def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
§240.14a-12
First Solar, Inc.
(Name of Registrant as Specified in
its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(set forth the amount on which the filing fee is calculated and
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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Persons who are to respond to the collection of information
contained in this form are not required to respond unless the
form displays a currently valid OMB control number.
First
Solar, Inc.
350 West Washington Street
Suite 600
Tempe, Arizona 85281
April 13,
2011
Dear Stockholder:
You are cordially invited to attend our 2011 annual meeting of
stockholders of First Solar, Inc. to be held on Wednesday,
May 25, 2011 at 9:00 a.m., local time, at the Desert
Willow Conference Center, 4340 East Cotton Center Boulevard,
Phoenix, Arizona 85040.
Details regarding admission to the meeting and the business to
be conducted are described in the Notice of Internet
Availability of Proxy Materials (the Notice) you
received in the mail and in this proxy statement. We have also
made available a copy of our 2010 Annual Report to Stockholders
(the 2010 Annual Report) with this proxy statement.
We encourage you to read our 2010 Annual Report. It includes our
audited financial statements and information about our
operations, markets and products.
We have elected to provide access to our proxy materials on the
internet under the Securities and Exchange Commissions
notice and access rules. We are pleased to take
advantage of these rules and believe that they enable us to
provide you with the information you need, while making delivery
more efficient and more environmentally friendly. In accordance
with these rules, we have sent the Notice to each of our
stockholders providing instructions on how to access our proxy
materials and our 2010 Annual Report on the internet.
Your vote is important. Whether or not you plan to attend the
annual meeting, we hope you will vote as soon as possible. You
may vote on the internet, as well as by telephone or, if you
requested to receive printed proxy materials, by mailing a proxy
or voting instruction card. Please review the instructions on
each of your voting options described in this proxy statement as
well as in the Notice you received in the mail.
I look forward to greeting those of you who are able to attend
the annual meeting in Phoenix.
Sincerely,
Robert J. Gillette
Chief Executive Officer
FIRST
SOLAR, INC.
350 West Washington Street
Suite 600
Tempe, Arizona 85281
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
The 2011 annual meeting of stockholders of First Solar, Inc.
will be held on Wednesday, May 25, 2011, at 9:00 a.m.,
local time. The annual meeting will take place at the Desert
Willow Conference Center, 4340 East Cotton Center Boulevard,
Phoenix, Arizona 85040.
The purposes of the annual meeting are as follows:
1. to elect nine members of the board of directors to hold
office until the next annual meeting of stockholders or until
their respective successors have been elected and qualified;
2. to hold an advisory vote on executive compensation;
3. to hold an advisory vote on the frequency of the
advisory vote on executive compensation;
4. to ratify the appointment of PricewaterhouseCoopers LLP
as First Solar, Inc.s independent registered public
accounting firm for the fiscal year ending December 31,
2011;
5. to vote on a stockholder proposal, if properly presented
at the annual meeting, as described on page 49 of this
proxy statement; and
6. to transact such other business as may properly come
before the annual meeting.
Any action may be taken on the foregoing proposals at the annual
meeting on the date specified above or on any date or dates to
which the annual meeting may be adjourned or postponed.
The close of business on April 7, 2011 is the record date
for determining stockholders entitled to vote at the annual
meeting. Only holders of common stock of First Solar, Inc. as of
the record date are entitled to vote on some or all of the
matters listed in this notice of annual meeting. A complete list
of stockholders entitled to vote at the annual meeting will be
available for inspection by stockholders during normal business
hours at our corporate headquarters located at 350 West
Washington Street, Suite 600, Tempe, Arizona 85281, during
the ten days prior to the annual meeting as well as at the
annual meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
Mary Beth Gustafsson
Executive Vice President,
General Counsel and Secretary
April 13, 2011
Your vote is very important.
Whether or not you plan to attend the Annual Meeting, we
encourage you to read this proxy statement and submit your proxy
or voting instructions as soon as possible. For specific
instructions on how to vote your shares, please refer to the
instructions on the Notice you received in the mail, the section
entitled Questions and Answers About the Annual Meeting
beginning on page 1 of this proxy statement or, if you
requested to receive printed proxy materials, your enclosed
proxy card.
TABLE OF
CONTENTS
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FIRST
SOLAR, INC.
350 West Washington Street
Suite 600
Tempe, Arizona 85281
PROXY STATEMENT
This proxy statement is being furnished in connection with the
solicitation of proxies by the board of directors of First
Solar, Inc., a Delaware corporation (First Solar or
the Company), for use at the annual meeting of the
Companys stockholders to be held on Wednesday,
May 25, 2011, at the Desert Willow Conference Center, 4340
East Cotton Center Boulevard, Phoenix, Arizona 85040, commencing
at 9:00 a.m., local time, and at any adjournment or
postponement. The Notice of Internet Availability of Proxy
Materials (the Notice) relating to the annual
meeting is first being mailed to stockholders, and this proxy
statement is first being made available to stockholders, on or
about April 13, 2011.
QUESTIONS
AND ANSWERS ABOUT THE ANNUAL MEETING
What is
the purpose of the annual meeting?
At the annual meeting, stockholders are being asked to consider
and vote upon the following matters:
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the election of nine members of our board of directors to hold
office until the next annual meeting of stockholders or until
their respective successors have been elected and qualified;
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an advisory vote on executive compensation;
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an advisory vote on the frequency of the advisory vote on
executive compensation;
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the ratification of the appointment of PricewaterhouseCoopers
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2011; and
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a stockholder proposal, if properly presented at the annual
meeting, as described on page 49 of this proxy statement.
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The stockholders will also transact any other business that may
properly come before the annual meeting.
Why did I receive a notice in the mail regarding the internet
availability of proxy materials instead of a full set of proxy
materials?
In accordance with rules adopted by the Securities and Exchange
Commission (the Commission), we may furnish proxy
materials, including this proxy statement and our 2010 Annual
Report to Stockholders (the 2010 Annual Report), to
our stockholders by providing access to such documents on the
internet instead of mailing printed copies. You will not receive
a printed copy of the proxy materials unless you specifically
request one. Instead, the Notice instructs you as to how you may
access and review all of the proxy materials on the internet.
The Notice also instructs you as to how you may submit your
proxy on the internet. If you would like to receive a paper or
email copy of our proxy materials, you should follow the
instructions for requesting such materials in the Notice.
How do I
get electronic access to the proxy materials?
The Notice provides you with instructions regarding how to:
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View our proxy materials for the annual meeting on the
internet; and
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Instruct us to send our future proxy materials to you
electronically by email.
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Choosing to receive your future proxy materials by email will
save us the cost of printing and mailing documents to you and
will reduce the environmental impact of printing and mailing
these materials. If you choose to receive future proxy materials
by email, you will receive an email next year with instructions
containing a link to those materials and a link to the proxy
voting site. Your election to receive proxy materials by email
will remain in effect until you terminate it.
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How does
the board of directors recommend that I vote?
Our board of directors recommends that you vote your shares
(1) FOR each of the nominees to the board of
directors, (2) FOR the approval (in a
non-binding advisory vote) of the compensation of the
Companys named executive officers as disclosed pursuant to
the compensation disclosure rules of the Securities and Exchange
Commission, including the Compensation Discussion and Analysis,
compensation tables and narrative discussion in this proxy
statement, (3) FOR (in a non-binding advisory
vote) the frequency of an advisory vote on the compensation of
our named executive officers to be once every three years,
(4) FOR the ratification of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm for the 2011 fiscal year and
(5) AGAINST the stockholder proposal described
on page 49 of this proxy statement.
Who is
entitled to vote?
The record date for the annual meeting is April 7, 2011.
Only stockholders of record at the close of business on that
date are entitled to notice of and to vote at the annual
meeting. Attendance at the meeting will be limited to such
stockholders of record, their proxies, beneficial owners having
evidence of ownership on that date and invited guests of the
Company.
The Companys sole outstanding capital stock is its common
stock, par value $0.001 per share. Each holder of the
Companys common stock is entitled to one vote per share on
each matter submitted at the annual meeting. At the close of
business on the record date there were 86,081,302 shares of
the Companys common stock outstanding and eligible to vote
at the annual meeting.
What is
the difference between holding shares as a stockholder of record
and as a beneficial owner?
Most First Solar stockholders hold their shares through a broker
or other nominee rather than directly in their own name. As
summarized below, there are some distinctions between shares
held of record and those owned beneficially.
Stockholder
of Record
If your shares are registered directly in your name with our
transfer agent, Computershare Trust Company, N.A., you are
considered, with respect to those shares, the stockholder of
record, and the Notice was sent directly to you by First Solar.
As the stockholder of record, you have the right to grant your
voting proxy directly to First Solar or to vote in person at the
annual meeting. If you requested to receive printed proxy
materials, First Solar has enclosed or sent a proxy card for
your use. You may also vote on the internet or by telephone, as
described in the Notice and below under the heading How
can I vote my shares without attending the annual meeting?
Beneficial
Owner
If your shares are held in an account at a brokerage firm, bank,
broker-dealer, trust or other similar organization, like the
vast majority of our stockholders, you are considered the
beneficial owner of shares held in street name, and the Notice
was forwarded to you by that organization. As the beneficial
owner, you have the right to direct your broker, bank, trustee
or nominee how to vote your shares, and you are also invited to
attend the annual meeting.
Since a beneficial owner is not the stockholder of record, you
may not vote your shares in person at the annual meeting unless
you obtain a legal proxy from the broker, bank,
trustee or nominee that holds your shares giving you the right
to vote the shares at the meeting. If you do not wish to vote in
person or you will not be attending the annual meeting, you may
vote by proxy. You may vote by proxy over the internet or by
telephone, as described in the Notice and below under the
heading How can I vote my shares without attending the
annual meeting?
How can I
vote my shares in person at the annual meeting?
Shares held in your name as the stockholder of record may be
voted by you in person at the annual meeting. Shares held
beneficially in street name may be voted by you in person at the
annual meeting only if you obtain a legal proxy from the broker,
bank, trustee or nominee that holds your shares giving you the
right to vote the shares. Even if you plan to attend the annual
meeting, we recommend that you also submit your proxy or voting
instructions as described below so that your vote will be
counted if you later decide not to attend the meeting.
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How can I
vote my shares without attending the annual meeting?
Whether you hold shares directly as the stockholder of record or
beneficially in street name, you may direct how your shares are
voted without attending the annual meeting. If you are a
stockholder of record, you may vote by proxy. You can vote by
proxy over the internet by following the instructions provided
in the Notice, or, if you requested to receive printed proxy
materials, you can also vote by mail or telephone pursuant to
instructions provided on the proxy card. If you hold shares
beneficially in street name, you may also vote by proxy over the
internet by following the instructions provided in the Notice,
or, if you requested to receive printed proxy materials, you can
also vote by telephone or mail by following the voting
instruction card provided to you by your broker, bank, trustee
or nominee.
Can I
change my vote after I submit my proxy?
Yes, you may change your vote at any time prior to the vote at
the annual meeting. If you are the stockholder of record, you
may change your vote by granting a new proxy bearing a later
date (which automatically revokes the earlier proxy), by
providing a written notice of revocation to First Solars
Corporate Secretary at 350 West Washington Street,
Suite 600, Tempe, Arizona 85281 prior to your shares being
voted, or by attending the annual meeting and voting in person.
Attendance at the annual meeting will not cause your previously
granted proxy to be revoked unless you specifically so request.
For shares you hold beneficially in street name, you may change
your vote by submitting new voting instructions to your broker,
trustee or nominee following the instruction they provided, or,
if you have obtained a legal proxy from your broker or nominee
giving you the right to vote your shares, by attending the
annual meeting and voting in person.
How many
shares must be present to hold the annual meeting?
A quorum must be present at the annual meeting for any business
to be conducted. The presence at the annual meeting, in person
or by proxy, of the holders of a majority of the shares of
voting stock outstanding on the record date, determined by
voting power, will constitute a quorum. Both abstentions and
broker non-votes (described below) are counted for the purpose
of determining the presence of a quorum. If a quorum is not
present, the chairman of the annual meeting may adjourn the
annual meeting until a quorum is present.
What is
the voting requirement to approve each of the
proposals?
In the election of directors, the affirmative vote of a
plurality of the votes cast is required to elect the nine
nominees as directors. This means that the nine nominees will be
elected if they receive more affirmative votes than any other
person. You may not accumulate your votes for the election of
directors. Please note that brokers may not use discretionary
authority to vote shares on the election of directors if they
have not received specific instructions from their clients. For
your vote to be counted in the election of directors, you will
need to communicate your voting decisions to your bank, broker
or other holder of record before the date of the annual meeting.
The frequency of the advisory vote on executive compensation
(Proposal No. 3) receiving the greatest number of
votes (every one, two or three years) will be considered the
frequency recommended by the stockholders. Because your vote is
advisory on Proposals No. 2 and 3, it will not be
binding on the board of directors or the Company. However, the
board will review the voting results and take them into
consideration when making future decisions regarding executive
compensation and the frequency of the advisory vote on executive
compensation.
The proposal to ratify the appointment of PricewaterhouseCoopers
LLP as our independent registered public accounting firm for the
fiscal year ending December 31, 2011 and the stockholder
proposal described on page 49 of this proxy statement each
requires the affirmative vote of a majority of the shares of the
Companys common stock present at the annual meeting in
person or by proxy and entitled to vote as of the record date.
If you hold shares beneficially in street name and do not
provide your broker with voting instructions, your shares may
constitute broker non-votes. Generally, broker
non-votes occur on a matter when a broker is not permitted to
vote on that matter without instructions from the beneficial
owner and instructions are not given. In tabulating the voting
result for any particular proposal, shares that constitute
broker non-votes are not considered entitled to vote or votes
cast on that proposal. Thus, broker non-votes will not affect
the outcome of any matter being voted on at the meeting,
assuming that a quorum is obtained. Abstentions, on the other
hand, have the same effect as votes against the matter.
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What
happens if a nominee is unable to stand for election?
If a nominee is unable to stand for election, the board of
directors may either reduce the number of directors to be
elected or cause a substitute nominee to be selected. If a
substitute nominee is selected, the proxy holders will vote your
shares for the substitute nominee, unless you have withheld
authority.
Who pays
for the costs of soliciting proxies?
The Company will pay the cost of soliciting proxies. The Company
will reimburse brokerage firms and other custodians, nominees
and fiduciaries for reasonable expenses incurred by them in
sending proxy materials to the beneficial owners of voting
stock. In addition to solicitation by mail, directors, officers
and associates (which is our term for employees and is used
throughout this proxy statement to mean employees) of the
Company may solicit proxies personally, by telephone or by
electronic communication, without additional compensation.
How do I
obtain more information about the Company?
A copy of our 2010 Annual Report is available on the website
http://www.envisionreports.com/fslr.
Our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 is available on
our investor relations website at
http://investor.firstsolar.com
under SEC Filings. You may also obtain, free of charge,
a copy of our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 by writing to
Investor Relations, First Solar, Inc., 350 West Washington
Street, Suite 600, Tempe, Arizona 85281; Email:
investor@firstsolar.com.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF THE STOCKHOLDERS TO BE HELD ON MAY 25,
2011
This Proxy Statement and our 2010 Annual Report are available at
http://www.envisionreports.com/fslr.
A Note
About the Company Website
Although we include references to our website
(www.firstsolar.com) throughout this proxy statement,
information that is included on our website is not incorporated
by reference into, and is not a part of, this proxy statement.
Our website address is included as an inactive textual reference
only.
We use our website as one means of disclosing material
non-public information and for complying with our disclosure
obligations under the SECs Regulation FD. Such
disclosures will typically be included within the Investor
Relations section of our website. Accordingly, investors should
monitor such portions of our website, in addition to following
our press releases, SEC filings and public conference calls and
webcasts.
CORPORATE
GOVERNANCE
We adopted corporate governance guidelines that address the
governance activities of the board of directors and include
criteria for determining the independence of the members of our
board. These guidelines are in addition to the requirements of
the Commission and The NASDAQ Stock Market (NASDAQ).
The guidelines also include requirements for the standing
committees of the board, responsibilities for board members and
the annual evaluation of the boards and its
committees effectiveness. The corporate governance
guidelines are available on our website at www.firstsolar.com
under Investors Corporate Governance. At
any time that these guidelines are not available on our website,
we will provide a copy upon written request made to Investor
Relations, First Solar, Inc., 350 West Washington Street,
Suite 600, Tempe, Arizona 85281.
Independence
The board of directors has determined that the following
directors are independent as required by applicable
laws and regulations, by the listing standards of NASDAQ and by
our corporate governance guidelines: Craig Kennedy, James F.
Nolan, William J. Post, J. Thomas Presby, Paul H. Stebbins,
Michael Sweeney and
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José H. Villarreal. The board of directors has
also concluded that the members of each of the audit,
compensation, nominating and governance and project development
risk committees are independent in accordance with
these same standards.
Code of
Business Conduct and Ethics
We have a code of business conduct and ethics that applies to
all directors and associates, including our chairman, chief
executive officer, chief financial officer and all of our
associates in the finance organization. These standards are
designed to deter wrongdoing and to promote the honest and
ethical conduct of all associates. The code of business conduct
and ethics is posted on our website at www.firstsolar.com
under Investors Corporate Governance.
Any substantive amendment to, or waiver from, any provision of
the code of business conduct and ethics with respect to any
director or executive officer will be posted on our website.
Board of
Directors Composition
Our board of directors is currently composed of nine directors:
seven independent directors and two non-independent directors,
consisting of our chairman of the board of directors (who
resigned as executive chairman effective January 1,
2011) and our chief executive officer.
Board of
Directors Leadership Structure
The boards current leadership structure separates the
position of chairman and chief executive officer. Michael J.
Ahearn served as the Companys chief executive officer and
chairman of the board during 2009 until being succeeded as chief
executive officer by Robert J. Gillette on October 1, 2009.
Since such date, Mr. Ahearn has served as the chairman of
the board of directors, and he served as executive chairman (an
executive officer position) through December 31, 2010.
Effective January 1, 2011, Mr. Ahearn resigned from
the executive chairman position and now serves solely as our
chairman of the board.
The board and the nominating and governance committee determined
that the structure was appropriate in that it enabled
Mr. Gillette, then relatively new to the solar industry, to
focus on the complexities associated with the role of chief
executive officer in our rapidly growing company, while enabling
Mr. Ahearn, a founder and industry veteran, to continue to
provide leadership on public policy and at the board level.
Although the roles of chief executive officer and chairman of
the board are currently separated, the board has not adopted a
formal policy requiring such separation. In general, the board
believes that the right structure should be informed by the
needs and circumstances of the Company, its board and its
stockholders at a given point in time, and that the board should
remain adaptable to shaping the leadership structure as those
needs change. Given the identity of the incumbents and the
growth and challenges facing our Company, the board determined
that the current structure, with the roles of chief executive
officer and chairman of the board separated, was appropriate
under the current circumstances.
The
Boards Role in Risk Oversight
The Company has a comprehensive risk management process in which
management is responsible for identifying and managing the
Companys risks and the board and its committees provide
oversight in connection with these efforts. Risks are
identified, assessed and managed on an ongoing basis and
communicated to management during standing management meetings
or otherwise as appropriate. Existing and potential material
risks are addressed during periodic senior management meetings,
resulting in both board and committee discussions and public
disclosure, as appropriate. Further, risk assessment is embedded
in the Companys business decision making, business
planning and strategic planning.
The board is responsible for overseeing management in the
execution of its risk management responsibilities and for
assessing the Companys approach to risk management. The
board administers this risk oversight function either through
the full board or through one of its four standing committees,
each of which examines various components of the Companys
enterprise risks as part of its responsibilities. The full board
reviews enterprise-wide strategic risks and certain other risk
areas on a regular basis. An overall review of risk is inherent
in the boards consideration of the Companys
long-term strategies and in the transactions and other matters
presented to the board, including capital expenditures,
manufacturing capacity expansions, acquisitions and significant
financial
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matters. The audit committee oversees financial risks (including
risks associated with accounting, financial reporting,
enterprise resource planning system implementation, foreign
currencies and the collectability of accounts receivable), legal
and compliance risks and other risk management functions. The
compensation committee considers risks related to the attraction
and retention of talent (including management succession
planning) and risks relating to the design of compensation
programs and arrangements, including a periodic review of such
compensation programs to ensure that they do not encourage
excessive risk-taking. The nominating and governance committee
considers risks related to corporate governance practices. The
project development risk committee considers risks related to
our project development and related project finance activities.
Management regularly reports on risk-related matters to the
board or the relevant committee thereof. Management
presentations containing information regarding risks and risk
management initiatives are given throughout the year in
connection with board and committee quarterly and special
meetings as well as other communications as needed or as
requested by the board or committee. In addition, the
Companys director of risk management reports to the audit
committee at least once per year, and has open access to the
chair of the audit committee.
Policy
Regarding Hedging of Company Securities
The First Solar, Inc. Insider Trading Policy prohibits its
directors and all associates, including all named executive
officers, from engaging in any short sales with respect to
Company securities, buying or selling puts, calls or derivatives
on Company securities and purchases of Company securities on
margin.
Security
Ownership Requirements
In February 2010, First Solar adopted share ownership guidelines
pursuant to which the Companys executive officers and
non-associate directors were afforded three years to achieve
share holdings equal to three times their annual base salary or
annual retainer, as applicable, and five times annual base
salary for the chief executive officer.
