prior to his role as Senior Vice President, Research &
Development at National Instruments
14
Corporation, Mr. Dehne served in various
executive positions in marketing and engineering. Mr. Dehne holds a B.S. in
Electrical Engineering from Rice University and serves on the Board of Directors
for Asset Intertech, a privately held company, where he also serves on its
Compensation Committee.
The Governance and Nominating Committee
believes that Mr. Dehne is well qualified to be on our Board of Directors based
on his extensive leadership experience in all aspects of managing a high
technology company in Austin, Texas, and his unique insight into significantly
growing revenues at a high technology company while maintaining an innovative
corporate culture and a great work environment. His leadership skills,
experience in creating and capturing business opportunities, and experience in
scaling up a business to enable growth, are valuable to the Company and the
Board of Directors.
JASON P. RHODE
Director since 2007
Dr.
Rhode,
age 42, was appointed President and
CEO, and a director of the Company in May 2007. Dr. Rhode joined the Company in
1995 and served in various engineering positions until he became Director of
Marketing for analog and mixed-signal products in November 2002. He was
appointed Vice President, General Manager, Mixed-Signal Audio Products, in
December 2004, a role he served in until his appointment as President and CEO.
Dr. Rhode holds a B.S. in Electrical Engineering from San Diego State
University, as well as M.S. and doctorate degrees in Electrical Engineering from
North Carolina State University.
The Governance and Nominating Committee
believes that Dr. Rhodes prior experience as a semiconductor designer and his
current role as Chief Executive Officer of the Company make him well qualified
to be on our Board of Directors based on his detailed and unique knowledge of
the Companys operations, opportunities, and challenges. In addition, the
Governance and Nominating Committee believes that having Dr. Rhode serve on the
Board of Directors helps to bridge the gap between the Companys Board of
Directors and management, to facilitate the regular flow of information between
management and the Board, and to ensure that the Board of Directors and
management act with a common purpose to execute our strategic initiatives and
business plans.
WILLIAM D. SHERMAN
Director since 2001
Mr.
Sherman,
age 69, is Senior Counsel in the law
firm of Morrison & Foerster LLP, where he has worked since 1987,
specializing in corporate and corporate securities practice. He has extensive
experience working with public companies, the Securities and Exchange
Commission, and the Financial Industry Regulatory Authority, formerly known as
the National Association of Securities Dealers. Mr. Sherman is also a recognized
specialist on corporate governance matters by way of his representation of
various public and private companies, and he regularly participates in panel
discussions on executive compensation and corporate governance topics. In 1972,
Mr. Sherman received a law degree from the University of California Berkeley,
School of Law, and an MBA degree from the Haas School of Business at the
University of California Berkeley.
Through his position with Morrison &
Foerster LLP, Mr. Sherman has extensive experience with the legal, regulatory,
and governance issues faced by a public company. The Governance and Nominating
Committee believes that his background and experience position him to contribute
significant corporate governance expertise to the Board of Directors and to
serve as chairman of the Companys Governance and Nominating Committee.
15
ALAN R. SCHUELE
Director Since 2011
Mr.
Schuele,
age 66, has been a general partner
since 2000 with Sevin Rosen Funds, a high tech venture capital firm. While at
Sevin Rosen Funds, Mr. Schuele led the investments in a number of semiconductor
companies, including Cicada Semiconductor (acquired by Vitesse), Zilker Labs and
D2Audio Corporation (both acquired by Intersil) and currently is a director of
Javelin Semiconductor. Prior to working at Sevin Rosen, he was Chief Executive
Officer of Benchmarq Microelectronics, and served as President and Chief
Operating Officer of Unitrode Corporation after its merger with Benchmarq. Over
his nearly 30 year career in the semiconductor industry, he has held various
executive and sales management positions in several semiconductor companies
including the Company, Crystal Semiconductor, Cypress Semiconductor, and Mostek.
Mr. Schuele was also previously a director at InfoNow Corp., a leading provider
of SaaS-based channel management solutions, where he has served as a director
between 2008 and November 2011.
In addition to Mr. Schueles extensive
executive management and sales experience at semiconductor companies, he has
played key roles in major mergers and acquisitions and has worked extensively in
Asian markets. The Governance and Nominating Committee believes that these
experiences, along with his experience in advising entrepreneurs on how to turn
their emerging technologies into winning companies, make him well qualified to
contribute strategic, operational, and industry expertise to the Board of
Directors.
SUSAN WANG
Director Since 2011
Ms.
Wang,
age 61, retired in February 2002 from
her position as Executive Vice President and Chief Financial Officer of
Solectron Corporation, a worldwide provider of electronics manufacturing
services, where she served in various management positions from 1984 until the
time of her retirement. Ms. Wang is currently a director of Altera Corporation,
a programmable semiconductor company; Suntech Power Holdings Co., Ltd., a solar
energy company; and Nektar Therapeutics, a biopharmaceutical company. In
addition, Ms. Wang served as a director of Calpine Corporation, an independent
power generation company, from 2003 to 2008, Avanex Corporation, a
telecommunications component and sub-systems provider, from 2002 to 2009; and
Rae Systems Inc., a developer of sensory technology for hazardous materials,
from 2009 to 2010. Ms. Wang holds an M.B.A. from the University of Connecticut
and a B.B.A. in accounting from the University of Texas.
Ms. Wang has extensive executive
management, board, and audit committee experience at public and private
companies within the technology industry. The Governance and Nominating
Committee believes that these experiences, along with her financial expertise,
her knowledge of manufacturing and supply chains, her familiarity with
acquisitions and integrations, and her international experience make her well
qualified to provide valuable insights to our Board of Directors and potentially
serve a role in the oversight of our financial reporting and accounting
practices as a member of the Companys Audit Committee.
The Board recommends a vote FOR the
election to the Board of each of the foregoing nominees.
16
Proposal No. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Audit Committee of the Board has
appointed Ernst & Young LLP (Ernst & Young) as the Companys
independent registered public accounting firm to audit the Companys
consolidated financial statements for the fiscal year ending March 30, 2013.
During fiscal year ended March 31, 2012, Ernst & Young served as the
Companys independent registered public accounting firm and also provided
certain tax services.
The Audit Committee pre-approves and
reviews all audit and non-audit services provided by Ernst & Young. In
considering the services to be provided by Ernst & Young, the Audit
Committee considers whether the provision of non-audit services is compatible
with maintaining the independence of Ernst & Young.
For additional information relating to the
Audit Committee, see the Report of the Audit Committee of the Board on page 45
of this proxy statement, as well as the Audit Committee Charter, which is
available under the Corporate Governance section of our Investors page on our
Web site at
investor.cirrus.com
.
A representative of Ernst & Young is
expected to attend our annual meeting and be available to respond to questions
and, if he or she desires, to make a statement.
The Board recommends a vote FOR the
ratification of the appointment of Ernst & Young as the Companys
independent registered public accounting firm for the fiscal year ending March
30, 2013.
If the appointment is not ratified, the
Audit Committee will consider this an indication to select other auditors for
the following fiscal year. Ratification of the appointment of Ernst & Young
as the Companys independent registered public accounting firm for the fiscal
year ending March 30, 2013, requires the affirmative vote of a majority of the
shares of common stock present or represented by proxy and entitled to vote at
the meeting.
Proposal No. 3
ADVISORY VOTE TO APPROVE NAMED
EXECUTIVE OFFICER COMPENSATION
The Dodd-Frank Wall Street Reform and
Consumer Protection Act, enacted in July 2010, enables our stockholders to vote
to approve, on an advisory, non-binding basis, the compensation of our Named
Executive Officers as disclosed in this Proxy Statement in accordance with the
rules of the Securities and Exchange Commission. This vote is advisory, and,
therefore, not binding on the Company, the Compensation Committee, or our Board
of Directors. However, our Board of Directors and our Compensation Committee
value the opinions of our stockholders and to the extent there is a significant
vote against the compensation of the Named Executive Officers as disclosed in
this Proxy Statement, we will consider our stockholders concerns and the
Compensation Committee will evaluate whether any actions are necessary to
address those concerns.
As described in detail under the heading
Compensation Discussion and Analysis at page 22, our executive compensation
program is designed to attract, motivate, and retain executive officers, while
aligning their interests with those of our stockholders. Under this program, our
executive officers are rewarded for the achievement of strategic and operational
objectives and the realization of increased stockholder value. Please read the
Compensation Discussion and Analysis and the accompanying compensation tables of
this Proxy Statement for additional information about our executive compensation
program, including information about the compensation of the Named Executive
Officers in fiscal year 2012.
17
The Compensation Committee regularly
reviews our executive compensation program to ensure that it achieves the
desired goal of aligning our executive compensation structure with the interests
of our stockholders and current market practices. We believe our executive
compensation program is well designed, appropriately aligns executive pay with
Company performance, and has demonstrated that it incentivizes desirable
behavior from our executives. Therefore, we are asking our stockholders to
indicate their support for the compensation of the Named Executive Officers as
described in this Proxy Statement. This proposal, commonly known as a
Say-on-Pay proposal, gives our stockholders the opportunity to express their
views on the compensation of the Named Executive Officers. Please note that this
vote is not intended to address any specific item of compensation, but rather
the overall compensation of the Named Executive Officers and the philosophy,
policies and practices described in this Proxy Statement.
We will ask our stockholders to vote FOR
the following resolution at the Annual Meeting:
RESOLVED, that the
compensation paid to the companys named executive officers, as disclosed
pursuant to Item 402 of Regulation S-K, including the Compensation Discussion
and Analysis, compensation tables and narrative discussion, is hereby
APPROVED.
The Board recommends a vote FOR the
approval of the above resolution.
OTHER MATTERS
The Company knows of no other matters that
will be presented for consideration at the annual meeting. If any other matters
properly come before the annual meeting, it is the intention of the persons
named in the Proxy to vote the shares they represent as the Board may recommend.
Discretionary authority with respect to such other matters is granted by the
execution of the Proxy.
18
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS
AND MANAGEMENT
The following table contains information
regarding the beneficial ownership of our common stock as of May 15, 2012
by:
-
The stockholders we know to beneficially own more
than 5% of our outstanding common stock;
-
Each director named in this proxy
statement;
-
Each executive officer named in the Summary
Compensation Table included in this proxy statement; and
-
All of our directors and executive officers as a
group.
The Companys common stock is the only
class of voting securities issued by the Company. Unless otherwise indicated in
the footnotes, the beneficial owner has sole voting and investment power with
respect to the securities beneficially owned, subject only to community property
laws, if applicable.
|
Shares
|
Beneficial Owner
|
|
Beneficially
Owned
|
|
Number
|
|
Percent
(1)
|
5% or Greater
Stockholders:
|
|
|
|
|
|
|
FMR
LLC
(2)
|
|
|
|
|
|
|
82 Devonshire
St.
|
|
|
|
|
|
|
Boston, MA
02109
|
9,614,400
|
|
|
14.93
|
%
|
|
Blackrock, Inc.
(3)
|
|
|
|
|
|
|
40 East 52
nd
Street
|
|
|
|
|
|
|
New York, NY
10022
|
4,829,806
|
|
|
7.49
|
%
|
|
The Vanguard Group,
Inc.
(4)
|
|
|
|
|
|
|
100 Vanguard
Blvd.
|
|
|
|
|
|
|
Malvern, PA
19355
|
3,397,583
|
|
|
5.27
|
%
|
|
Directors and Named Executive
Officers:
|
|
|
|
|
|
|
Jason P. Rhode,
President and Chief Executive Officer and Director
(5)
|
784,031
|
|
|
|
|
|
Robert H. Smith, Director
(6)
|
308,797
|
|
|
*
|
|
|
Gregory Scott Thomas,
Vice President, General Counsel, and
|
|
|
|
|
|
|
Corporate
Secretary
(7)
|
255,672
|
|
|
*
|
|
|
Scott A. Anderson, Senior Vice President and General
Manager,
|
|
|
|
|
|
|
Mixed-Signal Audio
Products
(8)
|
250,935
|
|
|
*
|
|
|
Thurman K. Case, Vice
President and Chief Financial Officer
(9)
|
206,863
|
|
|
*
|
|
|
Tom Stein, Vice President and General Manager, EXL
Division
(10)
|
124,568
|
|
|
*
|
|
|
John C. Carter,
Director
(11)
|
54,209
|
|
|
*
|
|
|
Timothy R. Dehne, Director
(12)
|
50,963
|
|
|
*
|
|
|
William D. Sherman,
Director
(13)
|
20,405
|
|
|
*
|
|
|
Alan R. Schuele, Director
(14)
|
10,000
|
|
|
*
|
|
|
Susan Wang,
Director
|
0
|
|
|
*
|
|
|
All current directors and
executive officers as a group (15 persons)
(15)
|
2,389,200
|
|
|
3.60
|
%
|
|
____________________
*Less than 1% of the outstanding
common stock
|
|
(1)
|
|
Percentage ownership
is based on 64,475,102 shares of common stock issued and outstanding on
May 15, 2012. Shares of common stock issuable under stock options that are
currently exercisable or will become exercisable within 60 days after May
15, 2012, and shares of common stock subject to restricted stock units
(RSUs) that will vest and be issued within 60 days after May 15, 2012,
are deemed to be outstanding and beneficially owned by the person holding
such options or RSUs for the purpose of computing the number of shares
beneficially owned and the percentage
|
19
|
ownership of such person, but are
not deemed outstanding for computing the percentage of any other person or
group. This table does not include options or RSUs that vest more than 60
days after May 15, 2012.
|
(2)
|
Based on a Schedule 13G filed
with the SEC on April 10, 2012. The filing indicates that Fidelity
Management & Research Company (Fidelity), a wholly-owned subsidiary
of FMR LLC and an investment adviser registered under Section 203 of the
Investment Advisers Act of 1940, is the beneficial owner of 9,614,400
shares of the Common Stock outstanding of Cirrus Logic, Inc, as a result
of acting as investment adviser to various investment companies registered
under Section 8 of the Investment Company Act of 1940. Edward C. Johnson
3d and FMR LLC, through its control of Fidelity, and the funds each has
sole power to dispose of the 8,409,163 shares owned by the funds. Neither
FMR LLC nor Edward C. Johnson 3d has sole power to vote or direct the vote
of the shares owned directly by Fidelity. Fidelity carries out the voting
of shares under written guidelines established by the funds Boards of
Trustees.
|
(3)
|
Based on a Schedule 13G filed
with the SEC on February 13, 2012, Blackrock Inc. is the beneficial owner
and has sole voting power for 4,829,806 shares.
|
(4)
|
Based on a Schedule 13G filed
with the SEC on February 10, 2012, The Vanguard Group Inc. is the
beneficial owner and has sole voting and dispositive power as to 3,306,783
shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The
Vanguard Group, Inc., is the beneficial owner of 90,800 shares and directs
the voting of those shares.
|
(5)
|
Includes 760,219 shares issuable
upon exercise of options held by Dr. Rhode and 23,812 shares held
directly.
|
(6)
|
Includes 25,000 shares issuable
upon exercise of options held by Mr. Smith and 283,797 shares held
directly.
|
(7)
|
Includes 243,505 shares issuable
upon exercise of options held by Mr. Thomas and 12,167 shares held
directly.
|
(8)
|
Includes 220,935 shares issuable
upon exercise of options held by Mr. Anderson and 30,000 shares held
directly.
|
(9)
|
Includes of 199,983 shares
issuable upon exercise of options held by Mr. Case and 6,880 shares held
directly.
|
(10)
|
Includes of 124,568 shares
issuable upon exercise of options held by Mr. Stein.
|
(11)
|
Includes 44,166 shares issuable
upon exercise of options held by Mr. Carter and 10,043 shares held
directly.
|
(12)
|
Includes 39,166 shares issuable
upon exercise of options held by Mr. Dehne and 11,797 shares held
directly.
|
(13)
|
Includes 20,000 shares issuable
upon exercise of options held by Mr. Sherman and 405 shares held
directly.
|
(14)
|
Includes 10,000 shares held
directly by Mr. Schuele.
|
(15)
|
Includes options held by all
executive officers and directors to purchase an aggregate of 1,993,418
shares of our Common Stock that are exercisable within 60 days of May 15,
2012.
|
20
EXECUTIVE OFFICERS
Scott A. Anderson Senior Vice
President and General Manager, Mixed-Signal Audio Products
Mr. Anderson, age 58, was appointed Senior Vice President and
General Manager, Mixed-Signal Audio Products, in October 2007. Prior to joining
the Company, Mr. Anderson served as the President and Chief Operating Officer of
Freescale Semiconductor between March 2004 and February 2005, and as President
and Chief Executive Officer of Motorola Semiconductor Products Sector (SPS)
between February 2003 and December 2003.
Jo-Dee M. Benson Vice President,
Corporate Marketing Communications and Human Resources
Ms. Benson, age 52, was appointed Vice President, Corporate
Marketing Communications and Human Resources in February 2005. Previously, she
had served as Vice President of Corporate Communications since December 2000.
Gregory L. Brennan Vice President and
General Manager, Apex Precision Power
Mr.
Brennan, age 50, was appointed Vice President and General Manager, Apex
Precision Power, in April 2008. Between July 2007, when the Company acquired
Apex Microtechnology, and April 2008, Mr. Brennan served as Director of
Marketing, Industrial Products Division. Prior to July 2007, Mr. Brennan had
served as Vice President, Marketing and Sales for Apex Microtechnology.
Randy Carlson Vice President of
Supply Chain
Mr. Carlson, age 46, was
appointed Vice President of Supply Chain in February 2010. Mr. Carlson
previously worked as Director of Supply Chain between May 2008 and February
2010. Prior to joining the Company in May 2008, Mr. Carlson held various
management positions at STATS ChipPAC between 2003 and April 2008.
