UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A INFORMATION

 

PROXY STATEMENT PURSUANT TO SECTION 14 (a) OF THE SECURITIES

EXCHANGE ACT OF 1934

 

Filed by the Registrant þ

 

Filed by a Party other than the Registrant o

 

Check the appropriate box:

 

o  Preliminary Proxy Statement

 

o  Confidential, for Use of the Commission Only (as permitted by Rule 14a 6 (e) (2))

 

þ  Definitive Proxy Statement

 

o  Definitive Additional Materials

 

o  Soliciting Material Pursuant to Section 240.14a 11 (c) or Section 240.14a 12

 

INTEVAC, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

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þ  No fee required.

 

o  Fee computed per Exchange Act Rules 14a 6 (i) (4) and 0 11.

 

o  Fee paid previously with preliminary materials.

 

 

 

April 2, 2009

 

Dear Stockholder:

 

You are cordially invited to attend the 2009 Annual Meeting of Stockholders of Intevac, Inc., a Delaware corporation, which will be held Thursday, May 14, 2009, at 4:30 p.m., local time, at our principal executive offices located at 3560 Bassett Street, Santa Clara, California 95054. The accompanying notice of Annual Meeting, proxy statement and form of proxy card are being distributed to you on or about April 3, 2009.

 

Details regarding admission to the Annual Meeting and the business to be conducted are described in the accompanying proxy materials. Also included is a copy of our 2008 Annual Report. We encourage you to read this information carefully.

 

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 over the Internet, by telephone or by mailing a proxy card. Voting over the Internet, by telephone or by written proxy will ensure your representation at the Annual Meeting regardless of whether or not you attend in person. Please review the instructions on the proxy card regarding each of these voting options.

 

Thank you for your ongoing support of Intevac. We look forward to seeing you at the Annual Meeting. Please notify Joanne Diener at (408) 496-2242 if you plan to attend.

 

Sincerely yours,

 

Kevin Fairbairn

President and Chief Executive Officer

INTEVAC, INC.

3560 Bassett Street

Santa Clara, California 95054

 

NOTICE OF ANNUAL MEETING

FOR 2009 ANNUAL MEETING OF STOCKHOLDERS

 

 

 

All stockholders are cordially invited to attend the Annual Meeting in person.

 

By Order of the Board of Directors,

 

JEFFREY ANDRESON

Executive Vice President, Finance and Administration,

Chief Financial Officer, Treasurer and Secretary

 

This notice of Annual Meeting, proxy statement and accompanying form of proxy card are being distributed on or about April 3, 2009.

TABLE OF CONTENTS

 

INTEVAC, INC.

3560 Bassett Street

Santa Clara, California 95054

 

PROXY STATEMENT
FOR 2009 ANNUAL MEETING OF STOCKHOLDERS

 

 

 

 

 

 

 

The proxy statement and the 2008 Annual Report are available at www.intevac.com

 

At the Annual Meeting, six directors (constituting the entire board) are to be elected to serve until the next Annual Meeting of Stockholders and until a successor for any such director is elected and qualified, or until the death, resignation or removal of such director. The six candidates receiving the highest number of the affirmative votes of the shares entitled to vote at the Annual Meeting will be elected directors of Intevac.

 

It is intended that the proxies will be voted for the six nominees named below unless authority to vote for any such nominee is withheld. All six nominees are currently directors of Intevac, and all were elected to the Board by the stockholders at the last Annual Meeting. Each person nominated for election has agreed to serve if elected, and the Board of Directors has no reason to believe that any nominee will be unavailable or will decline to serve. In the event, however, that any nominee is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any other person who is designated by the current Board of Directors to fill the vacancy. The proxies solicited by this Proxy Statement may not be voted for more than six nominees.

 

Set forth below is information regarding the nominees to the Board of Directors.

 

 

The Board of Directors recommends a vote “FOR” all the nominees listed above.

 

Mr. Pond is a founder of Intevac and has served as Chairman of the Board since February 1991. Mr. Pond served as President and Chief Executive Officer from February 1991 until July 2000 and again from September 2001 through January 2002. Mr. Pond holds a BS in physics from the University of Missouri at Rolla and an MS in physics from the University of California at Los Angeles.

 

Mr. Fairbairn joined Intevac as President and Chief Executive Officer in January 2002 and was appointed a director in February 2002. Before joining Intevac, Mr. Fairbairn was employed by Applied Materials from July 1985 to January 2002, most recently as Vice-President and General Manager of the Conductor Etch Organization with responsibility for the Silicon and Metal Etch Divisions. From 1996 to 1999, Mr. Fairbairn

was General Manager of Applied’s Plasma Enhanced Chemical Vapor Deposition Business Unit and from 1993 to 1996, he was General Manager of Applied’s Plasma Silane CVD Product Business Unit. Mr. Fairbairn holds an MA in engineering sciences from Cambridge University.

 

Mr. Dury has served as a director of Intevac since July 2002. Mr. Dury is a co-founder of Mentor Capital Group, a venture capital firm formed in July 2000. From 1996 to 2000, Mr. Dury served as Senior Vice-President and Chief Financial Officer of Aspect Development, a software development firm. Mr. Dury holds a BA in psychology from Duke University and an MBA from Cornell University.

 

Mr. Hill was appointed as a director of Intevac in March 2004. Mr. Hill joined Kaiser Aerospace and Electronics Corporation, a privately held manufacturer of electronics and electro-optical systems, in 1969 and served as Chief Executive Officer and Chairman of both Kaiser and K Systems, Inc., Kaiser’s parent company, from 1997 until his retirement in 2000. Prior to his appointment as Chief Executive Officer, Mr. Hill served in a number of executive positions at Kaiser. Mr. Hill holds a BS in mechanical engineering from the University of Maine an MS in engineering from the University of Connecticut and has completed post-graduate studies at the University of Santa Clara business school. He is also a director of First Aviation Services, Inc.

 

Mr. Lemos has served as a director of Intevac since August 2002. Mr. Lemos retired from Varian Associates, Inc. in 1999 after 23 years, including serving as Vice-President and Chief Financial Officer from 1988 to 1999. Mr. Lemos has a BS in business from the University of San Francisco, a JD in law from Hastings College and an LLM in law from New York University.

 

Dr. Yang was appointed as a director of Intevac in March 2006. Dr. Yang was employed by Taiwan Semiconductor Manufacturing Company beginning in 1997 and served as Vice-President of Research and Development from 1999 until 2005. Prior to joining TSMC, Dr. Yang worked at Texas Instruments from 1980 to 1997 where he was Director of Device and Design Flow. Dr. Yang is currently an independent consultant. Dr. Yang holds a BS in physics from National Taiwan University, and an MS and a PhD in electrical engineering from the University of Illinois. He is also a director of Credence and Apache Design Solutions.