Committee
Composition
We have four standing committees of the board: the audit
committee, the compensation committee, the nominating and
governance committee and the newly formed project development
risk committee. The committee membership and meetings during
2010 and the function of each of the committees are described
below.
During 2010, the board of directors held 10 meetings. Each
director attended at least 75% of the aggregate of all board of
directors meetings and committee meetings for the committees on
which he serves.
The following is a list of all directors and the committees on
which the directors serve as of December 31, 2010. These
committee assignments have been in effect since July 26,
2010.
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Compensation
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Nominating and Governance
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Project Development
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Board of Directors Member
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Audit Committee
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Committee
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Committee
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Risk Committee
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Michael J. Ahearn
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Robert J. Gillette
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Craig Kennedy
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Member
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James F. Nolan
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William J. Post
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Member
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Chair
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J. Thomas Presby
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Chair
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Paul H. Stebbins
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Member
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|
Member
|
|
Member
|
Michael Sweeney
|
|
|
|
Chair
|
|
Member
|
|
|
José H. Villarreal
|
|
|
|
Member
|
|
Chair
|
|
|
Audit
Committee
The audit committee oversees our financial reporting process on
behalf of the board of directors and reports to the board of
directors the results of these activities, including reviewing
the systems of internal controls established
6
by management, our audit and compliance process and financial
reporting. The audit committee, among other duties, engages the
independent registered public accounting firm, pre-approves all
audit and non-audit services provided by the independent
registered public accounting firm, reviews with the independent
registered public accounting firm the plans and results of the
audit engagement, considers whether any non-audit services
provided by the independent registered public accounting firm
conflict with the independence of such independent registered
public accounting firm and reviews the independence of the
independent registered public accounting firm. During 2010, the
audit committee held five meetings.
J. Thomas Presby (Chair), Craig Kennedy and Paul H.
Stebbins serve on our audit committee. Each member of the audit
committee meets the standards for financial knowledge for
companies listed on NASDAQ. In addition, the board of directors
has determined that Mr. Presby is qualified as an audit
committee financial expert within the meaning of Commission
regulations.
The audit committee operates pursuant to a written charter and
is of the view that it has complied with its charter. A current
copy of the audit committees charter is available on our
website at www.firstsolar.com under
Investors Corporate Governance.
Compensation
Committee
The compensation committee reviews and recommends compensation
and benefit plans for the Companys officers and directors,
including non-associate directors, reviews the base salary and
incentive compensation for each executive officer, reviews and
approves corporate goals and objectives relevant to our chief
executive officers compensation, administers our incentive
compensation program for key executive and management associates
and reviews at least annually the benefits strategy related to
benefits for all associates. During 2010, the compensation
committee held seven meetings.
Michael Sweeney (Chair), Paul H. Stebbins, José H.
Villarreal and William J. Post serve on our compensation
committee.
The compensation committee operates pursuant to a written
charter and is of the view that it has complied with its
charter. A current copy of the compensation committees
charter is available on our website at www.firstsolar.com
under Investors Corporate Governance.
Compensation
Committee Interlocks and Insider Participation
None of the members of our compensation committee has been an
executive officer or associate of the Company during our last
completed fiscal year. During our last completed fiscal year,
none of our executive officers served as a member of the
compensation committee of any entity that has one or more
executive officers serving on our compensation committee.
Nominating
and Governance Committee
The nominating and governance committee reviews the composition
and performance of the board and its committees and leads the
process to assess their performance, assesses candidates for
appointment to the board and recommends to the board whether
such candidates should stand for election at the next meeting of
stockholders. The nominating and governance committee is also
responsible for reviewing and assessing the Companys
corporate governance policies and guidelines. During 2010, the
nominating and governance committee held five meetings.
José H. Villarreal (Chair), J. Thomas Presby, Paul H.
Stebbins and Michael Sweeney serve on our nominating and
governance committee.
The nominating and governance committee operates pursuant to a
written charter and is of the view that it has complied with its
charter. A current copy of the nominating and governance
committees charter is available on our website at
www.firstsolar.com under Investors
Corporate Governance.
7
Nomination
Procedures
Director nominees are recommended by the nominating and
governance committee for selection by the board of directors. In
considering new nominees for the board of directors, the
nominating and governance committee considers qualified
individuals who, if added to the board of directors, would
provide the mix of director characteristics, experience,
perspectives and skills appropriate for the Company. In
accordance with the corporate governance guidelines adopted by
the board and the nominating and governance committee charter,
criteria for selection of candidates include, but are not
limited to: (i) roles and contributions valuable to the
business community; (ii) personal qualities of leadership,
character, judgment and whether the candidate possesses and
maintains a reputation in the community at large of integrity,
trust, respect, competence and adherence to the highest ethical
standards; (iii) relevant knowledge and diversity of
background and experience in such areas as business, technology,
finance and accounting, marketing, government relations and
other disciplines relevant to the Companys business; and
(iv) whether the candidate is free of conflicts and has the
time required for preparation, participation and attendance at
all meetings.
As indicated by these criteria, the board and the nominating and
governance committee seek a diversity of background and
experience among board members. The nominating and governance
committee does not follow any ratio or formula to determine the
appropriate mix. Rather, it uses its judgment to identify
nominees whose backgrounds, attributes and experiences, taken as
a whole, will contribute to the high standards of board service
at the Company. The effectiveness of this approach is evidenced
by the directors participation in the insightful and
robust deliberation that occurs at board and committee meetings
and in shaping the agendas for those meetings.
The board of directors does not have a specific policy for
consideration of nominees recommended by security holders due to
the fact that, as of April 7, 2011, the Estate of John T.
Walton and its affiliates control approximately 31% of our
outstanding common stock and their vote has a significant
influence on whether any director nominee recommended by the
board of directors or a security holder is elected to the board
of directors. However, security holders can recommend a
prospective nominee for the board of directors as described
below. There have been no recommended nominees from security
holders.
Our bylaws require that a stockholder who wishes to nominate an
individual for election as a director at our annual meeting must
give us advance written notice. The notice must be delivered to
or mailed and received by the Corporate Secretary of the Company
not later than 90 days or earlier than 120 days prior
to the first anniversary of the preceding years annual
meeting. If the annual meeting for which the recommendation is
submitted is more than 30 days before or more than
60 days after the first anniversary of the preceding
years annual meeting, such recommendation must be received
by the Corporate Secretary of the Company not earlier than
120 days prior to the annual meeting and not later than
90 days prior to such annual meeting or the 10th day
following the day on which public announcement of the annual
meeting date is first made by the Company.
Stockholders may contact our Corporate Secretary at First Solar,
Inc., 350 West Washington Street, Suite 600, Tempe,
Arizona 85281 for a copy of the relevant bylaw provisions
regarding the requirements for nominating director candidates
and making stockholder proposals.
Project
Development Risk Committee
The board of directors formed a project development risk
committee on July 26, 2010 for the purpose of overseeing
the Companys project development and related project
finance activities. During 2010, the project development risk
committee held one meeting.
William J. Post (Chair), J. Thomas Presby, Paul H. Stebbins and
Craig Kennedy serve on our project development risk committee.
The project development risk committee operates pursuant to a
written charter and is of the view that it has complied with its
charter. A current copy of the project development risk
committees charter is available on our website at
www.firstsolar.com under Investors
Corporate Governance.
8
Stockholder
Communications with Directors
A stockholder who wishes to communicate directly with the board,
a committee of the board or with an individual director
regarding matters related to First Solar should send the
communication to:
First Solar, Inc.
Attn: Corporate Secretary
350 West Washington Street
Suite 600
Tempe, Arizona 85281
We will forward all stockholder correspondence about First Solar
to the board, committee or individual director, as appropriate.
Please note that we will not forward communications that are
spam, junk mail and mass mailings, resumes and other forms of
job inquiries, surveys, and business solicitations or
advertisements.
Attendance
at Stockholder Meetings
The Company does not have a policy on directors attending the
annual stockholders meetings. Last years annual
stockholders meeting was held on June 1, 2010 in
Phoenix, Arizona and was attended by one director.
DIRECTORS
Members of the board of directors of the Company are elected at
each annual meeting of stockholders and serve until the next
annual meeting or until their respective successors have been
elected and qualified. The following information provided with
respect to the principal occupation, affiliations and business
experience during the last five years for each of the members of
the board of directors has been furnished to us by such members.
The name and certain information regarding each director of the
Company are set forth below as of April 7, 2011. There are
no family relationships among directors or executive officers of
the Company. Each of the following persons has been nominated by
the board of directors for election at the annual meeting. In
concluding that each of the following individuals should
continue to serve as director, the board considered such
persons qualifications as described below and determined
that each such person would continue to provide the
contributions to the board as specified below.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Current Position with First Solar
|
|
Director Since
|
|
Michael J. Ahearn
|
|
|
54
|
|
|
Chairman of the Board
|
|
|
2000
|
|
Robert J. Gillette
|
|
|
51
|
|
|
Chief Executive Officer and Director
|
|
|
2009
|
|
Craig Kennedy
|
|
|
59
|
|
|
Director
|
|
|
2007
|
|
James F. Nolan
|
|
|
79
|
|
|
Director
|
|
|
2003
|
|
William J. Post
|
|
|
60
|
|
|
Director
|
|
|
2010
|
|
J. Thomas Presby
|
|
|
71
|
|
|
Director
|
|
|
2006
|
|
Paul H. Stebbins
|
|
|
54
|
|
|
Director
|
|
|
2006
|
|
Michael Sweeney
|
|
|
53
|
|
|
Director
|
|
|
2003
|
|
José H. Villarreal
|
|
|
57
|
|
|
Director
|
|
|
2007
|
|
Michael J. Ahearn serves as chairman of the board of directors
of First Solar and served as chief executive officer from August
2000 to September 2009 and executive chairman from October 2009
to December 2010. Prior to First Solar, he was partner and
president of an equity investment firm, JWMA (formerly True
North Partners, L.L.C.). Prior to joining JWMA, Mr. Ahearn
practiced law as a partner in the firm of Gallagher &
Kennedy. Mr. Ahearn has served on the boards of Arizona
Technology Enterprises, Arizona State University Research Park,
Homeward Bound, the Arizona Science Museum and currently serves
on the board of the German Marshall Fund of the United States.
Mr. Ahearn holds a B.A. in Finance and a J.D. from Arizona
State University. During his nine-year tenure as chief executive
officer of First Solar, Mr. Ahearn led the development and
expansion of First Solar from a small privately-held company to
a successful multinational industry-leading public company; his
experience and insights are critical assets to the board of
directors.
9
Robert J. Gillette joined First Solar in October 2009 as chief
executive officer. Prior to joining First Solar,
Mr. Gillette served as president and chief executive
officer of Honeywell Aerospace since January 2005. Honeywell
Aerospace, headquartered in Phoenix, Arizona, is Honeywell
Internationals largest business group. In this role,
Mr. Gillette led Honeywell Aerospaces three main
businesses Air Transport & Regional,
Business & General Aviation, and Defense &
Space with more than 40,000 employees at nearly
100 worldwide manufacturing and service sites. Prior to this
assignment, Mr. Gillette had served as president and chief
executive officer of Honeywell Transportation Systems since July
2001. Mr. Gillette holds a bachelors of science
degree in Finance from Indiana University. Through his career,
Mr. Gillette has developed a deep understanding of the
successful management of a large global business. As chief
executive officer of First Solar, Mr. Gillette plays an
essential role at the board level in providing CEO-level
visibility into the management and operations of First Solar.
Craig Kennedy, Audit Committee; Project Development Risk
Committee, was elected a director of First Solar in
September 2007. Since 1995, Mr. Kennedy has been president
of the German Marshall Fund, an independent American
organization created in 1972 as a permanent memorial to the
Marshall Plan. The German Marshall Fund sponsors a wide range of
programs related to foreign, economic, immigration and
environmental policy, and it operates a number of political
exchanges between the United States and Europe with a special
emphasis on Germany. Mr. Kennedy began his career in 1980
as a program officer at the Joyce Foundation in Chicago.
Mr. Kennedy was president of the Joyce Foundation between
1986 and 1992, where he built the Foundations
environmental program and launched a new program on
U.S. immigration policy. Mr. Kennedy left the Joyce
Foundation to work for Richard J. Dennis, a Chicago investor and
philanthropist. During this same period, Mr. Kennedy
created a consulting firm working with nonprofit and public
sector clients. Mr. Kennedy serves on the board of the
nonprofit Thomas B. Fordham Foundation, the Rocky Mountain
Institute and the European Foundation Center. Mr. Kennedy
is audit committee chair of the Invesco Van Kampen
Closed-End-Funds. Mr. Kennedy holds a B.A., an M.A. and an
MBA from the University of Chicago. Mr. Kennedys deep
public policy experience and global perspective are valuable
resources to the Company, as our business is impacted by public
policy issues on a global scale.
James F. Nolan was elected a director of First Solar in February
2003. Mr. Nolan served as the vice president of operations
with Solar Cells, Inc., the predecessor to First Solar, and was
responsible for research, development and manufacturing
operations. He designed and built early prototype equipment for
First Solars pilot manufacturing line and led the team
that developed the process for producing large area thin film
cadmium telluride solar modules. Mr. Nolan worked as a
part-time consultant for First Solar from November 2000 until
March 2007. Mr. Nolan has over 35 years of experience
in physics, engineering, research and development, manufacturing
and process design with companies such as Westinghouse, Owens
Illinois, Glasstech and Photonics Systems. Mr. Nolan holds
more than 10 patents in areas of flat panel electronic displays
and photovoltaic devices and processes. Mr. Nolan earned
his B.S. in Physics from the University of Scranton
(Pennsylvania) and a PhD in Physics from the University of
Pittsburgh. Mr. Nolan provides the board with extensive
experience in engineering, research and development and
manufacturing and process design, obtained through his work at
the predecessor to First Solar and other companies throughout
his career.
William J Post, Chair, Project Development Risk Committee;
Compensation Committee, retired as chairman and chief
executive officer of Pinnacle West Capital Corporation in April
2009, and he retired from the board of directors of Pinnacle
West in May 2010. He joined Arizona Public Service (the largest
subsidiary of Pinnacle West and the largest electric utility in
Arizona) in 1973 and held various officer positions at APS
beginning in 1982 including: vice president and controller, vice
president of finance and regulation, chief operating officer,
president and chief executive officer. He became president of
Pinnacle West in 1997, chief executive officer in 1999 and
chairman of the board in 2001. Mr. Post joined the board of
Arizona Public Service in 1995 and the board of Pinnacle West in
1997. Mr. Post is chairman of the board of Swift
Transportation Corporation, chairman of Blue Cross Blue Shield
of Arizona and chairman of the Board of Trustees of Arizona
State University, where he received a Bachelor of Science Degree
in 1973. He also currently serves on the boards of Translational
Genomics Research Institute and the Thunderbird School of
International Management, and has served in the past as chairman
of Suncor Development Company, Stagg Information Systems,
Nuclear Assurance Corporation, Nuclear Electric Insurance
Limited, the Institute of Nuclear Power, and El Dorado
Investment Company. He also served as a Director of Phelps Dodge
Corporation from 2001 to 2007. Mr. Post brings to the board
executive-level utility-sector experience,
10
including a deep understanding of such sector within the
southwestern United States, a core target market for the
Companys expanding systems business.
J. Thomas Presby, Chair, Audit Committee;
Nominating & Governance Committee; Project
Development Risk Committee, was elected a director of First
Solar in August 2006. Mr. Presby retired in 2002 from a
30-year
career with Deloitte Touche Tohmatsu. At Deloitte,
Mr. Presby held numerous positions in the United States and
abroad, including the posts of deputy chairman and chief
operating officer. Mr. Presby serves as a director, the
audit committee chair and a member of the governance committee
of World Fuel Services, Inc. Mr. Presby also serves as a
director and the audit committee chair of INVESCO Ltd. and
Tiffany & Co., and as a director, audit committee
chair and member of the acquisition committee and the corporate
governance and nominating committee of Examworks Group, Inc.
Mr. Presby has previously served as a director of American
Eagle Outfitters, Inc., TurboChef Technologies, Inc.,
PracticeWorks and GreenPoint Financial Corp. Mr. Presby is
a Certified Public Accountant and holds an NACD Certificate of
Director Education. Mr. Presby holds a BSEE from Rutgers
University and an MBA from Carnegie Mellon University.
Mr. Presbys experience as an audit committee chair
for multiple public companies, together with his
30-year
career with Deloitte Touche Tohmatsu, provide a strong
background for his role as chair of the audit committee and the
audit committee financial expert.
Paul H. Stebbins, Audit Committee; Compensation Committee;
Nominating & Governance Committee; Project Development
Risk Committee, was elected a director of First Solar in
December 2006. Mr. Stebbins has served as the chairman and
chief executive officer of World Fuel Services Corporation since
July 2002 and has served as a director of World Fuel since June
1995. Between July 2000 and 2002, Mr. Stebbins also served
as president and chief operating officer of World Fuel. In 1985,
Mr. Stebbins co-founded Trans-Tec Services, a global marine
fuel service company acquired by World Fuel in 1995.
Mr. Stebbins is a member of the Business Roundtable, an
influential association of chief executive officers of leading
U.S. companies. Mr. Stebbins brings to the board
significant CEO-level experience in managing a large global
energy-related publicly-traded company.
Michael Sweeney, Chair, Compensation Committee;
Nominating & Governance Committee, was elected a
director of First Solar in July 2003. Mr. Sweeney has
served as chairman of the board of Star Tribune Media Holdings,
the holding company for the Minneapolis Star Tribune, since
September 2009. He also remains a partner in Goldner Hawn
Johnson & Morrison, Inc. (GHJM), a private equity
firm. Mr. Sweeney joined GHJM in 2000 and served as that
firms managing partner from 2001 through 2008. He had
previously served as president of Starbucks Coffee Company (UK)
Ltd. in London and held various operating management and
corporate finance roles. After starting his career with Merrill
Lynch in New York and Phoenix, he built and sold an investment
banking boutique. Mr. Sweeneys background in
investment banking and private equity, as well as his operating
company business acumen, are valuable resources to the board and
the Company, particularly with respect to the boards
consideration of compensation and financial matters and
strategic investments.
José H. Villarreal, Compensation Committee; Chair,
Nominating & Governance Committee, was elected a
director of First Solar in September 2007. Mr. Villarreal
currently serves as a public policy consultant to the law firm
of Akin Gump Strauss Hauer & Feld LLP and from July
1994 to January 2009 served as a partner in the firm. Prior to
joining Akin Gump, Mr. Villarreal served as an assistant
attorney general in the Public Finance Division of the Texas
Attorney Generals office. Mr. Villarreal has long
been active in civic affairs and has served on the boards of
numerous organizations, both public and private. He currently
serves on the boards of Union Pacific Corporation and PMI Group
Inc., and from 1998 to 2006 he served on the board of directors
of Wal-Mart Stores, Inc., where he chaired the compensation,
nominating and governance committee and served as lead
independent director. Mr. Villarreal recently served as
United States Commissioner General to the Shanghai 2010 World
Expo. He is on the board of the
U.S.-Mexico
Foundation, which collaborates bi-nationally to expand
opportunity for the people of Mexico, and the Center for
American Progress, a Washington D.C. based think-tank.
Mr. Villarreals background as an attorney and his
experience as chair of the nominating and governance committee
of a major global public company are particularly helpful in the
boards deliberation of corporate governance matters, and
his public policy insights contribute to the boards
consideration of important public policy matters.
11
NON-ASSOCIATE
DIRECTOR COMPENSATION
We use a combination of cash and stock-based compensation to
attract and retain qualified candidates to serve on our board of
directors. At the compensation committees initial meeting
of 2010, the committee adjusted non-associate director
compensation to (i) add a $10,000 retainer for committee
chairs other than the audit committee chair, and
(ii) adjust annual non-associate board compensation by
increasing the stock portion of such compensation by $25,000 (to
$100,000). The table below summarizes the 2010 Non-Associate
Director Compensation.
|
|
|
|
2010 Non-Associate Director Compensation
|
Annual Retainer ($175,000)
|
|
|
Audit Committee Chair (+ $35,000)
|
|
|
|
|
$100,000 in stock; $75,000 cash
|
|
|
Other Committee Chairs (+$10,000)
|
|
|
|
|
|
|
|
Paid in cash
|
|
|
|
|
Paid in equal quarterly installments
|
|
|
|
|
When reviewing non-associate director compensation we are guided
by three goals, as provided in our Corporate Governance
Guidelines: (i) compensation should fairly pay directors
for work required for a company of our size and scope;
(ii) compensation should align directors interests
with the long-term interests of our stockholders; and
(iii) the structure of the compensation should be clearly
disclosed to our stockholders. The 2010 changes are consistent
with this approach in that market data prepared by Compensation
Strategies, the boards independent compensation
consultant, indicated the changes were consistent with market
practice for companies of our size and scope.
Cash
Compensation
The annual cash compensation for our non-associate directors is
$75,000 (payable quarterly in four equal installments) plus an
additional $35,000 annual cash retainer (payable quarterly in
four equal installments) for the chairman of our audit committee
and an additional $10,000 annual cash retainer (payable
quarterly in four equal installments) for the other three
committee chairs.
Equity
Compensation
The annual equity compensation for our non-associate directors
is a $100,000 stock grant, payable quarterly in four equal
installments. With respect to such quarterly stock grants, our
practice is to issue the stock to our independent directors at
the end of the quarter. Our practice is not to time the date of
these awards, and we do not take into account any internal
black outs, during which associates and directors
are prohibited by our Insider Trading Policy from trading in our
securities, or whether they are or are not in possession of
undisclosed material facts or whether any undisclosed material
facts could be perceived as potentially positive or negative.