Thurman K. Case Vice President, Chief
Financial Officer and Principal Accounting Officer
Mr. Case, age 55, was appointed Chief Financial Officer
(CFO) on February 14, 2007. He joined the Company in October 2000 and was
appointed Vice President, Treasurer, Financial Planning & Analysis, in
September 2004. Prior to being appointed to his current position, Mr. Case
served as Vice President, Finance between June 2002 and September 2004, and as
Director of Finance between October 2000 and June 2002.
Jason P. Rhode President and Chief
Executive Officer, and Director Nominee
Dr. Rhode, age 42, was appointed President and CEO of the Company in May
2007. Dr. Rhode joined the Company in 1995 and served in various engineering
positions until he became Director of Marketing for analog and mixed-signal
products in November 2002. He was appointed Vice President, General Manager,
Mixed-Signal Audio Products, in December 2004, a role he served in until his
appointment as President and CEO.
Thomas Stein Vice President and
General Manager, EXL Products
Mr. Stein,
age 40, became Vice President and General Manager of the Companys Energy,
Exploration, and Lighting (EXL) group in September 2008. Prior to September
2008, Mr. Stein held various leadership positions in sales and marketing since
joining the Company in 1995.
Gregory Scott Thomas Vice President,
General Counsel and Corporate Secretary
Mr. Thomas, age 46, was appointed Vice President, General Counsel and
Corporate Secretary in December 2003. He joined the Company in December 2000 as
Vice President and Associate General Counsel, Intellectual Property.
21
Timothy R. Turk Vice President,
Worldwide Sales
Mr. Turk, age 55, was
appointed Vice President, Worldwide Sales in August 2007. Prior to joining the
Company, Mr. Turk was Vice President of Sales at Avnera Corporation. Mr. Turk
also served 20 years in sales and operations with Cypress Semiconductor,
including as Vice President of Worldwide Sales and Sales Operations from 2004
through 2006.
COMPENSATION DISCUSSION AND
ANALYSIS
The purpose of this Compensation
Discussion and Analysis is to explain the Compensation Committees philosophy
for determining the compensation program for the Companys Chief Executive
Officer (CEO), Chief Financial Officer and the three other most highly
compensated executive officers (the Named Executive Officers) for fiscal year
2012 and to discuss why and how the fiscal year 2012 compensation decisions for
these executives were reached. As used in this Compensation Discussion and
Analysis, all references to the 2012 fiscal year are applicable to the time
period that began on March 27, 2011 and ended on March 31, 2012. Following this
discussion are tables that include compensation information for the Named
Executive Officers. This analysis contains descriptions of various employee
compensation and benefit plans. These descriptions are qualified in their
entirety by reference to the full text or detailed descriptions of the plans
that are filed as exhibits to the Companys 2012 Annual Report on Form 10-K for
the 2012 fiscal year.
The Named Executive Officers for fiscal
year 2012 are as follows:
-
Jason P. Rhode, President and Chief Executive Officer;
-
Thurman K. Case, Chief Financial Officer and Principal Accounting
Officer;
-
Scott A. Anderson, Senior Vice President and General Manager, Mixed-Signal
Audio Division;
-
Gregory S. Thomas, Vice President, General Counsel and Corporate
Secretary; and
-
Thomas Stein, Vice President and General Manager, EXL Division.
As discussed above, the Compensation
Committee reviews and approves base salaries and other matters relating to
executive compensation, and administers the Companys stock incentive plans,
including reviewing and granting stock incentive awards to our executive
officers and other employees and reviewing and approving policies and procedures
for awarding grants under these plans.
Executive Summary
.
Cirrus Logic is
committed to paying executive officers based on Company and individual
performance. A large portion of each executive officers compensation is based
on the achievement of short-term and long-term profitable growth of the Company.
For 2011, the Compensation Committee did not make any significant adjustments to
the structure of the Companys executive officer compensation programs.
Nonetheless, in recognition of the Companys long-term strategic plan and the
Companys recent financial performance, the Compensation Committee raised the
target Operating Profit Margin for determining payouts under the Companys 2007
Management and Key Individual Contributor Incentive Plan to 20%. See
Executive Compensation Review for Fiscal Year
2012 Annual Performance Awards
at page 26.
In addition, in light of the growth in revenue and market capitalization of the
Company, the Compensation Committee approved a new set of peer companies for
purposes of developing competitive compensation positioning information. See
Competitive Positioning
Information
at page 24. Based at least in
part on this new set of peer companies, the Compensation Committee increased our
CEOs target bonus for each semi-annual period under the Companys annual
incentive plan from 37.5% to 50% of his annual base salary. See
Executive Compensation Review for Fiscal Year 2012 Annual
Performance Awards
at page 26.
The Compensation Committee believes that
the compensation paid to our executive officers as reflected in this proxy
statement is fully supported by the Companys strong performance over these time
periods. For the four quarters preceding the Companys annual review of
executive compensation
22
in September 2011, the Company delivered
strong results. Cirrus Logics total shareholder return and revenue growth were
positioned at or near the top of the Proxy Group (as defined in the section
Competitive Positioning
Information)
over the previous four
quarters. In addition, over the previous three-year period, the Companys total
shareholder and revenue growth was also positioned at or near the top of the
Proxy Group. In view of this performance, the Companys executive officers
earned payments under the Companys 2007 Management and Key Individual
Contributor Incentive Plan of approximately 66% and 233% of each individuals
target bonus for the first and second semi-annual payout periods in 2011. See
Executive Compensation Review for Fiscal Year
2012 Annual Performance Awards
at page 26.
In addition, the Company awarded equity grants to executive officers in fiscal
year 2012 that resulted in many of the officers receiving a target total direct
compensation opportunity above the 50
th
percentile level. The
Committee determined that the size of these awards was deserved based on the
performance of the Company in the preceding twelve (12) months. See
Executive Compensation Review for Fiscal Year
2012 Long Term Incentives
at page 28.
General Philosophy.
We provide our executive officers with compensation
opportunities that are based upon their personal performance, the financial
performance of the Company, and their contribution to that performance, through
a mix of base salary, annual performance awards, and equity compensation. These
opportunities are designed to attract and retain highly skilled individuals, and
to align managements incentives with the long-term interests of our
stockholders.
We believe that payments under the
compensation programs for our executive officers should reflect the Companys
performance and the value created for our stockholders. In addition, the
compensation programs should balance the short- and long-term strategic goals
and objectives of the Company and reward individual contribution to the
Companys success. We are engaged in a very competitive industry, and the
Companys success depends on its ability to attract and retain qualified
executives through the competitive compensation packages we offer to these
individuals.
Advisory Vote on Executive
Compensation.
We conducted our first
stockholder advisory vote on executive compensation at our 2011 Annual Meeting
of Stockholders. While this vote was not binding on the Company, we believe that
it is important for our stockholders to have an opportunity to have an advisory
vote on executive compensation on an annual basis as a means to express their
views regarding our executive compensation philosophy, our compensation policies
and programs, and our decisions regarding executive compensation, all as
disclosed in our proxy statements. Our Board of Directors and the Compensation
Committee value the opinions of our stockholders and, to the extent that there
is any significant vote against the compensation of our Named Executive Officers
as disclosed in this Proxy Statement, we will consider our stockholders
concerns and the Compensation Committee will evaluate whether any actions are
necessary to address those concerns.
At the 2011 Annual Meeting of
Stockholders, more than 93% of the votes cast on the advisory vote on executive
compensation proposal were in favor of our Named Executive Officers
compensation as disclosed in the Proxy Statement, and as a result, our Named
Executive Officers compensation was approved. The Compensation Committee
reviewed the final vote results and determined that, given the significant level
of support, no changes to our executive compensation policies and decisions were
necessary in light of these results.
We have determined that our stockholders
should have the opportunity to cast an advisory vote on executive compensation
each year, consistent with the preference expressed by our stockholders at the
2011 Annual Meeting. For more information, see
Proposal No. 3 Advisory Vote to Approve Named Executive Officer
Compensation.
Targeted Overall
Compensation.
The Compensation Committee
annually reviews and establishes each executive officers total compensation
package. The Compensation Committee considers a broad range of facts and
circumstances in setting executive compensation, including Company performance,
individual performance, external pay practices of peer companies, the strategic
importance of the executive officers position, as well as internal pay equity
and the executive officers time in the
23
position. The weight given to each of
these factors by the Compensation Committee may differ from year to year, and
among the individual executive officers. The Companys executive compensation
program is heavily weighted toward performance-based compensation that rewards
achievement of short-term and long-term corporate goals and objectives. In
setting target compensation for our executive officers, the Compensation
Committee seeks to strike a balance between providing compensation that is
competitive with the compensation paid to executives of peer companies, while
ensuring that a significant percentage of compensation is coupled to Company
performance, individual performance, and stock price appreciation.
Use of a Compensation
Consultant.
To support the Compensation
Committee in fulfilling its duties, the Compensation Committee has hired
independent consultants in the field of executive compensation to assist with
its design and evaluation of CEO, executive officer, and director compensation.
Pursuant to its charter, the Compensation Committee is authorized to retain and
terminate any consultant, as well as approve the consultants fees and other
terms of retention.
During fiscal year 2012, the Compensation
Committee retained DolmatConnell & Partners, Inc. (DolmatConnell) to
provide executive and director compensation consulting services. At the
direction of the Compensation Committee, DolmatConnell performed a comprehensive
review of our CEOs and other executive officers compensation. In addition to a
complete review of executive compensation, DolmatConnell reviewed and proposed a
compensation peer group to use for purposes of analyzing executive and director
compensation. DolmatConnell further reviewed the Companys annual incentive plan
and provided analysis of managements recommendations in setting the performance
criteria under the plan for fiscal year 2012. To maintain its independence from
management, DolmatConnell reported directly to the Compensation Committee and
did not perform any other services for the Company.
Competitive Positioning
Information.
To aid the Compensation
Committees annual executive compensation review, DolmatConnell prepared a
comparative review of the Companys executive compensation programs based on
competitive information obtained from Radford Survey data specific to companies
in the semiconductor industry with revenues less than $1 billion per year (the
Survey Group), and publicly-available data gathered from a group of specific
companies that are considered comparable to the Company (the Proxy Group). The
Proxy Group generally consists of public companies located in the United States
in the semiconductor industry that are similar in size (as measured by revenue
and market capitalization) and share common characteristics with the Company,
including location and similarity of business model and product lines. In
determining the Proxy Group, the Compensation Committee also considered whether
a proposed peer was historically in the Companys peer group to maintain some
consistency in the executive compensation analysis on a year-over-year basis.
Finally, the Compensation Committee also considered the likelihood that the
Company would compete with the other company for executive talent when selecting
the companies for the Proxy Group.
In the spring of 2011, based on these
criteria, and with input from the Board of Directors on companies to consider
including in the Proxy Group, DolmatConnell reviewed the then-existing Proxy
Group and recommended several changes. After reviewing DolmatConnells
recommendations, the Compensation Committee approved the following group of 17
companies for the Proxy Group: Applied Micro Circuits Corp.; Cavium Networks,
Inc.; Hittite Microwave Corp.; Integrated Device Technology, Inc.; Intersil
Corp.; Micrel, Inc.; Microsemi Corp.; Monolithic Power Systems Inc.; NetLogic
Microsystems, Inc.; OmniVision Technologies Inc.; PMC-Sierra, Inc.; Power
Integrations, Inc.; Semtech Corp.; Silicon Image, Inc.; Silicon Laboratories,
Inc.; Standard Microsystems Corp.; and TriQuint Semiconductor, Inc.
From the data derived from the Survey
Group and the Proxy Group, DolmatConnell developed market composite data for
each executive officer reflecting a blend of the data from each group (the
Market Composite Data). In some cases, Proxy Group data was not available for
an executive officer and DolmatConnells analysis and subsequent compensation
recommendations were based solely on
24
Survey Group data. The Compensation
Committee examined this compensation data along with DolmatConnells
recommendations and set each executive officers compensation, including each
Named Executive Officers compensation, with the intent of establishing
competitive compensation levels.
Role of Executive Officers in
Establishing Compensation.
Our Human
Resources and Legal departments support the Compensation Committee in its work
and in fulfilling various functions in administering our compensation programs.
This support generally consists of assistance with providing Survey Group data,
proposals of potential ranges of various components of compensation for our
executive officers, and information regarding available shares under the
Companys equity incentive plan. Regular meetings of our Compensation Committee
are generally attended by our CEO, Vice President of Human Resources, and our
General Counsel. Because each of the Companys executive officers (other than
the CEO) reports directly to the CEO, the Compensation Committee relies upon
input and recommendations from our CEO in determining an executive officers
compensation. The Compensation Committee considers and sets the compensation of
our CEO when no members of management are present. In addition, members of
management are not present while their specific compensation is being set or
discussed.
Elements of Compensation and Target
Market Positioning.
Each executive officers
compensation package is comprised of the following elements: (i) base salary
that is competitive with the market and reflects individual performance, (ii)
annual cash performance awards tied to the Companys achievement of specific
performance objectives, (iii) long-term incentive awards designed to strengthen
the mutuality of interests between the executive officers and the Companys
stockholders, (iv) other benefits that are generally available to the Companys
employees, including a 401(k) plan and medical, vision, and dental plans, and
(v) post-employment compensation.
In general, we have attempted to establish
a strong relationship between total cash compensation, the Companys
performance, and individual executive performance, by targeting base salaries at
approximately the 50
th
percentile of the Market Composite Data, and
by providing additional incentive opportunities so that the target total cash
compensation (base salary plus target annual cash incentive compensation)
approaches the 50
th
percentile levels, with the potential to earn in
the 75
th
percentile level or more for higher levels of performance.
We also provide additional long-term
incentives in the form of equity awards so that an executive officers target
total direct compensation opportunity is set at or near the 50
th
percentile level (i.e., the size of the equity award is a function of the
difference between the 50
th
percentile target total direct
compensation and the 50
th
percentile of target total cash
compensation). These percentages are intended as guidelines for evaluating and
establishing each executive officers compensation and are not applied on a
rigid or formulaic basis. The Compensation Committee exercises sole discretion
over each executive officers total compensation package.
Executive officers may also receive 401(k)
retirement and health and welfare benefits that are generally available to all
employees of the Company. In addition, executive officers are also eligible to
receive certain severance payments and benefits upon termination of their
employment other than for cause, as further described in the sections of this
Proxy Statement entitled
Post-Employment
Compensation
and
Potential Payments upon a Termination or Change of
Control
.
Executive Compensation Review for
Fiscal Year 2012.
Each year, the Compensation
Committee reviews our executive officers compensation at a regularly scheduled
Committee meeting in September. At that time, the Compensation Committee also
reviews the Companys performance as compared to the Proxy Group. As part of the
review, the Compensation Committee considers any changes to an executive
officers base salary or targeted amounts for his or her annual cash performance
awards. The Compensation Committee further considers any annual equity awards
for our executive officers. The timing of the annual executive compensation
review and any proposed equity grants is aligned with the Companys annual grant
of equity to our key employees, which occurs in October each year.
25
Base Salary
The base salary for each executive officer is designed to be
commensurate with the salary levels for comparable positions within the Survey
Group and Proxy Group, to reflect each individuals personal performance during
the year, to take into consideration the individuals responsibilities within
the Company, and to be consistent with our internal salary alignment. The
relative weight given to each factor varies with each executive officer and is
within the discretion of the Compensation Committee. In setting base salaries,
the Compensation Committee reviews (i) the Market Composite Data; (ii)
recommendations of our CEO; and (iii) the executive officers personal
performance for the year. The Companys profitability and operational
performance may also be a factor in determining the base salaries of executive
officers. The Compensation Committee utilizes a largely discretionary approach
for determining any changes to an individual executive officers base salary and
looks collectively at all of these factors. Ultimately, the Compensation
Committees decision to adjust any executive officers base salary is subjective
and made in the sole discretion of the Compensation Committee.
In September
2011, the Compensation Committee increased our CEOs annual base salary from
$430,000 (slightly below the 50
th
percentile of the Market Composite
Data for Chief Executive Officers) to $475,000 (slightly above the
50
th
percentile of the Market Composite Data for Chief Executive
Officers). The Compensation Committee decided to increase his base salary based
on the Companys performance in the previous 12 months and its assessment of the
competitive market base salary for positions of similar scope and
responsibility.
At its meeting in September 2011, the
Compensation Committee also reviewed the compensation of our other executive
officers, including the Companys other Named Executive Officers. Based on this
review, the Compensation Committee concluded that the base salary levels of our
executive officers, including our Named Executive Officers, were positioned, on
average, at the market 25
th
percentile -- below the market median. In
view of the lower overall market positioning of their base salaries and the
recent financial performance of the Company, the Compensation Committee
increased the overall base salaries of our executive officers, excluding our
CEO, by an aggregate of approximately 5% from the previous year. In general,
these increases were intended to recognize the performance of certain executive
officers during the previous year and to move certain executive officers base
salaries toward the 50
th
percentile of the Market Composite Data for
base salary levels of executives in similar positions.
The Compensation Committee also decided to
award a one-time discretionary bonus to Mr. Thomas in an effort to maintain his
salary at or near the 50
th
percentile of the Market Composite Data
for comparable positions, while at the same time recognizing his
responsibilities and contributions to the Companys performance during the prior
twelve (12) months.
Annual Performance
Awards
In fiscal year 2012, our
executives, including our Named Executive Officers, participated in the
Companys 2007 Management and Key Individual Contributor Incentive Plan (the
Incentive Plan). The Incentive Plan is designed to provide employees who are
in management or leadership positions in the Company, or who are key individual
contributors whose efforts potentially have a material impact on the Companys
performance, with incentives to improve the Companys performance through the
achievement of financial goals.