 

The Intevac 2003 Employee Stock Purchase Plan (the “2003 ESPP”) was adopted by our Board of Directors and approved by our stockholders in 2003. Employees have participated in the 2003 ESPP or its predecessor plan, the 1995 Employee Stock Purchase Plan, since 1995.

 

Our Board of Directors has determined that it is in our best interests and the best interests of our stockholders to make an additional 600,000 shares available for purchase under the 2003 ESPP. As such, the Board of Directors has put forth for approval of our stockholders an amendment to the 2003 ESPP to increase the number of shares reserved thereunder by 600,000 shares. If our stockholders approve the adoption of the amendment, the total number of shares available to be issued under such plan will be 732,000 shares.

 

The Board of Directors recommends a vote “FOR” the amendment to the 2003 Employee Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 600,000 shares.

 

The following paragraphs provide a summary of the principal features of the 2003 ESPP and its operation. The following summary is qualified in its entirety by reference to the 2003 ESPP.

 

General

 

The 2003 ESPP was adopted by our Board of Directors in January 2003 and approved by our stockholders in May 2003. The purpose of the 2003 ESPP is to provide employees with an opportunity to purchase our Common Stock through payroll deductions.

Administration

 

Our Board of Directors or a committee appointed by the Board administers the 2003 ESPP. All questions of interpretation or application of the 2003 ESPP are determined by the Board or the committee, and its decisions are final, conclusive and binding upon all participants.

 

Eligibility

 

Each of our employees, or the employees of our designated subsidiaries, whose customary employment is for more than twenty hours per week and more than five months per year is eligible to participate in the 2003 ESPP; except that no employee may be granted a purchase right under the 2003 ESPP (i) to the extent that, immediately after the grant, such employee would own our stock or the stock of any of our subsidiaries and/or hold outstanding options to purchase stock possessing 5% or more of the total voting power or total value of all classes of our stock or any of our subsidiaries, or (ii) to the extent that his or her rights to purchase stock under all of our employee stock purchase plans or those of our subsidiaries accrues at a rate which exceeds $25,000 worth of stock (determined at the fair market value of the shares at the time such purchase right is granted) for each calendar year. Eligible employees have the opportunity to elect to participate in the 2003 ESPP approximately twice per year.

 

Offering Period

 

Shares of our Common Stock are offered for purchase under the 2003 ESPP through a series of successive offering periods, each with a maximum duration of twenty-four (24) months. Each offering period is of a duration determined by the plan administrator prior to the start date and is comprised of a series of one or more successive purchase intervals. Purchase intervals within each offering period last approximately six (6) months and run from the first trading day in February to the last trading day in July each year and from the first trading day in August each year to the last trading day in January of the following year. Should the fair market value of our Common Stock on any semi-annual purchase date within an offering period be less than the fair market value per share on the start date of that offering period, then that offering period automatically terminates immediately after the purchase of shares on such purchase date, and a new offering period commences on the next trading day following the purchase date. The plan administrator may shorten the duration of such new offering period within five (5) trading days following the start date of such new offering period.

 

Purchase Price

 

The purchase price of our Common Stock acquired under the 2003 ESPP is equal to eighty-five percent (85%) of the lower of (i) the fair market value per share of our Common Stock on the first day of the offering period (or, if higher, on the participant’s entry date into the offering period) or (ii) the fair market value on the semi-annual purchase date. The fair market value of our Common Stock on any relevant date will be the closing sales price per share as reported on the Nasdaq National Market (or the closing bid, if no sales were reported), or the mean of the closing bid and asked prices if our common stock is regularly quoted by a recognized securities dealer but selling prices are not reported, as quoted on such exchange or reported in the Wall Street Journal.

 

Payment of Purchase Price; Payroll Deductions

 

Each participant’s purchase price of the shares is accumulated by payroll deductions throughout each purchase interval. A participant may elect to have up to 10% of his or her compensation deducted each payroll period. The number of shares of our Common Stock a participant may purchase in each purchase interval during an offering period is determined by dividing the total amount of payroll deductions withheld from the participant’s compensation during that purchase interval by the purchase price; provided, however, that a participant may not purchase more than 750 shares each purchase interval.

 

Withdrawal

 

Generally, a participant may withdraw from an offering period at any time by written notice without affecting his or her eligibility to participate in future offering periods. However, once a participant withdraws from a

particular offering period, that participant may not participate again in the same offering period, and to participate in a subsequent offering period, the participant must deliver to us a new subscription agreement.

 

Termination of Employment

 

Upon termination of a participant’s employment for any reason, including disability or death, his or her participation in the 2003 ESPP will immediately cease. The payroll deductions credited to the participant’s account, but not used to make a purchase will be returned to him or her or, in the case of death, to the person or persons entitled thereto as provided pursuant to the 2003 ESPP.

 

Adjustments; Merger or Change in Control

 

In the event of any stock split, stock dividend or other change in our capital structure, appropriate adjustments will be made in the number and kind and of shares available for purchase under the 2003 ESPP (including purchase interval limitations) and the purchase price and number of shares covered by each purchase right under the 2003 ESPP as determined by the plan administrator in its sole discretion.

 

In the event of any merger or “change of control,” as defined in the 2003 ESPP, the successor corporation or a parent or subsidiary of such successor corporation shall assume or substitute an equivalent purchase right for each outstanding purchase right. In the event the successor corporation refuses to do so, the Board of Directors shall shorten the purchase interval and offering period then in progress by setting a new purchase date before the merger or change of control, and the current purchase interval and offering period shall end on the new purchase date. The plan administrator shall notify each participant of the new purchase date at least 10 business days prior to such date, and the participant’s purchase right shall be exercised on such new purchase date, unless the participant withdraws prior to such date.

 

The following brief summary of the effect of federal income taxation upon the participant and Intevac with respect to the shares purchased under the 2003 ESPP does not purport to be complete, and does not discuss the tax consequences of a participant’s death or the income tax laws of any state or foreign country in which the participant may reside.