Other
We reimburse all non-associate directors for reasonable and
necessary expenses they incur in performing their duties as
non-associate directors of the Company. The 2010 board
compensation and committee chair retainer paid to Mr. Post
was pro-rated to reflect his service commencement date
(June 7, 2010) and the mid-year formation of the
project development risk committee (on July 26, 2010).
Chairman
of the Board
In December 2010, Michael Ahearn advised the board that
effective January 1, 2011 he would transition from
executive chairman to non-associate chairman. In connection
therewith, effective January 1, 2011, the compensation
committee determined that Mr. Ahearns compensation as
a non-associate director will be supplemented by an additional
$175,000 in recognition of the additional time and effort
required as chairman, with such amounts to be paid $75,000 in
cash and $100,000 in equity. Therefore, the total annual
compensation payable to Mr. Ahearn is $150,000 in cash and
$200,000 in equity, which amounts are paid in equal quarterly
installments of $37,500 in cash and $50,000 in equity in
accordance with the Companys pay practices for all
non-associate directors. In addition, it was agreed that
Mr. Ahearn may continue to rent office space from the
Company at 350 West Washington Street,
12
Tempe, AZ, at cost, and that the Company will provide an
administrative assistant to him at the Companys expense.
During 2010, Mr. Ahearn was not separately compensated for
his services as a director.
Non-Associate
Director Compensation Table
The following table sets forth information with respect to
compensation earned by our non-associate directors for the
fiscal year ended December 31, 2010:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
|
|
|
|
or Paid in
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
Cash ($)
|
|
|
($)(1)(2)
|
|
|
($)
|
|
|
Craig Kennedy
|
|
|
75,000
|
|
|
|
100,214
|
|
|
|
175,214
|
|
James F. Nolan
|
|
|
75,000
|
|
|
|
100,214
|
|
|
|
175,214
|
|
William J. Post
|
|
|
47,953
|
(3)
|
|
|
57,039
|
|
|
|
104,992
|
|
J. Thomas Presby
|
|
|
110,000
|
(4)
|
|
|
100,214
|
|
|
|
210,214
|
|
Paul H. Stebbins
|
|
|
75,000
|
|
|
|
100,214
|
|
|
|
175,214
|
|
Michael Sweeney
|
|
|
85,000
|
(5)
|
|
|
100,214
|
|
|
|
185,214
|
|
José H. Villarreal
|
|
|
85,000
|
(5)
|
|
|
100,214
|
|
|
|
185,214
|
|
|
|
|
(1) |
|
The amounts in this column represent the aggregate grant date
fair value of fully vested common stock granted during the
fiscal year ended December 31, 2010, computed in accordance
with Financial Accounting Standards Board Accounting Standards
Codification Topic 718, Compensation Stock
Compensation (FASB ASC Topic 718). |
|
(2) |
|
On March 26, 2010, 215 shares were issued to each
non-associate director (other than Mr. Post who did not
join the Board until June 7, 2010) at a market price
of $116.50 per share as of that date. The grant date fair value
of these shares was $25,047. On June 25, 2010,
210 shares were issued to each non-associate director
(other than Mr. Post) and 58 shares were issued to
Mr. Post, in each case at a market price of $119.26 per
share as of that date. The grant date fair value of these shares
was $25,045 and $6,917, respectively. On September 24,
2010, 170 shares were issued to each non-associate director
at a market price of $147.09 per share as of that date. The
grant date fair value of these shares was $25,005. On
December 31, 2010, 193 shares were issued to each
non-associate director at a market price of $130.14 per share as
of that date. The grant date fair value of these shares was
$25,117. The dollar values of the stock awards do not equal
exactly $25,000 per quarter due to the fact that we issue whole
shares and not fractional shares to our non-associate directors. |
|
(3) |
|
Mr. Post received an additional annual cash retainer of
$4,203 (a pro-rated annualized amount) as the chair of the
project development risk committee, which was formed on
July 26, 2010. |
|
(4) |
|
Mr. Presby received an additional annual cash retainer of
$35,000 in respect of his role as audit committee chair. |
|
(5) |
|
Messrs. Sweeney, and Villarreal, chairman of the
compensation committee and the nominating and corporate
governance committee respectively, each received an additional
annual cash retainer of $10,000 in respect of their roles. |
13
The number of outstanding stock option awards for our
non-associate directors as of December 31, 2010 was as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
|
Grant
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
Name
|
|
Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Craig Kennedy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James F. Nolan
|
|
|
12/15/2003
|
|
|
|
6,500
|
|
|
|
|
|
|
|
2.06
|
|
|
|
12/15/2013
|
|
|
|
|
1/12/2004
|
|
|
|
24,250
|
|
|
|
|
|
|
|
2.06
|
|
|
|
1/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
30,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
William J. Post
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Thomas Presby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul H. Stebbins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Sweeney
|
|
|
12/14/2005
|
|
|
|
6,750
|
|
|
|
|
|
|
|
4.54
|
|
|
|
12/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
6,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
José H. Villarreal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding the
beneficial ownership of our common stock, as of April 7,
2011, by:
|
|
|
|
|
each person or group who is known by us to own beneficially more
than 5% of our common stock;
|
|
|
|
each member of our board of directors and each of our named
executive officers; and
|
|
|
|
all members of our board of directors and our executive officers
as a group.
|
Beneficial ownership is determined in accordance with the rules
of the Commission and generally includes any shares over which a
person exercises sole or shared voting or investment power.
Shares of common stock subject to options or warrants that are
currently exercisable or exercisable within 60 days of the
date of this proxy statement are considered outstanding and
beneficially owned by the person holding the options for the
purpose of computing the percentage ownership of that person,
but are not treated as outstanding for the purpose of computing
the percentage ownership of any other person.
Unless otherwise indicated, each of the stockholders listed
below has sole voting and investment power (or shares such
powers) with respect to the shares beneficially owned. Except as
indicated below, the address for each stockholder, director or
named executive officer is
c/o First
Solar, Inc., 350 West Washington Street, Suite 600,
Tempe, Arizona 85281.
14
This table assumes 86,081,302 shares of common stock
outstanding as of April 7, 2011, assuming no exercise of
outstanding options.
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Percentage
|
|
|
Beneficially
|
|
Beneficially
|
Name of Beneficial Owner
|
|
Owned
|
|
Owned
|
|
Beneficial Owners of 5% or More
|
|
|
|
|
|
|
|
|
S. Robson Walton(1)
|
|
|
24,957,907
|
|
|
|
29.0
|
%
|
Jim C. Walton(2)
|
|
|
26,557,907
|
|
|
|
30.9
|
%
|
Alice L. Walton(3)
|
|
|
26,557,907
|
|
|
|
30.9
|
%
|
Estate of John T. Walton(4)
|
|
|
14,855,905
|
|
|
|
17.3
|
%
|
JCL Holdings, LLC(5)
|
|
|
10,102,002
|
|
|
|
11.7
|
%
|
JTW Trust No. 1 UAD 9/19/02(6)
|
|
|
1,600,000
|
|
|
|
1.9
|
%
|
Capital World Investors(7)
|
|
|
10,497,395
|
|
|
|
12.2
|
%
|
The Growth Fund of America(8)
|
|
|
5,569,800
|
|
|
|
6.5
|
%
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
Michael J. Ahearn
|
|
|
789,016
|
|
|
|
*
|
|
Robert Gillette(9)
|
|
|
60,942
|
|
|
|
*
|
|
Mary Beth Gustafsson
|
|
|
2,839
|
|
|
|
*
|
|
Craig Kennedy
|
|
|
1,933
|
|
|
|
*
|
|
Jens Meyerhoff(10)
|
|
|
21,426
|
|
|
|
*
|
|
James F. Nolan(11)
|
|
|
23,052
|
|
|
|
*
|
|
William J. Post
|
|
|
577
|
|
|
|
*
|
|
J. Thomas Presby
|
|
|
3,167
|
|
|
|
*
|
|
Bruce Sohn(12)
|
|
|
81,001
|
|
|
|
*
|
|
Paul H. Stebbins
|
|
|
5,642
|
|
|
|
*
|
|
Michael Sweeney
|
|
|
2,517
|
|
|
|
*
|
|
José H. Villarreal
|
|
|
1,761
|
|
|
|
*
|
|
Maja Wessels
|
|
|
3,890
|
|
|
|
*
|
|
All directors and executive officers as a group
(17 persons)(13)
|
|
|
1,014,589
|
|
|
|
1.2
|
%
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
The number and percentage of shares of common stock shown in the
table as beneficially owned by S. Robson Walton represent
(a) 10,102,002 shares held by JCL Holdings, LLC, as to
which S. Robson Walton, as a manager thereof, shares voting and
dispositive power with Jim C. Walton and Alice L. Walton, as
managers and (b) 14,855,905 shares held by the Estate
of John T. Walton, as to which S. Robson Walton, Jim C. Walton,
Alice L. Walton and an entity under their control, as
co-personal representatives, share dispositive and voting power
(such shares are also shown by the Estate of John T. Walton as
having sole voting and dispositive power). With respect to JCL
Holdings, LLC, dispositive and voting power over all of the
shares held thereby is exercised by the managers thereof. The
shares held by JCL Holdings, LLC and the Estate of John T.
Walton are for the benefit of John T. Waltons wife and his
descendants and for that reason, S. Robson Walton disclaims
beneficial ownership of the shares listed in (a) and
(b) above. The address of S. Robson Walton is
P.O. Box 1860, Bentonville, Arkansas 72712. |
|
(2) |
|
The number and percentage of shares of common stock shown in the
table as beneficially owned by Jim C. Walton represent
(a) 10,102,002 shares held by JCL Holdings, LLC, as to
which Jim C. Walton, as a manager thereof, shares voting and
dispositive power with S. Robson Walton and Alice L. Walton, as
managers, (b) 1,600,000 shares held by the JTW
Trust No. 1 UAD 9/19/02, as to which Jim C. Walton and
Alice L. Walton, as co-trustees, share voting and dispositive
power and (c) 14,855,905 shares held by the Estate of
John T. Walton, as to which S. Robson Walton, Jim C. Walton,
Alice L. Walton and an entity under their control, as
co-personal representatives, share dispositive and voting power
(such shares are also shown by the Estate of |
15
|
|
|
|
|
John T. Walton as having sole voting and dispositive power).
With respect to JCL Holdings, LLC, dispositive and voting power
over all of the shares held thereby is exercised by the managers
thereof. The shares held by JCL Holdings, LLC and the Estate of
John T. Walton are for the benefit of John T. Waltons wife
and his descendants. The shares held by the JTW
Trust No. 1 UAD 9/19/02 are for the benefit of
charitable interests and John T. Waltons descendants. For
those reasons, Jim C. Walton disclaims beneficial ownership of
the shares listed in (a), (b) and (c) above. The
address of Jim C. Walton is P.O. Box 1860,
Bentonville, Arkansas 72712. |
|
(3) |
|
The number and percentage of shares of common stock shown in the
table as beneficially owned by Alice L. Walton represent
(a) 10,102,002 shares held by JCL Holdings, LLC, as to
which Alice L. Walton, as a manager thereof, shares voting and
dispositive power with S. Robson Walton and Jim C. Walton, as
managers, (b) 1,600,000 shares held by the JTW
Trust No. 1 UAD 9/19/02, as to which Jim C. Walton and
Alice L. Walton, as co-trustees, share voting and dispositive
power and (c) 14,855,905 shares held by the Estate of
John T. Walton, as to which S. Robson Walton, Jim C. Walton,
Alice L. Walton and an entity under their control, as
co-personal representatives, share dispositive and voting power
(such shares are also shown by the Estate of John T. Walton as
having sole voting and dispositive power). With respect to JCL
Holdings, LLC, dispositive and voting power over all of the
shares held thereby is exercised by the managers thereof. The
shares held by JCL Holdings, LLC and the Estate of John T.
Walton are for the benefit of John T. Waltons wife and his
descendants. The shares held by the JTW Trust No. 1
UAD 9/19/02 are for the benefit of charitable interests and John
T. Waltons descendants. For those reasons, Alice L. Walton
disclaims beneficial ownership of the shares listed in (a),
(b) and (c) above. The address of Alice L. Walton is
P.O. Box 1860, Bentonville, Arkansas 72712. |
|
(4) |
|
In 2009, an entity under the control of S. Robson Walton, Jim C.
Walton and Alice L. Walton became an additional co-personal
representative of the Estate of John T. Walton. The number and
percentage of shares of common stock shown in the table as
beneficially owned by the Estate of John T. Walton represent
14,855,905 shares held directly by the Estate of John T.
Walton, as to which S. Robson Walton, Jim C. Walton, Alice L.
Walton and such entity, as co-personal representatives of the
Estate of John T. Walton, share voting and dispositive power.
The shares held by the Estate of John T. Walton are held for the
benefit of John T. Waltons wife and his descendants and
for that reason, S. Robson Walton, Jim C. Walton, Alice L.
Walton and such entity disclaim beneficial ownership of such
shares. The address of the Estate of John T. Walton is
P.O. Box 1860, Bentonville, Arkansas 72712. |
|
(5) |
|
The number and percentage of shares of common stock shown above
as beneficially owned by JCL Holdings, LLC represent
10,102,002 shares held directly by JCL Holdings, LLC as to
which S. Robson Walton, Jim C. Walton and Alice L. Walton, each
individually as managers thereof, share voting and dispositive
power. The shares held by JCL Holdings, LLC are held for the
benefit of John T. Waltons wife and his descendants and
for that reason, S. Robson Walton, Jim C. Walton and Alice L.
Walton disclaim beneficial ownership of such shares. The address
of JCL Holdings, LLC is P.O. Box 1860, Bentonville,
Arkansas 72712. |
|
(6) |
|
The number and percentage of shares of common stock shown above
as beneficially owned by JTW Trust No. 1 UAD 9/19/02
represent 1,600,000 shares held directly by JTW
Trust No. 1 UAD 9/19/02 as to which Jim C. Walton and
Alice L. Walton, as co-trustees of such trust, share voting and
dispositive power. The shares held by JTW Trust No. 1
UAD 9/19/02 are held in a trust principally for the benefit of
charity, and Jim C. Walton and Alice L. Walton have no
beneficial interest therein. Jim C. Walton and Alice L. Walton
therefore disclaim beneficial ownership of such shares. The
address of JTW Trust No. 1 UAD 9/19/02 is
P.O. Box 1860, Bentonville, Arkansas 72712. |
|
(7) |
|
Based on information provided by Capital World Investors, 333
South Hope Street, Los Angeles, CA 90071, in a
Schedule 13G/A filed with the SEC on February 14, 2011
reporting beneficial ownership as of December 31, 2010.
According to such Schedule 13G/A, Capital World Investors has
sole voting power with respect to 10,497,395 shares and
sole dispositive power with respect to 10,497,395 shares.
Capital World Investors, a division of Capital Research and
Management Company (CRMC), is deemed to be the
beneficial owner of such 10,497,395 shares as a result of
CRMC acting as investment advisor to various investment
companies registered under the Investment Company Act of 1940. |
16
|
|
|
(8) |
|
Based on information provided by The Growth Fund of America, 333
South Hope Street, Los Angeles, CA 90071, in a Schedule 13G
filed with the SEC on February 14, 2011 reporting
beneficial ownership as of December 31, 2010. According to
such Schedule 13G, The Growth Fund of America, an investment
company registered under the Investment Company Act of 1940,
which is advised by Capital Research and Management Company, has
sole voting power with respect to 5,569,800 shares. |
|
(9) |
|
Includes 34,084 shares of common stock issuable upon the
exercise of stock options. |
|
(10) |
|
Includes 12,501 shares of common stock issuable upon the
exercise of stock options. |
|
(11) |
|
Includes 20,750 shares of common stock issuable upon the
exercise of stock options. |
|
(12) |
|
Includes 55,500 shares of common stock issuable upon the
exercise of stock options. |
|
(13) |
|
Includes 132,101 shares of common stock issuable upon the
exercise of stock options. |
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since December 26, 2009 (the end of our 2009 fiscal year),
we have not been a party to any transaction or series of similar
transactions in which the amount involved exceeded or will
exceed $120,000 and in which any current director, executive
officer, holder of more than five percent of our capital stock,
or any member of the immediate family of any of the foregoing,
had or will have a material interest, other than in connection
with the transactions described below.
Related
Party Debt
We had no related party debt outstanding at December 31,
2010 and we did not pay any interest to related parties during
the year ended December 31, 2010.
Registration
Rights
We entered into a registration rights agreement with the Estate
of John T. Walton, JCL Holdings, LLC and Michael J. Ahearn. The
registration rights agreement provides for piggyback
registration rights if we register equity securities under the
Securities Act of 1933, as amended (the Securities
Act), subject to certain
lock-up
provisions and exceptions. In addition, subject to certain
lock-up
provisions and exceptions, Michael J. Ahearn has three demand
rights, JCL Holdings, LLC has five demand rights and the Estate
of John T. Walton has unlimited demand rights, provided that the
Estate of John T. Walton may only exercise one such demand right
within any
365-day
period. Following the termination of the Estate of John T.
Walton, the registration rights held by the Estate will be held
collectively by trusts for the benefit of John T. Waltons
wife and his descendants.
Review
and Approval of Related Party Transactions
The Companys audit committee charter requires the review
and approval by the audit committee of related party
transactions, to ensure that they are on such terms, which, in
the judgment of the audit committee, are no less favorable to
the Company than could be obtained from unaffiliated parties. If
a member of the audit committee has an interest in the proposed
transaction, our corporate governance guidelines require the
formation of a committee consisting entirely of independent
directors without an interest in the proposed transaction to
review and, if appropriate, approve such transaction.
17
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees billed to us
for the audit and other services provided by
PricewaterhouseCoopers LLP during the years ended
December 31, 2010 and December 26, 2009:
|
|
|
|
|
|
|
|
|
|
|
2010
|
|
|
2009
|
|
|
Audit Fees(1)
|
|
$
|
2,724,217
|
|
|
$
|
2,382,291
|
|
Audit-Related Fees(2)
|
|
|
476,108
|
|
|
|
361,193
|
|
Tax Fees(3)
|
|
|
504,783
|
|
|
|
457,347
|
|
All Other Fees(4)
|
|
|
1,188
|
|
|
|
2,467
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
3,706,296
|
|
|
$
|
3,203,298
|
|
|
|
|
(1) |
|
Represents the aggregate service fees billed for the audit of
the Companys financial statements in connection with the
statutory and regulatory filings or engagements for 2010 and
2009. |
|
(2) |
|
Represents the aggregate fees billed for assurance and related
services that are reasonably related to the performance of the
audit review of the Companys financial statements and are
not reported under audit fees, and represents
approximately 13% and 11% of the total fees in 2010 and 2009,
respectively. This category consists primarily of services
related to special projects. |
|
(3) |
|
Represents the aggregate fees billed for tax compliance and tax
consulting services, or approximately 14% of the total fees in
2010 and 2009. |
|
(4) |
|
Represents the aggregate fees billed for all products and
services provided that are not included under audit
fees, audit-related fees or tax
fees, and represents less than one percent of the total
fees in 2010 and 2009, respectively. These services include the
subscription to certain PricewaterhouseCoopers LLP proprietary
accounting research databases. |
Audit
Committees Pre-Approval Policies and Procedures
The audit committee has policies and procedures that require the
pre-approval by the audit committee of all fees paid to, and all
services performed by, the Companys independent auditor,
subject to de minimis exceptions for non-audit services
set forth in the applicable rules of the Commission. Each year,
the audit committee approves the proposed services, including
the nature, type and scope of services to be performed by the
independent auditor during the fiscal year and the related fees.
Audit committee pre-approval is also required for those
engagements that may arise during the course of the year that
are outside the scope of the initial services and fees
pre-approved by the audit committee.
The services related to Audit-Related Fees, Tax Fees and All
Other Fees presented in the above table were approved by the
audit committee pursuant to pre-approval provisions set forth in
the applicable rules of the Commission without resort to a
waiver of such pre-approval provisions.
COMPENSATION
DISCUSSION AND ANALYSIS
Overview
In this Compensation Discussion and Analysis, the individuals in
the Summary Compensation Table set forth after this Compensation
Discussion and Analysis are referred to as the named
executive officers. Our named executive officers for
fiscal year 2010 were:
|
|
|
|
|
Mr. Robert J. Gillette, chief executive officer;
|
|
|
|
Mr. Jens Meyerhoff, chief financial officer and president,
utility systems business group;
|
|
|
|
Mr. Bruce Sohn, president;
|
|
|
|
Ms. Maja Wessels, executive vice president, global public
affairs; and
|
|
|
|
Ms. Mary Beth Gustafsson, executive vice president, general
counsel and secretary.
|
18
2010
Compensation Decisions Key Factors
Following is a summary overview of the key factors affecting our
2010 compensation decisions.
First
Solar Pay is Simple
There are three primary components of First Solar executive
compensation: (1) base salary, (2) cash incentive
compensation (short-term incentive) and (3) equity
compensation (long-term incentive). There are no supplemental
executive retirement programs or other deferred compensation
arrangements and generally no perquisites only for executives.
