Base Salary
In May 2020, the Compensation Committee reviewed the base salaries of our executive officers. In light of global economic uncertainty resulting from the COVID-19 pandemic, the Committee determined to maintain the base salaries of our named executive officers at their fiscal 2020 levels.
The fiscal 2020 and 2021 base salaries of our named executive officers were as follows:
Named Executive Officer Fiscal 2020 and 2021 Base Salaries
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Named Executive Officer
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Fiscal Year 2020 Base Salary ($)
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Fiscal Year 2021 Base Salary ($)
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Percentage Increase (%)
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Victor Peng
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950,000
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950,000
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—
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Brice Hill (1)
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—
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550,000
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N/A
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William Madden
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525,000
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525,000
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—
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Salil Raje
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525,000
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525,000
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—
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Vamsi Boppana
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440,000
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440,000
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—
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(1) Mr. Hill joined us as our Executive Vice President and Chief Financial Officer effective April 9, 2020.
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Annual Cash Incentive Compensation
In May 2020, our Board of Directors approved the Xilinx, Inc. Executive Incentive Plan for fiscal 2021 (the 2021 Incentive Plan). The 2021 Incentive Plan was designed to link the annual cash incentives of our executive officers to the Company-wide achievement of pre-established financial objectives involving annual revenue growth and operating profit and their achievement of individual performance goals. The way these components factor into the annual cash incentive compensation is illustrated in the following chart:
The Compensation Committee determined the results under the 2021 Incentive Plan by taking into account both the pre-established objective performance metrics and the Committee’s evaluation of such subjective considerations, if any, determined appropriate by the Committee. The objective performance metrics were to be applied to determine a performance multiplier. When it adopted the 2021 Incentive Plan, the Committee retained discretion to modify the performance multiplier or any of the individual performance metrics, in response to extenuating or unanticipated circumstances such as those stemming from the COVID-19 pandemic. Ultimately, however, in determining the results under the 2021 Incentive Plan, the Compensation Committee did not exercise its discretion to adjust any performance multiplier and/or the underlying objective performance metrics.
Target Annual Cash Incentives
In connection with the adoption of the 2021 Incentive Plan, the Compensation Committee reviewed the target annual cash incentives of our executive officers. In light of global economic uncertainty resulting from the COVID-19 pandemic, the Committee determined to maintain the target annual cash incentives of our named executive officers at their fiscal 2020 levels.
The fiscal 2020 and 2021 target annual cash incentives of our named executive officers were as follows:
Named Executive Officer Fiscal 2020 and 2021 Target Annual Cash Incentive
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Named Executive Officer
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Fiscal 2020 Target Annual Cash Incentive (as % of base salary)
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Fiscal 2021 Target Annual Cash Incentive (as % of base salary)
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Victor Peng
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150%
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150%
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Brice Hill (1)
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N/A
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100%
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William Madden
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100%
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100%
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Salil Raje
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100%
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100%
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Vamsi Boppana
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80%
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80%
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(1) Mr. Hill joined us as our Executive Vice President and Chief Financial Officer effective April 9, 2020.
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Performance Components
For purposes of the 2021 Incentive Plan, annual cash incentive payments for our executive officers were to be determined using performance metrics similar to those used in fiscal 2020 – total revenue (with revenue growth having been used in 2020), operating margin and individual performance objectives – with the weighting of each metric being revised as follows:
•total revenue (the Total Revenue Component), weighted at 25%
•our operating profit margin, excluding accrued compensation expense for estimated incentive compensation (the OM Component), weighted at 35%; and
•individual performance, based on the achievement of performance goals pertaining to each executive officer’s position and responsibilities (the Individual Performance Component), weighted at 40%.
These revised weightings and the switch to a total revenue metric were adopted in light of the economic uncertainty created by the COVID-19 pandemic and the general political climate, which, in the Committee’s view, hampered both the Company’s ability to project future financial results and management’s ability to affect those results through individual performance. As a result of those factors, the Committee shifted the weighting of the performance metrics in favor of individual performance, which the Committee believed to be a more reliable measure of performance under the circumstances. Similarly, as management did not have enough visibility into fiscal 2021 to draft annual financial goals, the Committee chose to set the financial performance metrics for the first semi-annual period (March 29, 2020 through September 26, 2020) in May 2020 and the financial metrics for the second semi-annual period (September 27, 2020 through April 3, 2021) in October 2020.
For each of our executive officers other than our Chief Executive Officer, the Total Revenue Component, the OM Component and the Individual Performance Component were to be measured and paid on a semi-annual basis. For our Chief Executive Officer, the Total Revenue Component and the OM Component were to be measured and paid on a semi-annual basis, and the Individual Performance Component was to be measured and paid on an annual basis. The Compensation Committee generally had discretion to exclude extraordinary or one-time charges for purposes of calculating annual cash incentive payments under the 2021 Incentive Plan, but no such exclusions were made in fiscal 2021.
All changes to the 2021 Incentive Plan compared with the 2020 Incentive Plan were made in consultation with Compensia.
For purposes of the 2021 Incentive Plan, the Total Revenue Component, the OM Component and the Individual Performance Component were designed as follows:
Total Revenue Component
The Total Revenue Component was designed to reward increases in our total revenue over each of two semi-annual performance periods. The Total Revenue Component was subject to a minimum threshold performance level for any payout and a multiplier that increased the target payout depending on our actual performance during each semi-annual performance period. For fiscal 2021, the Total Revenue Component multiplier began at 0.05 for the threshold performance level and increased to a maximum of 2.0, rising in increments of between 0.05 and 0.15 at certain performance levels, depending on total Company revenue for the semi-annual performance period. The multiplier increments were based on the Compensation Committee’s assessment of the difficulty associated with each corresponding increase in total revenue.
On May 12, 2020, the Compensation Committee approved the following proposed payout scale for the Total Revenue Component multiplier for the first semi-annual performance period of fiscal 2021, with the Total Revenue Target in millions of dollars:
Total Revenue Component Scale
Fiscal 2021 First Half Total Revenue (25% Weight)
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Total Revenue Target
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Total Revenue Multiplier
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>$1,830
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2.00
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$1,830
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2.00
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$1,780
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1.85
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$1,730
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1.70
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$1,680
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1.60
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$1,630
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1.50
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$1,590
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1.40
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$1,550
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1.30
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$1,510
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1.20
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$1,470
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1.10
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$1,440
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1.00
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$1,415
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0.90
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$1,395
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0.80
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$1,380
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0.70
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$1,360
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0.65
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$1,340
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0.60
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$1,320
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0.55
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$1,300
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0.50
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$1,270
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0.45
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$1,240
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0.40
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$1,210
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0.35
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$1,180
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0.30
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$1,150
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0.25
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$1,120
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0.20
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$1,090
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0.15
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$1,060
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0.10
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$1,030
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0.05
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<$1,030
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—
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On October 30, 2020, the Compensation Committee approved the following proposed payout scale for the Total Revenue Component multiplier for the second semi-annual performance period of fiscal 2021, with the Total Revenue Target in millions of dollars:
Total Revenue Component Scale
Fiscal 2021 Second Half Total Revenue (25% Weight)
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Total Revenue Target
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Total Revenue Multiplier
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>$2,185
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2.00
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$2,185
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2.00
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$2,135
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1.90
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$2,085
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1.80
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$2,035
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1.70
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$1,985
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1.60
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$1,935
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1.50
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$1,885
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1.40
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$1,835
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1.30
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$1,785
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1.20
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$1,745
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1.15
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$1,705
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1.10
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$1,665
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1.05
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$1,625
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1.00
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$1,595
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0.925
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$1,570
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0.85
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$1,550
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0.775
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$1,535
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0.70
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$1,515
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0.65
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$1,495
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0.60
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$1,475
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0.55
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$1,455
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0.50
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$1,425
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0.45
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$1,395
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0.40
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$1,365
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0.35
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$1,335
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0.30
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$1,305
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0.25
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$1,275
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0.20
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$1,245
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0.15
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$1,215
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0.10
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$1,185
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0.05
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<$1,185
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—
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In fiscal 2021, we achieved total revenue of $1,470 million in the first half of the year, resulting in a Total Revenue Component multiplier of 1.10, while in the second half of the year we achieved total revenue of $1,654 million, resulting in a Total Revenue Component multiplier of 1.00.
OM Component
The OM Component was designed to reward achievement of certain levels of our operating margin over each of two semi-annual performance periods. The OM Component was subject to a minimum threshold for any payout and a multiplier that increased the payout amount depending on our actual performance during each semi-annual performance period. The OM Component multiplier began at 0.05 for the threshold performance level and increased to a maximum of 2.0, rising in increments of between 0.05 and 0.15 at certain performance levels, depending on Company operating margin for the semi-annual performance period. The multiplier increments were based on the Compensation Committee’s assessment of the difficulty associated with each corresponding increase in operating margin.
On May 12, 2020, the Compensation Committee approved the following proposed payout scale for the Operating Margin Component multiplier for the first semi-annual performance period of fiscal 2021:
OM Component Scale
Fiscal 2021 First Half Operating Margin (35% Weight)
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OM Target
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OM
Multiplier
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>37%
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2.00
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37%
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2.00
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36%
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1.85
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35%
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1.70
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34%
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1.60
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33%
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1.50
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32%
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1.40
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31%
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1.30
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30%
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1.20
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29%
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1.10
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28%
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1.00
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27%
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0.85
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26%
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0.70
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25%
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0.65
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24%
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0.60
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23%
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0.55
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22%
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0.50
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21%
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0.45
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20%
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0.40
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19%
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0.35
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18%
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0.30
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17%
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0.25
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16%
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0.20
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0.15
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0.15
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0.14
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0.10
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0.13
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0.05
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<13%
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—
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On October 30, 2020, the Compensation Committee approved the following proposed payout scale for the Operating Margin Component multiplier for the second semi-annual performance period of fiscal 2021:
OM Component Scale
Fiscal 2021 Second Half Operating Margin (35% Weight)
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OM Target
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OM
Multiplier
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>44%
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2.00
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44%
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2.00
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43%
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1.90
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42%
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1.80
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41%
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1.70
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40%
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1.60
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39%
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1.50
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38%
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1.40
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37%
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1.30
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36%
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1.20
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35%
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1.15
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34%
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|
1.10
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33%
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1.05
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32%
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1.00
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31%
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0.93
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30%
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0.85
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29%
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|
0.78
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28%
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|
0.70
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27%
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|
0.65
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26%
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|
0.60
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|
25%
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|
0.55
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|
24%
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|
0.50
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|
23%
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|
0.45
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|
22%
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|
0.40
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|
21%
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|
0.35
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|
20%
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|
0.30
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|
19%
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|
0.25
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|
18%
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|
0.20
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|
17%
|
|
0.15
|
|
16%
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|
0.10
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|
15%
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|
0.05
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|
<15%
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|
—
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In fiscal 2021, we achieved an operating margin percentage of 31% in the first half of the year, resulting in an OM Component multiplier of 1.30, while in the second half of the year we achieved an operating margin percentage of 28%, resulting in an OM Component multiplier of 0.70.
Individual Performance Component.
For all executive officers other than our Chief Executive Officer, the Individual Performance Component was based on a maximum of ten individual performance goals for each semi-annual performance period. Our Chief Executive Officer’s Individual Performance Component was based on a maximum of ten individual performance goals for the annual performance period. For all executive officers, achievement of each goal was measured on a scale of 0% achievement to 150% achievement. The threshold for any payout of the Individual Performance Component was 50% overall achievement, and the maximum performance was capped at 150%.