 

The 2003 ESPP, and the right of participants to make purchases thereunder, is intended to qualify under the provisions of Sections 421 and 423 of the Internal Revenue Code. Under these provisions, no income will be taxable to a participant until the shares purchased under the 2003 ESPP are sold or otherwise disposed of. Upon the sale or other disposition of the shares, the participant will generally be subject to tax in an amount that depends upon the holding period. If the shares are sold or otherwise disposed of more than (1) two years from the first day of the applicable offering period (or, if later, the first day the participant entered the offering period) and (2) one year from the applicable date of purchase, the participant will recognize ordinary income measured as the lesser of (a) the excess of the fair market value of the shares at the time of such sale or disposition over the purchase price, or (b) an amount equal to 15% of the fair market value of the shares as of the first day the participant entered the applicable offering period. Any additional gain will be treated as long-term capital gain. If the shares are sold or otherwise disposed of before the expiration of these holding periods, the participant will recognize ordinary income generally measured as the excess of the fair market value of the shares on the date the shares were purchased over the purchase price. Any additional gain or loss on such sale or disposition will be long-term or short-term capital gain or loss, depending on how long the shares have been held from the date of purchase.

 

Intevac generally is not entitled to a deduction for amounts taxed as ordinary income or capital gain to a participant, except to the extent of ordinary income recognized by participants upon a sale or disposition of shares prior to the expiration of the holding periods described above.

 

Our Board of Directors may at any time terminate or amend the 2003 ESPP. No amendment shall be effective unless it is approved by the stockholders, if such amendment would require shareholder approval in order to comply with Section 423 of the Internal Revenue Code.

 

Given that the number of shares that may be purchased under the 2003 ESPP is determined, in part, on our Common Stock’s value on the enrollment date of each participant and the last day of the purchase interval and given that participation in the 2003 ESPP is voluntary on part of employees, the actual number of shares that may be purchased by an individual is not determinable.

 

The table below shows, as to each of Intevac’s executive officers named in the 2008 Summary Compensation Table and the various indicated groups, the number of shares of Common Stock purchased under the 2003 ESPP during the last fiscal year, together with the weighted average purchase price paid per share.

 

 

 

 

Required Vote

 

The affirmative vote of the holders of a majority of the shares represented and voting at the Annual Meeting (provided that that vote also constitutes the affirmative vote of a majority of the required quorum) will be required for approval of the amendment to add an additional 600,000 shares to the Intevac 2003 Employee Stock Purchase Plan.

 

Summary

 

We believe strongly that approval of the amendment to the Intevac 2003 Employee Stock Purchase Plan is essential to our continued success. Awards such as those provided under the 2003 ESPP constitute an important incentive for our employees and help us to attract, retain and motivate people whose skills and performance are critical to our success. Our employees are our most valuable assets. We strongly believe that the 2003 ESPP is essential for us to compete for talent in the labor markets in which we operate.

 

The Board of Directors recommends that stockholders vote FOR the adoption of the amendment to the Intevac 2003 Employee Stock Purchase Plan to increase the number of shares reserved for issuance thereunder by 600,000 shares.

PROPOSAL THREE

RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS

 

The Audit Committee of the Board of Directors has selected Grant Thornton LLP as our independent public accountants for the fiscal year ending December 31, 2009. Grant Thornton LLP began auditing our financial statements in 2000. Its representatives are expected to be present at the Annual Meeting, will have an opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.

 

The Board of Directors recommends a vote “FOR” ratification of the selection of Grant Thornton LLP as Intevac’s independent registered public accounting firm for the fiscal year ending December 31, 2009.

 

The following table presents fees billed for professional audit services and other services rendered to us by Grant Thornton LLP for the years ended December 31, 2008 and 2007.

 

 

 

 

In making its recommendation to ratify the appointment of Grant Thornton LLP as our independent auditor for the fiscal year ending December 31, 2009, the Audit Committee has considered whether services other than audit and audit-related services provided by Grant Thornton LLP are compatible with maintaining the independence of Grant Thornton LLP and has determined that such services are compatible.

 

Our Audit Committee approves in advance all engagements with Grant Thornton LLP, including the audit of our annual financial statements, the review of the financial statements included in our Quarterly Reports on Form 10-Q and tax compliance services. Fees billed by Grant Thornton LLP are reviewed and approved by the Audit Committee on a quarterly basis.

 

We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. We have also adopted a Director Code of Ethics that applies to all of our directors. You can find both our Code of Business Conduct and Ethics and our Director Code of Ethics on our website at www.intevac.com. We post any amendments to the Code of Business Conduct and Ethics and the Director Code of Ethics, as well as any waivers, which are required to be disclosed by the rules of either the Securities and Exchange Commission (“SEC”) or The NASDAQ Global Select Market (“Nasdaq”) on our website.

 

The Board of Directors has determined that, with the exception of Mr. Pond and Mr. Fairbairn, all of its members are “independent directors” as that term is defined in the listing standards of Nasdaq.

 

During 2008, the Board of Directors held a total of six meetings (including regularly scheduled and special meetings) and also took certain actions by written consent. All members of the Board of Directors during fiscal 2008 attended at least seventy-five percent of the aggregate of the total number of meetings of the Board of Directors held during the fiscal year and the total number of meetings held by all committees of the Board on which each such director served (based on the time that each member served on the Board of Directors and the committees). The Board of Directors has an Audit Committee, a Compensation Committee and a Nominating and Governance Committee.

 

Audit Committee

 

The Audit Committee, which has been established in accordance with Section 3(a)(58)(A) of the Exchange Act, currently consists of Mr. Dury, Mr. Hill and Mr. Lemos, each of whom is “independent” as such term is defined for audit committee members by the Nasdaq listing standards. Mr. Dury is the chairman of the Audit Committee. The Board of Directors has determined that each member of the committee is an “audit committee financial expert” as defined under the rules of the SEC. The Audit Committee met eight times during 2008.

 

The Audit Committee is responsible for:

 

 

The Audit Committee has adopted a written charter approved by the Board of Directors, which is available on Intevac’s website at www.intevac.com under “Company — Governance.”

 

The Audit Committee Report is included in this proxy statement on page 33.

Compensation Committee

 

The Compensation Committee currently consists of Mr. Lemos and Dr. Yang, each of whom is “independent” as such term is defined by the Nasdaq listing standards. Mr. Lemos is the chairman of the Compensation Committee. The Compensation Committee met four times during 2008.

 

The Compensation Committee is responsible for:

 

 

See “Executive Compensation — Compensation Discussion and Analysis” and “Executive Compensation — Compensation of Directors” below for a description of Intevac’s processes and procedures for the consideration and determination of executive and director compensation.

 

The Compensation Committee has adopted a written charter approved by the Board of Directors, a copy of which is available on Intevac’s website at www.intevac.com under “Company — Governance.”