Market
Data on Compensation Informs Our Pay Values
We develop compensation data by reference to our peer group,
which includes direct competitors in the solar industry as well
as technology companies of similar size in the renewable energy,
hi-tech and high precision manufacturing, and electronic
components manufacturing sectors. Market data informs our pay
decisions but does not exclusively determine the actual amounts
to be paid. Once collected, the data is analyzed along with
other relevant factors such as job responsibility, individual
performance, and internal pay equity.
More
Responsibility Means More Pay At Risk; We Pay for Performance
and Align Executive Compensation with the Long-Term Interests of
Stockholders
The most senior associates in our organization have a larger
proportion of their pay at risk, meaning that a
portion of compensation is not payable to such associates unless
certain performance targets are achieved. These performance
targets are established by the compensation committee typically
in the first quarter of each fiscal year and are aligned with
the Companys annual operating plan and long-term strategic
objectives. This compensation practice ensures that we pay for
performance.
In addition, a substantial portion of our incentive compensation
is settled in restricted stock units with the most senior
executives in our Company receiving the largest portion of their
incentive compensation, if earned, as equity compensation. The
grant value of this equity award varies from year to year, and
is determined based on prior years performance and market
data. The equity awards generally vest (subject to certain
conditions) over the next four years. Thus, unlike cash
compensation, the actual value realized by the executive is
significantly affected by the long-term performance of the
Company, specifically, the market price of the stock on the
vesting date(s) and the value on also the date the stock is
subsequently sold. This compensation practice ensures not only
that we pay for performance but that our most senior
executives interests are aligned with the long-term
interests of our stockholders.
2010
Financial Metrics and Downward Discretion Provided a
Check
Our 2010 incentive plan financial metrics and the compensation
committees exercise of downward discretion were intended
to ensure that operational metrics were not achieved at the
expense of financial performance and to increase the focus of
our associates on fiscal discipline and profitability. In
addition, we recognize that even where financial performance is
sufficient and all operational goals are achieved, the
compensation committee has reserved the right to exercise
downward discretion on incentive program payouts so that it can
adjust payments when it determines that because of circumstances
that could not have been envisioned when the annual operating
plan and incentive programs were established, the calculation of
the amounts under the applicable formula do not fairly represent
Company or individual performance. For 2010, the compensation
committee exercised downward discretion and reduced the payout
factor from 1.475 to 1.4 in light of the financial impact of the
manufacturing excursion described in the Companys Annual
Report on
Form 10-K,
filed with the Securities and Exchange Commission on
February 28, 2011, under Item 7:
Managements Discussion and Analysis of Financial Condition
and Results of Operations Results of
Operations Fiscal Years Ended December 31, 2010
and December 26, 2009.
19
2010
Annual Bonus Program Design Reflected Our Strategic
Plan
In 2010, we continued the development of our systems business,
and our associates were increasingly involved in
non-manufacturing activities of the Company. Accordingly, our
2010 metrics were expanded to include metrics relevant to
aspects of our business other than module manufacturing, such as
balance of systems cost per watt (relevant to our
engineering, procurement and construction business) and the
achievement of identified project development milestones.
Executive
Compensation Policies
The compensation committee of our board of directors has
responsibility for establishing and overseeing our compensation
program as it applies to our executive officers. The
compensation committee bases its executive compensation programs
on the policies set forth below, which have remained constant
from prior years:
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Pay To Market |
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Compensation should be based on the level of job responsibility,
individual performance and Company performance. Compensation
should also reflect the value of the job in the marketplace. To
attract and retain a highly skilled work force, we must provide
pay that remains competitive with the pay of other employers who
compete with us for talent. |
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More Responsibility, More Pay at Risk; We Pay for
Performance |
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As associates progress to higher levels in the organization, an
increasing proportion of their pay should be linked to Company
performance and stockholder returns because they are better
able, relative to other associates, to affect the Companys
results. While all associates receive a mix of both annual and
longer-term incentives, associates at higher levels have an
increasing proportion of their compensation tied to longer-term
performance because they are in a position to have greater
influence on longer-term results. |
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Metrics Should Motivate Associates to Achieve the
Mission |
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To be effective, performance-based compensation programs should
enable associates to easily understand how their efforts can
affect their pay, both directly through individual performance
accomplishments and indirectly through contributing to the
Companys achievement of its strategic and operational
goals. |
We generally do not adhere to rigid formulas or necessarily
react to short-term changes in business performance in
determining the amount and mix of compensation elements for our
named executive officers. Generally, the types of compensation
and benefits provided to the named executive officers are
similar to those provided to other members of our senior
leadership and other associates.
Evaluating the Market: When setting
compensation, we review competitive compensation paid by other
companies in the same or similar industries of comparable size
and where our compensation falls within the peer group.
Depending on the role, the experience an individual brings to
the role, and individual performance, we broadly aim to set our
base salary and target bonus potential at least at the
50th percentile of our peer group executives (although
depending on the role, the experience an individual brings to
the role, and individual performance, we may set base salaries
and target bonus potential closer to the 75th percentile)
and to have our aggregate bonus and long-term incentives pay
out, subject to individual and Company performance, at around
the 75th percentile. The objective is to pay at least
market base compensation (50th percentile), and, to the
extent necessary to attract or retain experienced individuals in
key roles, to pay at a higher level (closer to the
75th percentile) while providing an opportunity to increase
compensation further through our incentive compensation programs.
We do not exclusively rely on market data to determine executive
compensation. Instead, we incorporate flexibility into our
compensation program and in our assessment process to respond to
and adjust for the dynamic business environment in which we
operate.
20
Components
of 2010 Executive Compensation
For 2010, the compensation of named executive officers consisted
primarily of three principal components: base salary, short-term
cash incentive compensation (e.g., an annual bonus) and
long-term equity-based compensation. As noted above in
2010 Compensation Decisions Key Factors,
First Solar pay is simple. Our senior executives participate in
broad-based associate benefit programs and do not generally
participate in executive only benefit programs. Each of these
elements of our executive compensation is described in a chart
below, including a description of the particular element and how
it fits into our overall executive compensation package (i.e.,
the particular objectives and the specific elements our
compensation programs are designed to address).
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Component
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Objective
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Focus
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ü
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Provides fixed portion of compensation
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ü
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Compensates our associates based on market value for position,
individual performance, level of experience and critical nature
of role to the Company
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ü
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Paid in cash
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Base
Salary
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ü
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Base salaries established at least at the 50th percentile
(but can range higher, depending on skill set, experience,
individual performance and target bonus %)
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ü
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Provides at-risk variable compensation linked to short-term
corporate organizational and strategic goals without sacrificing
long-term Company performance
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ü
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Compensates our associates based on our collective performance
on shorter-term objectives
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Cash Incentive
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ü
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Paid in cash
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Compensation
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ü
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At target performance, aggregate base salary and cash incentive
compensation should range from the 50th to the
75th percentile (depending on skill set, experience and
individual performance)
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ü
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Provides at-risk variable pay compensation linked to long-term
performance of the Company and individual performance
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ü
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Aligns associates with the long-term interests of our
stockholders
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ü
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Assists in attracting and retaining qualified associates
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Equity-Based
Compensation
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ü
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Paid primarily in restricted stock units
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ü
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Compensates our associates for overall Company performance
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ü
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At target performance, aggregate cash and equity compensation
grant values should provide total compensation closer to the
75th percentile
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Our senior executives, including each of our named executive
officers, are party to employment agreements and change in
control agreements that protect them in the event of certain
employment terminations, as well as confidentiality and
non-competition agreements. The employment and change in control
agreements provide severance, in exchange for a release of
claims, and equity vesting acceleration as described in more
detail in
21
Executive Compensation-Employment Agreements and
Executive Compensation-Change in Control Severance
Agreements. During 2010, Ms. Wessels received certain
benefits under an international assignment policy and was
eligible for relocation benefits in connection with her move to
the United States, all of which is described in more detail in
Executive Compensation Employment
Agreements Maja Wessels and is detailed in the
All Other Compensation column of the Summary
Compensation Table.
Below is a chart demonstrating, on an aggregate basis, the
relative weighting of 2010 compensation to our named executive
officers excluding (i) non-recurring and one-time payments
(i.e., sign-on grants and Ms. Wessels international
assignment and relocation benefits) and (ii) the value of
severance and change in control benefits.
Compensation
Committee Practices
Total
Compensation Review
When establishing total compensation, we broadly aim to set our
base salary and target bonus potential at least at the
50th percentile of our peer group (although, as noted above
in Executive Compensation Policies, depending on the
role, the experience an individual brings to the role, and
individual performance, we may set base salaries closer to the
75th percentile) and to have our aggregate bonus and
long-term incentives pay out, subject to individual and Company
performance, at around the 75th percentile.
Benchmarking
On an annual basis, the compensation committee evaluates the
total compensation of the executives and each of the principal
components against benchmarking data. In addition to these
principal compensation elements, the compensation committee
reviews each executives perquisites and other
compensation, as well as any payments that would be required
under various severance and
change-in-control
scenarios. When conducting this review, the compensation
committee obtains factual data from management as well as
proposals regarding, among other things, the range of values
(merit increase percentages, equity awards), metrics and other
terms.
In 2010, the compensation committee retained Compensation
Strategies as a consultant to evaluate our peer group companies
and to benchmark the compensation of each of the components of
the compensation of our executive officers against the
compensation paid to similarly-situated positions at peer group
companies. The consultants benchmarking services were
limited to comparing each element of compensation for a
particular position against similar elements in the peer group,
except that the consultant recommended that the Company adjust
non-associate director compensation to more closely align with
the benchmarked data. When benchmarking long-term incentive
compensation data, the survey extended deeper into the
organization (i.e., beyond the executives), and such information
was used to develop a matrix that serves as the basis for
developing the values of our annual long-term incentive awards.
The aggregate fees paid to Compensation Strategies for 2010
services
22
were $235,010. The fees were primarily incurred for executive
compensation services except to the extent non-executive data
was developed for the annual long-term incentive award matrix.
Our peer group for benchmarking is the same peer group we
identified last year. These are companies in the solar,
renewable energy, hi-tech and high precision manufacturing, and
electronic components manufacturing sectors, which had annual
revenues ranging from $362 million to $21 billion and
market capitalization ranging from $1 billion to
$35 billion.
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Agilent Technologies, Inc.
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Altera Corporation
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AMETEK, Inc.
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Analog Devices, Inc.
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Applied Materials, Inc.
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Broadcom Corporation
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Emerson Electric Co.
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EnerSys Inc.
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FLIR Systems, Inc.
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General Cable Corporation
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GT Solar International, Inc.
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Itron, Inc.
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Jabil Circuit, Inc.
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KLA-Tencor Corporation
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Lam Research Corporation
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Linear Technology Corporation
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Marvell Technology Group, Ltd.
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Maxim Integrated Products, Inc.
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MEMC Electronic Materials, Inc.
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Novellus Systems, Inc.
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NVIDIA Corporation
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Rockwell Automation, Inc.
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SunPower Corporation
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Teradyne, Inc.
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Texas Instruments, Inc.
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Tyco Electronics Ltd.
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Varian Semiconductor Equipment Associates, Inc.
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Veeco Instruments Inc.
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In each case, when performing benchmarking for executive
compensation, the consultant size adjusted the raw
market data (using a revenue basis of $1.5 billion for
2010; and $3 billion for 2011, including for purposes of
determining appropriate grant size for the 2010 long-term
incentive equity grants made in 2011) by using statistical
regression techniques to remove the significant swings that can
occur between individual raw data points and constructed market
pay levels reflective of the Companys adjusted size. In
each case, the consultant then ran regressions using sales to
develop a range of market-based pay. For the Companys
senior executives, this analysis was performed on total
compensation as a whole and on base salary, annual bonus and
equity-based compensation separately. The consultants
report supported the determination that the compensation paid to
the Companys executives, including its named executive
officers, was consistent with the Companys stated
compensation objectives regarding our target pay as compared to
our peer group, and was thus, reasonable as compared to the peer
group in the aggregate.
Individual
Compensation Review
Individual performance has a strong impact on the compensation
of all associates, including the executive officers. With
respect to our chief executive officer, Mr. Gillettes
compensation package contained certain guaranteed compensation
elements that were offered as an incentive for Mr. Gillette
to join the Company and are intended to compensate him for
monies he forfeited at his former employer (including, for 2010,
the second installment of his cash sign on bonus ($2,500,000
paid on the first anniversary of his employment) and two grants
of restricted stock units each valued at $5,000,000 (total value
of $10 million), one for 2009 and one for 2010. These
grants are discussed below at 2010 Compensation Decisions
(By Component) Equity-Based Compensation
Mr. Gillettes Contractual Equity Grants.
It is the practice of the chair of the compensation committee to
meet with the chief executive officer annually at the beginning
of the year to agree upon his performance objectives (both
individual and Company objectives) for the year. In the first
quarter of the year, the independent directors meet in an
executive session under the direction of the chair of the
compensation committee to conduct a performance review for the
prior year during which the chief executive officer was
evaluated based on his achievement against the
agreed-upon
objectives, contributions to the Companys performance and
other leadership accomplishments.
For the executive officers other than Mr. Gillette, the
compensation committee receives a performance assessment and
compensation recommendation from the chief executive officer.
The compensation committee also exercises its judgment based on
the boards interactions with the executive officer. The
performance evaluation of these executives is based on
achievement of preset objectives by the executive and his or her
organization, his or her contribution to the Companys
performance and other leadership accomplishments. Based on these
considerations, the compensation committee determines whether to
award variable compensation for the previous year, and it sets
base salary, target bonus percentages and the basis for their
participation in the long-term incentive program for the
following year, and the parameters for the corporate goals for
the Company in general.
23
2010
Compensation Decisions (By Component)
The following is a discussion of the compensation
committees considerations in establishing each of the
components for executive officer compensation in 2010.
Base
Salary
Base salary is the guaranteed element of an associates
annual cash compensation. The value of base salary for each
named executive officer reflects the requirements of such
executives employment agreement, his or her individual
performance and his or her skill set, including the market value
of that skill set. As noted in the table under Components
of 2010 Executive Compensation, the Company seeks to
establish or maintain base salaries and total cash compensation
(base salary plus target bonus) for our executives between the
50th and 75th percentile. Based on our assessment of
the individual performance and individual skill sets, the
aggregate base salary and target bonus percentage for most of
our named executive officers is at or closer to the
75th percentile.
The compensation committee evaluates market data and individual
performance of executives during our regular annual salary
review process, which we refer to as our annual merit
cycle. At the beginning of 2010, the base salaries of our
named executive officers were as follows: Robert J. Gillette,
$850,000; Jens Meyerhoff, $410,810; Bruce Sohn, $555,000; Maja
Wessels 274,953; and Mary Beth Gustafsson, $331,792. With
the exception of Ms. Gustafssons base salary, the
base salaries of our named executive officers were not adjusted
during the 2010 merit cycle because they had been adjusted
several months earlier in connection with organizational changes
that occurred at the beginning of Mr. Gillettes
tenure. Ms. Gustafssons base salary, which had not
then been adjusted, was increased during the annual merit cycle
to $345,064.
Mid-Year Changes and Related Salary
Adjustments. On July 1, 2010, the
compensation committee approved a salary increase for
Mr. Meyerhoff (from $410,810 to $500,000) in connection
with his assumption of the additional role of president, utility
systems business group. On October 1, 2010,
Ms. Wessels transferred from our Belgium office to our
Tempe headquarters, and in connection therewith, entered into a
new employment contract that established her base salary at
$384,962.
2011 Merit Cycle. During the 2011 annual merit
cycle, the compensation committee determined that the 2011 base
salaries of our named executive officers would be as follows:
Mr. Gillette ($850,000); Mr. Meyerhoff ($518,000);
Mr. Sohn ($575,000); Ms. Wessels ($399,000); and
Ms. Gustafsson ($400,000). These salary increases were
effective March 20, 2011.
Cash
Incentive Compensation
Our cash incentive compensation consists primarily of our annual
bonus program designed under our 2010 Omnibus Incentive
Compensation Plan and cash sign-on bonuses which we use to
incentivize individuals to join our Company.
Annual
Bonus Program
We use our annual bonus program to reward achievement of
specified strategic operational objectives designed to help us
achieve those tasks we believe will help us achieve our mission
of enabling a world powered by clean, affordable solar
electricity. With very limited exceptions, all of our associates
participate in the annual bonus program. In this way, the
program encourages teamwork and a focus on our mutual success by
tying rewards to our collective performance.
Targets,
Objective and Calculation
The 2010 annual bonus program was designed around eight
performance metrics: (i) total module watts produced,
(ii) module conversion efficiency, (iii) module
manufacturing cost per watt at the end of the fourth quarter,
(iv) balance of systems cost per watt, (v) achievement
of identified project development milestones (with points
assigned to each milestone and a score assigned based on the
number of milestones achieved), (vi) the timely go
live of our enterprise resources planning system,
(vii) the timely
start-up of
our fifth and sixth manufacturing plants in Kulim, Malaysia
(referred to as KLM 5 and 6) and (viii) operating
income.
Operational Metrics and Targets. Our
operational metrics, metrics (i) through (vii), were
selected based on operating goals set forth in our confidential
annual operating plan. These metrics, by design, focus on
strategic goals we believe will help us achieve sustainability
(i.e., the production of an environmentally responsible,
competitively-
24
priced product that presents a compelling alternative to
traditional sources of energy) and scalability (developing
sufficient production capacity to meet demand for our products
and the systems to manage our growth), both of which are key to
achieving our mission of enabling a world powered by clean,
affordable solar electricity. Continuing a trend from last year,
the bonus plan metrics are connected to a large portion of the
Company (i.e., not just manufacturing) in recognition that an
increasing number of our associates are involved in other
aspects of our business. Each metric is assigned a percentage
weighting based on the importance of the factor to the overall
performance of the Company under the annual operating plan.
To calculate total bonus payouts, each performance metric is
assigned a different relative weighting and one or more levels
of potential payout. For the eight performance metrics, the
levels of payout are expressed as a multiplier, ranging from a
threshold of 0.5 in cases of weaker performance to, in certain
cases, a maximum of 3.0 in cases of stronger performance. A 0.5
multiplier was assigned to performance at a level that, while
not certain at the time targets were set, we considered it
highly likely that such performance would be achieved by the end
of the year. A 1.0 multiplier was assigned to performance at a
level that, while not certain at the time targets were set
aligned with the goals in our annual operating plan, and thus we
expected we could achieve by the end of the year. A 2.0
multiplier was assigned to a performance level that was
substantially more uncertain (i.e., that we expected we would
have approximately a 50% chance of achieving by year end). A 3.0
multiplier was assigned to performance levels that we assigned a
probability of less than 50% of achieving by year end. If the
minimum threshold level of performance was not achieved, the
multiplier for the metric was zero. The multiplier for metric
(vi) was binary, 1.0 for a timely enterprise resource
planning system go live or zero. The multiplier for
metric (vii) was 1.0 for a timely
start-up and
2.0 for accelerating the
start-up of
KLM 5 and 6 by at least one month. No single performance metric
or multiplier was material to determining the actual amount of
total bonus payments.
Financial Metric and Target. The operating
income metric is designed to ensure that operational metrics are
not achieved at the expense of financial performance and to
ensure the focus of our associates on fiscal discipline and
profitability. The operating income metric is employed in two
ways under the 2010 annual bonus program: (i) as a
threshold (i.e., no incentive compensation was payable under
this program unless the Company achieved $317 million in
annual operating income, the same threshold under our long-term
incentive program), and (ii) as one of the eight weighted
metrics under the program used for calculating the bonus amount.
With a 25% weighting, the operating income metric was the
heaviest weighted metric in the program. The payout factors
assigned to the operating income metric were as follows:
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1.0
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1.5
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2.0
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³$633M
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³$792M
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³$807M
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³$822M
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Operating income was calculated at $908 million under the
program (which provides for calculation before the impact of
stock-based compensation and with foreign exchange rates
normalized to the rate used in preparing our annual operating
plan) and was therefore scored at 2.0.
Bonus Calculation and Exercise of Downward
Discretion. The calculated payout factor under
the 2010 annual bonus program after evaluating all eight metrics
was 1.475. However, the compensation committee exercised
downward discretion and reduced the payout factor from 1.475 to
1.4 in light of the financial impact of the manufacturing
excursion described in the Companys Annual Report on
Form 10-K,
filed with the Securities and Exchange Commission on
February 28, 2011, under Item 7:
Managements Discussion and Analysis of Financial Condition
and Results of Operations Results of
Operations Fiscal Years Ended December 31, 2010
and December 26, 2009. The chart below illustrates
how the annual bonus was calculated for 2010 for all of our
associates including our named executive officers, using a
hypothetical base salary and target bonus percentage.
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Target Bonus
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Reduced
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Base Salary
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Percentage
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Bonus Multiplier
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2010 Annual Bonus
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$400,000
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X
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60%
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X
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=
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$336,000
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25
Target
Bonus Percentage
Target bonus percentages were established based on job
responsibilities, internal relativity and peer group data. Our
objective is to set bonus targets such that total annual cash
compensation (salary and annual bonus) are between the
50th and 75th percentile. Based on our assessment of
the individual performance and individual skill sets, the
aggregate base salary and target bonus percentage of our named
executive officers is at or closer to the 75th percentile.
Our practice puts us within the broad middle range of peer group
companies. Consistent with our executive compensation policy,
individuals with greater job responsibilities had a greater
proportion of their total cash compensation tied to Company
performance through the bonus program.