Each individual goal under the Individual Performance Component was directly related to our business objectives and corresponded to each executive officer’s position and responsibilities. The goals for our executive officers related to the broader corporate goals generally within the following categories:
•Operational excellence and quality of results. This category consisted of goals related to adherence to product development plans and schedules, product delivery timeliness, product sales and gross margin achievement and sales achievement by geographic region.
•Strategic initiatives and performance. This category consisted of goals related to product and portfolio assessment, including customer and end market sub-segment identification.
•Leadership effectiveness. This category consisted of goals related to strategic leadership, responding to changes in the market and economic environment, organizational effectiveness and managing our relationship with stockholders.
For each executive officer, our Chief Executive Officer, in consultation with the individual, assigned a weight to each goal that reflected the importance of the business objective involved. These goals and assigned weightings were submitted to the Compensation Committee for its review at the beginning of each semi-annual period. At the end of each such period, each executive officer prepared a self-assessment of his or her level of achievement of each goal on a scale of 0% to 150%. Our Chief Executive Officer then reviewed with such executive officer his or her performance for the period and determined his or her level of achievement for each goal on the same scale. Based on our Chief Executive Officer’s determination of the level of achievement, he then recommended to the Committee an overall Individual Performance multiplier, on a scale of 0.00 to 1.50 (subject to a threshold of 0.50). After reviewing our Chief Executive Officer’s semi-annual assessment and recommendation, the Committee determined and approved the multiplier and semi-annual payout for each executive officer.
For our Chief Executive Officer, the Compensation Committee, in consultation with him, determined each of his goals, which were measured in proportion to the importance of that goal to our business. After the end of the fiscal year, our Chief Executive Officer prepared a self-assessment of his level of achievement of each goal on the same 0.00 to 1.50 scale and submitted this self-assessment to the Committee. After reviewing the self-assessment and making its own evaluation of our Chief Executive Officer’s performance, the Committee determined the final multiplier. In assessing our Chief Executive Officer’s achievements and determining and approving his compensation, the Committee, in consultation with independent members of our Board of Directors, considered his achievements within a broader set of expectations including strategic leadership, organizational quality and effectiveness, management abilities and responsiveness to economic conditions.
The payout relating to the Individual Performance Component was paid annually for our Chief Executive Officer and semi-annually for each of our other executive officers in fiscal 2021. A summary of each named executive officer’s individual performance goals is set forth in the footnotes to the table below titled “Named Executive Officer Incentive Cash Awards for Fiscal 2021.”
Payment Calculations for Executive Officers
Under the 2021 Incentive Plan, annual cash incentive payments were calculated slightly differently for our Chief Executive Officer compared to our other executive officers, given that the Individual Performance Component was determined on an annual basis for our CEO and on a semi-annual basis for all other executive officers.
Annual Cash Incentive Payment for Chief Executive Officer. The calculation to determine the annual cash incentive payment for our Chief Executive Officer was as follows:
Annual Cash Incentive Payments for Other Named Executive Officers. The calculation to determine the annual cash incentive payments for our named executive officers, other than our Chief Executive Officer, was as follows:
Annual Cash Incentive Payments for Fiscal 2021
We achieved our total revenue objective in both the first half and the second half of fiscal 2021, resulting in multipliers of 1.10 and 1.00, respectively, for these two periods under the Total Revenue Component.
We achieved the operating margin objective in both the first half and the second half of fiscal 2021, resulting in multipliers of 1.30 and 0.70, respectively, for these two periods under the OM Component.
The performance of our named executive officers (other than our Chief Executive Officer) with respect to the Individual Performance Component for the first half of the fiscal year resulted in multipliers ranging from 1.30 to 1.50. In the second half of the fiscal year, the performance of our named executive officers resulted in multipliers ranging from 1.10 to 1.30. The performance of our Chief Executive Officer with respect to the Individual Performance Component for the full fiscal year resulted in a multiplier of 1.50.
The target and actual annual cash incentive payments for fiscal 2021 for our named executive officers, based on their achievement against our financial goals and their individual performance goals, were as follows:
Named Executive Officer Incentive Cash Awards for Fiscal 2021
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Named
Executive
Officer
|
|
Annual Base
Salary (1)
($)
|
|
Target Annual Cash Incentive (as a percentage of base salary)
|
|
Target Annual Cash Incentive Payment (1)
($)
|
|
Cash Incentive Actually Paid (1) ($)
|
First-Half
Financial Metrics (2)
($)
|
|
First-Half
Individual
Performance
($)
|
|
Second-Half
Financial Metrics (3)
($)
|
|
Second-Half Individual Performance
($)
|
|
Actual Annual Cash Incentive Payment
($)
|
|
Victor Peng
|
|
950,000
|
|
|
150
|
|
1,425,000
|
|
|
520,125
|
|
|
N/A
|
|
|
352,688
|
|
|
855,000
|
|
(4)
|
|
1,727,813
|
|
|
Brice Hill
|
|
537,660
|
|
|
100
|
|
537,660
|
|
|
191,742
|
|
|
157,596
|
|
(5)
|
|
136,125
|
|
|
137,500
|
|
(6)
|
|
622,963
|
|
|
William Madden
|
|
525,000
|
|
|
100
|
|
525,000
|
|
|
191,625
|
|
|
136,500
|
|
(7)
|
|
129,938
|
|
|
115,500
|
|
(8)
|
|
573,563
|
|
|
Salil Raje
|
|
525,000
|
|
|
100
|
|
525,000
|
|
|
191,625
|
|
|
141,750
|
|
(9)
|
|
129,938
|
|
|
120,750
|
|
(10)
|
|
584,063
|
|
|
Vamsi Boppana
|
|
440,000
|
|
|
80
|
|
352,000
|
|
|
128,480
|
|
|
91,520
|
|
(11)
|
|
87,120
|
|
|
91,520
|
|
(12)
|
|
398,640
|
|
(1)Target payments and amounts paid are based on percentages of actual base salaries earned during fiscal 2021. For purposes of determining cash incentive payouts, salaries are split between the first half and the second half of fiscal 2021 as follows: Mr. Peng - 1H: $475,000, 2H: $475,000; Mr. Hill - 1H: $262,660, 2H: $275,000; Mr. Madden - 1H: $262,500, 2H: $262,500; Mr. Raje - 1H: $262,500, 2H: $262,500; and Mr. Boppana - 1H: $220,000, 2H: $220,000.
(2)The first-half financial metrics included both the Total Revenue Component, which was scored at $1,470 million and resulted in a multiplier of 110%, and the OM Component, which was scored at 31% and resulted in a multiplier of 1.30. For more information on the Total Revenue Component and the OM Component, see the sections above titled “Performance Components—Total Revenue Component” and “Performance Components—OM Component.” For more information on the calculation of the annual cash incentive payments for the first half of fiscal 2021, see the section above titled “Payment Calculations for Executive Officers.”
(3)The second-half financial metrics included both the Total Revenue Component, which was scored at $1,654 million and resulted in a multiplier of 1.00, and the OM Component, which was scored at 28% and resulted in a multiplier of 0.70. For more information on the Total Revenue Component and the OM Component, see the sections above titled “Performance Components—Total Revenue Component” and “Performance Components—OM Component.” For more information on the calculation of the annual cash incentive payments for the second half of fiscal 2021, see the section above titled “Payment Calculations for Executive Officers.”
(4)Represents the actual cash incentive paid to Mr. Peng for fiscal 2021 based on achievement against his specific individual performance goals. For fiscal 2021, Mr. Peng earned 150% of his target bonus attributable to the Individual Performance Component based on: (1) updating and expanding the Company’s strategy and five-year plans, incorporating the long-term challenges and opportunities resulting from the COVID-19 pandemic and recession, U.S./China trade relations, on-going industry consolidation, and environmental, social and governance considerations; (2) given the pandemic and accompanying recession, managing towards successful achievement of our fiscal 2021 annual operating plan, and prioritizing long-term goals within reasonable risk and profitability levels, while also prioritizing the health and well-being of employees and others at the Company’s sites; (3) providing overall leadership and direction in furthering the Company’s transformation, embodying best-in-class technical execution, marketing vision and customer intimacy, while building and developing a strong leadership team to drive our success in a challenging and uncertain global economic, geo-political and market environment; and (4) building and maintaining strong relationships with investors, government agencies, industry leaders and influencers, partners, suppliers and the press to drive corporate messages, objectives and brand value; and ensuring executive alignment and key customer relationships with both top and strategic customers. Additionally, during its assessment of Mr. Peng’s individual achievement and contributions to the Company in fiscal 2021, the Compensation Committee considered Mr. Peng’s leadership and the strategic decision-making involved in negotiating the merger agreement with AMD. This factor was not part of Mr. Peng’s original performance goals, which were established before the merger was under consideration, but was determined by the Compensation Committee to be an valuable part of Mr. Peng’s contributions during fiscal 2021.
(5)Represents the actual cash incentive paid to Mr. Hill for the first half of fiscal 2021 based on achievement against his specific individual performance goals. For the first half of fiscal 2021, Mr. Hill earned 150% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) driving financial growth by achieving revenue, gross margin, operating expense and operating margin goals, completing valuation assessment (including a sum-of-the-parts valuation) and updating the five-year annual operating plan; (2) increasing liquidity, execution of financial accounting and reporting, determining ERM and ESG actions and identifying facilities focus areas to manage COVID-19; (3) meeting onboarding goals, including establishing relationships with executive and finance staff, the board of directors, investors and analysts; reviewing prior year’s landscape and strategy session white papers, developing an understanding of each end market roadmap, products and growth strategy and fully preparing for first quarter earnings call and plan for Analyst Day; and (4) refining business continuity plans.
(6)Represents the actual cash incentive paid to Mr. Hill for the second half of fiscal 2021 based on achievement against his specific individual performance goals. For the second half of fiscal 2021, Mr. Hill earned 125% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) driving corporate financial growth by achieving revenue, gross margin, operating expense and EPS goals, completing the FY22 and five-year annual operating plan; (2) completing AMD acquisition transaction support; (3) execution of financial accounting and reporting, credit and cash management and year-end SOX and audit, completing Corporate Responsibility Report and ESG goals; and (4) determining organization adjustments and development plans for finance staff to strengthen leadership capabilities, build and retain talent including coaching and succession planning.
(7)Represents the actual cash incentive paid to Mr. Madden for the first half of fiscal 2021 based on achievement against his specific individual performance goals. For the first half of fiscal 2021, Mr. Madden earned 130% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) driving financial growth by achieving revenue, gross margin, operating expense and operating margin goals, achieving annual operating plan gross margin improvement actions from pricing/GMF actions and GOQ to achieve cost-reduction roadmap objective, refreshing TAM/SAM/SOM analysis and establishing financial target model leading to five-year strategic plan for Analyst Day, defining requirements to develop unified revenue/demand planning process and system; (2) design win on track for panels to meet revised revenue target in fiscal 2022 and identifying P4 beta customer, aligning account strategy to marketing’s five-year plan and improving overall account margin plan, winning pre-established percentage of identified high priority platforms aligned with formal SIP sales KSO opportunities; (3) in marketing, publishing GTM strategy and winning two beta sockets, delivering specified enhancements and auto negotiation update as specified in services statement of work, align and publish ecosystem strategy including justification for each VIP investment, signing up five Versal Premium beta customers and refreshing strategy for mid-year e-staff offsite meeting; (4) completing wired and wireless IP V&C supporting customer pre-production and early production milestones, staying on track for various Versal Premium and RFSoC DFE projects, successfully bring up deliverables for various panels projects and delivering specified demo for inter-governmental agency project; and (5) improving teamwork by identifying cross-functional collaboration gaps and challenges adopting best practices to improve effectiveness of e-staff, refining business continuity plan and adjusting necessary processes/program plans to account for first half COVID adjustments, forming task force team to focus on identified items to improve and implementing procedures for articulating clear business goals and direction.