 

The Compensation Committee Report is included in this proxy statement on page 23.

 

Nominating and Governance Committee

 

The Nominating and Governance Committee currently consists of Mr. Hill and Dr. Yang, each of whom is “independent” as such term is defined by the Nasdaq listing standards. Mr. Hill is the chairman of the Nominating and Governance Committee. The Nominating and Governance Committee met three times during 2008.

 

The primary focus of the Nominating and Governance Committee is on the broad range of issues surrounding the composition and operation of the Board of Directors. The Nominating and Governance Committee provides assistance to the Board, the Chairman and the CEO in the areas of membership selection, committee selection and rotation practices, evaluation of the overall effectiveness of the Board, and review and consideration of developments in corporate governance practices. The Nominating and Governance Committee’s goal is to assure that the composition, practices, and operation of the Board contribute to value creation and effective representation of Intevac stockholders.

 

The Nominating and Governance Committee will consider recommendations of candidates for the Board of Directors submitted by the stockholders of Intevac; for more information, see “Process for Recommending Candidates for Election to the Board of Directors” below.

 

The Nominating and Governance Committee has adopted a written charter approved by the Board of Directors, a copy of which is available on Intevac’s website at www.intevac.com under “Company — Governance.”

 

Compensation Committee Interlocks and Insider Participation

 

Mr. Lemos and Dr. Yang served as members of the Compensation Committee during fiscal 2008. No interlocking relationship exists between any member of Intevac’s Board of Directors or Compensation Committee and any member of the board of directors or compensation committee of any other company, nor has any such interlocking relationship existed in the past. No member of the Compensation Committee is or was formerly an officer or an employee of Intevac.

 

Intevac encourages members of the Board of Directors to attend the annual meeting of stockholders, but does not have a policy requiring attendance. All six of the Company’s directors, Mr. Fairbairn, Mr. Pond, Mr. Dury, Mr. Lemos, Mr. Hill and Dr. Yang attended Intevac’s 2008 annual meeting of stockholders.

Lead Director

 

Mr. David Dury serves as Lead Director and liaison between management and the other non-employee directors. The Lead Director schedules and chairs meetings of the independent directors. The independent directors (including the Lead Director) hold a closed session at each regularly scheduled Board meeting.

 

Policy Regarding Board Nominees

 

It is the policy of the Nominating and Governance Committee of the Company to consider recommendations for candidates to the Board of Directors from stockholders. Stockholder recommendations of candidates for election to the Board should be directed in writing to: Intevac, Inc., 3560 Bassett Street, Santa Clara, California, 95054, and must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and the Company within the last three years, and evidence of the nominating person’s ownership of Company stock. Stockholder nominations to the Board must also meet the requirements set forth in the Company’s bylaws.

 

The Nominating and Governance Committee’s criteria and process for identifying and evaluating the candidates that it selects, or recommends to the full Board for selection, as director nominees are as follows:

 

 

Any stockholder who desires to contact our Chairman of the Board or the other members of our Board of Directors may do so by writing to: Board of Directors, c/o Stanley J. Hill, Chairman, Nominating and Governance Committee, Intevac, Inc., 3560 Bassett Street, Santa Clara, California, 95054. Communications received by Mr. Hill will also be communicated to the Lead Director, the Chairman of the Board or the other members of the Board as appropriate depending on the facts and circumstances outlined in the communication received.

 

The following is a discussion of our executive compensation program and the compensation decisions made for the fiscal year 2008 with respect to Kevin Fairbairn, our Chief Executive Officer, and the other executive officers named in the 2008 Summary Compensation Table on page 24 (the “Named Executive Officers”).

 

Executive Summary

 

Intevac’s businesses are characterized by rapidly changing technology and customer requirements; intense competition; cyclical revenues; and significant competition for management talent. The Compensation Committee believes that compensation programs for our executive officers need to be designed to attract, retain and motivate high-caliber executives. More specifically, the objectives of our executive compensation program are to:

 

 

Each executive’s compensation consists of base salary, a performance-based annual cash bonus, periodic grants of stock options and the benefit packages offered all our employees.

 

In the fiscal year ended December 31, 2008, Intevac’s revenues were $110 million, down 49% from the prior year, and net income decreased 156% to a $15 million loss. The decline in our performance, relative to 2007, led to significantly reduced total compensation to our Named Executive Officers in 2008, as no performance-based annual cash bonus payments were made.

 

The specific compensation principles, components and decisions designed to achieve these objectives during 2008 are discussed in more detail below.

 

Executive Compensation Philosophy

 

The majority of our operations are located in Santa Clara, California, where numerous high tech companies are located, served by a highly skilled and mobile workforce. Our compensation structure is designed to attract, retain and motivate high-performing executives in this very competitive labor environment. The guiding principles of our executive compensation plan are as follows:

 

 

 

 

 

In general, executives do not receive compensation, benefits or non-compensation, non-equity special perquisites other than those offered to all of Intevac’s employees.

 

Competitive Market Data

 

The Compensation Committee retained Farient Advisors (“Farient”) to assist it in evaluating 2008 compensation programs. The instructions provided to Farient included assessing target compensation levels for our executives relative to market practices and evaluating the overall design of our executive compensation program. The consultant was also engaged by the Committee to update the assessment of the competiveness of compensation for our Board of Directors. Executive compensation data was drawn from the Radford Executive Benchmark Survey and from publicly available proxy filings for the Peer Companies. The market compensation levels for comparable positions were examined by Farient and the Compensation Committee as part of the process to determine overall program design, base salary, target incentives and annual stock option grants.

 

The Peer Companies we used to evaluate market compensation positioning for executives in making 2008 compensation decisions were selected from technology companies with annual revenues of $200 to $700 million which were comparable to Intevac based on factors such as lines of business, profitability, and technical sophistication. We added additional imaging companies such as FLIR Systems, Inc. and Newport Corporation to the 2008 Peer Group as a result of the increasing percentage of revenues that we expected our Intevac Photonics business to achieve. The 2008 Peer Companies we selected are as follows:

 

The base salary, total cash compensation (base salary plus performance-based annual cash bonus) and total compensation (including stock options) for each of Intevac’s eleven most senior executives were compared to their respective Peer Group medians for executives with similar levels of responsibility. The Compensation Committee concluded that Intevac’s executive compensation:

 

 

As a result of these factors the Compensation Committee noted that the cyclical downturn in our Equipment business led to reduced profitability in 2008, and no performance-based annual cash bonuses were paid to our Named Executive Officers in 2008.