The target bonus percentage is evaluated during our annual merit
cycle on the same basis as annual base salary (as discussed
above in 2010 Compensation Decisions (By Component)-Base
Salary). At the beginning of 2010, the target bonus
percentages of our named executive officers were as follows:
Robert Gillette, 100%; Jens Meyerhoff, 80%; Bruce Sohn, 90%;
Maja Wessels 60%; and Mary Beth Gustafsson, 60%. None of these
target bonus percentages were adjusted during the 2010 merit
cycle because they had been adjusted several months earlier in
connection with organizational changes that occurred at the
beginning of Mr. Gillettes tenure in 2009.
Mid-Year Changes and Related Salary
Adjustments. In connection with
Mr. Meyerhoffs assumption of the additional role of
president, utility systems business, the compensation committee
increased Mr. Meyerhoffs 2010 target bonus percentage
to 90%.
2011 Merit Cycle. During the 2011 merit cycle,
the compensation committee increased Ms. Gustafssons
target bonus percentage to 70%. In addition, because the
compensation committee now must affirmatively establish
Mr. Gillettes target bonus percentage each year, the
compensation committee determined that Mr. Gillettes
target bonus percentage would remain at 100%.
Other
Cash Incentives
For certain roles, we have granted individual incentives or
sign-on bonuses to attract associates to the Company. Often the
sign-on bonus is necessary to compensate an associate for the
potential compensation from a prior employer he or she must
forfeit to join First Solar. This was the case for
Mr. Gillette, our chief executive officer. When we hired
him, we agreed to pay him a one-time cash sign-on bonus of
$5 million cash, the second and last installment of which
was paid on October 1, 2010.
In connection with Ms. Wessels move from our Belgium
office to our Tempe, Arizona world headquarters, we agreed to
pay Ms. Wessels a one-time assignment completion bonus of
$368,438.
Equity-Based
Compensation
We are a firm proponent of equity-based compensation because we
believe that (i) it aligns the interests of our associates
more closely with those of our stockholders, and (ii) for
some positions (particularly executive level positions),
offering equity-based compensation is key to attracting and
retaining associates of the highest caliber.
Equity-based compensation, typically restricted stock units but
occasionally stock options, is granted under our 2010 Omnibus
Incentive Compensation Plan, following its adoption at the
June 1, 2010 annual meeting of stockholders. Except with
respect to Mr. Gillettes and
Mr. Meyerhoffs 2010 equity awards (discussed below,
2010 Compensation Decisions (By Component)
Equity-Based Compensation Mr. Gillettes
Contractual Equity Grants and Mr. Meyerhoffs 2010
Equity Awards) and the limited circumstance where relevant
tax laws favored another vesting schedule, the restricted stock
units granted in 2010 vest over four years, at the rate of 20%,
20%, 20% and 40%, respectively, on the anniversary of the grant
date, subject to an associates continued employment with
us.
Any options granted are issued with exercise prices no less than
fair market value as of the date of grant. Our most recent stock
option grant was a sign-on equity grant to Mr. Gillette,
our chief executive officer. Some associates, including some of
our named executive officers, still hold outstanding option
grants granted under the First Solar Holdings, LLC 2003 Unit
Option Plan.
26
Following the adoption of the 2010 Omnibus Plan, we have not
granted, nor do we anticipate granting any awards outside of the
2010 Omnibus Plan, and we incorporated into our granting
policies a change to our standard vesting schedule for
restricted stock grants commencing with grants made in 2011. The
revised schedule provides for four year straight-line vesting
(25% per year commencing on the first anniversary of the grant
date) and provides an additional 12 months service
credit for purposes of vesting in the event of the
associates in-service death.
Our practice is not to time the date of our equity awards, and
we do not take into account any internal black outs,
during which associates and directors are prohibited by our
Insider Trading Policy from trading in our securities, or
whether they are or are not in possession of undisclosed
material facts or whether any undisclosed material facts could
be perceived as potentially positive or negative. Equity grants
to our named executive officers are described in greater detail
in the Grants of Plan Based Awards table and the
Outstanding Equity Awards at Fiscal Year-End table.
New
Hire Grants
With very limited exceptions, every associate of the Company is
granted equity compensation when hired, with the amount
dependent on (i) the associates job responsibilities
(recognizing that higher level roles may have a greater
influence on the ability of the Company to meet its objectives
and succeed), and (ii) the region where the associate is
located (so that the amount is reflective of local compensation
practices and consistent with the compensation market in a
particular region). In 2010, we granted 140,448 restricted stock
units under new hire grants to 1,568 newly hired associates.
Long-Term
Incentive Programs
We have a discretionary practice of granting exempt associates
in the United States (i.e., those exempt from the overtime rules
under the U.S. Fair Labor Standards Act) and associates in
equivalent job categories outside of the United States annual
equity compensation grants in the form of restricted stock
units. In 2010, we adopted a performance equity program for our
senior executives including each named executive officer other
than Mr. Gillette (who received guaranteed grants of
equity-based awards under the employment agreement that was
negotiated in connection with his hiring), under which the
availability of the discretionary annual equity compensation
grants are contingent on the Companys attainment of a
performance goal.
On March 24, 2010 we granted 853,902 restricted stock units
under the 2006 Omnibus Incentive Compensation Plan (which
represents approximately 0.99% of our issued and outstanding
common stock as of December 31, 2010) to 1,451
associates representing approximately 30% of our associates at
the time of the grant, including 90,922 restricted stock units
to our executive officers (which group includes the named
executive officers who participated in the program).
Awards under the long-term incentive programs (i) represent
the largest component of executives compensation, (see
Compensation Discussion and Analysis
Components of 2010 Executive Compensation),
(ii) serve as a retention tool, and (iii) ensure that
our executives compensation is linked to the long-term
interests of our stockholders and our Company performance,
consistent with our compensation philosophy.
2010 Performance Equity Program. The 2010
performance equity program is a performance share program for
senior executives in which our senior executives (including each
named executive officer other than Mr. Gillette) earns the
right to receive a long-term incentive program award up to a
specified maximum value subject to the Companys
achievement of a performance threshold. In 2010, the performance
threshold was the achievement by the Company of operating income
of at least $317 million (calculated before the impact of
stock-based compensation and with foreign exchange rates
normalized to the rate used in preparing our annual operating
plan). As explained in 2010 Compensation Decisions (by
Component) Cash Incentive Compensation
Targets, Objectives Calculation, this financial metric was
chosen to focus associates on the importance on the
Companys fiscal discipline and profitability. If the
metric was not achieved, no incentive compensation would have
been payable under this program (or under the annual bonus
program).
The maximum grant value for our named executive officers was:
Mr. Meyerhoff ($2 million); Mr. Sohn
($3.2 million); Ms. Wessels ($1.3 million) and
Ms. Gustafsson ($1.8 million). Each senior executive
grantee was
27
advised that the actual award value would be subject to downward
discretion to align it with the market and performance.
Grant Size. When determining 2010 grant size,
Compensation Strategies, the compensation committees
compensation consultant, developed a matrix using criteria
approved by the compensation committee that established a
base long-term incentive award value for each salary
grade at each level of individual performance. For senior
executives (generally our Section 16 officers), thirty
percent of that base value could be further adjusted to reflect
individual performance. For participants in the performance
equity program, the matrixed award could not exceed the maximum
grant value.
Settlement of Performance Equity Program Awards and the
Exercise of Downward Discretion. Upon
certification that the Company had achieved the operating income
performance threshold, the compensation committee exercised its
downward discretion to grant the following long-term incentive
awards to the named executive officers under the performance
equity program: Mr. Meyerhoff (7,583 restricted stock units
totaling $1.1 million); Mr. Sohn (7,583 restricted
stock units totaling $1.1 million); Ms. Wessels (6,135
restricted stock units totaling $890,000); and
Ms. Gustafsson (8,616 restricted stock units totaling
$1.25 million). The grants were made on March 22, 2011
with the dollar value of the long-term incentive awards
converted to restricted stock units by dividing the value by the
average share price for the three full months preceding the date
of grant (December 1, 2010 February 28,
2011) and rounding up to the next whole restricted stock
unit.
Mr. Meyerhoffs
2010 Equity Awards
Effective July 1, 2010, Mr. Meyerhoff assumed the
additional role of president of our new utility systems business
group. In connection with the assumption of this role, we made
an incremental grant of 22,000 restricted stock units to
Mr. Meyerhoff. Vesting of the first 3,000 restricted stock
units (achieved in 2010) was contingent on
Mr. Meyerhoffs establishment of the utility systems
business organization. Vesting of the next tranche, an
additional 3,000 restricted stock units was contingent on the
establishment by Mr. Meyerhoff of specific templates, tools
and processes for the business.
The other tranches, each of which can partially vest in
scheduled
sub-tranches,
relate to:
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|
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Solar Projects Developed: |
|
Vesting of a scheduled amount of restricted stock units if full
notice to proceed is achieved on identified projects (or
substitute projects with equivalent megawatts) by a certain date
(maximum of 7,000 restricted stock units) |
|
Solar Projects Sold: |
|
Vesting of a scheduled amount of restricted stock units if
identified projects (or substitute projects with equivalent
megawatts) are sold at or above a scheduled price (maximum of
7,000 restricted stock units) |
|
Solar Projects Financed: |
|
Vesting of a scheduled amount of restricted stock units if
identified projects obtain specified forms of loan guarantees or
bank financing (maximum of 2,000 restricted stock units) |
In establishing the performance criteria, the compensation
committee believed Mr. Meyerhoff would satisfy the
performance criteria on the first two qualitative tranches (now
both since vested) at or near the end of 2010, and that the
remainder of the restricted stock units could be earned within
the remaining two year period.
Mr. Gillettes
Contractual Equity Grants
By the terms of his employment agreement, Mr. Gillette was
guaranteed a minimum $5 million long-term incentive award
in respect of each of 2009 and 2010. These equity awards were
granted in March 2010 under the 2006 Omnibus Plan. While the
compensation committee had originally intended the 2010 award to
be made in 2011, this award was shifted to 2010 to allow for the
grant to be made under the 2006 Omnibus Plan in a tax effective
manner. Mr. Gillettes 2009 long-term incentive award
vests over four years 20%, 20%, 20% and 40%, respectively, on
the anniversary of the grant date, subject to his continued
employment with us. Mr. Gillettes 2010 long-term
incentive award vests ratably at an annual rate of 25% per year
(the same rate of vesting of restricted stock units
28
awarded to other members of our senior leadership team under the
2010 performance equity program, which provides for restricted
stock units to be awarded under our 2010 Omnibus Plan).
Consistent with the original intent of the grant, the first
tranche does not vest until the second anniversary of the date
of grant, such that it would vest no sooner than if the grant
had been made in 2011. Therefore, subject to
Mr. Gillettes continued employment, the 2010
long-term incentive award will be fully vested on the fifth
anniversary of the date of grant. Mr. Gillettes 2010
long-term incentive award expressly prohibits accelerated
vesting for any reason (including change in control) prior to
the first anniversary of the date of grant.
Broad-based
Benefits Programs and Other Compensation
401(k). Our named executive officers are
entitled to participate in the various benefits programs we
offer to all of our associates, including a 401(k) plan, medical
plan, dental plan, life insurance plan and long-term and
short-term disability plans. Under our 401(k) plan, we make a
matching contribution equal to 100% of our associates
contributions to the plan up to a maximum of 4% of an
associates plan compensation. In 2010, each named
executive officer other than Ms. Wessels received the
maximum matching contribution of $9,800. Ms. Wessels, who
commenced participating in the 401(k) plan in connection with
her move to the United States, received a $3,613 matching
contribution.
Other Benefits. Our named executive officers
each have vacation entitlements of four weeks per year. During
2010, Ms. Wessels received certain benefits under an
international assignment policy and was eligible for relocation
benefits in connection with her move to the United States, all
of which is described in more detail in Executive
Compensation-Employment Agreements-Maja Wessels and are
detailed in the All Other Compensation column of the
Summary Compensation Table.
Employment
Agreements and Related Arrangements
We have entered into employment agreements with certain of our
executives, including each of our named executive officers. We
have also entered into separate non-competition and
non-solicitation agreements and confidentiality agreements with
our senior executives, including each of our named executive
officers. The compensation committee believes these contracts
are fair, reasonable, appropriate and necessary to attract and
retain the executives who are party to these agreements.
The named executive officer employment agreements generally
provide that if an executives employment is terminated
without cause (as defined therein) the executive
shall be eligible for (i) salary continuation for a
severance period subject to the execution of a release of claims
in favor of the Company, (ii) health benefit coverage for
the severance period, in some cases subject to certain
contingencies, (iii) an additional 12 months
service credit for purposes of determining vesting of
equity-based compensation awards with any options to remain
exercisable for one year plus 90 days after such employment
termination; and (iv) to the extent not fully vested, full
vesting of the new hire equity grants of those senior executives
(including Mr. Sohn, Mr. Meyerhoff, Ms. Wessels
and Ms. Gustafsson). As of April 13, 2011, only the
new hire equity awards of Ms. Wessels, Ms. Gustafsson
and Mr. Sohn would benefit from the additional vesting
described above under (iv). The named executive officer
employment agreements also provide for an additional
12 months service credit and option exercise period for
purposes of determining vesting of equity-based compensation in
the event employment terminates due to the executives
death or disability (as defined therein).
The non-competition and non-solicitation agreements establish a
protected period that matches the severance period.
During the protected period, the senior executives are subject
to restrictive covenants as described in the agreement. The
confidentiality agreements describe the Companys
expectations of the executives regarding the Companys
proprietary and confidential information.
For more details on these employment agreements and the
compensation and benefits payable or to be provided in the event
of a termination of employment, see Executive Compensation
- Employment Agreements and Arrangements and
Executive Compensation Potential Payments Upon
Termination or Change in Control Potential Payments
Upon Termination of Employment (Other Than in the Context of a
Change in Control).
29
Change
in Control Severance Agreements
We have entered into change in control severance agreements
(CIC Agreements) with each of our named executive
officers and certain other key officers and associates. The
purpose of these agreements, which are substantially identical,
is to align the interest of the executives with our stockholders
in any potential change in control situation by mitigating the
uncertainty and questions a potential change in control may
raise among such executives and associates and allowing them to
focus their continued attention and dedication to their assigned
duties.
Equity Vesting. The CIC Agreements provide for
full vesting of unvested equity-based compensation upon a change
in control of the Company thereby ensuring that such executives
and associates are fairly compensated for the lost opportunity
to realize the value of awards that is typically precipitated by
a change in control. While our equity plans also contemplate
vesting of this equity if it is not assumed by a successor
entity (see Executive Compensation Potential
Payments Upon Termination or Change in Control
Potential Payments Upon a Change in Control 2010
Omnibus Incentive Compensation Plan), the CIC Agreements ensure
this vesting will occur whether or not the equity-based awards
are assumed for executives with these arrangements. Given that a
substantial portion of their income is comprised of equity-based
compensation that vests over time (see Compensation Discussion
and Analysis Components of 2010 Executive
Compensation), the compensation committee believes that this
promise is fair, reasonable, appropriate and meaningful to our
executives.
Severance Benefits. The CIC Agreements provide
a standard severance package for all executives in the event
their employment is terminated without cause or they
resign for good reason within two years following a
change in control. We believe this standard benefit reinforces
the notion that in a change in control situation, all of the
executives are similarly situated and must remain focused. The
standard benefit is two times their base salary, two times a
bonus amount (which is defined as the greater of (i) the
executives target annual bonus for the year of
termination, and (ii) the average of the annual cash
bonuses payable to the executive in respect of the three full
calendar years immediately preceding the calendar year that
includes the termination date, a pro-rated target bonus,
18 months welfare benefit continuation, and outplacement
benefits (maximum of $20,000). Severance benefits are subject to
the executives execution of a release in favor of the
Company.
Parachute Tax
Gross-Up. The
CIC Agreements provide a parachute tax
gross-up
(unless the total payments are within 110% of the 280G parachute
tax threshold in which case the parachute payments are reduced
to just below the threshold). While we are aware that certain
stockholder groups disfavor these
gross-ups we
believe they are fair, reasonable and appropriate for First
Solar because they (i) neutralize the potential internal
equity issues related to the different tax jurisdictions of our
executive group (i.e., Arizona, Ohio, and New York); and
(ii) support our compensation structure by not penalizing
our executives for weighting our total compensation structure
towards long-term, equity-based compensation (which can result
in parachute taxes), rather than short-term current compensation
(which can avoid parachute tax payments but is inconsistent with
our executive compensation policies).
Evaluation by the Compensation Committee: When
the Company originally entered into the CIC Agreements, the
compensation committee reviewed the terms of the CIC Agreements
in consultation with an independent consultant, assessed the
impact of possible payouts under the CIC Agreements in the event
of a change in control and concluded that the CIC Agreements
were fair and reasonable. The CIC payment estimates are
presented to, and reviewed by, the compensation committee each
time compensation is evaluated. The compensation committee
continues to believe the payments are fair and reasonable. For a
further description of compensation provided in the event of a
change in control, see Executive Compensation
Potential Payments Upon Termination or Change in Control -
Potential Payments Upon a Change in Control.
Tax
and Accounting Implications
Section 162(m) of the Code. With certain
material exceptions, Section 162(m) of the Code limits the
deductibility of compensation paid by a public company in any
year to $1 million to each of the chief executive officer
and the next three most highly paid executive officers other
than the chief financial officer. A transition rule generally
applies to compensation paid under plans and arrangements in
existence on the date of an initial public offering, pursuant to
which such compensation will not be subject to the
$1 million limit. Prior to the June 1, 2010
30
annual meeting of stockholders, the Company generally sought to
avail itself of this transition rule, and expects that
transition rule to continue to apply to amounts paid or awards
granted prior to the date of the Companys annual meeting
held on June 1, 2010.
The Companys 2010 Omnibus Incentive Compensation Plan is
designed to enable most executive compensation to be deductible
by the Company under Section 162(m) of the Code; however,
the compensation committee has not adopted a policy that all
compensation must be deductible, particularly where additional
compensation may be needed to attract or retain executives for
key leadership positions in the Company.
Section 280G of the
Code. Section 280G of the Code denies a tax
deduction on certain compensation payments to any
disqualified individual (which term includes our
named executive officers) that are contingent upon a
change in ownership or control of the Company. A tax
deduction for compensation in excess of the disqualified
individuals average taxable compensation is denied, but
only if the total change in control payments equal or exceed
three times the individuals average taxable compensation
(i.e., the 280G parachute tax threshold). In addition, if the
threshold is exceeded, a 20% excise tax is imposed on the
disqualified individual under Section 4999 of
the Code. The Company has entered into CIC Agreements with
certain executive officers, including each of the named
executive officers that provides for the Company to
gross-up
such executive officer for the 20% excise tax if the applicable
compensation exceeds 110% of the 280G limit (payments will be
cut back to less than the 280G limit if the 110% threshold is
not exceeded). The Company has estimated the parachute payments
that would have been payable had a change in control occurred
and each named executive officers employment been
terminated on December 31, 2010. See Executive
Compensation Potential Payments Upon Termination or
Change in Control Potential Payments Upon a Change
in Control. As of that date, we estimated that
Ms. Gustafsson and Ms. Wessels were the only named
executive officers who would have had payments subject to the
tax gross up and deduction disallowance.
Accounting for Equity-Based Compensation. The
Company uses FASB ASC Topic 718 Compensation Stock
Compensation for purposes of determining the fair value of its
equity-based compensation. The assumptions used in the
calculation of these amounts are included in Note 17,
Share-Based Compensation to the Companys
audited financial statements for the fiscal year ended
December 31, 2010 included in the Companys Annual
Report on
Form 10-K
filed with the Commission on February 28, 2011. The fair
value of awards made to each named executive officer in 2010 are
set forth under Executive Compensation Summary
Compensation Table.
31
COMPENSATION
COMMITTEE REPORT
The following report of the compensation committee is not
soliciting material, is not deemed filed
with the Commission and is not to be incorporated by reference
into any other of the Companys filings under the
Securities Act or the Securities Exchange Act of 1934, as
amended (the Exchange Act), except to the extent we
specifically incorporate this report by reference therein.
Since the formation of the compensation committee in October
2006, Michael Sweeney has served on the compensation committee.
Paul H. Stebbins has served on the compensation committee since
his appointment to the board of directors on December 19,
2006. Mr. José H. Villarreal has served on the
compensation committee since his appointment to the board of
directors on September 24, 2007. Mr. William J. Post
has served on the compensation committee since July 26,
2010.
The compensation committee is and has been comprised solely of
non-associate directors who were each: (i) independent as
defined under the NASDAQ listing standards, (ii) a
non-associate director for purposes of
Rule 16b-3
of the Exchange Act, and (iii) an outside director for
purposes of Section 162(m) of the Code.
With a keen sense of awareness of its fiduciary obligations, the
compensation committee actively engages management and reviews
data on (i) the relationship between the Companys
incentive compensation programs and the Companys long-term
strategic goals, (ii) the impact of any individual
compensation changes on total compensation (including reviewing
executive tally sheets), and (iii) the possibility that any
particular program or arrangement could incentivize
inappropriate risk-taking behaviors. The compensation committee
believes that the Companys compensation philosophy is
appropriate and that the Companys incentive compensation
programs are an important tool that allows all associates,
including management, to successfully focus on matters critical
to the Companys long-term success.
