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 22,
2009
Dear Stockholder:
You are cordially invited to attend annual meeting of
stockholders of First Solar, Inc. to be held on Thursday,
June 4, 2009, at 10:00 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 2008 Annual Report to Stockholders
(the 2008 Annual Report) with this proxy statement.
We encourage you to read our 2008 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 2008 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,
Michael J. Ahearn
Chairman of the Board and
Chief Executive Officer
FIRST
SOLAR, INC.
350 West Washington Street
Suite 600
Tempe, Arizona 85281
NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS
The annual meeting of stockholders of First Solar, Inc. will be
held on Thursday, June 4, 2009, at 10:00 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 seven 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 ratify the appointment of PricewaterhouseCoopers LLP
as First Solar, Inc.s independent registered public
accounting firm for the fiscal year ending December 26,
2009; and
3. 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 14, 2009 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,
John T. Gaffney
Corporate Secretary
April 22, 2009
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 Thursday, June 4,
2009, at the Desert Willow Conference Center, 4340 East Cotton
Center Boulevard, Phoenix, Arizona 85040, commencing at
10:00 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 22, 2009.
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 seven 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; and
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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 26, 2009.
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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 2008 Annual
Report to Stockholders (the 2008 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 impact of printing and mailing these materials
on the environment. 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.
1
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 and (2) FOR the ratification of
PricewaterhouseCoopers LLP as our independent registered public
accounting firm for the 2009 fiscal year.
Who is
entitled to vote?
The record date for the annual meeting is April 14, 2009.
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 84,465,561 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 you
to 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.
2
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 seven
nominees as directors. This means that the seven 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.
The proposal to ratify the appointment of PricewaterhouseCoopers
LLP as our independent registered public accounting firm for the
fiscal year ending December 26, 2009 requires the
affirmative vote of a majority of the voting power of the
Companys common stock present at the 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.
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.
3
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 2008 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 27, 2008 is available on
our investor relations website at
http://investor.firstsolar.com
under Financial Information. You may also obtain,
free of charge, a copy of our Annual Report on
Form 10-K
for the fiscal year ended December 27, 2008 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 JUNE 4,
2009
This Proxy Statement and our 2008 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.
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.
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, J. Thomas Presby, Michael Sweeney, Paul H. Stebbins and
José H. Villarreal. The board of directors has also
concluded that the members of each of the audit, compensation
and nominating and governance 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 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. 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.
4
Board of
Directors Structure and Committee Composition
Our board of directors is currently composed of eight directors:
six independent directors and two executive directors, including
the Chairman. As described below under Directors,
the board of directors has decided that the executives who may
serve as directors should be limited to the Chairman and Chief
Executive Officer. Therefore, Mr. Sohn will not stand for
re-election at the annual meeting. We have three standing
committees of the board: the audit committee, the compensation
committee and the nominating and governance committee. The
committee membership and meetings during 2008 and the function
of each of the committees are described below.
During 2008, the board of directors held eight meetings and
acted by written consent once. 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.
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Compensation
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Nominating and Governance
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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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Michael J. Ahearn
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Bruce Sohn
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Craig Kennedy
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Member
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Member
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James F. Nolan
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Member
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J. Thomas Presby
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Chair
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Member
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Paul H. Stebbins
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Member
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Member
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Member
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Michael Sweeney
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Chair
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Member
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José H. Villarreal
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Member
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Chair
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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 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 the compatibility of any non-audit services provided
by the independent registered public accounting firm with the
independence of such independent registered public accounting
firm and reviews the independence of the independent registered
public accounting firm. During 2008, the audit committee held
six 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.
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 and approves employee benefit plans. During 2008,
the compensation committee held seven meetings and acted by
written consent five times.
Michael Sweeney (Chair), Paul H. Stebbins and José H.
Villarreal serve on our compensation committee.
5
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.
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 board of directors formed a nominating and governance
committee on January 31, 2008. The nominating and
governance committee reviews and assesses the composition and
performance of the board and its committees, assesses candidates
for appointment to the board and recommends to the board of
directors whether such candidates should stand for election at
the next meeting of stockholders, and reviews and assesses the
Companys corporate governance policies and guidelines.