 

Compensation Components

 

The components of executive compensation are:

 

 

We also provide our executives the same benefits and perquisites that we offer our other employees. These standard employee benefits include participation in our 401(k) plan and employee stock purchase plan, and medical, dental and life insurance benefits, each with the same terms and conditions available to employees. We do not provide any benefits or perquisites to our Named Executive Officers that are not available to the majority of employees.

 

Base Salary:

 

Prior to making an offer of employment to an executive officer, the Compensation Committee approves the executive officer’s base salary, Target Bonus Percentage, the initial stock option grant and any hiring incentives. In setting the executive officer’s base salary, a number of factors are taken into account, in the Committee’s discretion, including the executive’s compensation with his previous employer, the compensation of other Intevac executives, the competitive labor market for similar executives, and how difficult it is to recruit and retain executive officers with similar skills and experience. None of these factors is specifically weighted and the evaluation includes subjective evaluation of skills, experience and responsibilities in the Committee’s judgment.

 

Once an executive has joined Intevac, the Compensation Committee approves changes to his or her base salary and Target Bonus Percentage during its annual review of the Executive Incentive Plan. The data from the Peer Group analysis is used, in addition to each executive’s responsibilities and performance against objectives, to determine annual changes to base salary and the Target Bonus Percentage. As with new hires, these factors are evaluated at the Committee’s discretion and in the Committee’s judgment. Annual adjustments to base salary also proportionately affect the executive’s Target Bonus (equal to base salary multiplied by the applicable Target Bonus Percentage).

 

Base Salary:  2008 base salary levels, effective as of February 8, 2008, for the Named Executive Officers were approved by the Compensation Committee (with the exception of Mr. Fairbairn, whose base salary was approved by the independent members of the Board of Directors). Salaries for Mr. Fairbairn, Mr. Andreson, Dr. Barnes and Dr. Kerns were increased by 4.0%, 4.0%, 4.0% and 3.5%, respectively, or amounts roughly equal to the average raise given Intevac employees. Mr. Marusiak’s base salary was increased by 10.0% as a result of the significant increase in gross margin that the Equipment business achieved during a period of significantly reduced sales and to better align his base salary with the 2008 Peer Group. Dr. Pietras’ base salary was increased by 5.7% as a

result of the significant increase in revenues and gross margin that the Intevac Photonics business achieved during 2007, and to better align his base salary with the 2008 Peer Group.

 

As a result of these increases, annual base salaries for the CEO and other Named Executive Officers in 2007 and 2008 were as follows:

 

 

 

 

Performance-based annual cash bonus:

 

We provide performance-based annual cash bonuses to our Named Executive Officers and other vice-president and director level employees under our Executive Incentive Plan. The total amount payable under the Executive Incentive Plan is determined based on Intevac’s financial performance. The objective of the Executive Incentive Plan is to align our executive compensation with actual short-term business performance and with non-financial business objectives.

 

The components to determine the performance-based cash bonus include:

 

 

Each of these components and the resulting calculation of the annual bonus payments are described in more detail below.

 

Target Bonus:  Named Executive Officers are assigned an annual Target Bonus, computed by multiplying each executive’s base salary times his or her Target Bonus Percentage. Target Bonus Percentages are determined based on competitive market data, internal equity considerations, and the degree of difficulty associated with achieving plan performance levels. Each factor is evaluated by the Committee based on data and input provided by management and the independent consultant. No change was made to the Target Bonus Percentages in 2008 for Mr. Fairbairn, Mr. Andreson, Mr. Marusiak, Dr. Barnes, Dr. Pietras and Dr. Kerns which were considered by the Committee as in line with market data based on the review of Peer Company compensation practices.

Target Bonus Percentages for the CEO and other Named Executive Officers during 2007 and 2008 were as follows:

 

 

Bonus Pool:  The total amount of Executive Incentive Plan bonuses paid (the “Executive Incentive Plan Bonus Pool” or “Bonus Pool”) to all Executive Incentive Plan participants (which includes the Named Executive Officers as well as all Intevac vice presidents and functional directors) is calculated by multiplying the Bonus Pool Percentage times “Proforma Annual Income before Income Taxes,” which is equal to the sum of income before income taxes, Bonus Pool expense, employee profit sharing expense and stock-based compensation expense. The Compensation Committee set the Bonus Pool Percentage at 10% at the beginning of 2008 after taking into consideration our projected Proforma Annual Income before Income Taxes and the total amount required to pay Executive Incentive Plan bonuses at the target level. This Bonus Pool Percentage was insufficient to pay bonuses at the 2008 target levels.

 

The Compensation Committee approved a new policy for 2008 that capped the performance-based annual cash bonuses that any Executive Incentive Plan participant could receive to a maximum of two times the target bonus.

 

Because of the tight linking of the Executive Incentive Plan Bonus Pool to profitability, executives do not receive performance-based annual cash bonuses in years when Proforma Annual Income before Income Taxes is zero or negative. The Compensation Committee reserves the right to exclude amounts, such as extraordinary or unusual items, gains or losses when determining Proforma Annual Income Before Income Taxes, but did not make any adjustments to the formula during 2008.

 

Management by Objectives:  A comprehensive set of Management by Objective Goals (“MBO Goals”) was established for each business unit or functional organization and approved by the Compensation Committee at the beginning of 2008. The MBO Goals covered four areas:

 

 

Some of the MBO Goals are assigned to more than one of the Named Executive Officers to reinforce the teamwork required to achieve results. The relative importance of the each of the areas of MBO Goals was weighted differently for each Named Executive Officer according to his or her area of responsibility. For example, Mr. Marusiak’s objectives were more heavily weighted towards Equipment MBO Goals, Dr. Pietras’ objectives were more heavily weighted towards Intevac Photonics MBO Goals, Dr. Barnes’ and Dr. Kerns’ objectives were

more heavily weighted towards Equipment product excellence MBO Goals and Mr. Fairbairn’s and Mr. Andreson’s objectives were more heavily weighted towards company-wide performance. Performance against MBO Goals was evaluated and numerically graded at the end of the year by management. This numerical grading is used to formulaically adjust the allocation of individual bonuses from the pool, with higher graded executives receiving a larger allocation and lower graded executives receiving a smaller allocation. The performance and evaluation was then reviewed and approved by the Compensation Committee. Mr. Fairbairn’s performance was evaluated by the independent members of the Board of Directors.