The compensation committee has reviewed and discussed the
Compensation Discussion and Analysis required by
Item 402(b) of
Regulation S-K
with management. Based on such review and discussions, the
compensation committee recommended to the board of directors
that the Compensation Discussion and Analysis be
included in this Proxy Statement on Schedule 14A and
incorporated by reference in the Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010.
Submitted by the Members of the Compensation Committee
Michael Sweeney (Chair)
William J. Post
Paul H. Stebbins
José H. Villarreal
32
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following table sets forth information with respect to
compensation earned by our chief executive officer, our chief
financial officer, and our three other most highly compensated
executive officers (collectively, our named executive
officers), for the fiscal years ended December 31,
2010, December 26, 2009 and December 27, 2008,
respectively.
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Non-Equity
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Incentive
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All
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Stock
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Option
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Plan
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Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year
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($)(1)
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($)
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($)(2)
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($)(2)
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($)(3)
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($)(4)
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($)
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Robert J. Gillette(5)
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2010
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850,000
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2,500,000
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(8)
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8,764,538
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(9)
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1,190,000
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10,352
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13,314,890
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Chief Executive Officer
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2009
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202,692
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2,500,000
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(8)
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9,750,080
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(10)
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3,250,015
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(12)
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850,000
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60
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16,552,847
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2008
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Jens Meyerhoff
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2010
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454,376
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3,657,605
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(11)
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630,000
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19,687
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4,761,668
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Chief Financial Officer
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2009
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390,033
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1,169,184
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451,891
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19,688
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2,030,796
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President, Utility Systems Business Group
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2008
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372,462
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1,442,162
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263,340
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17,518
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2,095,482
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Bruce Sohn
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2010
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555,000
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1,681,043
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699,300
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10,160
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2,945,503
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President
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2009
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461,635
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1,831,296
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686,813
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79,891
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3,059,635
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2008
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403,846
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2,259,320
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330,000
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57,816
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3,050,982
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Maja Wessels(6)
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2010
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358,256
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(13)
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613,577
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323,368
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680,440
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1,975,641
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Executive Vice President,
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2009
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Global Public Affairs
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2008
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Mary Beth Gustafsson(7)
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2010
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342,001
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903,619
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289,854
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10,352
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1,545,826
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Executive Vice President,
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2009
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General Counsel, Corporate Secretary
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2008
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(1) |
|
Salary represents actual salary earned during each applicable
year, and includes base salary and actual payments for accrued
vacation and holidays. |
|
(2) |
|
The amounts reported in these columns reflect the aggregate
grant date fair value of these awards computed in accordance
with FASB ASC Topic 718 Stock Compensation, which
excludes the effect of estimated forfeitures. The assumptions
and methodologies used in the calculations of these amounts are
set forth, for 2010, in Note 17. Share-Based
Compensation to the Companys audited financial
statements for the fiscal year ended December 31, 2010
included in the Companys Annual Report on
Form 10-K
filed with the Securities and Exchange Commission (or, in the
case of grants made prior to 2010, the corresponding footnote in
the Companys
Form 10-K
for the applicable year). Under U.S. generally accepted
accounting principles, compensation expense with respect to
stock awards and option awards granted to our associates is
generally recognized over the vesting periods applicable to the
awards. The Securities and Exchange Commissions disclosure
rules previously required that we present stock award and option
award information for 2008 based on the amount recognized during
the corresponding year for financial statement reporting
purposes with respect to these awards (which meant, in effect,
that in any given year we could recognize for financial
statement reporting purposes amounts with respect to grants made
in that year as well as with respect to grants from past years
that vested in or were still vesting during that year). However,
the recent changes in the Securities and Exchange Commission
disclosure rules require that we now present the stock award and
option award amounts in the applicable columns of the table
above with respect to 2008 on a similar basis as the 2009 and
2010 presentations using the grant date fair value of the awards
granted during the corresponding year (regardless of the period
over which the awards are scheduled to vest). Since this
requirement differs from the Securities and Exchange
Commissions past disclosure rules, the amounts reported in
the table above for stock awards and option awards in 2008
differ from the amounts previously reported in our Summary
Compensation Table for this year. As a result, to the extent
applicable, each named executive officers total
compensation amounts for 2008 also differ from the amounts
previously reported in our Summary Compensation Table for |
33
|
|
|
|
|
this year. For a discussion of specific stock and option awards
during 2010, see also Grants of Plan-Based Awards
below and the narrative discussion that follows. |
|
(3) |
|
The amounts in this column represent cash incentive compensation
under our annual bonus program. For a description of Non-Equity
Incentive Plan Compensation, see Compensation Discussion
and Analysis Components of 2010 Executive
Compensation and Compensation Discussion and
Analysis 2010 Compensation Decisions (By
Component) Cash Incentive Compensation
Annual Bonus Program. |
|
(4) |
|
All Other Compensation is comprised of the following for fiscal
years 2010, 2009 and 2008: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax Gross-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ups for
|
|
|
|
|
|
|
|
Total All
|
|
|
|
|
Relocation
|
|
Relocation
|
|
401 (k)
|
|
Insurance
|
|
|
|
Other
|
|
|
|
|
Benefits
|
|
Benefits
|
|
Matching
|
|
Benefits
|
|
Other
|
|
Compensation
|
Name
|
|
Year
|
|
($)
|
|
($)
|
|
Contribution ($)
|
|
($)
|
|
($)
|
|
($)
|
|
Robert J. Gillette
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
9,800
|
|
|
|
552
|
|
|
|
|
|
|
|
10,352
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|
|
|
|
|
|
60
|
|
Jens Meyerhoff
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
9,800
|
|
|
|
9,887
|
|
|
|
|
|
|
|
19,687
|
|
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
9,800
|
|
|
|
9,888
|
|
|
|
|
|
|
|
19,688
|
|
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
7,750
|
|
|
|
9,768
|
|
|
|
|
|
|
|
17,518
|
|
Bruce Sohn
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
9,800
|
|
|
|
360
|
|
|
|
|
|
|
|
10,160
|
|
|
|
|
2009
|
|
|
|
50,284
|
|
|
|
19,447
|
|
|
|
9,800
|
|
|
|
360
|
|
|
|
|
|
|
|
79,891
|
|
|
|
|
2008
|
|
|
|
29,073
|
|
|
|
20,633
|
|
|
|
7,750
|
|
|
|
360
|
|
|
|
|
|
|
|
57,816
|
|
Maja Wessels
|
|
|
2010
|
|
|
|
24,441
|
|
|
|
2,429
|
|
|
|
3,613
|
|
|
|
2,291
|
|
|
|
647,666
|
(4a)
|
|
|
680,440
|
(4b)
|
Mary Beth Gustafsson
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
9,800
|
|
|
|
552
|
|
|
|
|
|
|
|
10,352
|
|
|
|
|
(4a) |
|
Consists of the following benefits under the Companys
international assignment policy: (1) $122,022 tax
equalization, (2) $112,113 housing allowance,
(3) $41,778 cost of living allowance, (4) $3,315
vehicle allowance and (5) $368,438 assignment completion
bonus. |
|
(4b) |
|
Includes benefits under the international assignment policy of
213,370 translated at an average exchange rate of
$1.32/1.00. |
|
(5) |
|
Mr. Gillettes employment with us commenced on
October 1, 2009. |
|
(6) |
|
Ms. Wessels employment with us commenced on
May 5, 2008. She was not a named executive officer in 2008
or 2009. |
|
(7) |
|
Ms. Gustafssons employment with us commenced on
October 6, 2008. She was not a named executive officer in
2008 or 2009. |
|
(8) |
|
Represents a one-time cash sign-on bonus of $5,000,000, of
which, 50% was paid on October 8, 2009, and the other 50%
was paid on October 1, 2010. |
|
(9) |
|
Represents Mr. Gillettes contractual equity grants
for 2009 and 2010 of 80,078 restricted stock units at a market
price of $109.45. The 2009 award vests over four years 20%, 20%,
20% and 40%, respectively, on the anniversary of the grant date
of March 24, 2010. The 2010 award is scheduled to vest at a
rate of 25% per year commencing on the second anniversary of the
grant date of March 24, 2010. |
|
(10) |
|
Includes a fully vested, stock sign-on grant on October 12,
2009 of 20,313 shares at a market price of $160.00 per
share as of that date and a new hire grant of 40,625 restricted
stock units at a market price of $160.00, scheduled to vest in a
lump sum on October 12, 2011. |
|
(11) |
|
Includes Mr. Meyerhoffs 2010 award of 22,000
restricted stock units at a market price of $117.45, of which
3,000 units vested in the fourth quarter of 2010 and
3,700 units vested in the first quarter of 2011. The
remaining 15,300 units may vest upon achievement of certain
performance criteria related to solar projects developed, sold,
and financed. |
|
(12) |
|
Represents a new hire grant of 34,084 fully vested stock options
with an exercise price of $160.00, the fair market value of our
shares on October 12, 2009. |
|
(13) |
|
Includes salary of 203,101 translated at an average
exchange rate of $1.32/1.00. |
34
Grants of
Plan-Based Awards
The following table sets forth summary information regarding all
grants of plan-based awards made to our named executive officers
during the year ended December 31, 2010. Unless otherwise
noted in the table below, the restricted stock units granted in
2010 vest over four years 20%, 20%, 20% and 40%, respectively,
commencing on the first anniversary of the grant date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Other Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
Estimated Possible
|
|
Awards:
|
|
Awards:
|
|
Exercise
|
|
|
|
Date Fair
|
|
|
|
|
|
|
Payouts Under
|
|
Number
|
|
Number of
|
|
or Base
|
|
Market
|
|
Value of
|
|
|
|
|
|
|
Non-Equity Incentive
|
|
of Shares
|
|
Securities
|
|
Price of
|
|
Price on
|
|
Stock and
|
|
|
|
|
|
|
Plan Awards(1)
|
|
of Stock
|
|
Underlying
|
|
Option
|
|
Grant
|
|
Option
|
|
|
Award
|
|
Grant
|
|
Target
|
|
Maximum
|
|
or Units
|
|
Options
|
|
Awards
|
|
Date
|
|
Awards
|
Name
|
|
Type
|
|
Date
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($/Sh)
|
|
($)(2)
|
|
Robert J. Gillette
|
|
|
RSU
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
40,039
|
|
|
|
|
|
|
|
|
|
|
|
109.45
|
|
|
|
4,382,269
|
|
|
|
|
RSU
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
40,039
|
(3)
|
|
|
|
|
|
|
|
|
|
|
109.45
|
|
|
|
4,382,269
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
850,000
|
|
|
|
1,955,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jens Meyerhoff
|
|
|
RSU
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
9,810
|
|
|
|
|
|
|
|
|
|
|
|
109.45
|
|
|
|
1,073,705
|
|
|
|
|
RSU
|
|
|
|
7/01/2010
|
|
|
|
|
|
|
|
|
|
|
|
22,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
117.45
|
|
|
|
2,583,900
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
450,000
|
|
|
|
1,035,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce Sohn
|
|
|
RSU
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
15,359
|
|
|
|
|
|
|
|
|
|
|
|
109.45
|
|
|
|
1,681,043
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
499,500
|
|
|
|
1,148,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maja Wessels
|
|
|
RSU
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
5,606
|
|
|
|
|
|
|
|
|
|
|
|
109.45
|
|
|
|
613,577
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
230,977
|
|
|
|
531,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mary Beth Gustafsson
|
|
|
RSU
|
|
|
|
3/24/2010
|
|
|
|
|
|
|
|
|
|
|
|
8,256
|
|
|
|
|
|
|
|
|
|
|
|
109.45
|
|
|
|
903,619
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
207,038
|
|
|
|
476,188
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For a description of Non-Equity Incentive Plan Compensation, see
Compensation Discussion and Analysis
Components of 2010 Executive Compensation and
Compensation Discussion and Analysis 2010
Compensation Decisions (By Component) Cash Incentive
Compensation Annual Bonus Program. |
|
(2) |
|
The grant date fair value of the stock and option awards was
determined in accordance with FASB ASC Topic 718. The
assumptions used in the calculation of these amounts are
included in Note 17, Share-Based Compensation
to the Companys audited financial statements for the
fiscal year ended December 31, 2010 included in the
Companys Annual Report on
Form 10-K
filed with the Commission on February 28, 2011. |
|
(3) |
|
This plan-based award vests over five years at the rate of 25%
per year, commencing on the second anniversary of the grant date. |
|
(4) |
|
This plan-based award vests upon certification that specific
operational milestones related to the utility systems business
have been achieved. For a description of this award see
Compensation Discussion and Analysis
Components of 2010 Executive Compensation and
Compensation Discussion and Analysis 2010
Compensation Decisions (By Component) Equity-Based
Compensation. |
35
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information with respect to
outstanding option and stock awards held by our named executive
officers at December 31, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Plan Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Market
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards:
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Value of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
Value
|
|
Unearned
|
|
Unearned
|
|
|
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
|
of Shares
|
|
of Shares
|
|
Shares,
|
|
Shares,
|
|
|
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
|
or Units
|
|
or Units
|
|
Units or
|
|
Units or
|
|
|
|
|
Underlying
|
|
Underlying
|
|
Option
|
|
|
|
|
|
of Stock
|
|
of Stock
|
|
Other Rights
|
|
Other Rights
|
|
|
|
|
Unexercised
|
|
Unexercised
|
|
Exercise
|
|
Option
|
|
|
|
That Have
|
|
That Have
|
|
That Have
|
|
that Have
|
|
|
Grant
|
|
Options (#)
|
|
Options (#)
|
|
Price
|
|
Expiration
|
|
Grant
|
|
Not Vested
|
|
Not Vested
|
|
Not Vested
|
|
Not Vested
|
Name
|
|
Date
|
|
Exercisable
|
|
Unexercisable
|
|
($)
|
|
Date
|
|
Date
|
|
(#)
|
|
($)(2)
|
|
(#)
|
|
($)(2)
|
|
Robert J. Gillette
|
|
|
10/12/2009
|
|
|
|
34,084
|
(3)
|
|
|
|
|
|
|
160.00
|
|
|
|
10/12/2019
|
|
|
|
10/12/2009
|
|
|
|
40,625
|
(4)
|
|
|
5,286,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/2010
|
|
|
|
40,039
|
|
|
|
5,210,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/2010
|
|
|
|
40,039
|
(5)
|
|
|
5,210,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
34,084
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,703
|
|
|
|
15,708,288
|
|
|
|
|
|
|
|
|
|
Jens Meyerhoff
|
|
|
11/16/2006
|
|
|
|
|
|
|
|
18,751
|
(6)
|
|
|
20.00
|
|
|
|
11/16/2013
|
|
|
|
7/30/2007
|
|
|
|
7,000
|
|
|
|
910,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/16/2007
|
|
|
|
3,600
|
|
|
|
468,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/2008
|
|
|
|
3,030
|
|
|
|
394,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/27/2009
|
|
|
|
6,153
|
|
|
|
800,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/2010
|
|
|
|
9,810
|
|
|
|
1,276,673
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/01/2010
|
|
|
|
|
|
|
|
|
|
|
|
19,000
|
|
|
|
2,472,660
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
18,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,593
|
|
|
|
3,851,232
|
|
|
|
19,000
|
|
|
|
2,472,660
|
|
Bruce Sohn
|
|
|
3/21/2007
|
|
|
|
68,500
|
|
|
|
37,500
|
(8)
|
|
|
54.50
|
|
|
|
3/21/2014
|
|
|
|
7/30/2007
|
|
|
|
8,000
|
|
|
|
1,041,120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/16/2007
|
|
|
|
4,000
|
|
|
|
520,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/2008
|
|
|
|
4,747
|
|
|
|
617,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/27/2009
|
|
|
|
9,638
|
|
|
|
1,254,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/2010
|
|
|
|
15,359
|
|
|
|
1,998,820
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
68,500
|
|
|
|
37,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,744
|
|
|
|
5,432,564
|
|
|
|
|
|
|
|
|
|
Maja Wessels
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2008
|
|
|
|
5,700
|
|
|
|
741,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/27/2009
|
|
|
|
6,893
|
|
|
|
897,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/2010
|
|
|
|
5,606
|
|
|
|
729,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,199
|
|
|
|
2,368,418
|
|
|
|
|
|
|
|
|
|
Mary Beth Gustafsson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/27/2008
|
|
|
|
4,800
|
|
|
|
624,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/27/2009
|
|
|
|
6,153
|
|
|
|
800,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/24/2010
|
|
|
|
8,256
|
|
|
|
1,074,436
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,209
|
|
|
|
2,499,859
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Unless otherwise noted, restricted stock units vest over four
years 20%, 20%, 20% and 40%, respectively, on the anniversary of
the grant date, subject to the named executive officers
continued employment with us. |
|
(2) |
|
The market value was calculated using the closing market price
of our common stock on December 31, 2010 of $130.14. |
|
(3) |
|
These options were fully vested upon issuance. |
|
(4) |
|
These restricted stock units vest in a lump sum on
October 12, 2011. |
|
(5) |
|
These restricted stock units vest over five years 25% annually
beginning on the second anniversary of the grant date, subject
to Mr. Gillettes continued employment with us. |
|
(6) |
|
These options vested with respect to 20% of the underlying
shares on June 1, 2007; and thereafter, vest in equal
monthly installments for 48 months, subject to
Mr. Meyerhoffs continued employment with us. |
|
(7) |
|
These restricted stock units vest in tranches, each contingent
upon the achievement of pre-established performance metrics over
a two year performance period. For a description of this award
see Compensation |
36
|
|
|
|
|
Discussion and Analysis 2010 Compensation Decisions
(By Component) Equity-Based Compensation
Mr. Meyerhoffs 2010 Equity Awards. |
|
(8) |
|
These options vested with respect to 20% of the underlying
shares on March 12, 2008; and thereafter, vest in equal
monthly installments on the first day of each month for
48 months, subject to Mr. Sohns continued
employment with us. |
Option
Exercises and Stock Vested
The following table provides information, on an aggregate basis,
about stock options that were exercised and stock awards that
vested during the fiscal year ended December 31, 2010 for
each of the named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized
|
|
|
Acquired on
|
|
|
Value Realized
|
|
Name
|
|
Exercise (#)
|
|
|
on Exercise ($)(1)
|
|
|
Vesting (#)
|
|
|
on Vesting ($)(2)
|
|
|
Robert J. Gillette
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jens Meyerhoff
|
|
|
77,500
|
|
|
|
9,030,531
|
|
|
|
10,849
|
|
|
|
1,432,572
|
|
Bruce Sohn
|
|
|
34,000
|
|
|
|
2,702,178
|
|
|
|
9,993
|
|
|
|
1,264,077
|
|
Maja Wessels
|
|
|
|
|
|
|
|
|
|
|
3,624
|
|
|
|
481,669
|
|
Mary Beth Gustafsson
|
|
|
|
|
|
|
|
|
|
|
3,139
|
|
|
|
438,026
|
|
|
|
|
(1) |
|
Value reflects the market value of our common stock at exercise
less the exercise price. |
|
(2) |
|
Value reflects the market value of our common stock on the
vesting date. For a description of vesting of restricted stock
units see Compensation Discussion and Analysis
Components of 2010 Executive Compensation and
Compensation Discussion and Analysis 2010
Compensation Decisions (By Component) Equity-Based
Compensation. |
Pensions
and Nonqualified Deferred Compensation
We do not currently provide our named executive officers with
pension benefits (other than a tax-qualified 401(k) plan
benefit) or other nonqualified deferred compensation
arrangements (other than such arrangements, disclosed elsewhere
in this proxy statement) that could be characterized as
nonqualified deferred compensation arrangements under
Section 409A of the Code.
Employment
Agreements and Arrangements
Robert
J. Gillette
Effective as of October 1, 2009, we entered into an
employment agreement with Mr. Robert J. Gillette, our chief
executive officer. Under the terms of his employment agreement,
Mr. Gillette is entitled to an annual base salary of
$850,000 (subject to annual increases at our discretion), is
eligible to receive a discretionary annual bonus and receives
standard employee benefits (including eligibility to participate
in the Companys equity incentive plans) and four weeks of
vacation per year. With respect to the annual bonus, the Company
agreed that Mr. Gillettes target bonus 2010 would be
100% of his annual base salary and that his bonus for 2009 would
be no less than $850,000.
As a further incentive to join the Company, the Company agreed
that the equity grant date value of Mr. Gillettes
restricted stock unit awards made in respect of each of fiscal
years 2009 and 2010 would be $5,000,000. In March 2010, the
Company awarded Mr. Gillette both his 2009 and 2010 equity
so that the grant could be made in a tax effective manner. See
Compensation Discussion and Analysis 2010
Compensation Decisions (Compensation Discussion and
Analysis 2010 Compensation Decisions (By
Component) Equity-Based Compensation
Mr. Gillettes Contractual Equity Grants) Upon
entering into the employment agreement, the Company provided
certain sign-on compensation including a cash sign-on bonus of
$5,000,000, one half of which was payable in a lump sum less
applicable withholdings within 15 days of October 1,
2009 and the remainder of which was paid on October 1, 2010.