During 2008, the nominating and governance committee held five
meetings.
José H. Villarreal (Chair), Craig Kennedy, James F. Nolan,
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.
Nomination
Procedures
Director nominees are recommended for selection by the board of
directors by the nominating and governance committee. 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 of directors, 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.
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 14, 2009, the Estate of John T.
Walton and its affiliates control approximately 39% 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.
6
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.
Stockholder
Communications with Directors
A stockholder who wishes to communicate directly with the board
of directors, a committee of the board of directors 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 of directors, 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 May 23, 2008 in
Phoenix, Arizona and was attended by two directors.
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 22, 2009. There are
no family relationships among directors or executive officers of
the Company. Upon the recommendation of the Nominating and
Governance Committee, the board of directors has decided that
the executives who may serve as directors should be limited to
the Chairman and Chief Executive Officer. Therefore,
Mr. Sohn will not stand for re-election at the annual
meeting. The board of directors thanks Mr. Sohn for his
service as a director and his many contributions to the Company
and looks forward to continuing to work with Mr. Sohn in
his role as President. Each of the following persons (other than
Mr. Sohn) has been nominated by the board of directors for
election at the annual meeting.
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Current Position with First Solar
|
|
Director Since
|
|
Michael J. Ahearn
|
|
|
52
|
|
|
Chief Executive Officer, Chairman
|
|
|
2000
|
|
Bruce Sohn
|
|
|
48
|
|
|
President, Director
|
|
|
2003
|
|
Craig Kennedy
|
|
|
57
|
|
|
Director
|
|
|
2007
|
|
James F. Nolan
|
|
|
77
|
|
|
Director
|
|
|
2003
|
|
J. Thomas Presby
|
|
|
69
|
|
|
Director
|
|
|
2006
|
|
Paul H. Stebbins
|
|
|
52
|
|
|
Director
|
|
|
2006
|
|
Michael Sweeney
|
|
|
51
|
|
|
Director
|
|
|
2003
|
|
José H. Villarreal
|
|
|
55
|
|
|
Director
|
|
|
2007
|
|
Michael J. Ahearn has served as the chief executive officer and
chairman of First Solar since August 2000. Mr. Ahearn also
served as president of First Solar from August 2000 to March
2007. From 1996 until November 2006, he was a partner and
president of the equity investment firm JWMA Partners, LLC, or
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. He received both a B.A. in
Finance and a J.D. from Arizona State University.
7
Bruce Sohn was elected a director of First Solar in July 2003
and has served as president of First Solar since March 2007.
Prior to joining First Solar as president, Mr. Sohn worked
at Intel Corporation for 24 years. He is a senior member of
IEEE and a certified Jonah. Mr. Sohn has been a guest
lecturer at several universities, including the Massachusetts
Institute of Technology and Stanford University. He graduated
from the Massachusetts Institute of Technology with a degree in
Materials Science and Engineering.
Craig Kennedy was appointed a director of First Solar in
September 2007. Mr. Kennedy has been president of the
German Marshall Fund since 1995. The German Marshall Fund
focuses its activities on bridging
U.S.-European
differences on foreign policy, economics, immigration and the
environment. 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 in 1992 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, the European Foundation Center and as
an independent trustee of the Van Kampen mutual funds.
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., 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 doctorate in
Physics from the University of Pittsburgh.
J. Thomas Presby was elected a director of First Solar in
August 2006. Mr. Presby retired in 2002 as a partner in
Deloitte Touche Tohmatsu. At Deloitte, he held numerous
positions in the United States and abroad, including the posts
of Deputy Chairman and Chief Operating Officer. He now serves as
a director and audit committee chair for First Solar, American
Eagle Outfitters, Inc., Invesco Ltd., Tiffany & Co.
and World Fuel Services Corporation. As Mr. Presby has no
significant business activities other than board service, he is
available full time to fulfill his board responsibilities. He
holds a B.S in Electrical Engineering from Rutgers University
and an MBA from Carnegie Mellon University. He is a certified
public accountant and a holder of the NACD Certificate of
Director Education.