 

Actual Bonus Payments:  No bonus payments were made to the Named Executive Officers in 2008 as Proforma Annual Income before Income Taxes was a loss. The 2008 target bonuses of the CEO and other Named Executive Officers and the actual 2007 bonuses are shown in the following table:

 

 

Stock Options:

 

We grant stock options to our Named Executive Officers to align their interests with the long-term interests of our stockholders and to provide our executives with incentive to manage Intevac from the perspective of an owner with an equity stake in the business.

 

Stock Option Terms:  Stock options enable our executives to acquire shares of our Common Stock at a fixed price per share (the closing market price on the grant date). The options have a 10-year term, subject to earlier termination following the executive’s cessation of service with Intevac in accordance with our 2004 Equity Incentive Plan. Options granted to executives generally vest in four equal annual installments, as measured from the option grant date.

 

Stock Option Grants:  The Compensation Committee grants options to Named Executive Officers shortly after their start date in accordance with our 2004 Equity Incentive Plan. Guidelines for the number of options granted are reviewed annually and changes are made based on peer group data. The Compensation Committee typically grants additional stock options annually to Named Executive Officers as discussed below.

 

In order to determine the overall level of stock option grants to each Named Executive Officer, the Compensation Committee took into account factors such as each executive’s recent performance, level of responsibility, job assignment, the competitive climate, market data, outstanding stock options, the number of shares in the 2004 Equity Incentive Plan available to grant, stock option overhang as a percent of Common Stock outstanding, the total number of shares granted as a percentage of shares outstanding, and projected compensation expense related to employee stock options. Each of these factors was considered by the Committee, in its judgment, and no formal weighting of these factors was used.

 

Annual renewal grants to Named Executive Officers, except for Mr. Fairbairn, were proposed by management and reviewed at a Compensation Committee meeting. The amount of the grants depended on business conditions, company performance, the competitive climate, market data, expense of the grants and other appropriate factors as determined by the Compensation Committee. Annual renewal grants are made only on days when our insider trading window is open. The Company’s insider trading window opens the third business day after quarterly earnings have been released, and closes at the end of the last day of the second month of each quarter. Our policy is not to make stock option grants during such times as management and/or the Compensation Committee may be in possession of material, non-public information. For 2008, renewal grants for Named Executive Officers were made on August 21, 2008.

The number of shares granted to the Named Executive Officers in 2007 and 2008 are shown in the table below. The stock option grant to Mr. Andreson in 2007 was his initial stock option grant when he joined Intevac. The 2007 grants to Mr. Fairbairn, Mr. Marusiak, Dr. Barnes, Dr. Pietras and Dr. Kerns and the 2008 grants to Mr. Fairbairn, Mr. Andreson, Mr. Marusiak, Dr. Barnes, Dr. Pietras and Dr. Kerns were annual renewal grants.

 

 

2009 Executive Compensation

 

Competitive Market Data

 

The Compensation Committee retained Farient to assist it in evaluating 2009 compensation programs. The instructions provided to Farient were consistent with past instructions provided and included assessing target compensation levels for our executives relative to market practices and evaluating the overall design of our executive compensation program. The consultant was also engaged by the Committee to update the assessment of the competiveness of compensation for our Board of Directors. Executive compensation data was drawn from the Radford Executive Benchmark Survey and from publicly available proxy filings for the Peer Companies. The market compensation levels for comparable positions were examined by Farient and the Compensation Committee as part of the process to determine overall program design, base salary, target incentives and annual stock option grants.

 

The Peer Companies we used to evaluate market compensation positioning for executives in making 2009 compensation decisions were selected based on the same criteria used for 2008. As a result, the only change was to remove FLIR Systems, Inc. due to the increased revenue size of the company which was over the top end of the targeted range of $700 million.

 

The base salary, total cash compensation (base salary plus performance-based annual cash bonus) and total compensation (including stock options) for each of Intevac’s twelve most senior executives were compared to their respective 2009 Peer Group averages for executives with similar levels of responsibility.

 

Base Salary:  2009 base salary levels, effective as of January 27, 2009, for the Named Executive Officers were approved by the Compensation Committee (with the exception of Mr. Fairbairn, whose base salary was approved by the independent members of the Board of Directors). There were no base salary increases for the Named Executive Officers in 2009. 2008 and 2009 base salaries for our Named Executive Officers are as follows:

 

 

Target Bonus Percentages:  The Compensation Committee also approved 2009 Target Bonus Percentages for the Named Executive Officers, with the exception of Mr. Fairbairn, whose 2009 Target Bonus Percentage was approved by the independent members of the Board of Directors. No changes were made to the 2009 Target Bonus Percentages from their 2008 levels.

Target Bonus: As a result of the base salaries and target bonus Percentages set by the Compensation Committee, target bonuses for each of our Named Executive Officers are as follows:

 

 

 

 

Bonus Pool:  The Compensation Committee met in early 2009 to establish 2009 compensation targets for our Named Executive Officers. The Committee did not change the 10% Bonus Pool Percentage for the Executive Incentive Plan. This Bonus Pool Percentage will be insufficient to pay bonuses at the 2009 target levels unless we are able to significantly exceed forecasted financial performance. In order to pay bonuses at target levels the Company would need to achieve financial performance in 2009 similar to 2007 levels.

 

Although the Compensation Committee projected that the Bonus Pool will fall substantially short of the amount necessary to pay performance-based annual cash bonuses at target levels, the Committee determined that it was not in the best interests of Intevac’s stockholders to allocate more than 10% of Proforma Annual Income Before Income Taxes to the Bonus Pool, which is used to fund performance-based annual cash bonuses for the Named Executive Officers and all other vice president and director level employees.

 

Stock Option Grants:  2009 annual renewal grants for the Named Executive Officers were approved by the Compensation Committee (with the exception of Mr. Fairbairn, whose renewal grant was approved by the independent members of the Board of Directors). For 2009, renewal grants for Named Executive Officers, including Kevin Fairbairn, were made on February 27, 2009. The number of shares granted to the Named Executive Officers in 2008 and 2009 are shown in the table below. The 2009 grants to Mr. Fairbairn, Mr. Andreson, Dr. Barnes, Dr. Pietras and Dr. Kerns were annual renewal grants.

 

 

Termination of Employment and Severance Agreements

 

With the exception of Mr. Fairbairn, none of Intevac’s executive officers have an employment agreement. Employment of all of our executive officers may be terminated at any time at the discretion of the Board of Directors. The terms of Mr. Fairbairn’s employment agreement are described in the section entitled “Potential Payments Upon Termination or Change of Control.” The Compensation Committee believes that entering into the employment agreement with Mr. Fairbairn was necessary to attract and retain Mr. Fairbairn. An agreement was negotiated with and entered into with Mr. Fairbairn at the original time of his hire as a precondition of Mr. Fairbairn to his accepting the offer, and was subsequently updated in 2007 and 2008 primarily to clarify its terms and to comply with Section 409A of the Internal Revenue Code.