37
Our employment agreement with Mr. Gillette provides that,
in the event Mr. Gillettes employment is terminated
by us without cause, Mr. Gillette will receive the
following: (a) a lump sum cash severance payment equal to
two years of his annual base salary, payable within 10 business
days following the effective date of a release of claims in
favor of the Company, (b) continued health benefits until
the earlier of 24 months following termination and the
executives coverage under any other medical benefits plan
and (c) an additional 12 months service credit
for purposes of determining vesting of equity-based compensation
awards (other than with respect to the initial restricted stock
unit award described in the previous paragraph) with any options
to remain exercisable for one year plus 90 days after such
employment termination (e.g., should he be granted options
beyond the initial stock options (the post termination exercise
period for which is as described in the previous paragraph). In
the event of termination of Mr. Gillettes employment
for any reason, he is entitled to payment of his earned and
unused (and unforfeited) vacation. Mr. Gillette must sign a
release in order to receive severance payments.
Mr. Gillette is also subject to a separate confidentiality
agreement and a separate non-competition and non-solicitation
agreement, which provides that Mr. Gillette will not
compete with the Company or solicit Company associates for two
years after termination of his employment.
Mr. Gillette has also entered into a separate CIC Agreement
with the Company, the terms of which are described in
Executive Compensation Potential Payments Upon
Termination or Change in Control Potential Payments
Upon a Change in Control Change in Control Severance
Agreements and discussed at Compensation Disclosure
and Analysis Change in Control Agreements.
Jens
Meyerhoff
Effective as of December 30, 2008, we entered into an
amended and restated employment agreement with Mr. Jens
Meyerhoff to serve as our chief financial officer, which was
amended in July 2009 to provide for accelerated vesting of his
new hire equity grant upon a termination of employment without
cause and amended again effective as of July 1, 2010 to
reflect Mr. Meyerhoffs assumption of the role of
president, utility systems business. In connection with
Mr. Meyerhoffs assumption of his new role, we also
granted 22,000 restricted stock units that vest only upon
achievement of specified performance milestones, as described in
more detail in Compensation Discussion and
Analysis 2010 Executive Compensation Decisions (By
Component) Equity Based Compensation
Mr. Meyerhoffs 2010 Equity Awards.
Under the terms of his employment agreement, Mr. Meyerhoff
is entitled to an annual base salary of $500,000 (subject to
annual increases at our discretion) and the opportunity to
participate in the Companys annual bonus program with a
target bonus percentage of at least 90% of his annual base
salary. Mr. Meyerhoff is eligible for standard health
benefits, or, in lieu thereof and at Mr. Meyerhoffs
election, separate medical insurance benefits with costs
reimbursed by us and other standard employee benefits.
Mr. Meyerhoff also receives four weeks of vacation per year.
Our employment agreement with Mr. Meyerhoff provides that,
in the event Mr. Meyerhoffs employment is terminated
by us without cause, Mr. Meyerhoff will receive the
following: (a) severance equal to 24 months of his
annual base salary, payable over the
24-month
period following termination of employment, (b) continued
health benefits for 24 months, (c) full vesting of the
unvested portion of Mr. Meyerhoffs new hire equity
grant, which options will remain exercisable for one year plus
90 days after such employment termination, and (d) an
additional 12 months service credit for purposes of
determining vesting on his other equity-based compensation
awards (other than the 22,000 restricted share units described
above, which are not subject to accelerated vesting). The
additional vesting described in (d) above also applies if
Mr. Meyerhoffs employment terminates due to his death
or disability. In the event of termination of
Mr. Meyerhoffs employment for any reason, he is
entitled to payment of his earned and unused (and unforfeited)
vacation. Mr. Meyerhoff must sign a release in order to
receive severance payments.
Mr. Meyerhoff is also subject to a separate confidentiality
agreement and a separate non-competition and non-solicitation
agreement, which provides that Mr. Meyerhoff will not
compete with the Company or solicit Company associates for
24 months after termination of his employment.
Mr. Meyerhoff has also entered into a separate amended and
restated CIC Agreement with the Company, the terms of which are
described in Executive Compensation Potential
Payments Upon Termination or Change in
38
Control Potential Payments Upon a Change in
Control Change in Control Severance Agreements
and discussed at Compensation Disclosure and
Analysis Change in Control Agreements.
Bruce
Sohn
Effective as of November 11, 2008, we entered into an
amended and restated employment agreement with Mr. Bruce
Sohn, to serve as our president, which was amended in July 2009
to provide for accelerated vesting of his new hire equity grant
upon a termination of employment without cause. Under the terms
of his employment agreement, Mr. Sohn is entitled to an
annual base salary of $555,000 (subject to annual increases at
our discretion) and the opportunity to participate in the
Companys annual bonus program with a target bonus
percentage of at least 90% of his annual base salary.
Mr. Sohn receives standard employee benefits and four weeks
of vacation per year.
Our employment agreement with Mr. Sohn provides that, in
the event Mr. Sohns employment is terminated by us
without cause, Mr. Sohn will receive the following:
(a) severance equal to 24 months of his annual base
salary, payable over the
24-month
period following termination of employment, (b) continued
health benefits for 24 months, (c) full vesting of the
unvested portion of Mr. Sohns new hire equity grant,
which options will remain exercisable for one year plus
90 days after such employment termination, and (d) an
additional 12 months service credit for purposes of
determining vesting of his equity-based compensation awards
other than his new hire equity grant. The additional vesting
described in (d) above also applies if Mr. Sohns
employment terminates due to his death or disability. In the
event of termination of Mr. Sohns employment for any
reason, he is entitled to payment of his earned and unused (and
unforfeited) vacation. Mr. Sohn must sign a release in
order to receive severance payments.
Mr. Sohn is also subject to a separate confidentiality
agreement and a separate non-competition and non-solicitation
agreement, which provides that Mr. Sohn will not compete
with the Company or solicit Company associates for
24 months after termination of his employment.
Mr. Sohn has also entered into a separate amended and
restated CIC Agreement with the Company, the terms of which are
described in Potential Payments Upon Termination or Change
in Control Potential Payments Upon a Change in
Control Change in Control Severance Agreements.
Maja
Wessels
Effective as of May 5, 2008, First Solar GmbH, an indirect
German subsidiary of the Company, entered into an employment
contract with Ms. Wessels under Belgian law to serve as our
vice president, governmental affairs EMEA. This agreement
provided Ms. Wessels with an annual base salary of
274,953, our Belgian fringe benefit package and certain
additional perquisites, including use of an automobile and
expenses related to her childs education (up to a maximum
30,000 per year). On October 1, 2009,
Ms. Wessels employment contract was amended and
restated in connection with her promotion to executive vice
president, global public affairs. At that time, Ms. Wessels
entered into a CIC Agreement with the Company, the terms of
which are described in Executive Compensation
Potential Payments Upon Termination or Change in
Control Potential Payments Upon a Change in
Control Change in Control Severance
Agreements, and we agreed to vest her new hire equity
grant if her employment were terminated without
cause. The Company also agreed to provide
Ms. Wessels with the benefit of its international
assignment policy (specifically, tax equalization benefits, a
housing allowance and cost of living allowance). These payments
are described in more detail in the footnoted table to the
All Other Compensation column of the Summary
Compensation Table.
On October 1, 2010, we relocated Ms. Wessels to the
United States and her Belgian employment contract terminated by
its terms. In connection with this move, Ms. Wessels became
eligible for relocation benefits under the terms of our
relocation policy (which is detailed in the All Other
Compensation column of the Summary Compensation Table).
Under the terms of her current employment agreement,
Ms. Wessels is entitled to an annual base salary of
$384,962 (subject to annual increases at our discretion) and the
opportunity to participate in the Companys annual bonus
program with a target bonus percentage of at least 60% of her
annual base salary. Ms. Wessels receives standard employee
benefits and four weeks of vacation per year.
39
Our employment agreement with Ms. Wessels provides that, in
the event Ms. Wessels employment is terminated by us
without cause, Ms. Wessels will receive the following:
(a) severance equal to 12 months of her annual base
salary, payable over the
12-month
period following termination of employment, (b) continued
health benefits for 12 months (or if sooner until she is
covered under another employers plan), (c) full
vesting of the unvested portion of Ms. Wessels new
hire equity grant, and (d) an additional
12 months service credit for purposes of determining
vesting of her other equity-based compensation awards. The
additional vesting in clause (d) also applies if
Ms. Wessels employment terminates due to her death or
disability. In the event of termination of
Ms. Wessels employment for any reason, she is
entitled to payment of her earned and unused (and unforfeited)
vacation. Ms. Wessels must sign a release in order to
receive severance payments.
Ms. Wessels is also subject to a separate confidentiality
agreement and a separate non-competition and non-solicitation
agreement, which provides that Ms. Wessels will not compete
with the Company or solicit Company associates for
12 months after termination of her employment.
Ms. Wessels has also entered into a separate amended and
restated CIC Agreement with the Company, the terms of which are
described in Executive Compensation Potential
Payments Upon Termination or Change in Control
Potential Payments Upon a Change in Control Change
in Control Severance Agreements and discussed at
Compensation Disclosure and Analysis Change in
Control Agreements.
Mary
Beth Gustafsson
Effective as of October 6, 2008, we entered into an
employment agreement with Ms. Mary Beth Gustafsson, to
serve as our vice president and general counsel. This employment
agreement amended in July 2009 to provide for the vesting of her
new hire equity in the event her employment terminated without
cause and amended again in November 2009 to reflect
Ms. Gustafssons promotion to executive vice president
and her assumption of the corporate secretary function at that
time. Under the terms of her employment agreement,
Ms. Gustafsson is entitled to an annual base salary of
$331,792 (subject to annual increases at our discretion) and the
opportunity to participate in the Companys annual bonus
program with a target bonus percentage of at least 60% of her
annual base salary. Ms. Gustafsson receives standard health
benefits and four weeks of vacation per year.
Our employment agreement with Ms. Gustafsson provides that
in the event Ms. Gustafsson employment is terminated
by us without cause, Ms. Gustafsson will receive the
following: (a) severance equal to 12 months of her
annual base salary, payable over the
12-month
period following termination of employment, (b) continued
health benefits for up to 12 months (or if sooner until she
is covered under another employers plan), (c) full
vesting of the unvested portion of Ms. Gustafsson new
hire equity grant, and (d) an additional
12 months service credit for purposes of determining
vesting on her other equity-based compensation awards. The
additional vesting in described in (d) above also applies
if Ms. Gustafsson employment terminates due to her
death or disability. In the event of termination of
Ms. Gustafsson employment for any reason, she is
entitled to payment of her earned and unused (and unforfeited)
vacation. Ms. Gustafsson must sign a release in order to
receive severance payments.
Ms. Gustafsson is also subject to a separate
confidentiality agreement and a separate non-competition and
non-solicitation agreement, which provides that
Ms. Gustafsson will not compete with the Company or solicit
Company associates for 12 months after termination of her
employment.
Ms. Gustafsson has also entered into a separate amended and
restated CIC Agreement with the Company, the terms of which are
described in Executive Compensation Potential
Payments Upon Termination or Change in Control
Potential Payments Upon a Change in Control Change
in Control Severance Agreements and discussed at
Compensation Disclosure and Analysis Change in
Control Agreements.
Potential
Payments Upon Termination or Change in Control
Potential
Payments Upon Termination of Employment (Other Than in the
Context of a Change in Control)
The table below reflects the estimated amount of compensation
payable to each of the named executive officers in the event of
termination of such executives employment. The amount of
compensation payable to each named executive officer upon
involuntary termination without cause and termination due to
disability or death of the executive, in each case, other than
in connection with a change in control, is shown below. The
amounts shown
40
assume that such termination was effective as of
December 31, 2010, and thus include amounts earned through
such time and are estimates of the amounts which would be paid
out to the executives upon their termination. For purposes of
the calculations below, we have used a share value of $130.14
per share, which was the closing price of our common stock on
December 31, 2010, the last trading day in the 2010 fiscal
year. The actual amounts to be paid out can only be determined
at the time of the executives separation from the Company.
None of the named executive officers are entitled to
compensation upon a termination for cause.
For descriptions relating to these payments and benefits,
including any release, non-competition, non-solicitation or
similar requirements, see Compensation Discussion and
Analysis Employment Agreements and
Arrangements. The amounts do not include amounts payable
pursuant to the Companys contracts, agreements, plans or
arrangements to the extent they do not discriminate in scope,
terms or operation, in favor of executive officers of the
Company and that are available generally to all salaried
associates, including payment of accrued rights such as payment
for accrued and unpaid vacation.
|
|
|
|
|
|
|
|
|
|
|
Involuntary Not for
|
|
|
Termination Due to
|
|
|
|
Cause Termination
|
|
|
Death or Disability
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
Robert J. Gillette
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
2,550,000
|
(1)(2)
|
|
|
850,000
|
(6)
|
Health Coverage
|
|
|
19,111
|
(1)(4)
|
|
|
|
|
Equity Treatment
|
|
|
6,329,099
|
(5)
|
|
|
6,329,099
|
(7)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
8,898,210
|
|
|
|
7,179,099
|
|
Jens Meyerhoff
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
1,450,000
|
(1)(2)(3)
|
|
|
450,000
|
(6)
|
Health Coverage
|
|
|
19,055
|
(1)
|
|
|
|
|
Equity Treatment
|
|
|
4,031,781
|
(5)
|
|
|
4,031,781
|
(7)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,500,836
|
|
|
|
4,481,781
|
|
Bruce Sohn
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
1,609,500
|
(1)(2)(3)
|
|
|
499,500
|
(6)
|
Health Coverage
|
|
|
30,119
|
(1)
|
|
|
|
|
Equity Treatment
|
|
|
5,317,489
|
(5)
|
|
|
4,750,189
|
(7)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,957,108
|
|
|
|
5,249,689
|
|
Maja Wessels
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
615,939
|
(1)(2)
|
|
|
230,977
|
(6)
|
Health Coverage
|
|
|
15,059
|
(1)(4)
|
|
|
|
|
Equity Treatment
|
|
|
1,112,176
|
(5)
|
|
|
617,644
|
(7)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,743,174
|
|
|
|
848,621
|
|
Mary Beth Gustafsson
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
552,102
|
(1)(2)(3)
|
|
|
207,038
|
(6)
|
Health Coverage
|
|
|
15,059
|
(1)(4)
|
|
|
|
|
Equity Treatment
|
|
|
1,039,949
|
(5)
|
|
|
623,501
|
(7)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,607,110
|
|
|
|
830,539
|
|
|
|
|
(1) |
|
Estimates based on aggregate payments to be made over the
severance period as follows: (i) Ms. Wessels and
Ms. Gustafsson (12 months); and
(ii) Messrs. Gillette, Meyerhoff and Sohn
(24 months). |
|
(2) |
|
Includes cash bonus calculated at target, because under the
terms of the bonus program, the bonus is earned and payable to
any associate who is employed on the last day of the year. |
|
(3) |
|
Severance payments shall be reduced by any compensation that the
executive earns from employment during the respective severance
period following such termination of employment. |
41
|
|
|
(4) |
|
Continued health benefit coverage will be provided by the
Company, until the earlier of (i) the end of the severance
period and (ii) the date the executive obtains coverage
under any other medical benefits plan. Estimated value of
continued medical coverage based on 2011 costs for this benefit. |
|
(5) |
|
Estimated aggregate value of 12 months acceleration of the
vesting of equity-based compensation, full vesting of the new
hire grants of Ms. Wessels and Ms. Gustafsson and full
vesting of the new hire option awards of Messrs. Sohn and
Meyerhoff. As of December 31, 2010, Mr. Meyerhoff had
less than 12 months to vest on his new hire option award. |
|
(6) |
|
Our Non-Equity Incentive Compensation plan requires that all
associates be employed through the end of the calendar year in
order to receive a bonus payout, with the following exceptions:
retirement, death, and U.S. long-term disability. These
exceptions allow eligibility for a pro-rated award based on days
of service completed during the performance year. Calculation
assumes a target payout of 1x. |
|
(7) |
|
Estimated aggregate value of 12 months acceleration of the
vesting of all equity-based compensation. |
Potential
Payments Upon a Change in Control
Consequences
of change in control under equity-based compensation
plans
2010 Omnibus Incentive Compensation Plan (and 2006 Omnibus
Incentive Compensation Plan). The 2010 Omnibus
Plan (and its predecessor, the 2006 Omnibus Incentive
Compensation Plan) provide that, unless otherwise provided in an
award agreement, in the event of a change of control (as defined
below) of the Company, or unless provision is made in connection
with the change of control for assumption of, or substitution
for, awards previously granted, any equity awards outstanding as
of the date the change of control is determined to have occurred
will become fully exercisable and vested, as of immediately
prior to the change of control, and cash incentive awards will
be paid out as if the change of control date were the last day
of the performance period and assuming target level of
performance and all other awards will be deemed exercisable.
The term change of control in the 2010 Omnibus Plan
(and the 2006 Omnibus Plan) is defined generally as the
occurrence of any of the following events:
|
|
|
|
|
during any period of 24 consecutive months, a change in the
composition of a majority of our board of directors that is not
supported by a majority of the incumbent board of directors;
|
|
|
|
the consummation of a merger, reorganization or consolidation or
sale or other disposition of all or substantially all of our
assets, subject to certain exceptions for transactions that
would not constitute a change in control;
|
|
|
|
the approval by our stockholders of a plan of our complete
liquidation or dissolution; or
|
|
|
|
an acquisition by any individual, entity or group of beneficial
ownership of a percentage of the combined voting power of our
then outstanding voting securities entitled to vote generally in
the election of directors that is equal to or greater than the
greater of (a) 20% and (b) the percentage of the
combined voting power of the outstanding voting securities owned
by certain specified stockholders, with exceptions for certain
acquisitions.
|
2003 Unit Option Plan. The 2003 Plan permits
the Company to accelerate the exercisability and vesting of
options in the event of a change in control, but does not
require the Company to do so.
Change in
Control Severance Agreements
The Company has entered into change in control severance
agreements, referred to as the CIC Agreements, with its
executive officers and certain senior management, including each
of its named executive officers. Under the CIC Agreements, if a
change in control (substantially as defined in the 2010 Omnibus
Plan) occurs, the executive would become immediately entitled to
accelerated vesting of all equity-based, long-term incentive and
cash incentive compensation awards (other than awards which by
their express terms do not accelerate under the CIC Agreements).
42
Executives who are party to a CIC Agreement will also be
entitled to severance payments and benefits if the
executives employment with the Company is terminated in
anticipation of a change in control or if, during the two-year
period after a change in control, the executives
employment is terminated without cause or the executive resigns
for good reason (which includes material changes in an
executives duties, responsibilities or reporting
relationships, failure to provide equivalent compensation and
benefits and being required to relocate 50 or more miles) (such
termination, a qualifying termination). If
terminated or separated from the Company under those
circumstances, the executive would be entitled to the following
additional benefits under the CIC Agreement:
|
|
|
|
|
a lump-sum cash severance payment equal to two times the sum of
(i) the executives annual base salary (without regard
to any reduction giving rise to good reason) and (ii) the
greater of
|
|
|
|
|
|
the executives target annual bonus for the year of
termination; and
|
|
|
|
the average of the annual cash bonuses payable to the executive
by us in respect of the three full calendar years immediately
preceding the calendar year that includes the termination date;
|
|
|
|
|
|
a pro-rated target annual bonus;
|
|
|
|
the continuation of, or reimbursement for, welfare and fringe
benefits for 18 months after termination of
employment; and
|
|
|
|
reimbursement for the cost of executive-level outplacement
services (subject to a $20,000 ceiling).
|
To obtain severance benefits under a CIC Agreement, an executive
must first execute a separation agreement with the Company that
includes a waiver and release of any and all claims against the
Company. For terminations other than a qualifying termination
following a change in control, the executive is entitled to
accrued rights only.
In addition to the foregoing, in accordance with the CIC
Agreements, the Company will make certain tax
gross-up
payments to the executive to cover any excise taxes that may be
imposed under Section 280G of the Code in connection with
qualifying termination payments (including the acceleration of
equity-based, long-term incentive and cash compensation upon a
change in control) unless the value of the payments and benefits
in connection with the change in control does not exceed by more
than 10% of the maximum amount payable without triggering any
such taxes, in which case the payments and benefits will be
reduced to such maximum amount.
The table below shows the amounts that would be payable to each
of the named executive officers in the event of a qualifying
termination following a change in control, if a change of
control and the qualifying termination had occurred on
December 31, 2010, using a share value of $130.14 per
share, which was the closing price of our common stock on
December 31, 2010, the last trading day in the 2010 fiscal
year.