(8)Represents the actual cash incentive paid to Mr. Madden for the second half of fiscal 2021 based on achievement against his specific individual performance goals. For the second half of fiscal 2021, Mr. Madden earned 110% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) driving corporate financial growth by achieving revenue, gross margin, operating expense and EPS goals, completing the FY22 and five-year annual operating plan; (2) analyzing the pipeline and defining quantitative criteria on conversion, growth and other key metrics, identify P4 beta customer, developing regional growth strategy aligned with account strategies as well as short/mid/long term goals aligned to marketing’s five-year plan, winning pre-established percentage of high-priority platforms aligned with formal SIP sales KSO opportunities, signing up five design wins and six new board bring-ups; (3) in marketing, successfully launching RFSOC DFE, plan and execute Adapt 5G virtual conference, developing communication plan and launching panel capability; (4) completing wired and wireless IP V&C supporting customer pre-production and early production milestones, staying on track for various Versal Premium and RFSOC DFE projects, successfully bringing up deliverables for various panels projects and delivering specified demo for inter-governmental agency project; and (5) improving teamwork by installing Task Force Team to focus on: Communication, Work from Home, Manager Effectiveness Survey and organization processes, articulating clear business goals and objectives, creating a cross-functional New Business Enablement Team to support the implementation of new operational processes required for new businesses in DCG, WWG and Core Markets Group.
(9)Represents the actual cash incentive paid to Mr. Raje for the first half of fiscal 2021 based on achievement against his specific individual performance goals. For the first half of fiscal 2021, Mr. Raje earned 135% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) driving corporate financial growth by achieving revenue, gross margin, operating expense and operating margin goals, achieving annual operating plan gross margin improvement actions from pricing/GMF actions and GOQ to achieve cost reduction roadmap objective, refreshing TAM/SAM/SOM analysis and establishing financial target model leading to five-year strategic plan for Analyst Day, defining requirements to develop unified revenue/demand planning process and system that takes input from selected sources to deliver a rolling multi-quarter consensus forecast and meeting or exceeding revenue targets for first and second quarters; (2) enhancing DCG sales pipeline by identifying a specified number of new opportunities at the hyperscale customer accounts, achieving sales and product related goals that enable hyperscale accounts to procure Alveo boards, achieving a specified number of PoCs with Alveo that could help with revenue in second half; (3) executing various DCG PORs to targeted customers with certain milestones achieved, completing various project objectives for specific customers including certain milestones achieved; (4) executing marketing plan, including meeting specific milestones for various Turnkey Alveo solutions, completing various financial plans for both revenue and margin for several products, exceeding our growth goals for our ISV ecosystem by providing high-quality solutions on Alveo and SMartSSD and delivering prominent DCG “real time computing” presence and showcasing solution readiness within strategic communities; and (5) improving teamwork by identifying cross-functional collaboration gaps and challenges adopting best practices to improve effectiveness of e-staff to be assessed after both the first and second quarters, refining business continuity plan and adjusting necessary processes/program plans to account for first half COVID adjustments and meeting various other goals established to facilitate teamwork, organizational excellence and cohesiveness and expanding leader communication efforts to drive engagement.
(10)Represents the actual cash incentive paid to Mr. Raje for the second half of fiscal 2021 based on achievement against his specific individual performance goals. For the second half of fiscal 2021, Mr. Raje earned 115% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) driving corporate financial growth by achieving revenue, gross margin, operating expense and EPS goals, completing the FY22 and five-year annual operating plan; (2) enhancing DCG sales pipeline by identifying a specified number of new opportunities in hyperscalers moving multiple customers to propose, build and deployment stages, FaaS deployments to general availability and private preview, improving Pipeline management with two opportunities in qualify stage, two sockets to propose stage and one new custom silicon proposal to qualify stage and one to propose stage; (3) in marketing, completing various financial plans for both revenue and margin for several products, exceeding our growth goals for our ISV ecosystem by providing high-quality solutions and delivering prominent DCG “real time computing” presence and showcasing solution readiness within strategic communities; (4) delivering targeted DCG compute, networking, storage, and horizontal releases; and (5) improving teamwork with joint Engineering and Marketing goals with Repeatable Product Planning and Product Roadmap Communication Processes, reinforce DCG desired culture and leadership effectiveness and create a cross-functional New Business Enablement team to support the implementation of new operational processes required to cultivate new business opportunities.
(11)Represents the actual cash incentive paid to Mr. Boppana for the first half of fiscal 2021 based on achievement against his specific individual performance goals. For the first half of fiscal 2021, Mr. Boppana earned 130% of his target annual cash incentive attributable to the Individual
Performance Component based on achievement of certain goals relating to: (1) driving corporate financial growth by achieving revenue, gross margin, operating expense and operating margin goals, achieving annual operating plan gross margin improvement actions from pricing/GMF actions and GOQ to achieve cost reduction roadmap objective, refreshing TAM/SAM/SOM analytics; (2) driving innovation, ease-of-use/expand user base, agility, productivity vectors to meet specific milestones, including the definition of improved product planning process, by designated dates within fiscal year; (3) extending product leadership with 16 nm and AI program execution, including a key product demo to inter-governmental agency and meeting various production milestones and launching AI services; (4) driving Versal program success by meeting various hardware and software product release dates and pre-established customer success goals; and (5) improving teamwork by identifying best practices to improve effectiveness of e-staff, refining business continuity plan and adjusting necessary processes/program plans to account for first half COVID adjustments (including creating functional essential business operations plans and establishing/deploying/customizing return-to-office functional plans), and driving employee learning and engagement by two learnings initiatives.
(12)Represents the actual cash incentive paid to Mr. Boppana for the second half of fiscal 2021 based on achievement against his specific individual performance goals. For the second half of fiscal 2021, Mr. Boppana earned 130% of his target annual cash incentive attributable to the Individual Performance Component based on achievement of certain goals relating to: (1) driving corporate financial growth by achieving revenue, gross margin, operating expense and EPS goals, completing the FY22 and five-year annual operating plan; (2) driving innovation, ease-of-use/expand user base, agility, productivity vectors to meet specific milestones, including execution of improved product planning process; (3) extending product leadership with 16 nm and AI program execution, including planned tapeout and production milestones and AI releases; (4) driving Versal program success by meeting various hardware and software and product release dates and pre-established customer success goals; and (5) developing organization by meeting AMD integration planning goals, delivering CPG Learning Council goals and meeting pre-established CPG-level workforce development goals.
Long-Term Equity Incentive Compensation
The Compensation Committee regularly monitors the environment in which we operate and reviews and makes changes to our long-term equity incentive compensation program as necessary to help us meet our goals, including generating long-term stockholder value and attracting, motivating and retaining talent. For fiscal 2021, as was the case in fiscal 2020, the Committee granted a mix of performance-based and time-based RSUs to our executive officers. In consultation with Compensia, the Committee increased the proportion of equity awards represented by time-based RSUs, compared to performance-based RSUs, due to the economic and political uncertainties that existed when the awards were approved. Specifically, the mix consisted of 50% performance-based RSUs and 50% time-based RSUs for our Chief Executive Officer (compared with 70% and 30%, respectively, last year) and 20% performance-based RSUs and 80% time-based RSUs for our other executive officers (compared with 60% and 40%, respectively, last year), with the exception of Mr. Hill’s award, which was granted in connection with his hiring and consists entirely of time-based RSUs. While the Committee believes that performance-based RSUs are an important means of aligning pay with performance, it also believes that time-based RSUs serve as a retention tool while still aligning the interests of our executive officers with the interests of our stockholders. In general, we prefer to grant our executive officers RSUs rather than stock options, as the higher value of RSU awards allows us to issue fewer shares of our common stock, thereby reducing dilution to our stockholders.
The total value of each RSU award granted to our executive officers during the Focal Review Period (including the value of performance-based RSUs at target) was determined by the Compensation Committee based on an evaluation of corporate and individual performance, internal parity for executive officers at certain levels, a review of compensation peer group data, the pay mix between cash and equity compensation, the Committee’s assessment of the retention value of existing and new equity awards and the recommendations of our Chief Executive Officer (except with respect to his own equity award). The awards granted to our named executive officers for fiscal 2021 were positioned between the 50th and 75th percentiles relative to awards granted by our peer group companies to officers in comparable positions. This represented an increase over the previous year in relation to awards granted by peer group companies, which was intended to balance the Committee’s decision not to increase salaries for our named executive officers for fiscal 2021 as a result of the economic uncertainties that were present at the time. Our Chief Executive Officer received the largest target RSU award based on his overall responsibility for our performance and success. Further differentiation was made among our executive officers based on the Committee’s review of the competitive market data for the compensation peer group for their respective positions and its assessment of each individual’s potential future contributions to the Company.
Focal Review Equity Awards
In May 2020, the Compensation Committee established the total award value of the RSU awards granted to each our executive officers (other than Mr. Hill) for fiscal 2021, in consultation with Compensia, with the value of performance-based RSUs reflecting performance at target. The number of units subject to each award, including performance-based RSUs reflecting target performance, was to be determined based on the tentative total grant value divided by the average closing price of our common stock as reported on the Nasdaq Stock Market during the three-month period starting on April 1, 2020 and ending on June 30, 2020, rounded up to the nearest 500 units. Mr. Hill was granted a special time-based award in connection with his joining the Company as Chief Financial Officer in April 2020, as described below under “Fiscal 2021 Time-Based RSU Awards,” and thus was not included in the awards granted to our named executive officers in May 2020. For fiscal 2021, the tentative total award value of the performance-based RSU awards at target and time-based RSU awards granted effective July 10, 2020 for each of our named executive officers was as follows:
Named Executive Officer Fiscal 2021 Tentative Total RSU Share Amounts
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Named Executive Officer
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Tentative Total Award Value ($)
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Tentative Total Share Amount (1)
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Victor Peng
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11,000,000
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124,500
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William Madden
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3,500,000
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39,500
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Salil Raje
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3,500,000
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39,500
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Vamsi Boppana
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3,000,000
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34,000
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(1)
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Based on an average closing price of our common stock of $88.69 per share over the three-month period beginning on April 1, 2020 and ending on June 30, 2020. Mr. Peng’s award consisted of both performance-based awards, which made up 50% of his award (based on achievement of performance goals at 100% of target), and time-based awards, which made up 50% of his award. The awards for the other named executive officers consisted of both performance-based awards, which made up 20% of each award (based on achievement of performance goals at 100% of target), and time-based awards, which made up 80% of each award. The amount of each time-based award is shown in the table below titled “Named Executive Officer Fiscal 2021 Time-Based RSU Awards.” The target value of each performance-based award, as well as the final value determined on the basis of actual performance, is shown in the table below titled “Named Executive Officer Fiscal 2021 Performance-Based RSU Awards.”