Paul H. Stebbins 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.
Michael Sweeney was elected a director of First Solar in July
2003. Mr. Sweeney joined Goldner Hawn Private Equity as a
Managing Director and was elected Managing Partner in November
2001. He had previously served as president of Starbucks Coffee
Company (UK) Ltd. in London. Mr. Sweeney serves on the
boards of the following Goldner Hawn portfolio companies: Allen
Edmonds Shoe Corporation, Transport Corporation of America, Inc.
and Westlake Hardware, Inc. Mr. Sweeney graduated from
Swarthmore College.
José H. Villarreal was appointed 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 served on the board of Wal-Mart Stores, Inc. He is on the
board of the New America Alliance, an organization of leading
Latino business leaders dedicated to philanthropy and the Center
for American Progress, a Washington D.C. based think-tank.
8
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. The table below summarizes the 2008 Non-Associate
Director Compensation.
|
|
|
|
2008 Non-Associate Director Compensation
|
Annual Retainer ($100,000)
|
|
|
Audit Committee Chair (+ $25,000)
|
|
|
|
|
Paid
1/2
in stock;
1/2
in cash
|
|
|
Paid all in stock
|
|
|
|
|
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.
In 2008, the Company retained a consultant to compare our
non-associate director compensation to the compensation paid to
non-associate directors of the peer group described in
Compensation Committee Practices Total
Compensation Review in the Compensation Discussion and
Analysis. When performing the benchmarking, the consultant
compared total non-associate director compensation, as well as
customary elements of such compensation, including annual
retainers, meeting fees, equity and committee retainers, against
the total compensation and elements of the peer group companies.
The consultant determined that the Companys total
non-associate director compensation, as well as its elements,
was substantially below the average market value of the
non-associate director compensation for the peer group.
Following the consultants report, the compensation
committee adopted the increase to the compensation of
non-associate director compensation described below beginning in
2009.
Cash
Compensation
For 2008, the annual cash compensation for our non-associate
directors was $50,000 (payable quarterly in four equal
installments). Non-associate directors were not paid any fees
for attending board meetings or committee meetings. Beginning in
2009, the annual cash compensation increased to $75,000, and the
chairman of our audit committee will receive an additional
$35,000 cash retainer (payable quarterly in four equal
installments).
Equity
Compensation
For 2008, we compensated our independent directors with a
$50,000 stock grant, payable quarterly in four equal
installments. The chairman of the audit committee also received
an additional annual $25,000 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 account of any
internal black outs, during which associates and
directors are prohibited by our Insider Trading Policy from
trading in our securities, or whether we are or are not in
possession of undisclosed material facts and without regard to
whether any undisclosed material facts could be perceived as
potentially positive or negative. Beginning in 2009, the annual
stock grant to our independent directors increased to $75,000;
however, the chairman of the audit committee will no longer
receive an additional annual $25,000 stock grant.
Other
We reimburse all directors for reasonable and necessary expenses
they incur in performing their duties as directors of the
Company.