The amounts do not include amounts payable pursuant to the
Companys contracts, agreements, plans or arrangements to
the extent they do not discriminate in scope, terms or
operation, in favor of executive officers of the Company and
that are available generally to all salaried associates,
including payment of accrued rights such as payment for accrued
and unpaid vacation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
Cash
|
|
Value of
|
|
Value of
|
|
Estimated
|
|
Estimated
|
|
|
|
|
Severance
|
|
Accelerated
|
|
Medical and
|
|
Value of
|
|
Value of
|
|
|
|
|
Payment
|
|
Equity
|
|
Welfare
|
|
Outplacement
|
|
280G Gross Up
|
|
|
|
|
Amount
|
|
Awards
|
|
Benefits
|
|
Assistance
|
|
Payment
|
|
Total
|
Name
|
|
($)(1)
|
|
($)(2)
|
|
($)(3)
|
|
($)(4)
|
|
($)(5)
|
|
($)
|
|
Robert J. Gillette
|
|
|
4,250,000
|
|
|
|
10,497,613
|
|
|
|
16,531
|
|
|
|
20,000
|
|
|
|
|
|
|
|
14,784,144
|
|
Jens Meyerhoff
|
|
|
2,350,000
|
|
|
|
10,164,628
|
|
|
|
15,909
|
|
|
|
20,000
|
|
|
|
|
|
|
|
12,550,537
|
|
Bruce Sohn
|
|
|
2,626,313
|
|
|
|
10,370,064
|
|
|
|
24,298
|
|
|
|
20,000
|
|
|
|
|
|
|
|
13,040,675
|
|
Maja Wessels
|
|
|
1,599,159
|
|
|
|
3,255,418
|
|
|
|
24,016
|
|
|
|
20,000
|
|
|
|
1,459,496
|
|
|
|
6,358,089
|
|
Mary Beth Gustafsson
|
|
|
1,444,624
|
|
|
|
3,544,859
|
|
|
|
23,950
|
|
|
|
20,000
|
|
|
|
1,555,769
|
|
|
|
6,589,202
|
|
|
|
|
(1) |
|
The Company will pay the executive an amount equal to two times
the sum of (A) the executives annual base salary
(without regard to any reduction giving rise to good reason) and
(B) the greater of (i) the annual bonus and
(ii) the average of the annual cash bonuses payable to the
executive in respect of the three (3) calendar years |
43
|
|
|
|
|
immediately preceding the calendar year that includes the
termination date or, if the executive has not been employed for
three (3) full calendar years preceding the calendar year
that includes the termination date, the average of the annual
cash bonuses payable to the executive for the number of full
calendar years prior to the termination date that he/she has
been employed. Further, the Company will pay the executive an
amount equal to the product of (A) the executives
annual bonus and (B) a fraction, the numerator of which is
the number of days in the Companys fiscal year containing
the termination date that the executive was employed by the
Company or any affiliate, and the denominator of which is 365,
in a lump-sum payment on the tenth business day after the
release effective date. |
|
(2) |
|
Vesting of equity awards is a single-trigger
benefit; the awards vest upon a change in control. |
|
(3) |
|
Estimated value of 18 months continued medical and welfare
benefits based on 2011 costs for these benefits. |
|
(4) |
|
Assumes a maximum payment of $20,000 which may be made for
outplacement assistance. |
|
(5) |
|
Assumes the highest applicable federal and state income tax
rates. |
44
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Upon the recommendation of the nominating and governance
committee of the board of directors, the board of directors has
nominated for election at the annual meeting the following slate
of nine nominees. Information about these nominees is provided
above under the heading Directors. Each of the
nominees is currently serving as a director of the Company. The
persons appointed in the enclosed proxy intend to vote such
proxy for the election of each of the nine nominees named below,
unless the stockholder indicates on the proxy that the vote
should be withheld from any or all of the nominees. The Company
expects each nominee for election as a director at the annual
meeting to be able to accept such nomination. If any nominee is
unable to accept the nomination, proxies will be voted in favor
of the remainder of those nominated and may be voted for
substitute nominees, unless you have withheld authority.
Nominees
The board of directors has nominated for election to the board
of directors the following nine nominees:
Michael J. Ahearn
Robert J. Gillette
Craig Kennedy
James F. Nolan
William J. Post
J. Thomas Presby
Paul H. Stebbins
Michael Sweeney
José H. Villarreal
Required
Vote
The nine nominees receiving the highest number of affirmative
votes of the shares of our common stock present at the annual
meeting in person or by proxy and entitled to vote shall be
elected as directors. Unless marked to the contrary, proxies
received will be voted FOR these nominees.
Recommendation
Our board of directors recommends a vote FOR the
election to the board of directors of each of the foregoing
nominees.
45
PROPOSAL NO. 2
ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Company is providing stockholders with an advisory vote on
executive compensation as required by Section 14A of the
Securities Exchange Act of 1934, as amended (the Exchange
Act). Section 14A was added to the Exchange Act by
Section 951 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act.
Discussion
As described more fully in the Compensation Discussion and
Analysis section of this proxy statement, the Companys
executive compensation program promotes a performance-based
culture and aligns the interests of stockholders and executives
through at-risk compensation tied to an appropriate balance of
near-term and long-term objectives. We are dedicated to global
leadership and to delivering superior stockholder value. Our
executive compensation philosophy supports these objectives by
attracting and retaining the best management talent and by
motivating these employees to achieve business and financial
goals that create value for stockholders in a manner consistent
with First Solars mission and strategic plan. For these
reasons, our board of directors recommends that stockholders
vote in favor of the following resolution:
RESOLVED, that the Companys stockholders approve, on
an advisory basis, the compensation of the named executive
officers, as disclosed in the Companys Proxy Statement for
the 2011 Annual Meeting of Stockholders pursuant to the
executive compensation disclosure rules of the Securities and
Exchange Commission, including the Compensation Discussion and
Analysis, the Summary Compensation Table and the other related
tables and disclosure.
Required
Vote
Because the vote is advisory, it will not be binding upon our
board of directors; however, our board and compensation
committee will take into account the outcome of the vote when
considering future executive compensation arrangements. Unless
marked to the contrary, proxies received will be voted
FOR the approval of the compensation of our named
executive officers as disclosed in this proxy statement.
Recommendation
Our board of directors recommends a vote FOR the
Companys executive compensation as disclosed in this proxy
statement.
46
PROPOSAL NO. 3
ADVISORY VOTE ON THE FREQUENCY OF THE
ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Exchange Act, we are also
providing stockholders with an advisory vote on how frequently
we should seek an advisory vote on the compensation of our named
executive officers. Accordingly, we are asking stockholders to
vote on whether future advisory votes on named executive officer
compensation should occur every one year, every two years or
every three years.
Discussion
After careful consideration of this proposal, our board of
directors has determined that an advisory vote on named
executive officer compensation that occurs every three years is
the most appropriate policy for First Solar at this time, and
therefore the board recommends that you vote for a three-year
interval for the advisory vote on executive compensation. As
described above under the caption Compensation Discussion
and Analysis and elsewhere in this proxy statement, our
executive compensation programs are designed to promote a
long-term connection between pay and performance, and
accordingly, our core executive compensation philosophy does not
vary significantly from year to year. Consistent with our
practice of seeking timely input from and engaging in frequent
dialogue with our stockholders on corporate governance matters
and our executive compensation philosophy, policies and
practices, we sought investor viewpoints on this topic during
the first quarter of 2011. As part of our regular dialogue with
our stockholders, investors holding a substantial majority of
our outstanding shares of common stock have advised us that they
either are in favor of a three year executive compensation
advisory vote cycle
and/or that
they would support managements decision regarding the
frequency of an executive compensation advisory vote. We will
continue to emphasize the focus of the Companys executive
compensation program on driving long-term, sustainable,
profitable growth and the design of the different program
elements to act in an integrated manner so that it may properly
be taken into account by stockholders in casting their advisory
vote on executive compensation.
Required
Vote
Stockholders will be able to specify one of four choices for
this proposal on the proxy card: one year, two years, three
years or abstain. Stockholders are not voting to approve or
disapprove the boards recommendation. This advisory vote
on the frequency of future advisory votes on executive
compensation is non-binding on the board of directors.
Notwithstanding the boards recommendation and the outcome
of the stockholder vote, the board may in the future decide to
conduct advisory votes on a more or less frequent basis and may
vary its practice based on factors such as discussions with
stockholders and adoption of material changes to compensation
programs. Unless marked to the contrary, proxies received will
be voted FOR an advisory vote every three years on
the compensation of our named executive officers.
Recommendation
Our board of directors unanimously recommends a vote for
submitting the advisory vote on the compensation of our named
executive officers to stockholders every three years.
47
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The audit committee of the board of directors has appointed
PricewaterhouseCoopers LLP as the independent registered public
accounting firm to audit our consolidated financial statements
for the year ending December 31, 2011. During fiscal years
2009 and 2010, PricewaterhouseCoopers LLP served as our
independent registered public accounting firm and also provided
certain tax and other audit-related services. See
Principal Accountant Fees and Services.
Representatives of PricewaterhouseCoopers LLP are expected to
attend the annual meeting, where they will be available to
respond to appropriate questions and, if they desire, to make a
statement.
Required
Vote
Ratification of the appointment of PricewaterhouseCoopers LLP as
our independent registered public accounting firm for the year
ending December 31, 2011 requires the affirmative vote of a
majority of the shares of our common stock present at the annual
meeting in person or by proxy and entitled to vote. Unless
marked to the contrary, proxies received will be voted
FOR ratification of the appointment of
PricewaterhouseCoopers LLP.
Recommendation
Our board of directors recommends a vote FOR the
ratification of the appointment of PricewaterhouseCoopers LLP as
our independent registered public accounting firm for the year
ending December 31, 2011.
48
PROPOSAL NO. 5
STOCKHOLDER PROPOSAL REGARDING
ARIZONA IMMIGRATION REFORM
Management has been advised that NorthStar Asset Management
Funded Pension Plan, P.O. Box 301840, Boston, MA
02130, the owner of 49 shares, intends to submit the
following proposal for consideration and action by the
stockholders at the annual meeting. Such stockholder has
provided the following resolution and accompanying statements,
and First Solar is not responsible for any inaccuracies
contained therein. Our board of directors recommends a vote
AGAINST this stockholder proposal.
Report on
Potential Risks Due to Arizona Immigration Reform
Whereas, the Arizona Senate Bill Support Our Law Enforcement
and Safe Neighborhoods Act (SB 1070), the broadest and
strictest anti-illegal immigration measure in decades, was
signed into Arizona law on April 23, 2010;
Whereas, critics of this law state that it encourages racial
profiling and discrimination against Latinos,
Hispanic-Americans,
and others perceived to be foreign;
Whereas, First Solar illustrates its nondiscrimination stance
through the firm non-discrimination policy in existence for its
employees which states that the Company values and
respects the importance of a diverse and inclusive
workforce, and that it hires and trains employees in
all job titles without regard to race, color, religion, sex,
age, national origin, veteran status, disability, sexual
orientation, or gender identity.
Whereas, First Solar is headquartered in Tempe, Arizona, and has
yet to take a political stance on this public policy issue;
Whereas a USA Today news article (Boycotts over immigration
law cost Arizona millions, November 21,
2010) reports that controversy over SB 1070 has cost the
Arizona economy up to $250 million and has resulted in at
least 2,700 job losses since the laws creation in April,
including boycotts by companies and municipalities across the
United States who refuse to purchase resources, services, and
products from companies headquartered in Arizona. The city of
Phoenix alone reports that it fears losing upwards of
$90 million over the next five years in cancelled hotel and
convention business;
Whereas, the government of San Francisco, the Los Angeles
City Council, and city officials in Oakland, Minneapolis, Saint
Paul, Denver, and Seattle all took specific boycotting action,
usually by banning some of their employees from work-related
travel to Arizona or by limiting city business done with
companies headquartered in Arizona;
Whereas, Representative Raul Grijalva of the 7th congressional
district of Arizona, himself, described SB 1070 as a
racist policy and called for an economic boycott of
his state;
Resolved, shareholders request that the Board of Directors
publish a report to shareholders by December 1, 2011,
omitting confidential information and at reasonable cost, fully
identifying potential risks and associated costs, both tangible
and intangible, and assessing the total financial impact on our
Company, its brand reputation, and shareholder value caused by
the boycotts and public outrage caused by SB 1070.
Required
Vote
Because the vote is advisory, it will not be binding on our
board of directors. The board will consider the proposal
approved by our stockholders if it receives the affirmative vote
of a majority of the shares of our common stock present at the
annual meeting in person or by proxy and entitled to vote. If
the proposal is approved, the board, in its discretion, would
determine when, how and in what manner to respond to the request
for the report. Unless marked to the contrary, proxies received
will be voted AGAINST this stockholder proposal.
Recommendation
Our board of directors recommends a vote AGAINST
this stockholder proposal.
49
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, requires our directors,
executive officers and holders of more than 10% of our common
stock to file with the Commission reports regarding their
ownership and changes in ownership of our securities. We believe
that, during the fiscal year ended December 31, 2010, our
directors, executive officers and 10% stockholders complied with
all Section 16(a) filing requirements.
In making these statements, we have relied upon examination of
the copies of Forms 3, 4 and 5 provided to us and the
written representations of our directors, executive officers and
10% stockholders.
50
OTHER
MATTERS
It is not anticipated that any matters other than those
described in this proxy statement will be brought before the
annual meeting. If any other matters are presented, however, it
is the intention of the persons named in the proxy to vote the
proxy in accordance with the discretion of the persons named in
the proxy.
STOCKHOLDER
PROPOSALS
A stockholder who would like to have a proposal considered for
inclusion in our 2012 proxy statement must submit the proposal
so that it is received by us no later than December 14,
2011. Commission rules set standards for eligibility and specify
the types of stockholder proposals that may be excluded from a
proxy statement. Stockholder proposals should be addressed to
the Corporate Secretary, First Solar, Inc., 350 West
Washington Street, Suite 600, Tempe, Arizona 85281.
If a stockholder does not submit a proposal for inclusion in
next years proxy statement, but instead wishes to present
it directly at next years annual meeting of stockholders,
our bylaws require that the stockholder notify us in writing on
or before February 24, 2012, but no earlier than
January 25, 2012, to be included in our materials relating
to that meeting. Proposals received after February 24, 2012
will not be voted on at the annual meeting. In addition, such
proposal must also include, among other things, a brief
description of the business desired to be brought before the
annual meeting; the text of the proposal or business (including
the text of any resolutions proposed for consideration) and the
reasons for conducting such business at the annual meeting; the
name and address, as they appear on the Companys books, of
the stockholder proposing such business or nomination and the
name and address of the beneficial owner, if any, on whose
behalf the nomination or proposal is being made; the class or
series and number of shares of the Company which are
beneficially owned or owned of record by the stockholder and the
beneficial owner; any material interest of the stockholder in
such business; and a representation that the stockholder is a
holder of record of stock of the Company entitled to vote at
such annual meeting and intends to appear in person or by proxy
at such meeting to propose such business. If the stockholder
wishes to nominate one or more persons for election as a
director, such stockholders notice must comply with
additional provisions as set forth in our bylaws, including
certain information with respect to the persons nominated for
election as directors and any information relating to the
stockholder that would need to be disclosed in a proxy filing.
Any such proposals should be directed to the Corporate Secretary
at First Solar, Inc., 350 West Washington Street,
Suite 600, Tempe, Arizona 85281.
51
REPORT OF
THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The following report of the audit committee is not
soliciting material, is not deemed filed
with the Commission and is not to be incorporated by reference
into any other of the Companys filings under the
Securities Act or the Exchange Act, except to the extent we
specifically incorporate this report by reference therein.
The Audit Committee is comprised of three non-management
directors, each of whom is independent as that term is defined
in the NASDAQ Marketplace Rules and satisfies the audit
committee independence standard under
Rule 10A-3(b)(1)
of the Exchange Act.
The Audit Committee was formed by a resolution of the board of
directors on October 3, 2006 and held five meetings during
fiscal 2010.
The Audit Committee operates under a written Audit Committee
Charter that was approved by the Audit Committee and approved by
the board.
The Audit Committee has reviewed and discussed with management
of the Company and PricewaterhouseCoopers LLP, the independent
registered public accounting firm for the Company, the audited
financial statements of the Company for the fiscal year ended
December 31, 2010 (the Audited Financial
Statements). The Audit Committee has discussed with
PricewaterhouseCoopers LLP the matters required to be discussed
by Statement on Auditing Standards No. 61 (as amended by
SAS 89 and SAS 90), as in effect on the date of this proxy
statement.
PricewaterhouseCoopers LLP provided to the Audit Committee the
written disclosures and the letter required by the applicable
requirements of the Public Company Accounting Oversight Board
(PCAOB) regarding the independent accountants
communication with the Audit Committee concerning independence,
and the Audit Committee discussed with PricewaterhouseCoopers
LLP the latters independence, including whether its
provision of non-audit services compromised such independence.
Based on the reviews and discussions described above, the Audit
Committee recommended to the board of directors of the Company
that the audited financial statements be included in the
Companys Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010 for filing with
the Securities and Exchange Commission.
Submitted by the Members of the Audit Committee
J. Thomas Presby (Chair)
Craig Kennedy
Paul H. Stebbins
52
DIRECTIONS
TO THE 2011 ANNUAL MEETING OF STOCKHOLDERS
From
North
Take I-17 South towards Tucson. Merge onto I-10 East via the
exit on the left towards Globe/Tucson. Exit at 40th Street.
Turn right onto South 40th Street and left onto east Cotton
Center Boulevard. Desert Willow will be on your left.
From
Tucson (South)
Take I-10 West towards Phoenix and exit at Broadway Road.
Turn left onto Broadway Road and left onto South
48th Street. Turn right onto East Cotton Center Boulevard,
pass through 1 roundabout and Desert Willow will be on your
right.
From East
Valley
Take US-60 West, merge onto I-10 West and exit at
Broadway Road. Turn left onto Broadway Road and left onto South
48th Street. Turn right onto East Cotton Center Boulevard,
pass through 1 roundabout and Desert Willow will be on your
right.
From
West
Take I-10 East to 40th Street. Turn right onto
40th Street and turn left onto east Cotton Center
Boulevard. Desert Willow will be on your left.
From
Airport
Go East on East Sky Harbor Boulevard, and merge onto AZ-153
South towards AZ-143 / I-10. Take the University Drive
exit on the left and bear left onto East University Drive. Merge
onto AZ 143 South. Stay straight towards South 48th Street
for 0.2 miles and turn right onto East Cotton Center
Boulevard. Desert Willow will be on your right.
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You can vote by Internet or telephone! Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the two voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. |
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Proxies
submitted by the Internet or telephone must be received by 1:00
a.m., Central Time, on May 25, 2011. |
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Vote by Internet
Log on to the Internet and go to
www.envisionreports.com/FSLR
Follow the steps outlined on the secured website. |
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Vote by telephone
Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada any time on a touch tone telephone. There is NO CHARGE to you for the call. |
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | |
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Follow the instructions provided by the recorded message. |
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Annual Meeting Proxy Card |
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YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
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A
Proposals The Board of Directors recommends a vote FOR all the nominees listed,
FOR Proposals 2 and 4, every 3 YEARS
for Proposal 3, and AGAINST Proposal 5. |
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LLP as the Independent Registered Public Accounting Firm
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Non-Voting Items |
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Change of Address Please print new address below. |
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C |
Authorized Signatures
This section must be completed for your vote to be counted. Date and Sign Below |
Please sign exactly as name(s) appears hereon.
Joint owners should each sign.
When signing as attorney, executor, administrator, corporate officer,
trustee, guardian, or custodian, please give full title.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box. |
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01AXKC
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
▼
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Proxy First Solar, Inc. |
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Solicited on Behalf of the Board of Directors for the Annual Meeting, May 25, 2011, Phoenix, Arizona
2011 Annual Meeting of First Solar, Inc. Stockholders
May 25, 2011, 9:00 a.m. (Local Time)
Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040
The undersigned hereby appoints Robert J. Gillette and Mary Beth Gustafsson (the proxies), or any of them, with
full power of substitution, to represent and to vote the Common Stock of the undersigned at the annual meeting of
stockholders of First Solar, Inc., to be held at the Desert Willow
Conference Center, 4340 East Cotton Center Boulevard,
Phoenix, Arizona 85040, on May 25, 2011, at 9:00 a.m., or at any
adjournment thereof as stated on the reverse side.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not
mark any boxes if you wish to vote in accordance with the Board of Directors recommendations. The proxies cannot vote
your shares unless you sign and return this card.
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Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas.
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Annual Meeting Proxy Card |
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PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
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A
Proposals The Board of Directors recommends a vote FOR all the nominees listed, FOR Proposals 2 and 4, every 3 YEARS
for
Proposal 3, and AGAINST Proposal 5.
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1.
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Election of Directors:
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01 Michael J. Ahearn
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02 Robert J. Gillette
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03 Craig Kennedy |
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04 James F. Nolan |
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06 J. Thomas Presby
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07 Paul H. Stebbins
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08 Michael Sweeney
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09 José H. Villarréal |
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Mark here to WITHHOLD vote from all nominees |
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For All EXCEPT To withhold a vote for one or more nominees, mark
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Approval, on an advisory basis, of the compensation of the
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Approval, on an advisory basis, of the frequency of
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LLP as the Independent Registered Public Accounting Firm
for the fiscal year ending December 31, 2011. |
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Stockholder proposal regarding Arizona immigration reform. |
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B |
Authorized
Signatures
This section must be completed for your vote to be counted.
Date and Sign Below
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Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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Date (mm/dd/yyyy) Please print date below.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box. |
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01AXLC |
▼ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE. ▼
Proxy First Solar, Inc.
Solicited on Behalf of the Board of Directors for the Annual Meeting, May 25, 2011, Phoenix, Arizona
2011 Annual Meeting of First Solar, Inc. Stockholders
May 25, 2011, 9:00 a.m. (Local Time)
Desert Willow Conference Center, 4340 East Cotton Center Boulevard,
Phoenix, Arizona 85040
The undersigned hereby appoints Robert J. Gillette and Mary Beth Gustafsson (the proxies), or any of them, with full power of substitution, to represent
and to vote the Common Stock of the undersigned at the annual meeting of stockholders of First Solar, Inc., to be held at the Desert Willow Conference
Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040, on May 25, 2011, at 9:00 a.m., or at any adjournment thereof as stated on the reverse
side.
You are encouraged to specify your choices by marking the appropriate boxes, SEE REVERSE SIDE, but you need not mark any boxes if you
wish to vote in accordance with the Board of Directors recommendations. The proxies cannot vote your shares unless you sign and return
this card.