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Fiscal 2021 Time-Based RSU Awards
In May 2020, the Compensation Committee approved the grant of time-based RSU awards to our executive officers, effective July 10, 2020, except in the case of Mr. Hill, who, upon joining the Company, was granted a time-based RSU award effective May 11, 2020. The following table sets forth the number of units that may be settled for shares of our common stock awarded to each of our named executive officers in fiscal 2021 with respect to their time-based RSU awards based on the above criteria:
Named Executive Officer Fiscal 2021 Time-Based RSU Awards
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Named Executive Officer
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Shares Subject to Time-Based RSU Award (1)
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Victor Peng
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62,250
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Brice Hill
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60,310
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William Madden
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31,600
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Salil Raje
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31,600
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Vamsi Boppana
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27,200
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(1)
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Represents 50% of the tentative total share amount shown for Mr. Peng, 100% of the tentative total share amount shown for Mr. Hill and 80% of the tentative total share amount shown for each of the other named executive officers in the table above titled “Named Executive Officer Fiscal 2021 Tentative Total RSU Share Amounts.”
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These RSU awards vest in four equal annual installments, the first of which occurs on the first anniversary of the effective date of the grant, subject to the officer’s continuous service over the vesting period. Upon vesting, they are settled for shares of our
common stock. Our executive officers are required to retain 45% of the shares of our common stock issued in settlement of these RSU awards until their respective stock ownership requirements are satisfied.
Fiscal 2021 Performance-Based RSU Awards
In May 2020, the Compensation Committee also approved grants of performance-based RSU awards to our executive officers, other than Mr. Hill, effective July 10, 2020. The units subject to the performance-based RSU awards were to be earned based on our achievement of pre-established financial and operational goals over a one-year performance period corresponding with our 2021 fiscal year. The number of earned units could increase with over-achievement of the applicable performance goals, to an aggregate maximum of 175% of the target number of units subject to the awards, or could decrease for under-achievement of the performance goals, with the possibility of no units being earned. Once the number of earned units is determined, they vest in three equal annual installments for periods ending on the first three anniversaries of July 10, 2020, subject to the named executive officer’s continuous service over the vesting period, provided that in the event of the executive officer’s death, the portion of the earned units, if any (or the target number of units if the Committee has not yet determined the number of earned units) that would vest on the next scheduled vesting date will vest as of the date of the executive officer’s death. Upon vesting, the units are settled for shares of our common stock.
For purposes of the Fiscal 2021 Performance-Based RSU Awards, “earned units” meant, subject to any modifications determined by the Compensation Committee as described below, a number of units (not to exceed the maximum number of RSUs) equal to the product of the target number of RSUs and a “Performance Multiplier” based on the sum of the following performance components (subject to any modifications determined by the Compensation Committee as described above):
•The new product revenue metric, weighted at 25% (the New Product Revenue Metric);
•The EBITDA metric, weighted at 25% (the EBITDA Metric); and
•The strategic initiatives and product execution metric, weighted at 50% (the Strategic Initiatives and Product Execution Metric).
For fiscal 2021, in consultation with the compensation consultant, the Compensation Committee eliminated the component relating to overall revenue, based on its view that overall revenue is adequately covered as a performance target due to its inclusion in the 2021 Incentive Plan. In addition, in light of the economic uncertainty resulting from the COVID-19 pandemic and the general political climate at the time, the Committee assigned greater weight to the Strategic Initiatives and Product Execution Metric, with the goal of rewarding management for execution on our product roadmap and mitigating the impact of unpredictable market factors on performance incentives.
Each of the performance factors was to be expressed as a ratio equal to the weighting of the applicable metric multiplied by the appropriate metric multiplier determined as follows:
New Product Revenue Metric. The New Product Revenue Metric was designed to measure and reward achievement of certain levels of gross revenue of the Company from new products for the performance period, including revenue from Spartan7 (28nm), Ultrascale (20nm), Ultrascale Plus (16 nm), Versal (7nm) and XBB (Alveo, Solarflare, SoM boards). The New Product Revenue Metric was selected as a metric because of the importance of these products to our overall technology and product strategy.
The New Product Revenue Metric was subject to a revenue threshold requirement and a multiplier that increased to a maximum of 2.00 depending on the revenue attainment for our identified new products for fiscal 2021. For fiscal 2021, the New Product Revenue Metric threshold was $744 million, at which point the payout multiplier was 0.05, with any product revenue level below this threshold resulting in a payout multiplier of 0.00. At the target product revenue level of at least $1.220 million but less than $1.385 million, the New Product Revenue Metric payout multiplier was 1.00. Then, at product revenue of $1.745 million or above, the New Product Revenue Metric multiplier was 2.00. In fiscal 2021, we achieved our threshold of $744 million in gross revenue for the New Product Revenue Metric, and thus the multiplier for the New Product Revenue Metric was 1.30.
EBITDA Metric. The EBITDA Metric was designed to measure and reward improvement in the growth of the Company’s earnings before interest, taxes, depreciation and amortization for the performance period. The EBITDA Metric was selected as a metric because it was considered an efficient way to measure the Company’s operating performance.
The EBITDA Metric was subject to a threshold requirement and a multiplier that increased to a maximum of 2.00 depending on our EBITDA score for fiscal 2021. For fiscal 2021, the EBITDA Metric threshold was $355 million, at which point the payout multiplier was 0.05, with any EBITDA level below this threshold resulting in a payout multiplier of 0.00. At the target EBITDA level of at least $735 million but less than $840 million, the EBITDA Metric payout multiplier was 1.00. Then, at EBITDA of $1,110 million or above, the EBITDA Metric multiplier was 2.00. In fiscal 2021, we achieved our threshold EBITDA level, and thus the multiplier for the EBITDA Metric was 1.60.
Strategic Initiatives and Product Execution Metric. The Strategic Initiatives and Product Execution Metric was designed to measure and reward our execution towards our five-year strategic goals in four distinct categories: the data center group, the core markets group, the wired and wireless group and the product and operational groups. These categories were equally weighted. For the data center group category, this involved achieving key strategic wins in each segment, meeting engineering objectives including setting up a custom chip framework and certain productivity improvements, achieving marketing initiatives with OEMs and growing the leadership team and improving employee engagement and R&D productivity. For the core markets category, this involved growing revenue and modernizing our sales and business intelligence, meeting certain engineering safety and security goals, ensuring readiness of our Versal platform and developing marketing initiatives for strategic auto DW, strategic DW and our Edge portfolio. For the wired and wireless group category, this involved enhancing sales initiatives for the panel business, ASAP custom devices, Versal ACAP (wireless) and wired products, achieving specific engineering and marketing goals for the panel business, ASAP custom devices, wired products and Versal ACAP (wireless) – engineering and ORAN (wireless) – marketing and devoting resources to the panel business readiness. For the product and operational groups category, this involved achieving silicon leadership goals, Versal success, achieving AI/ML leadership in platforms and software, undertaking marketing efforts to increase accessibility and expand the user base, particularly for Versal, improving operations and quality by driving cost reductions and gross margins, achieving greater supply chain resiliency and undertaking initiatives to drive organizational efficiency, transformation and productivity and supporting our corporate-wide ESG efforts and activities.
At the end of the fiscal year, we evaluated the Company’s performance in each category according to a scale that reflected the targeted outcome and the range of outcomes we considered achievable and assigned a numeric score based on this evaluation. The Strategic Initiatives and Product Execution Metric was subject to a threshold score requirement and a multiplier that increased to a maximum of 1.50 depending on the level of achievement of the desired outcomes for fiscal 2021. For fiscal 2021, the Strategic Initiatives and Product Execution Metric threshold score was 40 points, at which point the payout multiplier was 0.50, with any score below this threshold resulting in a payout multiplier of 0.00. At the target score of at least 80 points but less than 88 points, the Strategic Initiatives and Product Execution Metric payout multiplier was 1.00. Then, at any score greater than 112 points, the Strategic Initiatives and Product Execution Metric multiplier was 1.50. For fiscal 2021, we achieved a score of 80 for the Strategic Initiatives and Product Execution Metric, and thus the multiplier for this component was 1.00.
The long-term incentive compensation framework as described above is illustrated in the following chart:
The following table sets forth the long-term incentive compensation performance goals, their percentage weightings and achievements, and the total multiplier for fiscal 2021, based on the performance levels achieved during the fiscal year:
Long-Term Equity Incentive Performance Goals for Fiscal 2021
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Metric
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Weight
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Achievement
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Multiplier
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New Product Revenue
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25%
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$1,468 million
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1.30
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EBITDA
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25%
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$999 million
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1.60
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Strategic Initiatives and Product Execution
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50%
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80
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1.00
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Total
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100%
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1.225
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The Compensation Committee determined the number of earned RSUs under the Fiscal 2021 Performance-Based RSU Awards by taking into account both the pre-established objective performance metrics and the Committee’s evaluation of such subjective considerations, if any, deemed appropriate by the Committee. As described above, the objective performance metrics were to be applied to determine the Performance Multiplier. In determining the terms of the Performance-Based RSU Awards, the Committee retained discretion to modify the Performance Multiplier or any of the individual performance metrics in response to extenuating or unanticipated circumstances such as those stemming from the COVID-19 pandemic. Ultimately, however, in determining the results under the 2021 Incentive Plan, the Compensation Committee did not exercise discretion to adjust any performance multiplier and/or the objective performance metrics underlying the performance multipliers.
The following table sets forth the target and actual number of shares of common stock awarded to each of our named executive officers in fiscal 2021 with respect to their performance-based RSU awards, based on the considerations described above:
Named Executive Officer Fiscal 2021 Performance-Based RSU Awards
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Name
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Shares Subject to Performance-Based RSU Award (Target) (1)
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Shares Subject to Performance-Based RSU Award (Actual) (2)
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Actual Value at Fiscal Year-End (3)
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Victor Peng
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62,250
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76,256
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$9,901,842
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Brice Hill (4)
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N/A
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N/A
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N/A
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William Madden
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7,900
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9,677
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$1,256,558
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Salil Raje
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7,900
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9,677
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$1,256,558
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Vamsi Boppana
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6,800
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8,330
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$1,081,651
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(1)
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This column represents the number of shares of common stock subject to the performance-based RSU awards for fiscal 2021 based on achievement of the performance goals at 100% of target. The amount shown for Mr. Peng represents 50% of the amount shown for Mr. Peng in the table above titled “Named Executive Officer Fiscal 2021 Tentative Total RSU Share Amounts,” and the amount shown for each of the other named executive officers, other than Mr. Hill, represents 20% of the amount shown for such named executive officer in that table. Actual earned shares for fiscal 2021 may range from 0% to 175% of target depending on the level of performance.
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(2)
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This column represents the actual number of shares of our common stock subject to each award earned, based on an adjusted multiplier for performance achievement of 1.225.
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(3)
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This column represents the value of the shares subject to each award at April 1, 2021, the last trading day of our fiscal year, based on the closing price of our common stock of $129.85 per share.
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(4)
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Mr. Hill did not receive a performance-based RSU in fiscal 2021. Upon joining the Company in April 2020, Mr. Hill was granted a time-based RSU award effective May 11, 2020.
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The earned shares under the performance-based RSU awards vest in three equal annual installments for periods ending on the first three anniversaries of July 10, 2020, subject to the named executive officer’s continuous service over the vesting period. Our executive officers are required to retain 45% of the shares of our common stock issued in settlement of these performance-based RSU awards until their respective stock ownership requirements are satisfied.