 

Compliance with Internal Revenue Code Section 162(m)

 

Under Section 162(m) of the Internal Revenue Service Code, Intevac receives a federal income tax deduction for compensation paid to each of our Chief Executive Officer and the other Named Executive Officers only if the

compensation paid to the individual executive is less than $1 million during any fiscal year or is “performance-based” as defined under Section 162(m). Intevac’s 1995 Stock Option/Stock Issuance Plan and 2004 Equity Incentive Plan, permit our Compensation Committee to grant equity compensation that is considered “performance-based” and thus fully tax-deductible under IRC Section 162(m). Our Compensation Committee currently intends to continue seeking a tax deduction for all of our executive compensation, to the extent we determine it is in the best interests of Intevac.

 

Compensation Committee Interlocks and Insider Participation

 

The Compensation Committee of our Board of Directors was formed September 14, 1995 and during 2008 was comprised of Robert Lemos and Ping Yang. Neither of these individuals was at any time during fiscal 2008, or at any other time, an officer or employee of Intevac. None of our executive officers serves as a member of the board of directors or compensation committee of any other entity that has one or more executive officers serving as a member of our Board of Directors or Compensation Committee.

 

The information contained in this report shall not be deemed to be “soliciting material” or to be filed with the SEC, nor shall such information be incorporated by reference into any past or future filing under the Securities Act or the Exchange Act, except to the extent Intevac specifically incorporates it by reference into such filing.

 

The Compensation Committee oversees Intevac’s compensation policies, plans and benefit programs. 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 has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

 

This report is submitted by the members of the Compensation Committee.

 

Robert Lemos (Chairman)

Ping Yang

 

The following table presents information concerning the total compensation of Intevac’s Chief Executive Officer, Chief Financial Officer, each of the three most highly compensated officers at the end of the last fiscal year, and the former Chief Operating Officer (the “Named Executive Officers”) for services rendered to Intevac in all capacities for the fiscal years ended December 31, 2008, 2007 and 2006.

 

 

 

 

The following table presents information concerning grants of plan-based awards to each of the Named Executive Officers during the fiscal year ended December 31, 2008.

 

 

 

 

The following table shows all outstanding option awards held by each of the Named Executive Officers at the end of fiscal 2008. The option awards identified in the table below with an expiration date of August 21, 2018 for each of the Named Executive Officers are also reported in the “Grants of Plan-Based Awards” table on the previous page. We have not granted any stock awards.

 

 

 

 

 

The following table shows all stock options exercised and value realized upon exercise by the Named Executive Officers during fiscal 2008. We have not granted any stock awards. No options were exercised during fiscal 2008.

 

 

 

 

Termination or Change of Control Arrangements

 

With the exception of Mr. Fairbairn, none of Intevac’s executive officers have an employment agreement with the Company. Employment of all of our executive officers may be terminated at any time at the discretion of the Board of Directors. The terms of Mr. Fairbairn’s employment are specified in his offer letter of employment.

 

Employment Agreement:  For Mr. Fairbairn, the terms of his employment agreement include the following:

 

 

The Compensation Committee believes that the terms of this agreement with its CEO support the goals of attracting and retaining highly talented individuals by clarifying the terms of employment and reducing the risks to

the executive in situations where the Company may undergo a merger or be acquired. In addition, the Compensation Committee believes that such an agreement aligns the interests of the CEO with the interests of stockholders if a qualified offer to acquire the Company is made, in that it is to the benefit of stockholders to have the CEO negotiating in the best interests of the Company without concerns regarding his personal financial interests.

 

1995 Stock Option/Stock Issuance Plan:  Under the 1995 Stock Option/Stock Issuance Plan, unvested stock options would immediately accelerate and vest in full if the employment of the executive were to be terminated either involuntarily or through a forced resignation within twelve months after any acquisition of Intevac.

 

2004 Equity Incentive Plan:  Under the 2004 Equity Incentive Plan, all unvested options vest in full upon an acquisition of Intevac by merger or asset sale, unless the option is assumed by the acquiring entity. Each option also includes a limited stock appreciation right which provides the holder with a right, exercisable upon the successful completion of a hostile tender offer for fifty percent or more of Intevac’s outstanding voting securities, to surrender the option to Intevac, to the extent the option is at that time exercisable for vested shares, in return for a cash distribution for each surrendered option share equal to the difference between the highest price per share of Common Stock paid in the hostile tender offer and the option exercise price.

 

The Board of Directors or its Compensation Committee, as administrator of the 2004 Equity Incentive Plan, has the authority to provide for the accelerated vesting of any or all outstanding options under the 2004 Equity Incentive Plan, including options held by our directors and executive officers, under such circumstances and at such times as the Compensation Committee deems appropriate, including in the event of termination of the executive or a Change of Control of Intevac.

 

The following table sets forth summary information concerning compensation paid or accrued for services rendered to the Company in all capacities to the members of the Company’s Board of Directors for the fiscal year ended December 31, 2008, other than Kevin Fairbairn, whose compensation is set forth under the Summary Compensation Table, and Norman Pond, whose compensation is discussed below.

 

 

 

 

 

Standard Director Compensation Arrangements

 

Intevac uses a combination of cash and equity compensation to attract and retain qualified candidates to serve on our Board of Directors. The Compensation Committee of the Board of Directors conducts an annual review of director compensation and, if appropriate, recommends any changes in the type or amount of compensation to the Board of Directors. In reviewing director compensation, the Compensation Committee takes into consideration the compensation paid to non-employee directors of comparable companies, including competitive non-employee director compensation data and analyses prepared by compensation consulting firms and the specific duties and committee responsibilities of particular directors. In addition, the Compensation Committee may make recommendations or approve changes in director compensation in connection with the Compensation Committee’s administration and oversight of our 2004 Equity Incentive Plan. Any change in director compensation is approved by the Board of Directors.

 

Cash Compensation

 

Non-employee directors receive annual cash fees for service on the Board of Directors and its various committees. Intevac’s non-employee directors currently receive the following cash compensation:

 

 

Directors do not receive cash compensation for attending meetings of the Board of Directors or for serving on board committees.