Pursuant to the Incentive Plan,
participants are eligible to earn semi-annual cash bonus payments. The Incentive
Plan sets our CEOs target bonus for each semi-annual performance period at 50%
of his annual base salary, and sets certain other executive officers target
bonuses for each semi-annual performance period, including the target annual
incentives of other Named Executive Officers, at 25% of their annual base
salary. Payments are determined based on the achievement of certain internal
company performance objectives for operating profit margin and revenue growth,
which are set by the Compensation Committee prior to the commencement of each
semi-annual period. For purposes of the Incentive Plan, Operating Profit
Margin is defined as the Companys consolidated GAAP operating
26
income excluding Incentive Plan and other
bonus accruals and any non-recurring items such as gains on sales of assets not
otherwise included in revenue, losses on sales of assets, restructuring charges,
merger-related costs including amortization or impairments of
acquisition-related intangible assets, deferred tax adjustments, stock
compensation expense, asset write-offs, write-downs, and impairment charges, and
such other items as the Compensation Committee may determine in its sole
discretion.
These performance measures are designed to
balance short-term and long-term financial and strategic objectives for building
stockholder value and are further based on a review of the operating results of
other peer companies, including the performance of our Proxy Group. The
Compensation Committee sets these targets so that participants will achieve
their target bonuses only if the Companys Operating Profit Margin and revenue
growth goals are achieved during the measurement period. As designed, the
Operating Profit Margin and revenue growth goals were intended by the
Compensation Committee to be based on the Companys long-term strategic plan,
not the Companys annual operating plan. The Incentive Plan further provides
that no payments may be made unless certain Operating Profit Margin thresholds
are met. As opposed to the targets for the Incentive Plan, the Committee has
typically set the threshold levels for payments based in part on a review of the
Companys annual operating plan along with current economic and market
conditions.
In determining the amount of a bonus
payment for an individual participant, the Incentive Plan provides that the
Compensation Committee will set forth a formula for each measurement period for
determining the pay-out percentage (the Incentive Plan Pay-Out Percentage)
based on the actual performance of the Company relative to the target levels for
each of the performance measures. The Incentive Plan further provides that
payments may exceed the target payouts when the Companys financial performance
exceeds the achievement of those performance goals. Payments under the Incentive
Plan may not exceed 250% of a participants target bonus for any applicable
measurement period, and are further subject to the Companys cap of 12% of the
Companys non-GAAP operating profit on total payments under the Companys
variable compensation plans.
If a participants employment with the
Company is terminated by reason of death, disability, or termination by the
Company without cause during a performance period, then that participant will
still receive the same payment under the Incentive Plan that he would have
received if he were still employed on the last day of the semi-annual
performance period, but such amount will be prorated based on the number of
calendar days that the participant was employed with the Company during such
performance period. If, in the event of a change of control of the Company, the
Incentive Plan is not assumed or replaced with a comparable plan by the
Companys successor, each participant under the Incentive Plan will receive a
pro rata cash payment for their target bonus, based upon the number of calendar
days completed in the current semi-annual period. For more information, please
see the section of the proxy entitled
Potential Payments Upon a Termination or Change of
Control
.
In addition to the individual
participants payout cap, the Compensation Committee has set an overall cap on
total payments under the Companys variable compensation plans (including the
Incentive Plan) to an amount equal to 12% of the Companys non-GAAP operating
profit. The Compensation Committee instituted a cap in fiscal year 2010 because
it determined that the proposed targets and thresholds under the Inventive Plan
created a risk that a large percentage of the Companys operating profit for the
period could be paid out as bonuses if the revenue growth of the Company
continued to increase as anticipated. The Compensation Committee set the cap at
12% based on its desire to provide a reasonable payout for performance to the
Companys performance targets while maintaining a reasonable cap on payments
under all of the Companys variable compensation plans. The Compensation
Committee determined that the 12% cap was still appropriate for the 2012
year.
For the first semi-annual performance
period in fiscal year 2012, the performance target levels for the two
performance measures were set such that a participant would receive 100% of his
or her target bonus if the Company achieved an Operating Profit Margin of 20%
and annual revenue growth of 15% during the semi-annual performance period.
Specifically, the formula for determining the Incentive Plan Pay-Out Percentage
was set by the Compensation Committee as follows:
27
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(1)
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The operating profit
payout percentage is determined based on the Companys Operating Profit
Margin for the semi-annual performance period. If the Company fails to
achieve a threshold Operating Profit Margin of 10%, then no bonus payments
would be made for the performance period.
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(2)
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At the threshold
Operating Profit Margin of 10%, the operating profit payout percentage
would be 25%. At the target Operating Profit Margin of 20%, the operating
profit payout percentage would be 100%. For Operating Profit Margin
performance between the threshold of 10% and the target of 20%, the
operating profit percentage payout would be determined by using
straight-line interpolation between the threshold and target points. For
example, if the Company achieved an Operating Profit Margin of 16%, the
operating profit payout percentage would be calculated as 70% (25% + (3/5
x 75%)).
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(3)
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For performance above
the target Operating Profit Margin of 20%, the operating profit payout
percentage would increase linearly by 10% for each percentage point of
Operating Profit Margin in excess of 20%. For example, if the Company
achieved an Operating Profit Margin of 25%, the operating profit payout
percentage would be calculated as 150% (100% + (5 x 10%)).
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(4)
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Once the operating
profit payout percentage is determined, the Incentive Plan Pay-out
Percentage is calculated by multiplying the operating profit payout
percentage by a revenue growth multiplier.
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(5)
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For fiscal year 2012,
the revenue growth multiplier was set at 50% for revenue growth below 5%
and 100% for target revenue growth of 15%. For revenue growth performance
between 5% and 15%, the revenue growth multiplier would be determined
using straight-line interpolation between these points. For example, if
the Company achieved 10% revenue growth during the period, the revenue
growth multiplier would be calculated as 75% (50% + (5/10 x
50%)).
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(6)
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For performance levels
above the target revenue growth of 15%, the revenue growth multiplier
would increase linearly by 5% for each percentage point of revenue growth
in excess of 15%. For example, if the Company achieved annual revenue
growth of 20% in the relevant period, the revenue growth multiplier would
be calculated as 125% (100% + (5% x 5)).
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As a result of the Companys performance
in the first half of the fiscal year, executive officers, including our Named
Executive Officers, earned payments of 66% of each individuals target bonus for
the semi-annual period. The Incentive Plan Payout Percentage for the first half
of fiscal year 2012 was calculated based on an Operating Profit Margin of 22%
(17% on a GAAP basis) and revenue growth of 6%. As a result of the Companys
performance in the second half of the fiscal year, executive officers, including
our Named Executive Officers, earned payments of approximately 233% of each
individuals target bonus for the semi-annual period. The Incentive Plan Payout
Percentage for the second half of fiscal year 2012 was calculated based on an
Operating Profit Margin of 26% (20% on a GAAP basis) and revenue growth of 24.6%. A reconciliation of the Companys GAAP operating profit margin to the
Operating Profit Margin used in the Companys Incentive Plan calculations is
included as an annex to this proxy statement.
Long-Term
Incentives
We provide long-term
incentive opportunities through equity awards to motivate and reward our
executive officers, including our Named Executive Officers, for their
contributions to achieving our business objectives by tying incentives to the
performance of the Companys common stock over the long term. The use of equity
further reinforces the link between the interests of our executive officers and
our stockholders. Generally, equity awards are made annually by the Compensation
Committee to each of our executive officers under our 2006 Equity Incentive
Plan.
28
Historically, we used stock options as our
principal long-term incentive vehicle because of our belief that there was a
near universal expectation by employees and executive officers in our industry
that they would receive stock option grants. Options have provided an effective
compensation opportunity for companies, like ours, focused on growth. Options
are designed to align the interests of our executive officers and employees with
those of our stockholders and provide each individual with a significant
incentive to manage the Company from the perspective of an owner with an equity
stake in the business. Each option award enables the recipient to purchase
shares of the Companys common stock at a fixed price per share (the market
price of the Companys stock on the grant date) over a specified period of time
(up to ten years). Each option becomes exercisable in a series of installments
over a specified period, contingent upon the recipients continued employment
with the Company. Accordingly, the options provide a potential return to the
employee or executive officer only if he or she remains employed by the Company
during the vesting period, and then only if the market price of the Companys
common stock appreciates over the option term.
In September 2010, the Compensation
Committee approved DolmatConnells recommendation to move to a long-term
incentive framework based on an award mix of 50% stock options and 50%
time-vested restricted stock unit (RSUs) awards. The proposed mix is
consistent with the Companys Proxy Group practices in which stock options are
commonly used with other full value awards with time or performance-based
vesting. The decision to use time-vested RSUs balances the benefits of stock
options with the executive retention and stockholder dilution benefits that RSUs
provide. In particular, the Compensation Committee believes that the use of
time-based restricted stock units with a three-year cliff vest helps further our
retention objectives by encouraging our executive officers to remain with the
Company and fully execute our long-term strategies, which generally take a
number of years to be fully implemented and reflected in our financial
performance. And because RSU awards are typically granted at a lower number of
shares than an equivalent option grant, the dilutive impact of our long-term
incentive awards as a whole is reduced by using a mix of these two types of
equity.
The Compensation Committees long-term
incentive compensation philosophy is to grant awards to executive officers that
position target total direct compensation approximately at the market
50
th
percentile. Based on this philosophy, in September 2011,
DolmatConnell recommended grant ranges based on the implied market long-term
incentive compensation value, which was calculated by subtracting the market
median target total cash compensation for an executive officer from the
executive officers market median target total direct compensation. In addition
to these suggested annual grant guidelines, the Compensation Committee also
takes into account the number and current unrealized value of outstanding
options held by each executive officer in order to maintain an appropriate level
of equity incentive for that individual. The Compensation Committee further
considers the Companys current equity burn rate and dilution in setting the
amount of equity available for grant to our executive officers. The size of the
equity award to each executive officer is set by the Compensation Committee at a
level that is intended to create a meaningful opportunity for stock price
appreciation based upon the individuals position with the Company, current
performance, anticipated future contribution based on that performance, and
ability to affect corporate and/or business unit results. The Compensation
Committee utilizes a largely discretionary approach for determining the amount
of equity awards awarded to an individual executive officer and looks
collectively at all of these factors. Ultimately, the Compensation Committees
decision with respect to the size of equity awards is subjective and made in the
sole discretion of the Compensation Committee.
For fiscal year 2012, based on
DolmatConnells recommendations and the other relevant factors summarized above,
the Compensation Committee approved the grant of a mix of options and RSU awards
to our executive officers in conjunction with the Companys annual review of
equity awards for all employees. The relevant weight given to each of these
factors used to determine the size of each executive officers grant varied from
individual to individual. The equity awards were granted on the Companys
Monthly Grant Date (as defined below) in October 2011. The Company awarded
equity grants to executive officers in fiscal year 2012 that resulted in certain
executive officers receiving
29
a target total direct compensation
opportunity above the 50
th
percentile level. The Compensation
Committee determined that the size of these awards was deserved based on the
performance of the Company in the preceding twelve months.
Equity Award Practices and
Timing
The Compensation Committee has
implemented a process whereby new employee equity awards and special stock
awards are granted and priced on the first Wednesday of each calendar month (the
Monthly Grant Date). The purpose of this process is to minimize the
administrative burdens that would be created with multiple monthly grant dates
and to ensure that all required approvals are obtained on or before the Monthly
Grant Date. If the Monthly Grant Date occurs on a Company holiday, or on other
days that the Company or Nasdaq is closed for business, the Monthly Grant Date
will be the next regularly scheduled business day. The Compensation Committee
does not have any program, plan or practice to time option grants to our
executive officers in coordination with the release of material non-public
information.
Perquisites and Other
Benefits
All of our employees, including our executive officers, are
eligible to participate in the Companys welfare and health benefit programs,
including our 401(k) plan; medical, vision and dental plans; and certain other
standard employee benefit plans. The Cirrus Logic, Inc. 401(k) Plan is a
tax-qualified profit sharing and 401(k) plan. Under the plan, we match 50% of up
to the first 6% of an employees pre-tax deferrals, subject to the IRS
compensation limits.
Our CEO and other executive officers
participate in these welfare and health benefit programs to the same extent as
all other salaried employees based in the United States. Although perquisites
are not a material part of our compensation programs for executive officers and
are generally not provided, we do reimburse up to $500 for an annual physical
examination for each of our executive officers to the extent the physical
examination is not covered under our standard health care plans.
Post-Employment
Compensation
We do not maintain
separate individual employment, severance, or change of control agreements with
our Named Executive Officers; however, on July 26, 2007, after a review of other
companies practices with respect to management severance plans, the
Compensation Committee approved and adopted an Executive Severance and Change of
Control Plan (the 2007 Severance Plan). The 2007 Severance Plan provides
certain severance and other benefits to eligible executive officers (Eligible
Executives), including each of the Named Executive Officers, whose employment
is involuntarily terminated by the Company (other than for cause) or whose
employment terminates following a change of control of the Company. The 2007
Severance Plan became effective on October 1, 2007.
The 2007 Severance Plan provides that, in
the event of an Eligible Executives termination of employment without cause, an
Eligible Executive will be eligible to receive: (i) a continuation of base
salary for a period of up to six months (up to 12 months for the Companys CEO)
following termination, and (ii) payment in full of a reasonable estimate of
premiums for three months of continued health care coverage.
The 2007 Severance Plan further provides
that, if an Eligible Executives employment is terminated within 12 months
following a change in control, either by the Company without cause or by the
Eligible Executive for good reason, the Eligible Executive will be eligible to
receive (in lieu of the benefits described above): (i) a lump sum payment equal
to twelve months salary, (ii) acceleration in full of any unvested stock
options or any other securities or similar incentives that have been granted or
issued to the Eligible Executive as of the termination date, and (iii) payment
in full of a reasonable estimate of COBRA premiums for twelve months. The
Eligible Executive shall have six months from the termination date to exercise
any vested options.
30
The 2007 Severance Plan may not be amended
or terminated without the consent of any Eligible Executive during the one year
prior to or following the occurrence of a change in control, if such amendment
would be adverse to the interest of such Eligible Executive. In order to receive
severance payments under the 2007 Severance Plan, an Eligible Executive must
execute a general release of all claims against the Company. Additional details
and specific terms of the Severance Plan are set forth in the section of this
proxy entitled
Potential Payments upon
Termination or Change in Control.
We maintain a severance plan because we
believe it is consistent with the practices of peer companies and helps ensure
that we are able to attract and retain top talent. Further, we believe that our
plan provides a level of stability the Eligible Executives during volatile
business conditions that have historically existed in our industry so that they
remain focused on their responsibilities and the long-term interests of the
Company during such times. The 2007 Severance Plan provides for double-trigger
rather than single-trigger payment and benefits in the event of a change in
control. In other words, payments to an Eligible Executives are contingent upon
an involuntarily termination following a change in control. This severance plan
design is intended to provide a level of security to Eligible Executives
negotiating a transaction to avoid any misalignment with the interests of our
stockholders without resulting in a windfall to Eligible Executives who remain
employed following such a transaction.
Policies Regarding Short Selling and
Hedging Transactions
The Company prohibits
directors, officers, and employees from investing in derivative securities based
on or related to the Companys common stock or engaging in any short sale or
hedging transactions involving the Companys common stock. This policy does not
restrict the ownership of Company-granted awards, such as stock options,
restricted stock, RSUs, or other equity awards issued by the Company.
Tax Considerations
Section 162(m) of the Internal Revenue Code disallows a tax
deduction to publicly-held companies for compensation paid to our CEO and any of
the three most highly compensated officers (other than our principal financial
officer) to the extent that compensation exceeds $1,000,000 per covered officer
in any fiscal year. The limitation applies only to compensation that is not
considered to be performance-based compensation. Under the Treasury Regulations
corresponding to Section 162(m) of the Internal Revenue Code, compensation
received through the exercise of an option will not be subject to the $1,000,000
limit if it qualifies as qualified performance-based compensation within the
meaning of Section 162(m).
It is the Compensation Committees
objective, so long as it is reasonable and consistent with the Companys overall
business, compensation, and retention objectives, to endeavor to design
executive officer compensation programs that keep executive compensation
deductible for federal income tax purposes. We structured our 2006 Equity
Incentive Plan with the intention that stock options and full value awards with
performance-based vesting would qualify for tax deductibility. However, in order
to maintain flexibility in the compensation program, other forms of equity such
as RSU awards are available and do not qualify for tax deductibility. In
addition, although it is the Compensation Committees preference to keep
executive compensation deductible for federal income tax purposes when
appropriate, our stockholders have not approved our Incentive Plan, or the
performance goals under our Incentive Plan. Therefore, we expect that any
payments under the Incentive Plan will not qualify as performance-based
compensation under 162(m).
In fiscal year 2012, the Company had a tax
deduction disallowance under Section 162(m) of approximately $27,580. This
disallowance was the result of options exercised by covered employees during the
year. These options were granted prior to the adoption of the 2006 Equity
Incentive Plan from plans that did not qualify as performance-based compensation
under Section 162(m).
31
Section 280G of the Internal Revenue Code
disallows the deduction of any excess parachute payment paid in connection
with certain events. A portion of amounts payable under the 2007 Severance Plan
constitute excess parachute payments. Accordingly, the 2007 Severance Plan
provides for a modified Section 280G cut back pursuant to which payments and
benefits under the 2007 Severance Plan will be reduced in the event such
reduction produces a greater after-tax benefit to the executive. See
Potential Payments Upon
Termination
or
Change of Control
at page
39.
Compensation Committee Interlocks and
Insider Participation
The Compensation
Committee of the Board currently consists of Messrs. Carter, Dehne, and Schuele.