Generally Available Benefit Plans
We maintain generally available benefit programs in which our executive officers may participate. Under our employee stock purchase plan, employees are able to purchase shares of our common stock at a discounted price. We also maintain a tax-
qualified 401(k) plan for employees in the U.S., which provides for broad-based employee participation. Under the 401(k) plan, we match up to 50% of an employee’s first 8% of compensation that the employee contributes to his or her 401(k) account, up to a maximum per calendar year of $4,500 per employee. We also provide a “true-up” for participants who did not receive their maximum matching contribution during a 401(k) plan year as a result of meeting their contribution limits early in the year. We make matching contributions to help attract and retain employees, and to provide an additional incentive for our employees to save for their retirement in a tax-favored manner. We do not maintain any guaranteed pension plan or other defined benefit plan.
We also offer a number of other benefits to our executive officers pursuant to benefits programs that provide for broad-based employee participation, which includes medical, dental and vision insurance, disability insurance, various other insurance programs, health and dependent care flexible spending accounts, educational assistance, employee assistance and certain other benefits. The terms of these benefits are essentially the same for all eligible employees.
Deferred Compensation Plan
We maintain an unfunded, nonqualified deferred compensation plan which allows eligible participants, including our executive officers and members of our Board of Directors, to voluntarily defer receipt of a portion or all of their base salary, annual cash incentive payment or director fees, as the case may be, until the date or dates elected by the participants, thereby allowing the participating employees and directors to defer taxation on such amounts. For more information about this plan, see the section below entitled “Nonqualified Deferred Compensation Plan.” We do not maintain a supplemental executive retirement plan (SERP) or similar defined benefit deferred compensation plan for any of our employees.
Perquisites and Other Personal Benefits
We generally do not provide perquisites or other personal benefits to our executive officers except in situations where we believe it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective and for recruitment and retention purposes.
Consistent with our compensation philosophy, we intend to continue to maintain market-competitive benefits for all employees, including our executive officers, provided that the Compensation Committee may revise, amend or augment an executive officer’s perquisites or other personal benefits if it deems it advisable in order to remain competitive with comparable companies or retain an individual whose services are critical to us. We believe the benefits we offer are currently at competitive levels with comparable companies.
Employment and Change of Control Severance Arrangements
We have entered into an employment agreement with Mr. Peng, our CEO. This agreement governs the terms of his compensation and, in addition, provides for certain payments and benefits in the event of certain qualifying terminations of employment, including a termination of employment in connection with a change in control of the Company. The terms of Mr. Peng’s employment agreement are discussed in greater detail below in the section entitled “Potential Payments upon Termination or Change in Control.”
In filling each of our executive positions, we have recognized the need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, in formulating these compensation packages, we have been sensitive to the need to integrate new executive officers into the executive compensation structure that we have developed, balancing both competitive and internal equity considerations. Each of these arrangements provides for “at will” employment.
We have approved post-employment compensation arrangements for each of our executive officers in the event of a change of control. We believe that having in place reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly-qualified executive officers. These arrangements are designed to provide reasonable compensation to executive officers whose employment terminates under certain circumstances following a change of control.
Under our post-employment compensation arrangements with our CEO and our other executive officers, payments and benefits in the event of a change in control of the Company are payable only if there is a subsequent qualifying loss of employment by a named executive officer (commonly referred to as a “double-trigger” arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention value following a change in control of the Company and to avoid windfalls, both of which could occur if vesting of either equity or cash-based awards accelerated automatically as a result of the transaction.
We believe that these arrangements are designed to offer compensation packages that are competitive and to align the interests of our executive officers and our stockholders when considering our long-term future. The primary purpose of these arrangements is to keep our most senior executive officers focused on pursuing all corporate transaction activity that is in the best interests of our stockholders regardless of whether those transactions may result in their own job loss. Reasonable post-acquisition payments and benefits should serve the interests of both the executive officer and our stockholders.
Historically, we have avoided the use of excise tax reimbursements (or “gross-ups”) relating to a change in control of the Company and have no such obligations in place with respect to any of our named executive officers. Consistent with our historical practice, we intend to continue to refrain from providing excise tax payments relating to a change in control of the Company.
For a description of the vesting acceleration arrangements for Mr. Hill’s equity awards in the event that we terminate his employment without cause or he resigns under circumstances that constitute a constructive termination, in either case after the consummation of a change in control of the Company that occurs before the second anniversary of his starting date, see “Executive Summary – Fiscal 2021 Compensation Highlights – Compensation Arrangements with Mr. Hill” above.
For detailed descriptions of the post-employment compensation arrangements we maintained with our named executive officers for fiscal 2021, as well as an estimate of the potential payments and benefits payable under these arrangements, see the section below entitled “Potential Payments upon Termination or Change in Control.”
Equity Award Grant Guidelines
We have adopted written procedures for the grant of equity awards. With respect to grants to executive officers and other employees, the Compensation Committee reserves the authority to make grants at such time and with such terms as it deems appropriate in its discretion, subject to the terms of our 2007 Equity Plan. The 2007 Equity Plan requires that all awards be subject to either time-based vesting (with no portion of the award vesting earlier than one year after the date of grant) or performance-based vesting. Generally, grants of equity awards are made to our executive officers based on and in connection with the annual review during the Focal Review Period.
The Compensation Committee determines individual grants to each executive officer based on a variety of factors that it determines to be relevant and appropriate at the time of grant. These factors typically have included the executive officer’s job performance, skill set, prior experience and time in the position, as well as external market data, internal equity, the size and value of the individual’s unvested equity awards, the desire to attract and retain talent, dilutive effect of grant size and business conditions. The Committee also periodically grants equity awards for new hires and promotions.
We have not granted, nor do we intend to grant in the future, equity awards to executive officers in anticipation of the release of material nonpublic information that is likely to result in changes to the price of our common stock, such as a significant positive or negative earnings announcement. Similarly, the Compensation Committee has not timed, nor does it intend to time in the future, the release of material non-public information based on equity grant dates. In any event, because equity compensation awards typically vest over three or four-year periods, the effect of any immediate increase in the price of our common stock following grant is minimal.
Our Board of Directors has delegated to our Chief Executive Officer and Chief Financial Officer limited authority to approve equity award grants to non-officer employees pursuant to the terms of the 2007 Equity Plan, subject to pre-determined guidelines. The Compensation Committee is responsible for determining and granting all equity awards to executive officers.
Other Compensation Policies
Stock Ownership Guidelines
We have adopted stock ownership guidelines for our executive officers to align more closely their interests with those of our stockholders. Under these guidelines:
•our Chief Executive Officer is required to own shares of our stock having a value of at least $4.5 million;
•executive vice presidents are required to own shares of our common stock having a value of at least $1.0 million; and
•senior vice presidents who are executive officers for purposes of Section 16 of the Exchange Act are required to own shares of our common stock having a value of at least $750,000.
All such executive officers must retain 45% of the shares issued in settlement of their RSU awards until their respective stock ownership requirements are met. To date, of our named executive officers, Messrs. Boppana, Peng, Madden, and Raje have satisfied the applicable stock ownership guidelines, and Mr. Hill has not yet satisfied the applicable guidelines.
Clawback Policy
The Board has adopted a policy for seeking the return (clawback) from our executive officers of compensation to the extent such amounts were paid due to financial results that later had to be restated, subject to the terms described below. The policy provides that to the extent the Board (or any committee thereof) and the Company determine appropriate, we may require
reimbursement of all or a portion of any bonus, incentive payment, commission, equity-based award or other compensation granted to and received by or for an executive officer beginning in fiscal 2009, where:
•the compensation was predicated upon achieving certain financial results that were subsequently the subject of a substantial restatement of financial statements filed with the SEC;
•the Board (or a committee thereof) determines that the executive officer engaged in intentional misconduct that was directly responsible for the substantial restatement; and
•a reduced amount of compensation would have been paid to the executive officer based upon the restated financial results.
We intend for such policy to comply with the requirements of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 pertaining to the recovery of executive compensation once the SEC adopts final rules implementing this provision.
Policy Against Hedging and Pledging Transactions
All employees, including our executive officers, as well as all directors, are subject to our Insider Trading Policy. Our Insider Trading Policy prohibits any employee or director from hedging, engaging in short sales, participating in exchange funds or entering into any transaction, investment or arrangement that is intended or may be expected to increase in value if the market value of our common stock falls (such as buying “put” options). In addition, our Insider Trading Policy prohibits any employee, including any executive officer, from holding shares of our common stock in a margin account or pledging shares of our common stock.
Trading Plans
We have a corporate policy regarding Exchange Act Rule 10b5-1 trading plans, pursuant to which key terms of the 10b5-1 trading plans adopted by any of our executive officers or members of the Board are disclosed on our website at www.investor.xilinx.com.
Tax and Accounting Treatment of Compensation
Deductibility of Compensation
Generally, Section 162(m) of the Internal Revenue Code disallows a federal income tax deduction for public corporations with respect to remuneration in excess of $1 million paid in any fiscal year to “covered employees.” Under Section 162(m), “covered employees” are any individuals who served as the principal executive officer or principal financial officer at any time during the taxable year, each of the three other most highly-compensated executive officers whose compensation may be required to be disclosed to stockholders under the Exchange Act in any taxable year, and each person who was a covered employee for any taxable year beginning after December 31, 2016.
Prior to the effectiveness of the Tax Cuts and Jobs Act, the limitation on deductibility pursuant to Section 162(m) did not apply to compensation that qualified under applicable regulations as “performance-based compensation.” Under the Tax Cuts and Jobs Act, the performance-based compensation exception to Section 162(m) was repealed, effective for tax years beginning after December 31, 2017. Accordingly, commencing with our fiscal year ended March 30, 2019, compensation to our covered employees in excess of $1 million is generally not deductible. Remuneration in excess of $1 million will remain exempt from this deduction limit if it qualifies as “performance-based compensation” within the meaning of Section 162(m) as in effect prior to the enactment of the Tax Cuts and Jobs Act and is payable pursuant to a binding written agreement in effect on November 2, 2017 that has not been modified in any material respect on or after that date. Also, all remuneration paid to our principal financial officer pursuant to a binding written agreement in effect on November 2, 2017 that has not been modified in any material respect on or after that date is exempt from the deduction limitation of Section 162(m). Because of the technical nature of the application and interpretation of Section 162(m) and the regulations and guidance issued thereunder, there is no assurance that any compensation granted in the past that was intended to satisfy the requirements for deductibility under Section 162(m) actually was or will ultimately be deductible.
In designing our executive compensation program and determining the compensation of our executive officers, the Compensation Committee considers a variety of factors, including the possibility that certain forms of compensation may be deductible for tax purposes. However, interpretations of and changes in the tax law and other factors beyond the Committee’s control also affect the deductibility of compensation.
To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and long-term corporate goals, the Compensation Committee has not adopted a policy that all compensation must be deductible. The Committee believes that our stockholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted, even though some compensation awards may result in non-deductible compensation expense. From time to time, the Committee may approve compensation for our named executive officers that is not deductible when it believes that such
compensation is consistent with the goals of our executive compensation program and is in the best interests of the Company and our stockholders.
Accounting Considerations
We account for the equity awards granted to our employees, including executive officers, and the non-employee members of our Board of Directors in accordance with FASB ASC Topic 718, which requires us to estimate and record expense for each award of equity compensation over the service period of the award.
Compensation-Related Risks
The Compensation Committee considers potential risks when reviewing and approving our executive and general employee compensation programs. The Committee, in cooperation with management, has reviewed our existing compensation programs and believes that the mix and design of the elements of such programs does not encourage management to assume excessive risks and accordingly are not reasonably likely to have a material adverse effect on the Company. Our programs have been balanced to focus on both short-term and long-term financial and operational performance through prudent business judgment and appropriate, measured risk-taking.