9
Non-Associate
Director Compensation Table
The following table sets forth information with respect to
compensation earned by our non-associate directors for the
fiscal year ended December 27, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fees Earned
|
|
|
Stock
|
|
|
|
|
|
|
or Paid in
|
|
|
Awards
|
|
|
Total
|
|
Name
|
|
Cash ($)
|
|
|
($)(1)(2)
|
|
|
($)
|
|
|
Craig Kennedy
|
|
|
50,000
|
|
|
|
50,016
|
(3)
|
|
|
100,016
|
|
James F. Nolan
|
|
|
50,000
|
|
|
|
50,016
|
(3)
|
|
|
100,016
|
|
J. Thomas Presby
|
|
|
50,000
|
|
|
|
74,943
|
(3)(4)
|
|
|
124,943
|
|
Paul H. Stebbins
|
|
|
50,000
|
|
|
|
50,016
|
(3)
|
|
|
100,016
|
|
Michael Sweeney
|
|
|
50,000
|
|
|
|
50,016
|
(3)
|
|
|
100,016
|
|
José H. Villarreal
|
|
|
50,000
|
|
|
|
50,016
|
(3)
|
|
|
100,016
|
|
|
|
|
(1) |
|
The amounts in this column reflect the dollar amount recognized
for financial statement reporting purposes for the fiscal year
ended December 27, 2008, in accordance with FAS 123R,
of awards pursuant to the Companys 2006 Omnibus Incentive
Compensation Plan. 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 27, 2008
included in the Companys Annual Report on
Form 10-K
filed with the Commission on February 25, 2009. However, as
required, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. None of
our non-associate directors forfeited any equity based
compensation in 2008. |
|
(2) |
|
The number of outstanding equity awards as of December 27,
2008 is 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
J. Thomas Presby
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paul H. Stebbins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Sweeney
|
|
|
12/14/2005
|
|
|
|
19,750
|
|
|
|
|
|
|
|
4.54
|
|
|
|
12/14/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
19,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
José H. Villarreal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3) |
|
On March 31, 2008, 54 shares were issued to each
non-associate director at a market price of $231.14 per share,
as of that date. The grant date fair value of these shares was
$12,482. On June 30, 2008, 46 shares were issued to
each non-associate director at a market price of $272.82 per
share, as of that date. The grant date fair value of these
shares was $12,550. On September 30, 2008, 66 shares
were issued to each non-associate director at a market price of
$188.91 per share, as of that date. The grant date fair value of
these shares was $12,468. On January 9, 2009,
77 shares were issued to each non-associate director, with
respect to service in 2008, at a market price of $162.54 per
share, as of that date. The grant date fair value of these
shares was $12,516. |
10
|
|
|
(4) |
|
As the 2008 audit committee chairman, Mr. Presby received
an additional annual $25,000 stock grant. On March 31,
2008, 27 shares were issued at a market price of $231.14
per share, as of that date. The grant date fair value of these
shares was $6,241. On June 30, 2008, 23 shares were
issued at a market price of $272.82 per share, as of that date.
The grant date fair value of these shares was $6,275. On
September 30, 2008, 33 shares were issued at a market
price of $188.91 per share, as of that date. The grant date fair
value of these shares was $6,234. On January 9, 2009,
38 shares were issued, with respect to service in 2008, at
a market price of $162.54 per share, as of that date. The grant
date fair value of these shares was $6,177. |
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 14,
2009, 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.
11
This table assumes 84,465,561 shares of common stock
outstanding as of April 14, 2009, 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)
|
|
|
29,105,859
|
|
|
|
34.5
|
%
|
Jim C. Walton(2)
|
|
|
33,105,859
|
|
|
|
39.2
|
%
|
Alice L. Walton(3)
|
|
|
33,105,859
|
|
|
|
39.2
|
%
|
Estate of John T. Walton(4)
|
|
|
19,003,857
|
|
|
|
22.5
|
%
|
JCL Holdings, LLC(5)
|
|
|
10,102,002
|
|
|
|
12.0
|
%
|
JTW Trust No. 1 UAD 9/19/02(6)
|
|
|
4,000,000
|
|
|
|
4.7
|
%
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
Michael J. Ahearn
|
|
|
3,076,871
|
|
|
|
3.6
|
%
|
John Carrington
|
|
|
|
|
|
|
*
|
|
John T. Gaffney(7)
|
|
|
27,908
|
|
|
|
*
|
|
Craig Kennedy
|
|
|
609
|
|
|
|
*
|
|
Jens Meyerhoff(8)
|
|
|
39,377
|
|
|
|
*
|
|
James F. Nolan(9)
|
|
|
31,728
|
|
|
|
*
|
|
J. Thomas Presby
|
|
|
2,843
|
|
|
|
*
|
|
Bruce Sohn(10)
|
|
|
69,997
|
|
|
|
*
|
|
Paul H. Stebbins
|
|
|
4,318
|
|
|
|
*
|
|
Michael Sweeney(11)
|
|
|
20,943
|
|
|
|
*
|
|
José H. Villarreal
|
|
|
437
|
|
|
|
*
|
|
All directors and executive officers as a group
(12 persons)(12)
|
|
|
3,275,031
|
|
|
|
3.9
|
%
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
The number and percentage of shares of common stock shown above
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 managing member thereof, shares
voting and dispositive power with Jim C. Walton and Alice L.