None of our executive officers have ever served as a member of the board of
directors or the compensation committee of another entity that has or has had,
at the time of his service or during the same fiscal year, one or more executive
officers serving as a member of the Companys Board or Compensation Committee.
These members are considered independent under the Companys Board and Committee
independence standards as set forth in the Companys Corporate Governance
Guidelines, which is included as an Exhibit to this proxy.
COMPENSATION COMMITTEE REPORT
We, the Compensation Committee of the
Board of Directors, have reviewed and discussed the Compensation Discussion and
Analysis (CD&A) required by Item 402(b) of Regulation S-K with management
of the Company. Based on such review and discussion, we have recommended to the
Board of Directors that the CD&A be included as part of this Proxy
Statement.
Submitted by the Compensation Committee of
the Board of Directors:
Timothy R. Dehne, Chairman
John C.
Carter
Alan R. Schuele
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CONSIDERATION OF RISK RELATED TO COMPENSATION PROGRAMS
The Compensation Committee structures our
executive compensation program to provide incentives to appropriately reward our
executive officers without undue risk taking. Our approach is similar for the
compensation practices and polices applicable to all employees throughout the
Company. Overall, we believe that our compensation programs do not create risks
that are reasonably likely to have a material adverse effect on our Company. In
general, we attempt to align our compensation programs with the long-term
interests of the Company and its stockholders and mitigate the likelihood of
inducing excessive risk-taking behavior. More specifically, we believe the
following program features and policies help to mitigate the likelihood of
inducing excessive risk-taking behavior:
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The Company pays a mix of fixed and variable
compensation, with variable compensation tied both to short-term objectives
and the long-term value of our stock price.
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Our annual incentive programs are based on a mix
of bottom-line objectives (i.e., operating profit goals) and top-line
objectives (i.e., revenue growth) in order to avoid the risk of excessive
focus on one goal or performance measure.
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To prevent the risk that our annual incentive
program pays bonuses despite weak short-term performance, no payout may occur
without a threshold level of operating profit performance being
met.
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Our executive and leadership team annual incentive
program payout is capped at a percentage of overall operating profit to
prevent the risk of excessive payout of the Companys operating
profit.
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Our executive and leadership team annual incentive
program is further capped so that no participant may receive a payout of
greater than 250% of his or her target payout.
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Long-term incentives are awarded to executives in
the form of equity that vests over a significant period of time, typically
three or four years. The vesting period is intended to align the interests of
our executive officers with the long-term interests of stockholders and to
provide an incentive for our executive officers to remain with the
Company.
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Long-term incentives are typically granted
annually so our executive officers will have unvested awards that may decrease
in value if our business is not managed with long-term goals in
mind.
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In calendar 2010, we began using a mixture of
stock options and restricted stock unit (RSU) awards in order to create an
overall long-term incentive package that aligns with stockholder interests,
appropriately balances risk and performance, and provides competitive
incentives for the purpose of executive retention.
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The Compensation Committee hires an independent
compensation consultant and uses market data, when available, to inform our
focus on pay for performance.
33
EXECUTIVE COMPENSATION
TABLES
Fiscal Year 2012 Summary Compensation
Table
The following table provides certain
summary information concerning the compensation awarded to, earned by, or paid
to the Named Executive. The table sets forth compensation for services rendered
by our Named Executive Officers for the fiscal years ended March 31, 2012; March
26, 2011; and March 27, 2010 as applicable.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
All Other
|
|
|
|
|
|
Name and Principal
|
|
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
Awards
(1)
|
|
|
Awards
(1)
|
|
|
Compensation
(2)
|
|
|
Compensation
|
|
|
Total
|
|
Position
|
|
|
Year
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(i)
|
|
|
(j)
|
|
Jason P. Rhode,
|
|
|
2012
|
|
|
$
|
453,415
|
|
|
$
|
1,300
|
(3)
|
|
|
$
|
577,875
|
|
|
$
|
1,085,968
|
|
|
|
$
|
572,470
|
|
|
|
$
|
9,201
|
(4)
|
|
|
$
|
2,700,229
|
|
President and Chief
|
|
|
2011
|
|
|
|
408,616
|
|
|
|
|
|
|
|
|
609,375
|
|
|
|
1,347,530
|
|
|
|
|
736,500
|
|
|
|
|
8,316
|
(5)
|
|
|
|
3,110,337
|
|
Executive Officer
|
|
|
2010
|
|
|
|
390,000
|
|
|
|
|
|
|
|
|
|
|
|
|
1,093,712
|
|
|
|
|
193,971
|
|
|
|
|
23,101
|
(6)
|
|
|
|
1,700,784
|
|
Thurman K. Case,
|
|
|
2012
|
|
|
$
|
263,943
|
|
|
$
|
|
|
|
|
$
|
192,625
|
|
|
$
|
201,106
|
|
|
|
$
|
202,105
|
|
|
|
$
|
8,525
|
(7)
|
|
|
$
|
868,304
|
|
Chief Financial Officer,
|
|
|
2011
|
|
|
|
250,701
|
|
|
|
|
|
|
|
|
203,125
|
|
|
|
246,595
|
|
|
|
|
301,044
|
|
|
|
|
9,083
|
(8)
|
|
|
|
1,010,548
|
|
Vice President of Finance
|
|
|
2010
|
|
|
|
245,000
|
|
|
|
|
|
|
|
|
|
|
|
|
204,160
|
|
|
|
|
81,236
|
|
|
|
|
8,588
|
(9)
|
|
|
|
538,984
|
|
and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Anderson,
|
|
|
2012
|
|
|
$
|
279,293
|
|
|
$
|
|
|
|
|
$
|
269,675
|
|
|
$
|
281,548
|
|
|
|
$
|
211,935
|
|
|
|
$
|
3,275
|
(10)
|
|
|
$
|
1,045,726
|
|
Senior Vice President
|
|
|
2011
|
|
|
|
275,000
|
|
|
|
13,750
|
(11)
|
|
|
|
284,375
|
|
|
|
352,216
|
|
|
|
|
330,000
|
|
|
|
|
2,692
|
(12)
|
|
|
|
1,258,033
|
|
and General Manager,
|
|
|
2010
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
262,491
|
|
|
|
|
91,183
|
|
|
|
|
3,381
|
(13)
|
|
|
|
632,055
|
|
Mixed-Signal Audio Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Thomas,
|
|
|
2012
|
|
|
$
|
280,500
|
|
|
$
|
15,000
|
(14)
|
|
|
$
|
231,150
|
|
|
$
|
241,326
|
|
|
|
$
|
209,877
|
|
|
|
$
|
9,184
|
(15)
|
|
|
$
|
987,037
|
|
Vice President,
|
|
|
2011
|
|
|
|
277,560
|
|
|
|
8,750
|
(16)
|
|
|
|
260,000
|
|
|
|
322,356
|
|
|
|
|
333,163
|
|
|
|
|
8,410
|
(17)
|
|
|
|
1,210,239
|
|
General Counsel
|
|
|
2010
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
262,491
|
|
|
|
|
91,183
|
|
|
|
|
25,210
|
(18)
|
|
|
|
653,884
|
|
and Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Stein,
|
|
|
2012
|
|
|
$
|
237,010
|
|
|
$
|
|
|
|
|
$
|
231,150
|
|
|
$
|
241,326
|
|
|
|
$
|
181,482
|
|
|
|
$
|
7,145
|
(20)
|
|
|
$
|
898,113
|
|
Vice President and
|
|
|
2011
|
|
|
|
219,773
|
|
|
|
|
|
|
|
|
227,500
|
|
|
|
276,103
|
|
|
|
|
264,075
|
|
|
|
|
6,015
|
(21)
|
|
|
|
993,466
|
|
General Manager,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXL Division (19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
amounts reflected in the Stock Awards and Option Awards columns show
amounts that do not reflect compensation actually received by the Named
Executive Officer, but represent the aggregate grant date fair value of
all equity granted in fiscal year 2012 and previous fiscal years as
determined pursuant to FASB ASC Topic 718, excluding any assumptions
regarding potential forfeitures. The assumptions underlying the
calculation under FASB ASC Topic 718 are discussed under Note 8,
Stockholders Equity Compensation, in our Annual Report on Form 10-K for
the fiscal year ended March 31, 2012.
|
|
(2)
|
This
column shows amounts earned under the Companys 2007 Management and Key
Individual Contributor Incentive Plan, which is described in further
detail in the
Compensation
Discussion and Analysis Annual Performance Awards
section of these proxy materials. Payments
earned in the second semi-annual period of fiscal year 2012 were paid in
fiscal year 2013.
|
|
(3)
|
This
amount was awarded pursuant to the Companys Patent Incentive
Program.
|
|
(4)
|
This
amount includes $7,923 in matched contributions under our 401(k) plan,
$685 associated with the value of insurance premiums paid with respect to
life insurance for the benefit of Dr. Rhode, and $593 in tax gross ups
paid to all employees of the Company with respect to the Companys
long-term disability plan.
|
|
(5)
|
This
amount includes $7,534 in matched contributions under our 401(k) plan,
$660 associated with the value of insurance premiums paid with respect to
life insurance for the benefit of Dr. Rhode, $121 in tax gross ups paid to
all employees of the Company with respect to the Companys long term
disability plan.
|
34
(6)
|
This
amount includes $7,350 in matched contributions under our 401(k) plan and
$609 associated with the value of insurance premiums paid with respect to
life insurance for the benefit of Dr. Rhode, $28 in tax gross ups paid to
all employees of the Company with respect to the Companys long term
disability plan, and $15,114 in payment for accrued vacation made in
association with changes made to the Companys vacation
policy.
|
|
(7)
|
This
amount includes $5,447 in matched contributions under our 401(k) plan,
$2,557 associated with the value of insurance premiums paid with respect
to life insurance for the benefit of Mr. Case, and $521 in tax gross ups
paid to all employees of the Company with respect to the Companys
long-term disability plan.
|
|
(8)
|
This
amount includes $7,477 in matched contributions under our 401(k) plan,
$1,504 associated with the value of insurance premiums paid with respect
to life insurance for the benefit of Mr. Case, and $102 in tax gross ups
paid to all employees of the Company with respect to the Companys long
term disability plan.
|
|
(9)
|
This
amount includes $7,350 in matched contributions under our 401(k) plan and
$1,215 associated with the value of insurance premiums paid with respect
to life insurance for the benefit of Mr. Case, and $23 in tax gross ups
paid to all employees of the Company with respect to the Companys long
term disability plan.
|
|
(10)
|
This
amount reflects $2,723 associated with the value of insurance premiums
paid with respect to life insurance for the benefit of Mr. Anderson, and
$552 in tax gross ups paid to all employees of the Company with respect to
the Companys long-term disability plan.
|
|
(11)
|
This
amount was awarded as a discretionary bonus in lieu of an annual base
salary increase.
|
|
(12)
|
This
amount reflects $2,580 associated with the value of insurance premiums
paid with respect to life insurance for the benefit of Mr. Anderson, and
$112 in tax gross ups paid to all employees of the Company with respect to
the Companys long-term disability plan.
|
|
(13)
|
This
amount includes $775 in opt-out payments associated with opting out of the
Companys medical plan, $2,580 associated with the value of insurance
premiums paid with respect to life insurance for the benefit of Mr.
Anderson, and $26 in tax gross ups paid to all employees of the Company
with respect to the Companys long term disability plan.
|
|
(14)
|
This
amount was awarded as a discretionary bonus in lieu of an annual salary
increase as further detailed in the
Compensation Discussion and Analysis Base Salary
section of these proxy
materials.
|
|
(15)
|
This
amount includes $7,674 in matched contributions under our 401(k) plan,
$955 associated with the value of insurance premiums paid with respect to
life insurance for the benefit of Mr. Thomas, and $555 in tax gross ups
paid to all employees of the Company with respect to the Companys
long-term disability plan.
|
|
(16)
|
This
amount was awarded as a discretionary bonus in lieu of an annual base
salary increase.
|
|
(17)
|
This
amount includes $7,388 in matched contributions under our 401(k) plan,
$909 associated with the value of insurance premiums paid with respect to
life insurance for the benefit of Mr. Thomas, and $113 in tax gross ups
paid to all employees of the Company with respect to the Companys
long-term disability plan.
|
|
(18)
|
This
amount includes $7,350 in matched contributions under our 401(k) plan,
$669 associated with the value of insurance premiums paid with respect to
life insurance for the benefit of Mr. Thomas, $25 in tax gross ups paid to
all employees of the Company with respect to the Companys long term
disability plan, and $17,165 in payment for accrued vacation made in
association with changes made to the Companys vacation
policy.
|
|
(19)
|
Mr. Stein
was not a Named Executive Officer during the 2010 fiscal
year.
|
35
(20)
|
This amount includes
$6,150 in matched contributions under our 401(k) plan, $527 associated
with the value of insurance premiums paid with respect to life insurance
for the benefit of Mr. Stein, and $468 in tax gross ups paid to all
employees of the Company with respect to the Companys long-term
disability plan.
|
|
(21)
|
This amount includes
$5,494 in matched contributions under our 401(k) plan, $432 associated
with the value of insurance premiums paid with respect to life insurance
for the benefit of Mr. Stein, and $89 in tax gross ups paid to all
employees of the Company with respect to the Companys long-term
disability plan.
|
Fiscal Year 2012 Grants of Plan-Based
Awards
The following table sets forth certain
information with respect to grants of plan-based awards for the fiscal year
ended March 31, 2012, to the Named Executive Officers. All of the restricted
stock units and stock options reflected in the table were granted under our 2006
Equity Incentive Plan. Each stock option has a maximum term of ten years,
subject to earlier termination if the optionees services are terminated. Unless
noted, the exercisability of options vests with respect to 25% of the shares
underlying the option one year after the date of grant and with respect to the
remaining shares underlying the option thereafter in 36 equal monthly
installments. The exercise price of each stock option is equal to the closing
price of our common stock on the date of grant. The restricted stock unit awards
will vest with respect to 100% of the shares underlying the award on the third
anniversary of the grant date. Holders of restricted stock unit awards are not
entitled to receive any dividends or dividend equivalents with respect to
outstanding restricted stock units. Special accelerated vesting provisions
applicable to the equity awards upon a Named Executive Officers termination of
employment or upon a change of control are described below under
Potential Payments Upon Termination or Change
of Control
.
The amounts reported in the Estimated
Future Payouts Under Non-Equity Incentive Plan Awards column set forth
potential payouts under the Companys 2007 Management and Key Individual
Contributor Incentive Plan, which is described further at page 26.
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Fair
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Value
|
|
|
|
|
|
|
|
|
|
|
Incentive Plan
Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
of Stock
|
|
|
|
|
|
|
|
|
|
|
Threshold (2)
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
and Option
|
|
Name
|
|
|
Grant Date (1)
|
|
|
Approval
|
|
|
|
|
($)
|
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
Awards (3)
|
|
(a)
|
|
|
(b)
|
|
|
Date
|
|
|
|
|
(c)
|
|
|
|
(d)
|
|
|
(e)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
Jason P.
Rhode,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and
Chief
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
|
|
|
|
|
|
|
|
$
|
577,875
|
|
|
Executive Officer
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
$
|
118,750
|
|
|
|
$475,000
|
|
|
$
|
1,187,500
|
|
|
|
|
|
|
135,000
|
|
|
|
$15.41
|
|
|
|
1,085,968
|
|
|
Thurman K.
Case,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief
Financial Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President
of Finance
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
$
|
192,625
|
|
|
and Treasurer
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
$
|
33,764
|
|
|
|
$135,057
|
|
|
$
|
337,641
|
|
|
|
|
|
|
25,000
|
|
|
|
$15.41
|
|
|
|
201,106
|
|
|
Scott A.
Anderson,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Vice
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and General
Manager,
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
|
|
|
|
|
|
|
|
$
|
269,675
|
|
|
Mixed-Signal Audio Division
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
$
|
35,406
|
|
|
|
$141,625
|
|
|
$
|
354,063
|
|
|
|
|
|
|
35,000
|
|
|
|
$15.41
|
|
|
|
281,548
|
|
|
Gregory S.