Our annual cash incentive plans are designed to reward financial and operational performance in areas we consider critical to our short-term and long-term success. The annual cash incentive plan for our executive officers is based on a combination of corporate financial performance and individual strategic and operational goals. The financial performance component is based on multiple financial metrics that counterbalance each other, decreasing the likelihood that our executive officers will pursue any one metric to the detriment of overall financial performance. The Operating Margin Component is designed to reward improvements in our operating profit, and the Total Revenue Component is designed to measure and reward increases in our revenue. These metrics limit the likelihood that an executive officer may be rewarded for taking excessive risk on our behalf by, for example, seeking revenue-enhancing opportunities at the expense of profitability. In addition, there are caps on annual cash incentive payments in all the components of the annual cash incentive plan; for fiscal 2021, the Operating Margin Component and Total Revenue Component multipliers were each capped at 2.00, and the Individual Performance Component multiplier was capped at 1.50. These limitations and caps eliminate the risk of compensation windfalls resulting from uncapped annual cash incentives.
The individual strategic and operational goals established at the beginning of the fiscal year for our Chief Executive Officer are reviewed and discussed with our Board of Directors and approved by the Compensation Committee, and the individual strategic and operational goals established at the beginning of the fiscal year for each of our other executive officers are reviewed and discussed with the Committee and approved by our CEO.
Further, annual cash incentive payments for our executive officers are approved by the Compensation Committee. This multi-layer approval process in the goal-setting and payment approval process reduces the risk of improper awards.
The annual cash incentive plan for employees other than executive officers is based on our corporate financial performance of operating profit margin only. This measure is intended to align the interests of participating employees with enhancement of profitability. For each period, participating employees establish individual goals that support key company objectives and are assigned a bonus multiplier. They earn cash awards from the available incentive pool based on the extent of their goal achievement and the applicable multipliers for financial and individual performance. Individual bonus award opportunities are expressed as a percentage of an employee’s eligible earnings (ranging from 8% up to 30% of eligible earnings), and payments are capped at 150% of the employee’s bonus target for the applicable performance period. The modest size of the potential bonuses, the fact that bonuses are funded solely by actual financial performance and the overall cap eliminate the risk of compensation windfalls resulting from uncapped annual cash incentives.
Our equity incentive program is designed to promote long-term performance. During fiscal 2021, our equity incentive program contained a mix of time-based RSU awards and performance-based RSU awards. Time-based RSU awards vest annually over a four-year vesting period. Performance-based RSU awards granted to our executive officers are earned over a one-year performance period, and the earned shares then vest in three equal annual installments, beginning on the first anniversary of the grant date.
We have also adopted stock ownership guidelines that further align the interests of our executive officers and stockholders and promote long-term focus on our growth since these guidelines ensure that our executive officers retain the downside risk of stock ownership for an extended period of time. Therefore, the Compensation Committee believes that our equity incentive program does not encourage unnecessary or excessive risk taking by our executive officers since their equity awards are subject to long-term vesting schedules and the ultimate value of the awards is tied to the changes in value of our common stock. The stock ownership guidelines combined with our long-term vesting schedules help to ensure that our executive officers and other employees have significant value tied to long-term stock price performance.
Our Board of Directors has also adopted a clawback policy (as described above) whereby we may seek a return from our executive officers of compensation to the extent such compensation was paid due to financial results that later had to be restated.
We have also adopted corporate policies to encourage diligence, prudent decision-making and oversight during the goal-setting and review process. The processes that are in place to manage and control risk include the following:
•The Compensation Committee approves the payment scales for the Operating Margin Component and Total Revenue Component under the annual cash incentive plan.
•The Compensation Committee sets the financial metrics at reasonable levels in light of past performance and market conditions.
•Payments under the annual cash incentive plan for our executive officers are subject to approval of the Compensation Committee.
•The Compensation Committee approves the performance metrics and multipliers for the long-term equity incentive compensation plan.
•The Compensation Committee retains discretion in administering all awards and in determining performance achievement.
We also have implemented a number of controls such as our Code of Conduct, our clawback policy and quarterly sub-certification process for all executive officers in order to mitigate the risk of unethical behavior.
Summary Compensation Table
The following table provides compensation information for the named executive officers:
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Name and Position
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Year
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Salary (1)
($)
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Bonus (2) ($)
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Stock
Awards (3)
($)
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Non-Equity
Incentive Plan
Compensation
(4) ($)
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All Other
Compensation (5) ($)
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Total
($)
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Victor Peng (6)
President and Chief Executive Officer
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2021
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950,000
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11,918,915
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1,727,813
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4,500
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14,601,228
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2020
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887,500
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9,324,173
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1,005,141
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5,438
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11,222,252
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2019
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700,000
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4,181,520
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1,703,625
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4,662
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6,589,807
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Brice Hill (7)
Executive Vice President and Chief Financial Officer
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2021
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537,660
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350,000
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4,985,989
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622,963
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5,167
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6,501,779
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William Madden
Executive Vice President and General Manager, Wired and Wireless Group
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2021
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525,000
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3,772,608
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573,563
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6,000
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4,877,171
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2020
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508,750
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2,458,254
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383,538
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6,488
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3,357,030
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2019
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445,000
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1,471,570
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699,688
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4,950
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2,621,208
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Salil Raje (6)
Executive Vice President and General Manager, Data Center Group
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2021
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525,000
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3,772,608
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584,063
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4,500
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4,886,171
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2020
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508,750
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2,458,254
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383,538
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5,708
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3,356,250
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2019
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445,000
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1,471,570
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699,688
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5,829
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2,622,087
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Vamsi Boppana (8)
Senior Vice President, Central Products Group
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2021
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440,000
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3,247,308
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398,640
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—
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4,085,948
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2020
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432,500
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1,486,386
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263,220
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—
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2,182,106
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(1)Amounts shown reflect salaries earned in the applicable fiscal year. This column includes the portion of salary deferred at the respective named executive officer’s election under the Company’s 401(k) Plan and/or nonqualified deferred compensation plan, as applicable.
(2)Represents a sign-on bonus paid to Mr. Hill when he joined the Company in April 2020.
(3)Amounts shown reflect the grant date fair value for stock awards as determined pursuant to FASB ASC Topic 718. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2021 filed with the SEC on May 14, 2021. These compensation costs as they relate to stock awards reflect costs associated with stock awards granted in fiscal 2021. For fiscal 2021, this includes the following numbers of performance-based RSUs based on achievement at 100% of target level performance: Mr. Peng, 62,250 shares; Messrs. Madden and Raje, 7,900 shares each; and Mr. Boppana, 6,800 shares. The maximum number of performance-based RSUs that could be earned by these named executive officers based on achievement at 175% of target level performance is as follows: Mr. Peng, 108,938 shares; Messrs. Madden and Raje, 13,825 shares each; and Mr. Boppana, 11,900 shares. The amounts shown for fiscal 2021 also include RSUs subject only to time-based vesting, in the amounts of 62,250 shares granted to Mr. Peng, 60,310 shares granted to Mr. Hill, 31,600 shares granted to each of Messrs. Madden and Raje, and 27,200 shares granted to Mr. Boppana.
(4)This column includes cash bonuses under the Executive Incentive Plan, including the portion of cash incentive bonus deferred at the respective named executive officer’s election under the Company’s 401(k) Plan and/or nonqualified deferred compensation plan, as applicable. See the section above entitled “Annual Cash Incentive Compensation” for additional details about the Executive Incentive Plan.
(5)Except as otherwise noted, amounts in this column for fiscal 2021 represent the Company’s 401(k) matching contributions. The amount shown for Messrs. Hill and Madden for fiscal 2021 also includes a $1,500 matching charitable contribution made on each individual’s behalf.
(6)The named executive officer participates in the Company’s nonqualified deferred compensation plan. For more information about this plan see the section below entitled “Nonqualified Deferred Compensation Plan.”
(7)Mr. Hill joined the Company as Executive Vice President and Chief Financial Officer in April 2020.
(8)Mr. Boppana became a named executive officer in fiscal 2020.
Grants of Plan-Based Awards for Fiscal Year 2021
The following table provides information on equity and non-equity awards granted to our named executive officers during fiscal 2021:
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Type
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Approval
Date
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Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards (1)
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Estimated Future Payouts
Under Equity Incentive
Plan Awards (2)
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All Other Stock Awards: Number of Shares of Stock or Units (3)
(#)
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Grant
Date
Fair Value of Stock
and Option
Awards (4)
($)
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Name
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Grant
Date
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Threshold
($)
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Target
($)
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Maximum
($)
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Threshold
(#)
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Target
(#)
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Maximum
(#)
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Victor Peng
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EIP
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—
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5/12/20
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17,813
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1,425,000
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2,565,000
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—
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—
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—
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—
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—
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RSU
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7/10/20
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5/12/20
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—
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—
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—
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778
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62,250
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108,938
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—
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5,982,823
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RSU
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7/10/20
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5/12/20
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—
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—
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—
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—
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—
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—
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62,250
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5,936,093
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Brice Hill
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EIP
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—
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5/12/20
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6,721
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537,660
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967,789
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—
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—
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—
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—
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—
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RSU
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5/11/20
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5/12/20
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—
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—
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—
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—
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—
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—
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60,310
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4,985,989
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William Madden
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EIP
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—
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5/12/20
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6,563
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525,000
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945,001
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—
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—
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—
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—
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—
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RSU
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7/10/20
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5/12/20
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—
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—
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—
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99
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7,900
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13,825
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—
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759,266
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|
RSU
|
|
7/10/20
|
|
5/12/20
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,600
|
|
|
3,013,342
|
|
|
Salil Raje
|
|
EIP
|
|
—
|
|
5/12/20
|
|
6,563
|
|
|
525,000
|
|
|
945,001
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
RSU
|
|
7/10/20
|
|
5/12/20
|
|
—
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
7,900
|
|
|
13,825
|
|
|
—
|
|
|
759,266
|
|
|
|
RSU
|
|
7/10/20
|
|
5/12/20
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,600
|
|
|
3,013,342
|
|
|
Vamsi Boppana
|
|
EIP
|
|
—
|
|
5/12/20
|
|
4,400
|
|
|
352,000
|
|
|
633,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
RSU
|
|
7/10/20
|
|
5/12/20
|
|
—
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
6,800
|
|
|
11,900
|
|
|
—
|
|
|
653,545
|
|
|
|
RSU
|
|
7/10/20
|
|
5/12/20
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,200
|
|
|
2,593,763
|
|
(1)Actual payouts have been made under the 2021 Incentive Plan, as disclosed in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.”
(2)Represents performance-based RSU awards granted in fiscal 2021, which became earned based on performance in fiscal 2021. These columns show the number of performance-based RSU awards that may become earned at threshold, target, and maximum levels of performance. The awards were granted under our 2007 Equity Plan. After the final performance-based share amounts are determined, these RSUs vest at the rate of 1/3 of the shares on each anniversary of the grant date.
(3)The awards were granted under our 2007 Equity Plan. Represents time-based RSUs that vest at the rate of 1/4 of the shares on each anniversary of the grant date.
(4)Amounts in this column represent the grant date fair value of RSUs granted in fiscal 2021 calculated in accordance with FASB ASC Topic 718, with performance-based RSUs valued at the grant date based upon the probable outcome of performance conditions, excluding the effect of estimated forfeitures. The assumptions used to calculate the value of the awards are set forth in Note 6 of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for fiscal 2021 filed with the SEC on May 14, 2021.