Walton, each individually as managing members, and
(b) 19,003,857 shares held by the Estate of John T.
Walton, as to which S. Robson Walton, Jim C. Walton and Alice L.
Walton, as co-personal representatives, share dispositive and
voting power (such shares are also shown by the Estate of John
T. Walton and JCL Holdings, LLC as having sole voting and
dispositive power). 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 above
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 managing member thereof, shares voting
and dispositive power with S. Robson Walton and Alice L. Walton,
each individually as managing members,
(b) 19,003,857 shares held by the Estate of John T.
Walton, as to which S. Robson Walton, Jim C. Walton and
Alice L. Walton, as co-personal representatives, share
dispositive and voting power and (c) 4,000,000 shares
held 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 (such shares are also shown by the
Estate of John T. Walton and JCL Holdings, LLC and JTW
Trust No. 1 UAD 9/19/02 as having sole voting and
dispositive power). 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, Jim
C. Walton disclaims beneficial ownership of the shares listed in
(a) and (b) above. 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 has no
beneficial interest therein, and |
12
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therefore he disclaims beneficial ownership of the shares listed
in (c) above. The address of Jim C. Walton is
P.O. Box 1860, Bentonville, Arkansas 72712. |
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(3) |
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The number and percentage of shares of common stock shown above
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 managing member thereof, shares
voting and dispositive power with S. Robson Walton and Jim C.
Walton, each individually as managing members,
(b) 19,003,857 shares held by the Estate of John T.
Walton, as to which S. Robson Walton, Jim C. Walton and
Alice L. Walton, as co-personal representatives, share
dispositive and voting power and (c) 4,000,000 shares
held 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 (such shares are also shown by the
Estate of John T. Walton and JCL Holdings, LLC and JTW
Trust No. 1 UAD 9/19/02 as having sole voting and
dispositive power). 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,
Alice L. Walton disclaims beneficial ownership of the shares
listed in (a) and (b) above. The shares held by JTW
Trust No. 1 UAD 9/19/02 are held in a trust
principally for the benefit of charity, and Alice L. Walton has
no beneficial interest therein, and therefore she disclaims
beneficial ownership of the shares listed in (c) above. The
address of Alice L. Walton is P.O. Box 1860,
Bentonville, Arkansas 72712. |
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(4) |
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The number and percentage of shares of common stock shown above
as beneficially owned by the Estate of John T. Walton represent
19,003,857 shares held directly by the Estate of John T.
Walton, as to which S. Robson Walton, Jim C. Walton and
Alice L. Walton, 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 and Alice L.
Walton 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 managing members 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. |
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(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 4,000,000 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. |
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(7) |
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Includes 20,000 shares of common stock issuable upon the
exercise of stock options. |
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(8) |
|
Includes 31,250 shares of common stock issuable upon the
exercise of stock options. |
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(9) |
|
Includes 30,750 shares of common stock issuable upon the
exercise of stock options. |
|
(10) |
|
Includes 57,500 shares of common stock issuable upon the
exercise of stock options. |
|
(11) |
|
Includes 19,750 shares of common stock issuable upon the
exercise of stock options. |
|
(12) |
|
Includes 159,250 shares of common stock issuable upon the
exercise of stock options. |
13
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since December 31, 2007, 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 27,
2008 and we did not pay any interest to related parties during
the year ended December 27, 2008.
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.
On February 22, 2006, we entered into a registration rights
agreement with Goldman, Sachs & Co., the purchaser of
the convertible senior subordinated notes. The registration
rights agreement provides that, subject to certain
lock-up
provisions and exceptions, Goldman, Sachs & Co. has
two demand rights and piggyback registration rights if we
register equity securities under the Securities Act. The
registration rights and related provisions are transferable with
respect to the shares issued upon conversion of the notes on
May 10, 2006.