Thomas,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice
President, General
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counsel and
Corporate
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
$
|
231,150
|
|
|
Secretary
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
$
|
35,063
|
|
|
|
$140,250
|
|
|
$
|
350,625
|
|
|
|
|
|
|
30,000
|
|
|
|
$15.41
|
|
|
|
241,326
|
|
|
Thomas Stein,
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and General
Manager, EXL
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
$
|
231,150
|
|
|
Division
|
|
|
10/5/2011
|
|
|
9/21/2011
|
|
|
|
$
|
30,319
|
|
|
|
$121,275
|
|
|
$
|
303,188
|
|
|
|
|
|
|
30,000
|
|
|
|
$15.41
|
|
|
|
241,326
|
|
|
(1)
|
|
The
Companys policy is to grant employee equity awards on the first Wednesday
of the month (the Monthly Grant Date) after the Companys Compensation
Committee approves the grant. If the Monthly Grant Date occurs on a
Company holiday, or on other days that the Company or Nasdaq is closed for
business, the Monthly Grant Date is the next regularly scheduled business
day when the Company and Nasdaq are open for business.
|
|
(2)
|
|
Payments
may be paid only if Operating Profit Margin thresholds are achieved
pursuant to the Companys 2007 Management and Key Individual Contributor
Incentive Plan (as described further at page 26). No payments may be paid
under the plan if the Operating Profit Margin thresholds are not
achieved.
|
|
(3)
|
|
This
amount represents the aggregate grant date fair value of the equity awards
computed in accordance with FASB ASC Topic 718, excluding the effect of
estimated forfeitures. The assumptions underlying the calculation under
FASB ASC Topic 718 are discussed under Note 8, Equity Compensation, in the
Companys Form 10-K for the fiscal year ended March 31,
2012.
|
37
Fiscal Year 2012 Outstanding Equity
Awards at Fiscal Year-End Table
The following table provides information
concerning the outstanding equity award holdings held by our Named Executive
Officers as of March 31, 2012.
|
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
|
|
|
Underlying
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares or
|
|
|
|
|
|
|
Unexercised
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
Units of Stock
|
|
|
Units of Stock
|
|
|
|
|
|
|
Options
|
|
|
Unexercised Options
|
|
|
Option
|
|
|
Option
|
|
|
That Have Not
|
|
|
That Have Not
|
|
|
|
Name
|
|
|
Exercisable
|
|
|
Unexercisable(1)
|
|
|
Exercise Price
|
|
|
Expiration Date
|
|
|
Vested(3)
|
|
|
Vested(4)
|
|
|
|
|
|
|
(#)
|
|
|
(#)
|
|
|
|
|
($)
|
|
|
|
|
|
|
(#)
|
|
|
($)
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
|
|
|
(e)
|
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
|
Jason P. Rhode,
|
|
|
|
15,000
|
|
|
|
|
|
-
|
|
|
|
|
$
|
6.97
|
|
|
|
10/24/2013
|
|
|
|
|
|
|
|
|
|
President and Chief
|
|
|
|
80,000
|
|
|
|
|
|
-
|
|
|
|
|
$
|
8.06
|
|
|
|
03/01/2016
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
|
325,000
|
|
|
|
|
|
-
|
|
|
|
|
$
|
7.87
|
|
|
|
06/06/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,772
|
|
|
|
|
|
38,647
|
|
|
|
|
$
|
5.25
|
|
|
|
10/01/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,054
|
|
|
|
|
|
156,946
|
|
|
|
|
$
|
5.55
|
|
|
|
10/07/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,812
|
|
|
|
|
|
87,188
|
|
|
|
|
$
|
16.25
|
|
|
|
10/06/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
135,000
|
|
|
|
|
$
|
15.41
|
|
|
|
10/05/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
$892,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37,500
|
|
|
$892,500
|
|
|
|
Thurman K. Case,
|
|
|
|
27,159
|
(2)
|
|
|
|
|
-
|
|
|
|
|
$
|
3.40
|
|
|
|
06/23/2013
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer,
|
|
|
|
25,000
|
|
|
|
|
|
-
|
|
|
|
|
$
|
4.58
|
|
|
|
03/02/2015
|
|
|
|
|
|
|
|
|
|
Vice
President of Finance
|
|
|
|
2,084
|
|
|
|
|
|
-
|
|
|
|
|
$
|
8.41
|
|
|
|
03/07/2017
|
|
|
|
|
|
|
|
|
|
and
Treasurer
|
|
|
|
39,806
|
|
|
|
|
|
-
|
|
|
|
|
$
|
6.51
|
|
|
|
10/03/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,708
|
|
|
|
|
|
7,292
|
|
|
|
|
$
|
5.25
|
|
|
|
10/01/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,291
|
|
|
|
|
|
27,709
|
|
|
|
|
$
|
5.55
|
|
|
|
10/07/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,853
|
|
|
|
|
|
16,147
|
|
|
|
|
$
|
16.25
|
|
|
|
10/06/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
25,000
|
|
|
|
|
$
|
15.41
|
|
|
|
10/05/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
$297,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
$297,500
|
|
|
|
Scott A. Anderson,
|
|
|
|
80,000
|
|
|
|
|
|
-
|
|
|
|
|
$
|
5.67
|
|
|
|
11/07/2017
|
|
|
|
|
|
|
|
|
|
Senior Vice President and
|
|
|
|
58,083
|
|
|
|
|
|
9,917
|
|
|
|
|
$
|
5.25
|
|
|
|
10/01/2018
|
|
|
|
|
|
|
|
|
|
General Manager, Mixed-
|
|
|
|
54,375
|
|
|
|
|
|
35,625
|
|
|
|
|
$
|
5.55
|
|
|
|
10/07/2019
|
|
|
|
|
|
|
|
|
|
Signal Audio Division
|
|
|
|
12,395
|
|
|
|
|
|
22,605
|
|
|
|
|
$
|
16.25
|
|
|
|
10/06/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
35,000
|
|
|
|
|
$
|
15.41
|
|
|
|
10/05/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
$416,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
$416,500
|
|
|
|
Gregory S. Thomas,
|
|
|
|
80,000
|
|
|
|
|
|
-
|
|
|
|
|
$
|
8.06
|
|
|
|
03/01/2016
|
|
|
|
|
|
|
|
|
|
Vice
President,
|
|
|
|
75,000
|
|
|
|
|
|
-
|
|
|
|
|
$
|
6.51
|
|
|
|
10/03/2017
|
|
|
|
|
|
|
|
|
|
General Counsel and
|
|
|
|
19,835
|
|
|
|
|
|
9,917
|
|
|
|
|
$
|
5.25
|
|
|
|
10/01/2018
|
|
|
|
|
|
|
|
|
|
Corporate Secretary
|
|
|
|
41,854
|
|
|
|
|
|
48,146
|
|
|
|
|
$
|
5.55
|
|
|
|
10/07/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,333
|
|
|
|
|
|
20,667
|
|
|
|
|
$
|
16.25
|
|
|
|
10/06/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
30,000
|
|
|
|
|
$
|
15.41
|
|
|
|
10/05/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,000
|
|
|
$380,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$357,000
|
|
|
|
Thomas Stein,
|
|
|
|
105
|
|
|
|
|
|
-
|
|
|
|
|
$
|
6.56
|
|
|
|
08/02/2016
|
|
|
|
|
|
|
|
|
|
Vice
President and
|
|
|
|
4,688
|
|
|
|
|
|
-
|
|
|
|
|
$
|
6.51
|
|
|
|
10/03/2017
|
|
|
|
|
|
|
|
|
|
General Manager,
|
|
|
|
2,083
|
|
|
|
|
|
313
|
|
|
|
|
$
|
6.63
|
|
|
|
06/04/2018
|
|
|
|
|
|
|
|
|
|
EXL
Division
|
|
|
|
50,757
|
|
|
|
|
|
10,938
|
|
|
|
|
$
|
5.25
|
|
|
|
10/01/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42,290
|
|
|
|
|
|
27,710
|
|
|
|
|
$
|
5.55
|
|
|
|
10/07/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,916
|
|
|
|
|
|
18,084
|
|
|
|
|
$
|
16.25
|
|
|
|
10/06/2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
30,000
|
|
|
|
|
$
|
15.41
|
|
|
|
10/05/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
$357,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,000
|
|
|
$333,200
|
|
|
38
Fiscal Year 2012 Outstanding Equity
Awards at Fiscal Year-End Table (continued from previous page)
(1)
|
|
Unless
otherwise noted within this table, all stock options vest over four years,
with one-year cliff vesting for 25% of the options on the first
anniversary of the grant date, and 1/36 of the remaining options vesting
on a monthly basis over the following three years.
|
|
(2)
|
|
Stock
options granted on June 23, 2003 to Mr. Case vested over four years, with
cliff vesting for 20% of the options on the six-month anniversary of the
grant date, cliff vesting for 20% of the options on the 12-month
anniversary of the grant date, and 1/36 of the remaining options vesting
on a monthly basis over the following three years.
|
|
(3)
|
|
All RSU
awards vest for 100% of the shares underlying the award on the third
anniversary of the grant date.
|
|
(4)
|
|
The market
value of unvested RSUs awards reported in this column (h) is calculated by
multiplying the number of units reported in column (g) by the closing
market price of the Companys common stock on March 30, 2012 (the last
trading day of fiscal year 2012), which was
$23.80.
|
Fiscal Year 2012 Options Exercised and
Stock Vested Table
The following table
provides information on the value realized by each Named Executive Officer as a
result of options that were exercised during the Companys 2012 fiscal year. No
stock awards vested for our Named Executive Officers during fiscal year
2012.
|
Option
Awards
|
Stock
Awards
|
|
Number of Shares
|
Value Realized
|
Number of Shares
|
Value Realized
|
|
Acquired on
|
on
|
Acquired on
|
on
|
|
Exercise
|
Exercise
|
Vesting
|
Vesting
|
Name
|
(#)
|
($)
|
(#)
|
($)
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
Jason P. Rhode, President and
|
|
|
|
|
Chief Executive Officer
|
10,000
|
$66,500
|
|
|
(1)
|
|
The value realized on
the exercise of stock options was computed by determining the difference
between the market price of the underlying securities at exercise and the
exercise price of the options for each share
exercised.
|
Pension Benefits and Nonqualified
Deferred Compensation
The Company does not
sponsor or maintain either a defined benefit pension plan or a nonqualified
deferred compensation plan for the benefit of its executive officers.
Potential Payments upon Termination or
Change of Control.
The Company does not
maintain individual employment, severance, or change of control agreements with
our Named Executive Officers; however, on July 26, 2007, our Compensation
Committee approved and adopted an Executive Severance and Change of Control Plan
(the 2007 Severance Plan) providing for certain payments and benefits to
individuals employed by the Company and its subsidiaries at the level of Chief
Executive Officer and Vice President or above and reporting directly to the
Chief Executive Officer (Eligible Executives) in the event that the employment
of an executive is involuntarily terminated other than for cause or whose
employment terminates following a change of control of the Company. The Plan
became effective on October 1, 2007. Each of our Named Executive Officers would
be considered Eligible Executives under the 2007 Severance Plan.
The Company maintains the 2007 Severance
Plan because we believe it helps to ensure that we are able to attract and
retain top talent. Further, we believe that our the 2007 Severance Plan provides
a level of stability for our executives during volatile business conditions that
have historically existed so that they remain focused on their responsibilities
and the long-term interests of the Company during such times.
39
The 2007 Severance Plan provides that, in
the event of an Eligible Executives involuntary termination of employment other
than for cause, an Eligible Executive will be eligible to receive: (i) a
continuation of base salary for a period of up to six (6) months (up to twelve
(12) months in the case of the Companys Chief Executive Officer) following
termination, and (ii) payment in full of a reasonable estimate of COBRA premiums
for 3 months (collectively, the Termination Payment).
The 2007 Severance Plan further provides
that, if an Eligible Executives employment is terminated either by the Company
without cause or by the Eligible Executive for good reason within twelve
(12) months following a change in control, the Eligible Executive will be
eligible to receive a Change in Control Termination Payment, which is
comprised of: (i) a lump sum payment equal to twelve (12) months base salary,
(ii) acceleration in full of any unvested stock options or any other securities
or similar incentives that have been granted or issued to the Eligible Executive
as of the termination date, and (iii) payment in full of a reasonable estimate
of COBRA premiums for twelve (12) months. An Eligible Executive has until the
later of six months from the termination date or the original expiration date of
the award to exercise any vested options.
In the event of an Eligible Executives
death or disability, the Eligible Executive or his estate, as applicable will
receive the Termination Payment described above. If the death or disability has
occurred within twelve (12) months following a change in control, the Eligible
Executive or his estate, as applicable, will receive the Change in Control
Termination Payment described above.
For purposes of the 2007 Severance Plan,
the term cause means (i) gross negligence or willful misconduct in the
performance of an executive officers duties; (ii) a material and willful
violation of any federal or state law that if made public would injure the
business or reputation of the Company; (iii) a refusal or willful failure to
comply with any specific lawful direction or order of the Company or the
material policies and procedures of the Company including but not limited to the
Companys Code of Conduct and the Companys Insider Trading Policy as well as
any obligations concerning proprietary rights and confidential information of
the Company; (iv) a conviction (including a plea of
nolo contendere
)
of a felony, or of a
misdemeanor that would have a material adverse effect on the Companys goodwill
if the executive officer were to continue to be retained as an employee of the
Company; or (v) a substantial and continuing willful refusal to perform duties
ordinarily performed by an employee in the same position and having similar
duties as the executive officer. The term good reason means: (i) without the
executive officers express written consent, a material reduction of the
executive officers duties, authority, or responsibilities relative to the
executives duties, authority, or responsibilities as in effect immediately
prior to such reduction; (ii) a material reduction by the Company in the base
salary of an executive officer as in effect immediately prior to such reduction;
or (iii) the relocation of an executive officers principal work location to a
facility or a location more than fifty (50) miles from executive officers then
present principal work location. Good reason shall not exist unless the
executive officer provides written notice of the circumstances alleged to give
rise to good reason within thirty (30) days of their occurrence and the Company
(or our successor) fails to cure such circumstances within thirty (30) days. A
disability is generally defined in the 2007 Severance Plan as the executives
mental or physical disability, illness or injury that renders the executive
unable to perform any one or more of the essential duties of his position for a
period of ninety (90) days or more in any one year period.
For purposes of the 2007 Severance Plan,
the term change of control means the occurrence of one or more of the
following with respect to the Company: (i) the acquisition by any person (or
related group of persons), whether by tender or exchange offer made directly to
the Companys stockholders, open market purchases or any other transaction or
series of transactions, of stock of the Company that, together with stock of the
Company held by such person or group, constitutes more than fifty percent (50%)
of the total fair market value or total voting power of the then outstanding
stock of the Company entitled to vote generally in the election of the members
of the Companys Board of Directors; (ii) a merger or consolidation in which the
Company is not the surviving entity, except for a transaction in which both (A)
securities representing more than fifty percent (50%) of the total combined
voting power of the surviving entity are beneficially owned (within the meaning
of Rule 13d-3 promulgated
40
under the Securities Exchange Act of
1934), directly or indirectly, immediately after such merger or consolidation by
persons who beneficially owned common stock immediately prior to such merger or
consolidation, and (B) the members of the Board of Directors immediately prior
to the transaction (the Existing Board) constitute a majority of the Board of
Directors immediately after such merger or consolidation; (iii) any reverse
merger in which the Company is the surviving entity but in which either (A)
persons who beneficially owned, directly or indirectly, Common Stock immediately
prior to such reverse merger do not retain immediately after such reverse merger
direct or indirect beneficial ownership of securities representing more than
fifty percent (50%) of the total combined voting power of the Companys
outstanding securities or (B) the members of the existing Board do not
constitute a majority of the Board of Directors immediately after such reverse
merger; or (iv) the sale, transfer or other disposition of all or substantially
all of the assets of the Company (other than a sale, transfer or other
disposition to one or more subsidiaries of the Company).
The 2007 Severance Plan may not be amended
or terminated without the consent of any Eligible Executive during the one year
prior to or following the occurrence of a change in control, if such amendment
would be adverse to the interest of such Eligible Executive. If any payment or
benefit under the 2007 Severance Plan would be a parachute payment (within the
meaning of Section 280G of the Internal Revenue Code) and would therefore result
in the imposition of an excise tax, an Eligible Executives payments and
benefits will not exceed the amount that produces the greatest after-tax benefit
to the executive.
To receive payments and benefits under the
2007 Severance Plan, an Eligible Executive must execute a release of all claims
against the Company. If the Eligible Executive is considered a specified
employee under Section 409A of the Internal Revenue Code at the time of the
executives termination of employment, any amounts payable under the 2007
Severance Plan will be delayed for a period of six (6) months if it is
determined that such a delay is necessary in order to prevent the payment from
imposing exercise taxes on the executive.
In addition, a participant in the
Incentive Plan, as described further in the Compensation Discussion and Analysis
of this proxy statement, may also receive payments upon termination of
employment or a change of control. Pursuant to the Incentive Plan, a
participant, including each of our Named Executive Officers, must be
continuously employed through the last day of the applicable plan cycle and
through the date that cash bonuses under the Incentive Plan for such plan cycle
are actually paid. However, participants whose employment terminates under
certain circumstances (such as without cause or due to death or disability)
during a plan cycle will be eligible to receive a pro rata cash bonus payment
based on the number of days the participant was employed during that plan cycle
and our actual performance during the plan cycle. The pro rata bonus amount will
be paid to the terminated participant on or before the 15th day of the third
month after the later of (i) the last day of the calendar year in which the
termination occurred or (ii) the last day of our taxable year in which the
termination occurred. In addition, if a change of control occurs and our
successor does not assume the Incentive Plan, each participant will receive a
pro rata cash bonus payment based on the number of calendar days completed in
the current plan cycle multiplied by an incentive plan pay-out percentage of 100
percent. Any such payment will be made in a lump sum in cash within ten (10)
days of the change of control.
For purposes of the Incentive Plan, the
term cause means (i) gross negligence or willful misconduct in the performance
of a participants duties to us after one written warning detailing the concerns
and offering the participant opportunities to cure, (ii) material and willful
violation of any federal or state law, (iii) commission of any act of fraud with
respect to us, (iv) conviction of a felony or any crime causing material harm to
our standing and reputation, or (v) intentional and improper disclosure of our
confidential or proprietary information. The term disability in the Incentive
Plan means total and permanent disability as defined in accordance with our long
term disability plan.
For purposes of the Incentive Plan, the
term change in control means (i) the sale, lease, conveyance or other
disposition of all or substantially all of our assets to any person, entity or
group of persons acting in concert, (ii) any person (as defined in Section 13(d)
and 14(d) of the Securities Exchange Act of 1934) becoming the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act
41
of 1934), directly or indirectly, of our
securities representing 50% or more of the total voting power represented by our
then outstanding voting securities, or (iii) a merger or consolidation of us
with any other corporation, other than a merger or consolidation that would
result in our voting securities outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or party outstanding immediately after such
merger or consolidation).