Outstanding Equity Awards at Fiscal Year End 2021
The following table provides information on outstanding RSUs held by the named executive officers as of April 3, 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Grant Date
|
|
Number of Shares or Units of Stock that Have Not Vested (1)
(#)
|
|
Market Value of Shares or Units of Stock that Have Not Vested (2)
($)
|
|
Victor Peng
|
|
2/1/18
|
|
3,625
|
|
(3)
|
|
470,706
|
|
|
|
|
|
7/2/18
|
|
35,911
|
|
|
|
4,663,043
|
|
|
|
|
|
7/10/19
|
|
18,338
|
|
(3)
|
|
2,381,189
|
|
|
|
|
|
7/10/19
|
|
19,017
|
|
|
|
2,469,357
|
|
|
|
|
|
7/10/20
|
|
76,256
|
|
|
|
9,901,842
|
|
|
|
|
|
7/10/20
|
|
62,250
|
|
(3)
|
|
8,083,163
|
|
|
|
Brice Hill
|
|
5/11/20
|
|
60,310
|
|
(3)
|
|
7,831,254
|
|
|
|
William Madden
|
|
7/2/18
|
|
7,615
|
|
|
|
988,808
|
|
|
|
|
|
7/2/18
|
|
4,700
|
|
|
|
610,295
|
|
|
|
|
|
7/10/19
|
|
6,450
|
|
|
|
837,533
|
|
|
|
|
|
7/10/19
|
|
4,300
|
|
(3)
|
|
558,355
|
|
|
|
|
|
7/10/20
|
|
9,677
|
|
|
|
1,256,558
|
|
|
|
|
|
7/10/20
|
|
31,600
|
|
(3)
|
|
4,103,260
|
|
|
|
Salil Raje
|
|
7/2/18
|
|
7,615
|
|
|
|
988,808
|
|
|
|
|
|
7/2/18
|
|
4,700
|
|
|
|
610,295
|
|
|
|
|
|
7/10/19
|
|
6,450
|
|
|
|
837,533
|
|
|
|
|
|
7/10/19
|
|
4,300
|
|
(3)
|
|
558,355
|
|
|
|
|
|
7/10/20
|
|
9,677
|
|
|
|
1,256,558
|
|
|
|
|
|
7/10/20
|
|
31,600
|
|
(3)
|
|
4,103,260
|
|
|
|
Vamsi Boppana
|
|
7/2/18
|
|
2,500
|
|
|
|
324,625
|
|
|
|
|
|
7/2/18
|
|
2,701
|
|
|
|
350,725
|
|
|
|
|
|
7/10/19
|
|
3,900
|
|
|
|
506,415
|
|
|
|
|
|
7/10/19
|
|
2,600
|
|
(3)
|
|
337,610
|
|
|
|
|
|
7/10/20
|
|
8,330
|
|
|
|
1,081,651
|
|
|
|
|
|
7/10/20
|
|
27,200
|
|
(3)
|
|
3,531,920
|
|
|
(1)Except as noted, these awards represent performance-based RSUs that have been earned based on achievement of pre-established performance goals. Once earned, performance-based RSUs vest in equal annual installments over a three-year period from the grant date, subject to the named executive officer’s continued employment with the Company.
(2)Market value is computed by multiplying the closing price of the Company’s stock on the last trading day of the fiscal year by the number of shares reported in the adjacent column. The closing price of the Company’s stock on April 1, 2021 (the last trading day of our fiscal year) was $129.85.
(3)The award is a time-based RSU that vests in equal annual installments over a four-year period from the grant date, subject to the named executive officer’s continued employment with the Company.
Option Exercises and Stock Vested for Fiscal Year 2021
The following table provides information on stock option exercises and the value realized upon exercise, and all stock awards vested and the value realized upon vesting, by the named executive officers during fiscal 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Number of Shares Acquired on Vesting
(#)
|
|
Value Realized on Vesting (1)
($)
|
|
Victor Peng
|
|
64,846
|
|
6,384,385
|
|
Brice Hill
|
|
—
|
|
—
|
|
William Madden
|
|
21,416
|
|
2,057,286
|
|
Salil Raje
|
|
21,416
|
|
2,057,286
|
|
Vamsi Boppana
|
|
12,851
|
|
1,270,987
|
(1)The value realized upon vesting is equal to the number of shares of stock multiplied by the market value of a share of common stock on the vesting date.
Nonqualified Deferred Compensation Plan
The Company maintains an unfunded, nonqualified deferred compensation plan which allows our employees in positions of director-level or above, including executive officers, as well as our non-employee directors, to voluntarily defer receipt of a portion or all of their salary, cash bonus payment, sales incentive payment or director fees, as the case may be, until the earliest “distribution event” (e.g., specific date, termination of employment, death or change of control) elected by the participants or provided for by the plan, thereby allowing participating employees and directors to defer taxation on such amounts. Distributions may be made in a lump sum payment or in installments (not to exceed 15 years). This deferred compensation plan is offered to allow participants to defer more compensation than they would otherwise be permitted to defer under a tax-qualified retirement plan, such as our 401(k) Plan. Further, we offer the deferred compensation plan as a competitive practice to enable us to attract and retain top talent by providing employees with an opportunity to save in a tax efficient manner.
Amounts credited to the deferred compensation plan consist only of cash compensation that has been earned and payment of which has been timely and properly deferred by the participant. Under the deferred compensation plan, the Company is obligated to deliver on a future date the deferred compensation credited to the relevant participant’s account, adjusted for any positive or negative notional investment results from hypothetical investment alternatives selected by the participant under the deferred compensation plan (Obligations). The Obligations are unsecured general obligations of the Company and rank in parity with other unsecured and subordinated indebtedness of the Company.
In addition, the Company, acting through the Board, may make discretionary contributions to the accounts of one or more deferred compensation plan participants. There were no such discretionary contributions in fiscal 2021. We do not guarantee minimum returns to any participant in the deferred compensation plan. We incur only limited administration expenses to maintain the deferred compensation plan. The deferred compensation plan is evaluated for competitiveness in the marketplace from time to time, but the level of benefits provided is not typically taken into account in determining an executive officer’s overall compensation package for a particular year.
Nonqualified Deferred Compensation Table for Fiscal Year 2021
The following table provides information on nonqualified deferred compensation for the named executive officers during fiscal 2021:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions in
Last FY
($)
|
|
|
Registrant
Contributions in
Last FY
($) (1)
|
|
Aggregate
Earnings in
Last FY
($) (1)
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
Aggregate
Balance at
Last FYE
($)
|
|
Victor Peng
|
|
—
|
|
|
|
—
|
|
|
2,624,699
|
|
|
—
|
|
|
6,969,439
|
|
(2)
|
|
Brice Hill
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
William Madden
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Salil Raje
|
|
—
|
|
|
|
—
|
|
|
446,092
|
|
|
—
|
|
|
1,154,306
|
|
(3)
|
|
Vamsi Boppana
|
|
—
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1) Amounts included in this column are not reported as compensation in the Summary Compensation Table.
(2) The fiscal year-end balance reported for Mr. Peng includes $3,578,172 that was previously reported in the Summary Compensation Table as compensation earned in fiscal years prior to fiscal 2021.
(3) The fiscal year-end balance reported for Mr. Raje includes $507,150 that was previously reported in the Summary Compensation Table as compensation earned in fiscal years prior to fiscal 2021.
Potential Payments Upon Termination or Change in Control
We maintain an employment agreement with Mr. Peng that we entered into as part of an arm’s length negotiation with the Compensation Committee when he became Chief Executive Officer in January 2018. The terms of Mr. Peng’s employment agreement are summarized below.
In January 2016, after reviewing market data, including change in control arrangements provided by some of the Company’s competitors in connection with the recent consolidation in the semiconductor industry, the Compensation Committee approved change of control agreements for our officers. The change of control agreements with Messrs. Hill, Madden, Raje and Boppana provide certain benefits if the executive’s employment is terminated in connection with a change of control of the Company, as more fully described below.
The 2007 Equity Plan does not provide for automatic acceleration of vesting of stock awards upon termination or a change of control; however, the agreement with Mr. Peng and the change of control agreements with the other named executive officers provide for acceleration under certain conditions. The narrative and tables that follow describe potential payments and benefits to the named executive officers under their existing agreements, including payments and benefits that would be due to them in connection with the occurrence of a change of control, assuming their employment terminated on April 3, 2021, the last day of the Company’s fiscal year.
Employment Agreement with Victor Peng
Effective January 29, 2018, we entered into an Employment Agreement with Mr. Peng providing for Mr. Peng’s employment with the Company as President and Chief Executive Officer.
Under the employment agreement, if the Company terminates Mr. Peng’s employment at any time due to disability or other than for “Cause” or if Mr. Peng voluntarily terminates his employment for “Good Reason” (as each such term is defined in his agreement and described below in the section entitled “Definitions of Good Reason, Cause, Constructive Termination, and Change of Control”) then, subject to Mr. Peng’s execution of a release of claims in favor of the Company, he will be eligible for:
(i) a pro rata portion of his bonus for the fiscal year during which his employment was terminated based on (a) his termination date, (b) the determination by the Compensation Committee whether Company performance objectives have been met (such performance to be determined within two and one-half months after the end of the fiscal year in which termination occurs) and (c) an assumption that any individual performance objectives have been achieved at target;
(ii) a lump sum payment equal to one year of his then-current base salary;
(iii) a lump sum payment equal to one year of his annual target bonus;
(iv) at the Company’s election, a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance; and
(v) 24 months’ accelerated vesting of all equity grants received from the Company prior to his termination of employment, provided that (a) in the case of performance-based RSUs for which the number of earned RSUs has not been determined as of the date of termination, the number of accelerated shares will be the actual number of RSUs earned for actual performance achievement that would have vested in the 24 months following termination of employment (such performance to be determined by the Compensation Committee within two and one-half months after the end of the fiscal year in which termination occurs), had the original vesting schedule provided for monthly rather than annual vesting, and (b) in the case of any outstanding awards of RSUs that are not subject to performance metrics and that are subject to “cliff” vesting on one or more anniversaries of the date of grant, such RSUs will be treated as instead being subject to monthly vesting in equal installments from the applicable date of grant, and Mr. Peng will become vested in that number of RSUs which would have vested during the period commencing from the date of grant and continuing up to his termination date and during an additional 24-month period following his termination date.
Notwithstanding the foregoing, if Mr. Peng’s employment is terminated at any time within 90 days prior to or two years following a Change of Control and he executes a release of claims in favor of the Company, he will be eligible for:
(i) a pro rata portion of his bonus for the fiscal year during which his employment was terminated based on (a) his termination date, (b) the determination by the Compensation Committee whether Company performance objectives have been met and (c) an assumption that any individual performance objectives have been achieved at target;
(ii) a lump sum payment equal to 24 months of his then-current base salary;
(iii) a lump sum payment equal to two years of his annual target bonus;
(iv) a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance;
(v) 100% accelerated vesting of all non-performance-based equity awards; and
(vi) 100% accelerated vesting of performance-based RSUs.