Review
and Approval of Related Party Transactions
The Companys audit committee charter requires the review
and approval by the audit committee of any proposed related
party transaction, as defined by the applicable regulations of
the Commission. 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.
14
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 27, 2008 and December 29, 2007:
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2008
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2007
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Audit Fees(1)
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$
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2,309,990
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$
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2,573,216
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Audit-Related Fees(2)
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472,032
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161,078
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Tax Fees(3)
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171,825
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66,765
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All Other Fees(4)
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2,582
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2,588
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|
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|
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Total
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$
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2,956,429
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$
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2,803,647
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(1) |
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Represents the aggregate fees billed for the audit of the
Companys financial statements services in connection with
the statutory and regulatory filings or engagements for this
fiscal year. |
|
(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 16% of the total fees in 2008. 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 6% of the total fees in
2008. |
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(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 2008. 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 2008 are:
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Mr. Michael J. Ahearn, chairman and chief executive officer;
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Mr. Jens Meyerhoff, chief financial officer;
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Mr. Bruce Sohn, president;
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Mr. John T. Gaffney, executive vice president and corporate
secretary; and
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Mr. John Carrington, executive vice president, global
marketing and business development.
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15
The starting point for understanding our compensation decisions
is the exponential growth our Company has experienced this year.
We commenced production at two plants in Malaysia, surpassed 500
megawatts of production and proceeded apace with our expansion
plans in our Kulim, Malaysia and Perrysburg, Ohio manufacturing
facilities. We have also been integrating and developing the
U.S. engineering, procurement and construction business we
acquired at the end of 2007. By the end of 2008, we had more
than doubled our global workforce as compared to fiscal 2007,
including the addition of Messrs. Gaffney and Carrington,
two of our named executive officers.
As in years past, our compensation decisions continue to be
grounded in our executive compensation policies described below.
These policies are designed to attract, motivate and retain the
individuals who can best help us to achieve our mission
consistent with our core values. We continue to believe that our
long-term success depends on our ability to continuously
reduce solar electricity costs to expand global markets for
solar electricity and extend our competitive cost advantage.
This requires that we continue to discover, develop,
commercialize and improve a stream of manufacturing process and
product improvements; expand our sales and manufacturing volumes
to realize economies of scale and cost reductions; and discover
and penetrate new markets for solar electricity that extend
beyond the traditional subsidy-dependent markets.
A key challenge this year was the need to attract accomplished
individuals capable of rapidly building the administrative
infrastructure to support our growth. Not surprisingly,
accomplished people are well-compensated in their current
roles and are unwilling to leave their current circumstances
without recompense for what they leave behind. In the case of
Mr. Gaffney (a former partner at the New York law firm
Cravath, Swaine & Moore LLP who was known to us
because he served as a corporate legal advisor to the Estate of
John T. Walton, our largest stockholder), and
Mr. Carrington (an award winning former general manager and
chief marketing officer for General Electric Plastics), we
bridged the gap with sign-on bonuses paid in cash and
equity awards.
In 2008, we imposed additional metrics for our senior leadership
team, including our named executive officers, in determining our
annual bonus payment. As in 2007, the performance bonus of all
of our associates, including the named executive officers, was
determined based on the Companys performance on corporate
operational metrics that are aligned with our 2008 annual
operating plan. In addition, in 2008, we tied the bonus payment
multiple of our senior leadership team to additional subjective
and objective metrics that were tied to achievement of the
Companys long-term strategy. The purpose of this
structure was to keep the organization aligned on day-to-day
operating metrics while making it more difficult for our
executives to earn their full bonus potential if
long-term strategic goals were not achieved. In 2008,
this resulted in our senior executives, including our named
executive officers, receiving an adjusted bonus multiplier of
1.0 their target bonus percentage while the rest of the
organization earned a multiplier of 1.75 of their target bonus
percentage.
Finally, as described below in our discussion of employment
agreements and change in control severance agreements, we
amended all executive employment and change in control severance
agreements primarily to comply with Section 409A of the
Internal Revenue Code (the Code).