The discussion and tables below present an
estimate of the amount of compensation and/or other benefits payable to our
Named Executive Officers in the event of their termination of employment and/or
in the event of a change in control of the Company. The amounts disclosed assume
that such termination and/or the occurrence of such change of control was
effective as of March 31, 2012. The amounts below have been calculated using
numerous other assumptions that we believe to be reasonable and include amounts
earned through March 31, 2012, and estimates to the amounts that would be paid
to our Named Executive Officers upon their respective terminations of employment
and/or upon the occurrence of a change of control. The actual amounts to be paid
out are dependent on various factors, which may or may not exist at the time a
Named Executive Officers employment is actually terminated and/or a change of
control actually occurs. Therefore, such amounts and disclosures should be
considered forward-looking statements.
The estimated amount payable to each of
our Named Executive Officers pursuant to the 2007 Severance Plan and the
Incentive Plan in the event of an involuntary termination of employment other
than for cause, or due to the Named Executive Officers death or disability, is
set forth in the table below:
Name
|
Salary
Continuation
(1)
|
Health Benefits
(up to 3
months)
(2)
|
Cash Bonus
Under
Incentive Plan
(3)
|
Total
|
Jason P. Rhode, President
|
|
$
|
475,000
|
|
|
$
|
2,645
|
|
|
$
|
556,426
|
|
|
$
|
1,034,071
|
|
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thurman K. Case, Chief
|
|
$
|
135,057
|
|
|
$
|
2,579
|
|
|
$
|
158,208
|
|
|
$
|
295,843
|
|
Financial Officer,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vice President of Finance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Anderson, Senior Vice
|
|
$
|
141,625
|
|
|
$
|
2,645
|
|
|
$
|
165,903
|
|
|
$
|
310,173
|
|
President and General Manager,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mixed-Signal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Audio Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Thomas, Vice
|
|
$
|
140,250
|
|
|
$
|
3,863
|
|
|
$
|
164,292
|
|
|
$
|
308,405
|
|
President, General Counsel and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Stein, Vice President
|
|
$
|
121,275
|
|
|
$
|
3,863
|
|
|
$
|
142,064
|
|
|
$
|
267,202
|
|
and General Manager, EXL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The salary
continuation payment for the Chief Executive Officer represents twelve
months of his base salary as in effect on March 31, 2012; for each of the
other Named Executive Officers, the amount is based on six months of base
salary as in effect on March 31, 2012.
|
|
|
|
(2)
|
|
The valuation of the
healthcare benefits has been computed based on an estimate of the COBRA
payments required for the three-month period payable by the
Company.
|
|
|
|
(3)
|
|
The cash bonus under
the incentive plan has been computed based on the amount that was actually
paid under the Companys Incentive Plan for the period ending on March 31,
2012.
|
42
The estimated amount payable to each of
our Named Executive Officers pursuant to the 2007 Severance Plan in the event of
termination of employment following a change of control of the Company, other
than for cause, is set forth in the table below. The possible application of any
cutback required under the 2007 Severance Plan due to the operation of Section
280G and 4999 of the Internal Revenue Code has not been included in these
calculations:
Name
|
Salary
Continuation
|
Accelerated
Vesting
of Unvested
Equity(1)
|
Health Benefits
(up to 12
months)(2)
|
Cash Bonus
Under
Incentive
Plan
|
Total
|
Jason P. Rhode,
|
|
|
$
|
475,000
|
|
|
|
|
$
|
7,157,086
|
|
|
|
|
$
|
10,582
|
|
|
|
|
$
|
237,500
|
|
|
|
|
$
|
7,880,167
|
|
|
President and Chief
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thurman K. Case, Chief
|
|
|
$
|
270,113
|
|
|
|
|
$
|
1,567,616
|
|
|
|
|
$
|
10,315
|
|
|
|
|
$
|
67,528
|
|
|
|
|
$
|
1,915,572
|
|
|
Financial Officer, Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President of Finance and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scott A. Anderson,
|
|
|
$
|
283,250
|
|
|
|
|
$
|
2,131,434
|
|
|
|
|
$
|
10,582
|
|
|
|
|
$
|
70,813
|
|
|
|
|
$
|
2,496,078
|
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and General Manager,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mixed-Signal Audio
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory S. Thomas,
|
|
|
$
|
280,500
|
|
|
|
|
$
|
2,208,161
|
|
|
|
|
$
|
15,453
|
|
|
|
|
$
|
70,125
|
|
|
|
|
$
|
2,574,238
|
|
|
Vice President, General
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Counsel and Corporate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas Stein, Vice
|
|
|
$
|
242,550
|
|
|
|
|
$
|
1,792,416
|
|
|
|
|
$
|
15,453
|
|
|
|
|
$
|
60,638
|
|
|
|
|
$
|
2,111,056
|
|
|
President and General
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manager, EXL Division
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
The valuation of
accelerated vesting of unvested equity has been computed based on: (1) the
estimated value that would have been realized based on the difference
between the exercise price of the options that were subject to accelerated
vesting and the closing market price of our common stock on March 30,
2012, which was $23.80, and (2) the value of RSUs subject to accelerated
vesting based on that same closing market price.
|
|
|
|
(2)
|
|
The valuation of
healthcare benefits is based on an estimate of the COBRA payments required
for the 12-month period payable by the Company.
|
43
EQUITY COMPENSATION PLAN
INFORMATION
The following table provides information
about the Companys common stock that may be issued upon the exercise of
options, warrants, and rights under all of the Companys existing equity
compensation plans as of March 31, 2012, including the 1990 Directors Stock
Option Plan, the 1996 Stock Plan, the 2002 Stock Option Plan, the 2006 Stock
Incentive Plan, the Stream Machine Company 1996 Stock Plan, and the Stream
Machine Company non-statutory stock option grants made outside of a plan (in
thousands, except per share amounts):
|
|
(A)
Number of
Securities to be
issued upon
exercise
of outstanding
options
|
|
(B)
Weighted-average
exercise price of
outstanding
options
|
|
(C)
Number of securities
remaining available
for
future issuance under equity
compensation plans
(except
securities reflected
in column (A))
|
Equity compensation
plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
approved by security
holders
(1)
|
|
|
|
|
7,101
|
(2)
|
|
|
|
|
|
|
|
|
|
$
|
8.43
|
(3)
|
|
|
|
|
|
|
|
|
|
|
6,257
|
(4)
|
|
|
|
|
Equity compensation plans not
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
approved by security
holders
(5)
|
|
|
|
|
419
|
|
|
|
|
|
|
|
|
|
|
$
|
5.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
7,520
|
|
|
|
|
|
|
|
|
|
|
$
|
6.87
|
|
|
|
|
|
|
|
|
|
|
|
6,257
|
|
|
|
|
|
(1)
|
|
The Companys stockholders have
approved the Companys 1990 Directors Stock Option Plan, the 1996 Stock
Plan, and the 2006 Stock Incentive Plan. The following plans were assumed
by the Company at the time of acquisition, and the Companys stockholder
approval was not required for these plans or their respective outstanding
grants, as they were approved by the acquired companies stockholders: the
Stream Machine Company 1996 Stock Plan and the Stream Machine Company
non-statutory stock option grants made outside of a plan.
|
|
|
|
(2)
|
|
Includes 1,616,350 shares granted
under the 2006 Stock Incentive Plan that are issuable upon the vesting of
the outstanding RSUs.
|
|
(3)
|
|
The weighted average exercise
price does not take into account the shares issuable upon the vesting of
the outstanding RSUs, which have no exercise price.
|
|
(4)
|
|
Our Board discontinued the grant
of future awards under the option plans that we assumed in connection with
our past acquisitions; as a result, the shares authorized for grant under
these plans have not been included in the total shares remaining available
for future issuance. As of March 31, 2012, the Company was granting equity
awards only under the 2006 Stock Incentive Plan. Approximately 871,670
shares have been deducted from the shares available for future issuance
under the 2006 Stock Incentive Plan due to a 1.5 full value award
multiplier applied to restricted stock awards and RSUs granted pursuant to
the 2006 Stock Incentive Plan.
|
|
|
|
(5)
|
|
In August 2002, our Board of
Directors approved the 2002 Stock Option Plan, which permits awards of
fair market value stock options to non-executive employees. As of July
2006, when our stockholders approved the adoption of the 2006 Stock
Incentive Plan, we canceled all remaining options available for grant
under the 2002 Stock Option Plan.
|
44
REPORT OF THE AUDIT COMMITTEE
OF
THE BOARD OF DIRECTORS
The Audit Committee is comprised solely of
independent directors, as defined by the applicable Nasdaq listing standards and
rules of the SEC, and it operates under a written charter adopted by the Board,
which is available under the Corporate Governance section of our Investors
page on our Web site at
investor.cirrus.com
. The
composition of the Audit Committee, the attributes of its members, and the
responsibilities of the Audit Committee, as reflected in its charter, are
intended to comply with applicable requirements for corporate audit committees.
The Sarbanes-Oxley Act added provisions to federal law to strengthen the
authority of, and increase the responsibility of, corporate audit committees. In
2004, Nasdaq also adopted, and the SEC approved, additional rules concerning
audit committee structure, membership, authority, and responsibility. The Audit
Committee amended and restated its charter in response to the Sarbanes-Oxley Act
and the Nasdaq listing standards, and continues to review and assess the
adequacy of its charter on an annual basis, and will revise it to comply with
other new rules and regulations as they are adopted.
As described more fully in its charter,
the primary focus of the Audit Committee is to assist the Board in its general
oversight of the Companys financial reporting, internal control, and audit
functions. Management is responsible for the preparation, presentation, and
integrity of the Companys financial statements; accounting and financial
reporting principles; internal controls; and procedures designed to assure
compliance with accounting standards, applicable laws and regulations. The
Companys independent registered public accounting firm, Ernst & Young, is
responsible for performing an independent audit of the consolidated financial
statements in accordance with the standards of the Public Company Accounting
Oversight Board (PCAOB).
In accordance with the Sarbanes-Oxley Act
and the Nasdaq listing standards, the Audit Committee has ultimate authority and
responsibility to select, compensate, evaluate and, when appropriate, replace
the Companys independent registered public accounting firm.
The Audit Committee serves an oversight
role for the Board in which it provides advice, counsel, and direction to
management and the auditors on the basis of the information it receives,
discussions with management and the auditors, and the experience of the Audit
Committees members in business, financial and accounting matters. The Audit
Committee members are not professional auditors, and their functions are not
intended to duplicate or to certify the activities of management and the
independent auditors, nor can the Audit Committee certify that the independent
auditors are independent under applicable rules.
In this context, the Audit Committee has
met and held discussions with management and Ernst & Young. Management
represented to the Audit Committee that the audited financial statements of the
Company contained in the Companys Annual Report to Stockholders for the year
ended March 31, 2012, were prepared in accordance with U.S. generally accepted
accounting principles, and the Audit Committee has reviewed and discussed the
consolidated financial statements with management and the independent auditors.
The Audit Committee discussed with Ernst & Young matters required to be
discussed by Statement on Auditing Standards No. 61, as amended (AICPA,
Professional Standards, Vol. 1. AU section 380), as adopted by the PCAOB in Rule
3200T.
The Audit Committee has received and
reviewed the written disclosures and the letter from Ernst & Young required
by PCAOB Rule 3526 regarding the independent accountants communications with
the Audit Committee concerning independence, and the Audit Committee discussed
with Ernst & Young the firms independence. In addition, the Audit Committee
has considered whether the provision of non-audit services is compatible with
maintaining Ernst & Youngs independence.
45
Based upon the Audit Committees
discussions with management and the independent auditors, and the Audit
Committees review of the representations of management, and the report of the
independent auditors to the Audit Committee, the Audit Committee recommended
that the Board include the audited consolidated financial statements in the
Companys Annual Report on Form 10-K for the year ended March 31, 2012, as filed
with the SEC.
Submitted by the Audit Committee of the
Board:
Robert H. Smith, Chairman
John C.
Carter
Susan Wang
AUDIT AND NON-AUDIT FEES AND
SERVICES
Audit and Related
Fees
The following table shows the fees
paid or accrued by the Company for the audit and other services provided by
Ernst & Young for fiscal years 2012 and 2011. All fees were pre-approved by
the Companys Audit Committee.
|
|
2012
|
|
2011
|
Audit Fees
|
|
$
|
469,890
|
|
$
|
391,420
|
Audit-Related Fees
|
|
$
|
0
|
|
$
|
0
|
Tax Fees
|
|
$
|
10,166
|
|
$
|
8,987
|
All Other Fees
|
|
$
|
0
|
|
$
|
0
|
|
TOTAL
|
|
$
|
480,056
|
|
$
|
400,407
|
Audit Fees.
Audit services consisted of the audit of the Companys consolidated
financial statements and of managements assessment of the operating
effectiveness of internal control over financial reporting included in the
Companys annual report on Form 10-K, the review of the Companys financial
statements included in its quarterly reports on Form 10-Q, and statutory audits
required internationally.
Audit-Related Fees.
Audit-related services generally include fees for accounting
consultations and registration statements filed with the SEC.
Tax Fees.
Tax services include tax compliance services, technical tax advice,
administrative fees, as well as certain expatriate services.
All Other Fees.
There were no other fees during fiscal year 2012 or
2011.
Pre-Approval Policies and
Procedures
The Audit Committee has adopted
a policy for the pre-approval of audit, audit-related, and non-audit services
provided by the Companys independent registered public accounting
firm.
For audit and audit-related services, the
independent auditor will provide the Audit Committee with an engagement letter
and estimated budget for formal acceptance and approval. A list of non-audit
services and estimated budget for such services for the upcoming fiscal year
shall be submitted to the Audit Committee by Company management for
pre-approval. To ensure prompt handling of unexpected non-budgeted non-audit
related services, the Audit Committee has delegated to its Chair the authority
to amend or modify the list of approved permissible non-audit services and fees
if the cost of the service is less than $100,000. Any such unexpected services
for which the cost is more than $100,000 shall be approved by the Audit
Committee. If the Chair takes any action, the Chair will report such action to
the Audit Committee at the next Audit Committee meeting.
46
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Indemnification and
Insurance
. Our Bylaws require us to indemnify
our directors and executive officers to the fullest extent permitted by Delaware
law. We have entered into indemnification agreements with all of our directors
and executive officers and have purchased directors and officers liability
insurance.
Procedures for Review, Approval, and
Ratification of Related Person Transactions.
The Board recognizes that Related Person Transactions (as defined below)
can present conflicts of interest and questions as to whether transactions are
in the best interests of the Company. Accordingly, the Board has documented and
implemented certain procedures for the review, approval, or ratification of
Related Person Transactions. Pursuant to these procedures, the Audit Committee
must review, approve, or ratify any transactions with Related Persons (as
defined below). When it is impractical to wait for a scheduled Audit Committee
meeting, a proposed related-person transaction may be submitted to the Audit
Committee Chair for approval and then subsequently reported to the Committee at
the next Committee meeting.
This procedure seeks to ensure that
Company decisions are based on the merits of the transaction and the interests
of the Company and its stockholders. It is the Companys preference to avoid
Related Person Transactions but when, in the course of business, transactions
with related parties are unavoidable, this procedure sets forth a methodology
for considering a proposed Related Person Transaction. The standard to be
applied when evaluating a proposed Related Person Transaction is whether such
transactions are at arms length and on terms comparable to those terms provided
to other unrelated entities in the marketplace.
For these purposes, a Related Person is
any person who is: (1) a director or Executive Officer of the Company, (2) a
nominee for director (if the information called for is being presented in a
proxy or information statement relating to the election of that nominee for
director), (3) an immediate family member of a director or Executive Officer of
the Company, (4) an immediate family member of a nominee for director (if the
information called for is being presented in a proxy or information statement
relating to the election of that nominee for director), (5) a Security holder of
5% or more of any class of the Companys Common Stock (or other Equity Security)
(if a transaction in which the person had a direct or indirect material interest
occurred or existed), or (6) an immediate family member of the Security holder
(if a transaction in which the person had a direct or indirect material interest
occurred or existed).
For these purposes, a Related Person
Transaction is any transaction, arrangement, or relationship (or any series of
similar transactions, arrangements or relationships) in which the Company
(including any of its subsidiaries) was, is, or will be a participant and in
which a Related Person had, has, or will have a direct interest. The Company has
not established a materiality limit for purposes of defining a Related Person
Transaction.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange
Act of 1934 requires the Companys executive officers and directors and persons
who own more than 10% of a registered class of the Companys equity securities
to file an initial report of ownership on Form 3 and changes in ownership on
Form 4 or 5 with the SEC. Executive officers, directors, and greater than ten
percent stockholders are also required by the federal securities rules to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on a review of copies of the
Forms 3, 4 and 5 received by the Company or representations from certain
reporting persons, the Company believes that, during the fiscal year 2012, all
Section 16(a) filing requirements applicable to its officers, directors and 10%
stockholders were met in a timely manner.
47
HOUSEHOLDING
The Securities and Exchange Commission has
adopted rules that permit companies and intermediaries (such as brokers) to
implement a delivery procedure called householding. Under this procedure,
multiple stockholders who reside at the same address may receive a single copy
of our annual report and proxy materials, including the Notice of Internet
Availability of Proxy materials, unless the affected stockholder has provided
contrary instructions. This procedure reduces printing costs and postage
fees.
This year, we expect that a number of
brokers with account holders who beneficially own our common stock will be
householding our annual report and proxy materials, including the Notice of
Internet Availability of Proxy Materials. A single Notice of Internet
Availability of Proxy Materials and, if applicable, a single set of annual
report and other proxy materials will be delivered to multiple stockholders
sharing an address unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your broker that it
will be householding communications to your address, householding will
continue until you are notified otherwise or until you revoke your consent.