Potential Payments upon Termination of Mr. Peng’s Employment
The following table sets forth all payments that would have been made to Mr. Peng assuming his employment was terminated without Cause or Good Reason on April 3, 2021 and Mr. Peng signed a release in favor of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
Target Bonus
|
|
Fiscal 2021 Bonus (1)
|
|
Medical and
Dental
Insurance
|
|
Value of
RSUs (2)
|
|
Total (3)
|
|
$950,000
|
|
$1,425,000
|
|
$1,442,813
|
|
$21,367
|
|
$23,910,074
|
|
$27,749,254
|
|
(1)Based on actual corporate performance compared to target objectives and assumed individual performance at 100% of target objectives.
|
|
(2)Includes 24 months’ acceleration of RSUs (with amounts of performance-based RSUs based on actual performance of the applicable performance metrics), and assuming monthly vesting from the date of grant. In May 2021, the Compensation Committee determined that Mr. Peng had earned 76,256 performance-based RSUs based on actual performance (as adjusted in the manner described above under “Compensation Discussion and Analysis—Compensation Elements—Long-Term Equity Incentive Compensation”), of which 67,783 performance-based RSUs would have accelerated upon his termination of employment. Mr. Peng also held 84,213 time-based RSUs, of which 64,142 RSUs would have accelerated upon termination of employment.
|
|
(3)If such termination had occurred within 90 days before or two years after a Change of Control, then Mr. Peng would have received the following:$1,900,000, representing 24 months of base salary; $2,850,000, equal to two years of his target bonus; $1,442,813, representing the amount of his fiscal 2021 bonus he would have received based on individual performance objectives being achieved at target and corporate performance objectives being achieved as determined by the Compensation Committee; $21,367, consisting of one year of COBRA premiums for medical and dental insurance; and $26,150,621, representing 100% accelerated vesting of equity awards, including 100% accelerated vesting of performance-based RSUs, for a total of $32,364,801.
|
Change of Control Agreements with the Other Named Executive Officers
Under the change of control agreements entered into with Messrs. Hill, Madden, Raje and Boppana, if the employment of the executive is terminated without Cause or the executive resigns pursuant to a Constructive Termination at any time within 90 days prior to or two years following a Change of Control of the Company (in each case, as defined in his agreement and described below under “Definitions of Good Reason, Cause, Constructive Termination, and Change of Control”), and subject to his execution of a release of claims in favor of the Company, the executive will be eligible for: (i) a lump sum payment equal to 150% of his then-current base salary; (ii) a lump sum payment equal to 150% of his annual target bonus; (iii) a lump sum payment equal to, or payment of, one year of COBRA premiums for medical and dental insurance, if the executive elects continuation coverage under COBRA; (iv) 100% accelerated vesting of all non-performance-based equity awards; and (v) 100% accelerated vesting of performance-based RSUs at 100% of target; provided that, with respect to items (iv) and (v) for Mr. Hill, if a Change of Control occurs within the first or second year, respectively, of Mr. Hill’s employment, 25% or 50% of such equity awards, respectively, will accelerate.
Potential Payments upon Change of Control and Termination of Messrs. Hill, Madden, Raje and Boppana
The following table sets forth all payments that would have been made to Messrs. Hill, Madden, Raje and Boppana, assuming a Change of Control occurred on April 3, 2021 and the employment of each such individual was terminated without Cause or as a result of a Constructive Termination on April 3, 2021 and each executive signed a release in favor of the Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150% Annual Base Salary
|
|
150% Annual
Target Bonus
|
|
Medical and Dental
Insurance
|
|
Value of
RSUs
|
|
Total
|
|
Brice Hill
|
|
$825,000
|
|
$825,000
|
|
$30,381
|
|
$1,957,813
|
|
$3,638,194
|
|
William Madden
|
|
$787,500
|
|
$787,500
|
|
$29,238
|
|
$8,124,065
|
|
$9,728,303
|
|
Salil Raje
|
|
$787,500
|
|
$787,500
|
|
$30,381
|
|
$8,124,065
|
|
$9,729,446
|
|
Vamsi Boppana
|
|
$660,000
|
|
$528,000
|
|
$33,128
|
|
$5,934,275
|
|
$7,155,403
|
Definitions of Good Reason, Cause, Constructive Termination, and Change of Control
Under Mr. Peng’s employment agreement “Good Reason” means (i) a reduction of $50,000 or more in his base compensation or target cash incentive or guaranteed bonus, (ii) a material reduction in his authority, duties or responsibilities, (iii) his no longer being Chief Executive Officer of the Company reporting to the Board or (iv) a relocation of the Company’s headquarters outside
of the San Francisco Bay Area, provided that Mr. Peng gives written notice to the Board of the first to occur of any of the foregoing events within 90 days following the first occurrence of such event and the Company fails to remedy the event within 30 days of such notice.
Under Mr. Peng’s employment agreement, “Cause” means (i) continued neglect of or willful failure in the performance of his duties, which, if curable, continues for a period of 20 days following written notice by the Company, (ii) a material breach of the Company’s Proprietary Information and Inventions Agreement, (iii) a material breach of the Company’s Code of Conduct or other Company policies, which, if curable, continues for a period of 20 days following written notice by the Company, (iv) fraud against or embezzlement or material misappropriation from the Company or its affiliates, (v) conviction of, or entering a plea of no contest or nolo contendere to a charge of, a crime constituting a felony, (vi) willful malfeasance or willful misconduct in connection with his duties, which, if curable, continues for a period of 20 days following written notice by the Company, or (vii) any willful and wrongful act or omission which is materially injurious to the financial condition or business reputation of the Company and its subsidiaries, which, if curable, continues for a period of 20 days following written notice by the Company.
Under the agreements with Messrs. Hill, Madden, Raje and Boppana, “Constructive Termination” means the executive’s resignation following the occurrence of any of the following events without the executive’s approval: (i) a material reduction in the executive’s base salary, target bonus or benefits, other than a reduction that is applied across-the-board to all employees at the executive’s level; (ii) a material reduction in the executive’s title, authority or responsibilities; or (iii) the requirement that the executive relocate to a place of employment more than 50 miles from the executive’s primary work location; provided that the executive provides written notice of a condition described in (i), (ii) or (iii) within 90 days of the initial occurrence of the condition and the Company fails to remedy such condition within 30 days of such notice (or, if later, the executive’s actual termination of employment).
Under Mr. Peng’s employment agreement and the change of control agreements with Messrs. Hill, Madden, Raje and Boppana, a “Change of Control” will generally be deemed to have occurred in the event of any of the following: (i) the acquisition by any person or group (other than the Company, a subsidiary of the Company or a Company employee benefit plan) of more than 50% of the voting power of the Company’s outstanding securities; (ii) the closing of (a) a sale of all or substantially all of the Company’s assets if the holders of all voting power for election of directors before the transaction hold less than a majority of the total voting power for election of directors of all entities which acquire the assets or (b) the merger of the Company with or into another corporation if the holders of Company securities representing all voting power for the election of directors before the transaction hold less than a majority of the total voting power for the election of directors of the surviving entity; (iii) any issuance of securities that would give a person or group beneficial ownership of Company securities representing 50% or more of all voting power for election of directors; or (iv) a change in the board of directors over a period of 24 months such that the incumbent directors as of the beginning of any such 24-month period and nominees of the incumbent directors are no longer a majority of the total number of directors.
None of the employment and change of control agreements described above provide any named executive officer with a gross-up or other reimbursement for tax amounts the named executive officer might be required to pay pursuant to Section 280G of the Internal Revenue Code. The agreements described above are intended to comply, to the extent applicable, with Section 409A of the Internal Revenue Code.
Pay Ratio
Under rules adopted pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to calculate and disclose the annual total compensation paid to our median employee, as well as the ratio of the annual total compensation paid to our median employee as compared to the annual total compensation paid to our Chief Executive Officer, Mr. Peng.
For fiscal 2021:
•the median of the annual total compensation of all our employees (other than our CEO) was $139,582; and
•the annual total compensation of our CEO for purposes of this calculation was $14,601,228.
Based on this information, for fiscal 2021 the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee (other than our CEO) was 105 to 1.
This ratio represents our reasonable estimate calculated in a manner consistent with Item 402(u). This rule, which addresses the identification of the “median employee” and the calculation of the pay ratio based on that employee’s annual total compensation, allows companies to adopt a variety of methodologies, apply certain exclusions and make reasonable estimates and assumptions that reflect their compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported by us, as other companies may have different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their pay ratios.
Under Item 402(u), we are required to identify our median employee only once every three years, provided that, during our last-completed fiscal year, there have been no changes in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio. In light of the significant growth in our employee population during fiscal 2021, we could not rule out the likelihood that such growth would result in a significant change to our pay ratio, absent the type of analysis that is required to identify the median employee; accordingly, we have identified a new median employee for fiscal 2021. To identify the median of the annual total compensation of all our employees and the annual total compensation of our median employee, we used the following methodology and material assumptions, adjustments and estimates and continued using the last day of our fiscal year as the date for identifying the median employee:
•In determining our employee population, we considered the individuals, excluding our CEO, who were employed by us and our consolidated subsidiaries on April 3, 2021 (the last day of fiscal 2021), whether employed on a full-time, part-time or temporary basis. We did not include any contractors or other non-employee workers in our employee population.
•As of April 3, 2021, our employee population consisted of approximately 4,890 individuals, including approximately 2,840 individuals located outside of the United States.
•To identify the “median employee,” we compared the annual base salary or wages, as applicable, of each employee as of April 3, 2021, the target annual incentive compensation award of each employee for fiscal 2021 and the grant date fair value of each employee’s equity award (if any) granted in fiscal 2021 as the most appropriate measure of compensation. Target incentive compensation represents a fixed measure of each employee’s compensation arrangements that is not subject to fluctuation as a result of financial or operational performance in a given year.
•For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using the applicable exchange rates in effect on March 1, 2021. For permanent employees hired during fiscal 2021, we annualized their compensation as if they had been employed for the entire measurement period.
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are Ronald S. Jankov, Mary Louise Krakauer and Elizabeth W. Vanderslice. No member of the Compensation Committee is, or was during fiscal 2021, an officer or employee of the Company or any of its subsidiaries, was formerly an officer of the Company or any of its subsidiaries, or had any relationship disclosed in the section below entitled “RELATED PARTY TRANSACTIONS.” No member of the Compensation Committee is, or was during fiscal 2021, an executive officer of another company whose board of directors has a comparable committee on which one of the Company’s executive officers serves.
RELATED PARTY TRANSACTIONS
Our Audit Committee is responsible for reviewing and approving all related party transactions, as provided in the Audit Committee charter. Related parties include any of our directors or executive officers, beneficial owners of more than five percent of our outstanding common stock and immediate family members of the foregoing. The Audit Committee reviews related party transactions due to the potential for a conflict of interest. A conflict of interest arises when an individual’s personal interest interferes with the Company’s interests. All transactions identified through our disclosure controls and procedures as potential related party transactions, or transactions that may create a conflict of interest or the appearance of a conflict of interest, are brought to the attention of the Audit Committee for its review. In reviewing related party transactions, the Audit Committee applies the standards set forth in the Company’s Code of Conduct and the Directors’ Code of Ethics, which provide that directors, officers and employees are to avoid any activity, investment or association that would cause or even appear to cause a conflict of interest. Copies of the Audit Committee Charter, Code of Conduct and Directors’ Code of Ethics are available on our website at www.investor.xilinx.com under “Corporate Governance.” For further discussion regarding transactions with related parties, see the section above entitled “DIRECTORS AND CORPORATE GOVERNANCE—Board Independence.”
In fiscal 2011, the Audit Committee pre-approved our engagement of BlackRock, Inc. (BlackRock) as an investment manager. At the time we entered into this engagement, BlackRock was the beneficial owner of more than five percent of our outstanding common stock, and it continues to be a beneficial owner of more than five percent of our outstanding common stock at present. Xilinx paid BlackRock $209,999 in management fees during fiscal 2021.
COMMITTEE REPORTS