 

Equity Compensation

 

Our non-employee directors are eligible to receive grants of options to purchase shares of our common stock pursuant to our 2004 Equity Incentive Plan when and as determined by our Board of Directors. During fiscal 2008, Mr. Dury, Mr. Hill, Mr. Lemos and Dr. Yang each received an option to purchase 12,000 shares under the 2004 Equity Incentive Plan.

 

Other Arrangements

 

Non-employee directors also have their travel, lodging and related expenses associated with attending Board or Committee meetings and for participating in Board-related activities paid or reimbursed by Intevac.

 

Compensation Arrangement with Norman Pond

 

As an executive officer of Intevac, the Chairman of the Board, Mr. Pond received a salary of $133,181 for fiscal 2008. In addition, Mr. Pond received a matching contribution of $2,000 under our tax-qualified 401(k) Plan, which provides for broad-based employee participation. Intevac recognized compensation cost of $181,879 in fiscal 2008 for stock option grants with the following fair values as of the grant date: (a) $77,648 for a stock option grant to purchase 50,000 shares of common stock made on February 1, 2005 at an exercise price of $7.53 per share; (b) $27,529 for a stock option grant to purchase 10,000 shares of common stock made on May 24, 2006 at an exercise price of $22.01 per share; and (c) $33,086 for a stock option grant to purchase 7,500 shares of common stock made on May 22, 2007 at an exercise price of $20.10 per share; (d) $31,514 for a stock option grant to purchase 7,500 shares of common stock made on May 15, 2008 at an exercise price of $12.52 per share; and (e) $12,102 for a stock option grant to purchase

4,500 shares of common stock made on August 21, 2008 at an exercise price of $11.16 per share. Mr. Pond did not receive any additional fees for attending Board or Committee meetings.

 

The following table summarizes the number of outstanding shares underlying options granted to employees and directors, as well as the number of securities remaining available for future issuance, under our equity compensation plans at December 31, 2008.

 

 

 

 

The following table sets forth certain information regarding the ownership of our Common Stock as of February 14, 2009, for each person or entity who is known by us to own beneficially more than 5% of the outstanding shares of our Common Stock, each of the Named Executive Officers in the 2008 Summary Compensation Table on page 27, each of our directors, and all directors and executive officers of Intevac as a group.

 

 

 

 

Review, Approval or Ratification of Related Person Transactions

 

In accordance with our Code of Business Conduct and Ethics and our Director Code of Ethics and the charter for the Audit Committee of the Board of Directors, our Audit Committee reviews and approves in advance in writing any proposed related person transactions. The most significant related person transactions, as determined by the Audit Committee, must be reviewed and approved in writing in advance by our Board of Directors. Any related person transaction will be disclosed in the applicable SEC filing as required by the rules of the SEC. For purposes of these procedures, “related person” and “transaction” have the meanings contained in Item 404 of Regulation S-K.

 

Related Person Transactions

 

We did not enter into any transactions, and no relationships existed during the fiscal year ending December 31, 2008, which are required to be disclosed pursuant to Item 404 of Regulation S-K.

 

Section 16(a) of the Securities and Exchange Act of 1934 requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership on Form 3, and reports of changes in ownership on Form 4 or Form 5, of our Common Stock and other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish Intevac with copies of all Section 16(a) forms they file.

Based solely upon review of the copies of such reports furnished to us and written representations that no other reports were required, we believe that during the fiscal year ended December 31, 2008, our officers, directors and holders of more than ten percent of our Common Stock complied with all Section 16(a) filing requirements.

 

The primary role of the Audit Committee is to provide oversight and monitoring of Intevac’s management and the independent registered public accounting firm and their activities with respect to Intevac’s financial reporting process. In the performance of its oversight function, the Audit Committee has:

 

 

Based upon the review and discussions described in this Report, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Intevac’s Annual Report on Form 10-K for the year ended December 31, 2008.

 

Respectfully submitted by the members of the Audit Committee of the Board of Directors

 

David S. Dury (Chairman)

Stanley J. Hill

Robert Lemos

 

The Board of Directors knows of no other business that will be presented for consideration at the Annual Meeting. If other matters are properly brought before the Annual Meeting, however, it is the intention of the persons named in the accompanying proxy to vote the shares represented thereby on such matters in accordance with their best judgment.

 

BY ORDER OF THE BOARD OF DIRECTORS

 

JEFFREY ANDRESON

Executive Vice President, Finance and

Administration, Chief Financial

Officer, Treasurer and Secretary

 

April 3, 2009

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF

INTEVAC, INC.

     Kevin Fairbairn and Jeffrey Andreson, or either of them, are hereby appointed as the lawful agents and proxies of the undersigned (with all powers the undersigned would possess if personally present, including full power of substitution) to represent and to vote all shares of capital stock of Intevac, Inc. which the undersigned is entitled to vote at our Annual Meeting of Stockholders on May 14, 2009, and at any adjournments or postponements thereof, as follows on the reverse side.

CONTINUED AND TO BE SIGNED ON REVERSE SIDE

The Board of Directors recommends a vote FOR each of the proposals below. This Proxy will be voted as directed, or, if no direction is indicated, will be voted FOR each of the proposals below and at the discretion of the persons named as proxies upon such other matters as may properly come before the meeting. This proxy may be revoked at any time before it is voted.

1.		The election of all nominees listed below for the Board of Directors, as described in the Proxy Statement:
		Nominees: Norman H. Pond, Kevin Fairbairn, David S. Dury, Stanley J. Hill, Robert Lemos, and Ping Yang

		FOR  o		WITHHELD  o

          (INSTRUCTION: To withhold authority to vote for any individual nominee, write such name or names in the space provided below.)

2.

Proposal to approve an amendment to increase the maximum number of shares of Common Stock authorized for issuance under the Company’s 2003 Employee Stock Purchase Plan by 600,000 shares:

		FOR  o		AGAINST  o		ABSTAIN  o

4.

Proposal to ratify the appointment of Grant Thornton LLP as independent public accountants of Intevac for the fiscal year ending December 31, 2009:

		FOR  o		AGAINST  o		ABSTAIN  o

5.

Transaction of any other business which may properly come before the meeting and any adjournment or postponement thereof.

DATE:                                              , 2009

(Signature)
(Signature if held jointly)

          (Please sign exactly as shown on your stock certificate and on the envelope in which this proxy was mailed. When signing as partner, corporate officer, attorney, executor, administrator, trustee, guardian or in any other representative capacity, give full title as such and sign your own name as well. If stock is held jointly, each joint owner should sign.)

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY,
USING THE ENCLOSED ENVELOPE.