Stockholders may revoke their consent at any time by contacting Broadridge ICS,
either by calling toll-free (800) 542-1061, or by writing to Broadridge ICS,
Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
We will promptly deliver to you a separate
copy of our annual report and proxy materials for the 2012 Annual Meeting and
for future meetings if you so request. Please also contact Broadridge ICS if you
wish to request delivery of a single copy of materials if you currently receive
multiple copies.
COMMUNICATING WITH US
Communicating with the
Board
If you would like to contact the
Board, including a committee of the Board, you may write to the following
address:
Board of Directors
c/o Corporate Secretary
Cirrus Logic, Inc.
800 West
6
th
Street
Austin, Texas 78701
The Corporate Secretary or chair of the
Governance and Nominating Committee, as appropriate, reviews all correspondence
addressed to the Board and regularly forwards to the Board all such
correspondence that, in the opinion of the Corporate Secretary or chair of the
Governance and Nominating Committee, deals with the functions of the Board or
the Board Committees. Directors may at any time review a log of all
correspondence received by the Company that is addressed to the Board or
individual Board members. Concerns relating to accounting, internal controls, or
auditing issues will be immediately brought to the attention of the chair of the
Audit Committee.
Other Communications
If you would like to receive information
about the Company, you may use one of these convenient methods:
1.
|
|
To have information
such as our latest Annual Report on Form 10-K or Form 10-Q mailed to you,
please call our Investor Relations Department at (512)
851-4125.
|
|
|
|
2.
|
|
To view our home page
on the Internet, use our Web site address:
www.cirrus.com
. Our home page
provides you access to product, marketing and financial data, job
listings, and an on-line version of this proxy statement, our Annual
Report on Form 10-K, and other filings with the
SEC.
|
48
If you would like to write to us, please
send your correspondence to the following address:
Cirrus Logic, Inc.
Attention:
Investor Relations
800 West
6
th
Street
Austin, TX 78701
If you would like to inquire about stock
transfer requirements, lost certificates, and change of stockholder address,
please contact our transfer agent, Computershare Investor Services, at (877)
373-6374 (toll free) or (781) 575-2879 or by email to
shareholder@computershare.com. You may also visit their Web site at
www.computershare.com
for step-by-step transfer instructions.
If you would like to report any
inappropriate, illegal, or criminal conduct by any employee, agent, or
representative of the Company; any violation of the Companys Code of Conduct;
or any complaint or concern regarding accounting, internal accounting controls
or auditing matters, you may file an anonymous and confidential report by
contacting EthicsPoint, an independent reporting system provider, by telephone
at 1-866-384-4277 (1-866-ETHICSP), or through its website at
www.ethicspoint.com
.
49
ANNUAL REPORT
On May 30, 2012, we filed with the SEC an
Annual Report on Form 10-K for the fiscal year ended March 31, 2012. The Annual
Report on Form 10-K has been provided concurrently with this proxy Statement to
all stockholders entitled to notice of, and to vote at, the Annual
Meeting.
Stockholders may also obtain a copy of the
Annual Report on Form 10-K and any of our other SEC reports, free of charge, (1)
from the SECs website at
www.sec.gov
, (2) from our website at
investor.cirrus.com
, or (3) by writing to Investor Relations, Cirrus
Logic, Inc., 800 West 6
th
Street, Austin, TX 78701. The Annual Report
on Form 10-K is not incorporated into this proxy statement and is not considered
proxy solicitation material.
BY ORDER OF THE BOARD OF
DIRECTORS
|
|
Jason P. Rhode
President and Chief Executive Officer
Austin,
Texas
May 30, 2012
|
50
ANNEX
INCENTIVE PLAN
RECONCILIATION
|
|
6 Months Ended
|
|
|
Mar. 31,
2012
|
|
Sep. 24
2012
|
|
|
2H12
|
|
1H12
|
Net Revenue
|
|
$
|
232,999
|
|
|
$
|
193,845
|
|
Cost of Sales
|
|
$
|
104,622
|
|
|
$
|
91,779
|
|
Gross Profit
|
|
$
|
128,377
|
|
|
$
|
102,066
|
|
|
Total Operating Expenses
|
|
$
|
81,090
|
|
|
$
|
69,815
|
|
|
|
|
|
|
|
|
|
|
Total Operating Income
|
|
$
|
47,287
|
|
|
$
|
32,251
|
|
Operating Income Percentage
|
|
|
20
|
%
|
|
|
17
|
%
|
|
Operating Income
Reconciliation
|
|
|
|
|
|
|
|
|
GAAP Operating
Income
|
|
$
|
47,287
|
|
|
$
|
32,251
|
|
Amortization of
acquisition intangibles
|
|
$
|
706
|
|
|
$
|
706
|
|
Stock compensation expense -
COGS
|
|
$
|
205
|
|
|
$
|
192
|
|
Stock compensation
expense - Opex
|
|
$
|
6,015
|
|
|
$
|
5,766
|
|
Other adjustments **
|
|
$
|
263
|
|
|
$
|
622
|
|
Bonus VCP, Executive,
Leadership Plan Exclusion - COGS
|
|
$
|
406
|
|
|
$
|
136
|
|
Bonus VCP, Executive, Leadership Plan
Exclusion - Opex
|
|
$
|
6,087
|
|
|
$
|
2,639
|
|
Non GAAP Operating Income Used for Bonus
Plans
|
|
$
|
60,969
|
|
|
$
|
42,311
|
|
Non GAAP Operating Income Percentage
Used for Bonus Plans
|
|
|
26
|
%
|
|
|
22
|
%
|
51
Exhibit A
Cirrus Logic, Inc.
Charter of the Compensation
Committee
of the Board of Directors
The Board of Directors (the Board) of
Cirrus Logic, Inc. (the Company) has constituted and established a
Compensation Committee (the Compensation Committee) with the authority,
responsibility and specific duties as described in this Compensation Committee
Charter (this Charter).
I. Purpose
The primary purpose of the Compensation
Committee is to (i) review and recommend to the Independent Directors of the
Board of Directors (as hereinafter defined) for approval the compensation of
directors, (ii) review and approve the compensation of the Companys Chief
Executive Officer and other executive officers who are subject to the reporting
requirements of Section 16 of the Securities Exchange Act of 1934 (Executive
Officers), (iii) review the Companys general compensation policies for other
employees on an annual basis, and (iv) produce an annual report on executive
compensation for public disclosure in the Companys proxy statement or otherwise
as required by applicable laws, rules, and regulations.
The purposes and provisions specified in
this Charter are meant to serve as guidelines, and the Compensation Committee is
delegated the authority to adopt additional procedures and standards as it deems
necessary from time to time to fulfill its responsibilities. Nothing herein is
intended to expand applicable standards of liability under state or federal law
for directors of a corporation.
II. Appointment
The members of the Compensation Committee
shall be designated by the Board consistent with the following
requirements:
-
The Compensation Committee shall consist of three
or more directors, as determined by
the
Board.
-
Each member of the Compensation Committee shall
satisfy the applicable independence
requirements of the Securities and Exchange Commission (the SEC) and
the Nasdaq Stock
Market
(Nasdaq).
Compensation Committee members shall be
designated annually by the Board. Members shall serve until the successors shall
be duly designated and qualified. Any member may be removed at any time, with or
without cause, by a majority of the Board then in office. Any vacancy in the
Compensation Committee occurring for any cause whatsoever may be filled by a
majority of the Board then in office.
The Compensation Committees chairperson
shall be designated by the Board, or if it does not do so, the Compensation
Committee members shall elect a chairperson by vote of a majority of the
Compensation Committee. A majority of the members of the Compensation Committee
shall constitute a quorum for the transaction of business and the act of a
majority of those present at any meeting at which there is a quorum shall be the
act of the Compensation Committee.
The Compensation Committee may form and
delegate authority to subcommittees when appropriate. For example, in the event
that not all of the members of the Compensation Committee are outside
directors for purposes of Section 162(m) of the Internal Revenue Code of 1986,
as amended, the Compensation Committee may authorize a subcommittee of not less
than two members who are
A-1
outside directors to review and approve
all elements of performance-based compensation that may require approval by a
committee of outside directors in order for such compensation to qualify for
deductibility under Section 162(m) and related regulations.
III. Duties and
Responsibilities
The Compensation Committee shall
have the power and authority of the Board to perform the following duties and to
fulfill the following responsibilities:
|
1.
|
|
Review and approve the
corporate performance goals and targets relevant to the Companys
Management and Key Individual Contributor Incentive Plan.
|
|
|
|
2.
|
|
Review and approve for
the Chief Executive and other Executive Officers of the Company the
following: (a) compensation policies; (b) annual base salary compensation;
(c) bonus or incentive plan(s), (d) perquisites; (e) employment
agreements, severance arrangements and change in control
agreements/provisions; and (f) any other special or supplemental benefits
or compensation applicable to the Chief Executive Officer and other
Executive Officers to ensure that such items are aligned with the
Companys objectives and stockholder interests. In reviewing and approving
the compensation for the Chief Executive Officer and other Executive
Officers, the Committee may consider any factors considered appropriate by
the Committee, including, but not limited to: (a) Company performance; (b)
individual performance; (c) external pay practices of competitors and
similarly situated companies; (d) the strategic importance of the
officers position, as well as internal pay equity and the officers time
in the position; and (e) the results of any recent stockholder advisory
vote on executive compensation (the say-on-pay vote).
|
|
|
|
3.
|
|
Review on an annual
basis the Companys general compensation policies and programs applicable
to non-executive employees of the Company.
|
|
|
|
4.
|
|
Review annually the
Companys bonus, incentive and other benefit plans. Review and recommend
for approval by the directors of the Board of Directors who satisfy the
independence requirements of the SEC and Nasdaq (the Independent
Directors) any new plans, and amendments and modifications to any
existing plan, that include executive officers as participants in the plan
and/or are subject to applicable stockholder approval
requirements.
|
|
|
|
5.
|
|
Administer the
Companys various equity plans, review and approve policies and procedures
for awarding grants under such plans, and review and approve option,
restricted stock, stock appreciation right and other equity-based grants
to employees, the Chief Executive Officer, and other Executive
Officers.
|
|
|
|
6.
|
|
Review the
compensation and benefits for the Companys non-employee directors, and
recommend for approval by the Independent Directors any changes in the
compensation and benefits.
|
|
|
|
7.
|
|
Establish rules and
regulations and perform all other administrative or management duties
required of the Board of Directors or the Compensation Committee by the
provisions of any compensation or benefit plan maintained by the
Company.
|
|
|
|
8.
|
|
Provide, over the
names of the members of the Committee, the required Compensation Committee
report for the Companys annual report or proxy statement for the annual
meeting of shareholders.
|
|
|
|
9.
|
|
Review and discuss
with the Companys management the Compensation Discussion and Analysis
required by Securities and Exchange Commission Regulation S-K, Item 402.
Based on such review and discussion, the Committee shall determine whether
to
|
A-2
|
|
|
recommend to the Board
of Directors of the Company that the Compensation Discussion and Analysis
be included in the Companys annual report or proxy statement for the
annual meeting of shareholders.
|
|
|
|
10.
|
|
Determine and
recommend to the Board of Directors of the Company a desired frequency for
say-on-pay votes to be proposed to stockholders at an annual meeting at
least once every six years and in accordance with applicable law, SEC
rules and NASDAQ listing requirements.
|
|
|
|
11.
|
|
Review and recommend
to the Board of Directors of the Company proposed say-on-pay resolutions
to be included in the Companys proxy statement for annual meetings of
shareholders.
|
|
|
|
12.
|
|
Perform any other
activities consistent with this Charter and applicable law as the
Compensation Committee or the Board of Directors may deem
appropriate.
|
IV. Meetings
The Compensation Committee shall meet at
least two times annually or more frequently as necessary. The chairperson of the
Compensation Committee will preside at each meeting of the Compensation
Committee and, in consultation with other members of the Compensation Committee,
shall determine the frequency and length of each meeting and the agenda of items
to be addressed at each meeting. The chairperson will ensure that the agenda for
each meeting is circulated in advance of the meeting. The meetings will be held
in accordance with applicable SEC and Nasdaq rules.
V. Reporting
The Compensation Committee will apprise
the Board of Directors regularly of significant developments in the course of
performing the above responsibilities and duties, including reviewing with the
Board of Directors any issues that arise with respect to the quality or
integrity of the Companys compliance with legal or regulatory
requirements.
VI. Compensation
Each member of the Compensation
Committee shall be entitled to compensation for their service on the Committee
and to reimbursement for associated reasonable out-of-pocket
expenses.
VII. Additional
Resources
To assist the Compensation Committee in
fulfilling its duties, management will provide the Compensation Committee with
information and recommendations as needed and requested. If appropriate, the
Committee may hire advisors in the field of executive compensation to assist
with its evaluation of director, CEO or senior executive compensation. The
Committee shall have the sole authority to retain and to terminate such
advisors, and to approve the advisors fees and other retention terms. Before
selecting an advisor, the Committee shall consider all applicable independence
standards for compensation committee advisors.
The Committee shall also have the
authority to obtain advice and assistance from internal or external legal,
accounting or other advisors. However, the Committee may not retain the
Companys auditors for any purpose without prior approval from the Companys
Audit Committee.
A-3
Exhibit B
Cirrus Logic, Inc.
Corporate Governance
Guidelines
I.
|
|
Director Qualifications
|
|
|
|
|
|
General
The Board of
Directors (the Board) of Cirrus Logic, Inc. (the Company) will have at
least two-thirds (2/3
rds
) of its directors who meet the
criteria for independence required by the applicable listing standards of
the Nasdaq Stock Market, Inc. (the NASDAQ), other applicable laws and
regulations, and the standards set forth in Exhibit A to these Guidelines
(the Independent Directors). The Nominating and Governance Committee
(the Governance Committee) will review, on an annual basis, the
requisite skills and characteristics of all Board members, taking into
consideration skills and experience in the context of the needs of the
Board. Nominees for directorship will be selected and considered by the
Governance Committee in accordance with its charter. An invitation to join
the Board should be extended on behalf of the Board by the Chair of the
Governance Committee and the Chair of the Board. The Chief Executive
Officer shall be the only member of the Board who is an executive officer
of the Company.
Size of
Board
Subject to the Companys
Certificate of Incorporation and By-Laws, the Board shall be limited to
seven or fewer members, except during certain periods, such as director
transitions and the integration of acquisitions.
Service on Other
Boards
Due to the commitment of
time required to adequately fulfill the responsibilities of Board
membership, no director may serve on more than five other public company
boards. Directors should advise the Chairman of the Board and the Chair of
the Governance Committee in advance of accepting an invitation to serve on
another company board.
Board Evaluation
Process
The Governance Committee
will oversee an annual self-assessment of the Boards performance as well
as the performance of each committee of the Board.
Annual Review for
Re-Election
The Governance
Committee will review each directors continuation on the Board every
year. This will allow each director the opportunity to conveniently
confirm his or her desire to continue as a member of the Board.
Directors Who Change Their
Present Job Responsibility
It is
not necessary that directors leave the Board when they retire or change
from the position they held when they joined the Board. A director should,
however, offer to resign to provide an opportunity for the Board, via the
Governance Committee, to review the continued appropriateness of Board
membership under the circumstances.
|
B-1
Retirement Policy
Board members will retire at the first
stockholders meeting in which directors will be elected following the
directors 75th birthday.
II.
|
|
Director Responsibilities
|
|
|
|
|
|
General
The basic responsibility of each
director is to exercise his or her business judgment to act in what he or
she reasonably believes to be in the best interest of the Company and its
stockholders. In discharging this obligation, directors should be entitled
to rely on the honesty and integrity of the Companys executive officers
and its outside advisors and auditors. The directors shall also be
entitled to have the Company purchase reasonable directors liability
insurance on their behalf, and to receive the benefits of indemnification
to the fullest extent permitted by law and the Companys Certificate of
Incorporation, By-Laws and any indemnification agreements.
Selection of Chairman of the
Board
The Board is free to select its
Chairman in the manner and upon the criteria that it deems best for the
Company at the time of selection, except that the Chief Executive Officer
shall not be eligible to be selected as Chairman of the Board. The
Chairman of the Board will:
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a)
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Seek input from all
directors as to the preparation of the agendas for Company board and
Committee meetings;
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b)
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Advise the Board as to
the quality, quantity, and timeliness of the flow of information from the
Companys management that is necessary for the Independent Directors to
effectively and responsibly perform their duties; and
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c)
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Assist the Companys
officers in assuring compliance with and implementation of all applicable
corporate and securities laws and be principally responsible for revisions
to the Companys governance guidelines for compliance and implement of
same.
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Lead Independent
Director
In the event that the Chairman of
the Board is not an Independent Director, the Independent Directors will
designate an Independent Director to be the Lead Independent Director.
The Lead Independent Director shall coordinate the activities of the other
Independent Directors and perform various other duties. Service of the
Lead Independent Director shall not exceed five (5) years.
Attendance at Board
Meetings
Directors are expected to attend
Board meetings and meetings of committees on which they serve, and to
spend the time needed and meet as frequently as necessary to properly
discharge their responsibilities. Information and data that are important
to the Boards understanding of the business to be conducted at a Board or
committee meeting generally should be distributed in writing to the
directors before the meeting, and directors should review these materials
in advance of the meeting. Sensitive subject matters may be discussed at
the meeting without written materials being distributed in advance or at
the meeting.
Attendance at Annual
Meeting
Directors are expected to attend the
Companys annual meeting absent extraordinary circumstances. To facilitate
attendance and reduce travel costs, the annual meeting should be scheduled
to occur around the same time as a periodic meeting of the
Board.
|
B-2
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Content of Board
Meetings
The Chairman of the Board will
establish the agenda for each Board meeting. Each Board member is free to
suggest the inclusion of items on the agenda. Each Board member is free to
raise at any Board meeting subjects that are not on the agenda for that
meeting. The Board will review the Companys long-term strategic plans and
the principal issues that the Company will face in the future during at
least one Board meeting each year.
Executive Session
The Companys independent directors
who satisfy the independence requirements of the NASD will usually meet in
executive session during each regularly scheduled Board
meeting.
Potential Conflicts of
Interest
Board members are required to
accurately and completely disclose to the Board (or any applicable
committee) all financial interest or personal interest that he or she has
in any contract or transaction that is being considered by the Board (or
any committee) for approval. Disclosed conflicts of interest shall be
included in the minutes of the meeting.
Board Interaction with Investors,
Press, Customers, etc.
The Board believes that the
management speaks for the Company when dealing with the media, investors,
rating agencies, stockholders, customers, regulators and other similar
constituencies.
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III.
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Board Committees
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General
The Board will have at all times an
Audit Committee, a Compensation Committee and a Governance Committee. All
of the members of these committees will meet the criteria for independence
required by applicable listing standards of the NASDAQ and other
applicable laws and regulations. Committee members will be appointed by
the Board upon recommendation of the Governance Committee with
consideration of the desires of individual directors. It is the belief of
the Board that consideration should be given to rotating committee members
periodically. It is expected that each committee Chair will have had
previous service on the applicable committee.
Charters
Each committee will have its own
charter, which is approved by the Board. The charters will establish the
purposes, goals and responsibilities of the committees, as well as
qualifications for committee membership, procedures for committee member
appointment and removal, committee structure, operations and reporting to
the Board.
Schedule and Timing of
Meetings
The Chair of each committee, in
consultation with the committee members, will determine the frequency and
length of the committee meetings consistent with any requirements set
forth in the committees charter. The Chair of each committee, in
consultation with the appropriate members of the committee and management,
will develop the committees agenda. At the beginning of the year, each
committee will establish a schedule of agenda subjects to be discussed
during the year (to the degree these can be foreseen). The schedule for
each committee will be furnished to all directors. Board members are
welcome to attend any Committee meeting, whether they are a member of the
committee or not.
|
B-3
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Additional
Committees
The Board may, from time to time,
establish or maintain additional committees as deemed necessary or
appropriate.
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IV.
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Director Access To Officers and Employees
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Directors
have full and free access to officers and employees of the Company. Any
meetings or contacts that a director wishes to initiate may be arranged
through the Chief Executive Officer or the Secretary or directly by the
director. The directors will use their judgment to ensure that any such
contact is not disruptive to the business operations of the Company and
will, to the extent deemed appropriate by the director, inform the Chief
Executive Officer that such communications are taking
place.
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V.
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Director Compensation
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General
The Board believes that director
compensation should include components that are designed to align the
interests of the directors with the interests of stockholders and that the
aggregate value of director compensation and perquisites should generally
be at or near the median level of director compensation at peer companies.
The form and amount of director compensation will be recommended to the
Board by the Compensation Committee in accordance with the policies and
principles set forth in its charter.
Expense
Reimbursement
A director of the Company will be
reimbursed for any ordinary and necessary business and professional
expense incurred on behalf of the Company, if the following conditions are
satisfied: (a) the expenses are reasonable in amount; (b) the director
documents the amount, date, place (for transportation, travel and
entertainment expenses), business purpose (and for entertainment expenses,
the business relationship of the person or persons entertained) of each
such expense with the same kind of documentary evidence as would be
required to support a deduction of the expense on the directors federal
income tax return; and (c) the director substantiates such expenses by
providing the Company with an accounting of such expenses no less
frequently than monthly. Examples of reimbursable business expenses
include local transportation, overnight travel (including lodging and
meals), entertainment, education and professional dues. Under no
circumstances will the Company reimburse a director for business or
professional expenses incurred that are not properly substantiated
according to this policy.
In no event will an expense be
reimbursed if substantiated more than sixty (60) days after the expense is
paid or incurred by the director. In addition, any reimbursement by the
Company that exceeds the amount of business or professional expenses
properly accounted for by a director pursuant to this policy must be
returned to the Company within 120 days after the associated expenses are
paid
It is the Companys intent that this
reimbursement policy be classified as an accountable plan. Accordingly,
the Company will not include in a directors form 1099 the amount of any
business or professional expense properly substantiated and reimbursed
according to this policy.
Charitable
Contributions
Charitable contributions by the
Company exceeding $10,000 in any calendar year to an organization in which
an independent director is affiliated shall be subject to the approval of
the Compensation Committee, which shall consider the impact of any such
contributions on the applicable directors
independence.
|
B-4
VI.
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Continuing Director Education
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The Board believes that it is
appropriate for directors, at their discretion, to attend continuing
director education programs related to their duties as directors. Upon
approval by the Chair of the Governance Committee, the Company will
reimburse reasonable continuing education and travel expenses incurred by
a director in attending such programs. The Company will provide a
reasonable budget to each member of the Board for the purpose of attending
director education programs of the directors
choosing.
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VII.
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Management Evaluation, Compensation Review and Succession
Planning
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Review of CEO and Executive Officers
The Board of Directors will review
the Chief Executive Officers, the Chief Financial Officers, and the
Chief Legal Officers (or General Counsel) performance on an annual
basis.
Compensation Review
At least once every three years, the
Compensation Committee shall select and retain an independent consultant
to conduct a comparative study of the Companys executive compensation
polices, practices, and procedures (including specifically with respect to
options) relative to other public companies and prepare and submit to the
Compensation Committee a report and recommendations.
Succession Planning
The Board of Directors will evaluate
and nominate potential successors to the Chief Executive Officer. The
Chief Executive Officer may make available his or her recommendations and
evaluations of potential successors, along with a review of any
development plans recommended for such
individuals.
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VIII.
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Option Granting Procedures
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In
addition to the standard controls and procedures with respect to the
Companys stock option granting procedures, The Company shall require the
following:
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a)
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All stock option
grants to directors and executive officers of the Company subject to the
requirements of Section 16 of the Securities Exchange Act of 1934, shall
be disclosed by or on behalf of the director or executive officer within
two business days of such grants;
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b)
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All grants of options
to executive officers and directors shall be made only at a meeting of the
Companys Board or Compensation Committee and not by unanimous written
consent. The Companys General Counsel and/or Corporate Counsel shall
attend any and all meetings where options are granted; and
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c)
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Stock options granted
to all officers, directors and employees shall be granted on predetermined
dates. In setting these predetermined dates, the Company will not have any
program, plan or practice to time option grants in coordination with the
release of material non-public information. The Company shall complete all
grant documentation required to approve the option grants and circulate
that information to those approving the grants prior to the predetermined
grant dates.
|
B-5
IX.
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Director Nominations Process
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Annual Review
The Governance Committee will review
annually the needs of the Board for various skills, experience, expected
contributions and other characteristics in determining the director
candidates to be nominated for election at the annual meeting of
stockholders. The Governance Committee will evaluate candidates for
directors proposed by directors, stockholders or management in light of
the committees views of the current needs of the Board for certain
skills, experience or other characteristics, the candidates background,
skills, experience, other characteristics and expected contributions and
the qualification standards established from time to time by the
Governance Committee. If the committee believes that the Board requires
additional candidates for nomination, the Committee may engage a third
party search firm to assist in identifying qualified candidates. All
directors and nominees will submit a completed form of directors and
officers questionnaire as part of the nominating process. The process may
also include interviews and additional background and reference checks for
non-incumbent nominees, at the discretion of the Governance Committee. In
making the determinations regarding nominations of directors, the
Governance Committee may take into account the benefits of diverse
viewpoints as well as the benefits of a constructive working relationship
among directors.
Nominations
Process
In considering candidates
recommended by stockholders for the Companys Board, the Governance
Committee shall follow the following
process:
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a)
|
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The Governance
Committee shall consider all candidates as recommended by a stockholder
(or group of stockholders) who own at least 5% of the Companys
outstanding common stock and who have held such shares for at least one
year (an Eligible Stockholder);
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b)
|
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An Eligible
Stockholder wishing to recommend a candidate must submit the following not
less than 120 calendar days prior to the anniversary of the date the proxy
was released to the shareholders in connection with the previous years
annual meeting: (A) a recommendation that identifies the candidate and
provides contact information; (B) the written consent of the candidate to
serve as a director of the Company, if elected; and (C) documentation
establishing that the shareholder making the recommendation is an Eligible
Stockholder;
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c)
|
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Upon timely receipt of
the required documents, the Corporate Secretary will determine if the
shareholder submitting the recommendation is an Eligible Stockholder based
on such documents. The Corporate Secretary will inform the stockholder of
his or her determination;
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d)
|
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If the candidate is to
be evaluated by the Governance Committee, the Corporate Secretary will
request a resume, a completed director and officer questionnaire, a
completed statement regarding conflicts of interest, and a waiver of
liability for background check from the candidate. To evaluate the
candidate and consider such candidate for nomination by the Board, such
documents must be received from the candidate before the first day of
March preceding the annual meeting; and
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e)
|
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If, in the exercise of
its business judgment, the Governance Committee determines not to nominate
the Eligible Stockholders initial candidate, the Governance Committee
will inform the Eligible Stockholder of its decision and provide the
stockholder the opportunity to submit one alternate candidate; provided,
however, the Committee shall not be obligated to consider a candidate if
the Committee does not receive within 30 calendar days of its notice of
determination: (A) the written consent of the candidate to serve as a
director of the
|
B-6
Company, if
elected; and (B) the documents required above. The Governance Committee will, in
the exercise of its business judgment, determine whether to nominate the
alternate candidate for election to the Board.
X.
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Shareholder Proposals
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All shareholder proposals that are
required to be included in the Companys proxy statement shall be
evaluated by a committee of at least three Independent Directors. Such
committee shall determine, with the assistance of outside advisors, if
necessary, whether the shareholder proposal is in the best interest of the
Company. The committee shall recommend to the Board for or against such
shareholder proposal and the reasons for such recommendation. The Board
shall publish the recommendation for or against such proposal and the
reason for such recommendation in a proxy
statement.
|
XI.
|
|
Communications with the Board of Directors
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The Corporate Secretary, or the
Chair of the Governance Committee, as appropriate, shall review
correspondence addressed to the Board and regularly forward to the Board a
summary of all such correspondence and copies of all correspondence that,
in the opinion of the Corporate Secretary and/or the Chair of the
Governance Committee, deals with the functions of the Board or committees
thereof. Directors may at any time review a log of all correspondence
received by the Company that is addressed to the Board of Directors or
individual members thereof. Concerns relating to accounting, internal
controls, or auditing issues will be immediately brought to the attention
of the Audit Committee Chair.
|
B-7
Exhibit A
Cirrus Logic Director Independence
Standards
Cirrus Logic,
Inc. provides that the following requirements should be met in order for a
director to be considered independent:
|
a)
|
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The director has not
been employed by the Company or any of its affiliates (defined as any
individual or business entity that owns at least 5% of the securities of
the Company having ordinary voting power) at any time during the preceding
three years;
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b)
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The director has not
received, during the current calendar year or any of the three immediately
preceding calendar years, remuneration, directly or indirectly, other than
de minimus remuneration, as a result of service as, or compensation paid
to an entity affiliated with the individual who serves as (1) an advisor,
consultant, or legal counsel to the Company or to a member of the
Companys senior management; or (2) a significant customer or supplier of
the Company;
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c)
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The director has no
personal services contract with the Company;
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d)
|
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The director is not
employed and compensated by a not-for-profit entity that receives from the
Company significant contributions that are required to be disclosed in the
Companys proxy statement;
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e)
|
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The director is not a
member of the immediate family of any person who fails to satisfy the
Companys Director Independence Standards, except that with respect to
employment with the Company or its affiliates, employment of immediate
family members will not negate independence unless such employment is in
an executive officer or director position;
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f)
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The director has no
interest in any investment that the director jointly acquired in
conjunction with the Company;
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g)
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During the current
fiscal year or any of the three immediately preceding fiscal years, a
company of which the director is an executive officer or an employee has
not had any business relationship with the Company for which the Company
has been required to make disclosure under Regulation S-K of the
Securities and Exchange Commission (SEC), other than for service as a
director or for which relationship no more than de minimus remuneration
was received in any one such year; provided, however, that the need to
disclose any relationship that existed prior to a director joining the
Board shall not in and of itself render the director non-independent;
and
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h)
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The director shall not
be employed by a public company at which an executive officer of the
Company serves as a director.
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i)
|
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A director is deemed
to have received remuneration (other than remuneration as a director
including remuneration provided to a non-executive Chairman of the Board,
Committee Chairman, or Lead Independent Director), directly or indirectly,
if remuneration, other than de minimus remuneration, was paid by the
Company, its subsidiaries or affiliates, to any entity in which the
director has beneficial ownership interest of 5% or more, or to an entity
by which the director is employed or self-employed other than as a
director. Remuneration is deemed de minimus remuneration if such
remuneration is $50,000 or less in any calendar year, or if such
remuneration is paid to an entity, it (1) did not for the calendar year
exceed 5% of the gross revenues of the entity, or $200,000, whichever is
more; and (2) did not directly result in a material increase in the
compensation received by the director from that
entity.
|
B-8
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Annual Meeting of Stockholders
|
|
Annual Meeting of
Stockholders
|
Cirrus Logic, Inc.
|
|
Cirrus Logic, Inc.
|
800 West 6
th
Street
|
|
800 West 6
th
Street
|
Austin, Texas 78701
|
|
Austin, Texas 78701
|
July 26, 2012
|
|
July 26, 2012
|
11:00 A.M.
|
|
11:00 A.M.
|
|
ADMIT ONE
|
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ADMIT
ONE
|
|
CIRRUS LOGIC, INC.
2901 VIA
FORTUNA
AUSTIN, TX 78746
|
ELECTRONIC DELIVERY OF FUTURE
PROXY MATERIALS
|
If you would like to reduce the costs incurred by Cirrus
Logic, Inc. in mailing proxy materials, you can consent to receiving all
future proxy statements, proxy cards and annual reports electronically via
e-mail or the Internet. To sign up for electronic delivery, please follow
the instructions below to vote using the Internet and, when prompted,
indicate that you agree to receive or access proxy materials
electronically in future years.
|
|
VOTE BY INTERNET -
www.proxyvote.com
|
Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time on
July 25, 2012. Have your proxy card in hand when you access the web site
and follow the instructions to obtain your records and to create an
electronic voting instruction form.
|
|
VOTE BY
PHONE - 1-800-690-6903
|
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time on July 25, 2012. Have
your proxy card in hand when you call and then follow the
instructions.
|
|
VOTE BY
MAIL
|
Mark, sign and date your proxy card and return it in the
postage-paid envelope we have provided or return it to Vote Processing,
c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
|
|
|
TO VOTE, MARK BLOCKS BELOW
IN BLUE OR BLACK INK AS FOLLOWS:
|
|
|
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|
M47415-P26726
|
|
KEEP THIS PORTION FOR YOUR RECORDS
|
|
DETACH AND RETURN THIS PORTION
ONLY
|
THIS PROXY CARD IS VALID ONLY
WHEN SIGNED AND DATED.
|
CIRRUS LOGIC, INC.
|
|
For
|
Withhold
|
For All
|
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All
|
All
|
Except
|
|
The Board of Directors
recommends you vote
FOR the following nominees:
|
|
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|
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|
|
|
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|
|
1.
|
Election of Directors:
|
|
o
|
o
|
o
|
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Nominees:
|
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|
|
01)
|
John C. Carter
|
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02)
|
Timothy R. Dehne
|
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03)
|
Jason P. Rhode
|
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04)
|
Alan R. Schuele
|
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05)
|
William D. Sherman
|
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06)
|
Susan
Wang
|
To withhold authority to vote for any individual nominee(s),
mark For All Except and write the number(s) of the nominee(s) on
the line below.
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For
|
Against
|
Abstain
|
|
The Board of Directors
recommends you vote FOR the following proposals:
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2.
|
Ratification of the appointment of Ernst &
Young LLP as the Company's independent registered public accounting firm
for the fiscal year ending March 30, 2013.
|
|
o
|
o
|
o
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3.
|
Advisory vote to approve named executive
officer compensation.
|
|
o
|
o
|
o
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For address changes and/or comments, please check this box and
write them on the back where indicated.
|
o
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|
Please sign exactly as your name(s) appear(s)
hereon. When signing as attorney, executor, administrator, or other
fiduciary, please give full title as such. Joint owners should each sign
personally. All holders must sign. If a corporation or partnership, please
sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
|
Date
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Signature (Joint Owners)
|
Date
|
|
Important Notice
Regarding the Availability of Proxy Materials for the Annual
Meeting:
The Proxy Statement and
Company's Annual Report are available at www.proxyvote.com.
CIRRUS LOGIC,
INC.
PROXY FOR 2012 ANNUAL MEETING OF
STOCKHOLDERS
JULY 26, 2012 AT 11:00 A.M. (CENTRAL
DAYLIGHT TIME)
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned stockholder of CIRRUS LOGIC, INC., a
Delaware corporation, hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement, each dated May 30, 2012, and the
Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2012,
and hereby appoints Thurman K. Case and Gregory Scott Thomas, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
2012 Annual Meeting of Stockholders of CIRRUS LOGIC, INC., to be held on July
26, 2012 at 11:00 a.m. local time at Cirrus Logic, Inc., 800 West 6th Street,
Austin, TX 78701, and at any adjournments or postponements thereof, and to vote
all shares of Common Stock that the undersigned would be entitled to vote, if
then and there personally present, on the matters set forth on the reverse
side.
Address Changes/Comments:
|
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|
(If you noted any Address
Changes/Comments above, please mark corresponding box on the reverse
side.)
Continued and to be signed on
reverse side
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