Executive
Compensation Policies
Our long-term success depends on our ability to continuously
reduce solar electricity costs in order to expand global markets
for solar electricity and extend our addressable markets. This
requires that we continue to discover, develop, commercialize
and improve a stream of manufacturing process and product
improvements; expand our sales and manufacturing volumes to
realize economies of scale and cost reductions; and discover and
penetrate new markets for solar electricity that extend beyond
the traditional subsidy-dependent markets. To execute these
objectives rapidly and efficiently, it is critical that we
attract, motivate and retain highly talented individuals who are
committed to the Companys mission and core values at all
levels of our organization.
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 following policies:
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Compensation should be based on level of job responsibility,
individual performance and Company performance.
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16
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Compensation should 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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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
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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Compensation should reward performance. Our programs should
deliver top-tier compensation for top-tier individual and
Company performance. Similarly, if individual performance falls
short of expectations
and/or
Company performance lags behind expectations, the programs
should deliver lower compensation.
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Performance-based compensation should foster the long-term focus
required for success in the solar industry. We believe success
can best be measured by our ability to earn a superior return on
invested capital (or net assets) by focusing on reducing our
product costs, thereby enabling us to reduce the price that we
can charge for our products while still earning a superior
return-ultimately to levels that enable consumers to generate
solar electricity cost competitively with conventional energy
generation alternatives.
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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.
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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. When setting compensation, we
review competitive compensation paid by other companies in the
same or similar industries of comparable size and stage of
development and where our compensation falls within the peer
group. While we broadly aim to set our base salary and target
bonus potential at approximately the 50th percentile of our
peer group and to have our aggregate bonus and long-term
incentives pay out, subject to individual and company
performance between the 75th and 90th percentiles, we
do not exclusively rely on market data to determine executive
compensation. We incorporate flexibility into our compensation
program and in our assessment process to respond to and adjust
for the evolving business environment in which we operate.
Components
of Executive Compensation for 2008
For 2008, the compensation of named executive officers consisted
of three principal components: base salary, cash incentive
compensation (e.g., an annual bonus) and equity-based
compensation. Our named executive officers also participate in
broad based employee benefit programs and are party to
employment agreements and change in control agreements which
provide them with certain additional benefits (including
severance and equity vesting acceleration in exchange for a
release and a non-compete covenant) in certain circumstances
described in more detail in Executive
Compensation-Employment Agreements and Executive
Compensation-Change of Control Severance Agreements. Each
of these elements of our executive compensation is described
below, including a description of the particular element and how
it fits into our overall executive compensation package. In the
descriptions, we highlight the particular objectives and the
specific elements our compensation programs are designed to
address. However, it should be noted that we have designed our
program so that each of the principal components complements the
other. In particular, for the named executive officers (those at
the highest level in our organization), we have elected to
provide them with substantially more than half of their
compensation in the form of short-term (cash) and long-term
(equity) incentives (i.e., linked to Company performance and
stockholder returns) because they are better able to affect the
Companys results.
17
Below is a chart demonstrating, on an aggregate basis, the
relative weighting of 2008 compensation to our named executive
officers, excluding the value of severance and change in control
benefits, which are described in more detail at Executive
Compensation-Employment Agreements and Arrangements and
Executive Compensation-Potential Payments upon Termination
or Change of Control-Potential Payments upon Termination of
Employment (Other Than in the Context of a Change of Control)
and excluding the value of one-time hiring grants of cash and
equity, which are described in more detail at Components
of Compensation-Sign-On Bonuses.
Compensation
Committee Practices
Total
Compensation Review
When establishing total compensation, we broadly aim to set our
base salary and target bonus potential at approximately the
50th percentile of our peer group and to have our aggregate
bonus and long-term incentives pay out, subject to individual
and company performance, between the 75th and
90th percentiles. On an annual basis, the compensation
committee evaluates the total compensation of the executives and
each of the principal components against that objective. 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 2008, the Company retained a consultant to benchmark
the compensation of each of the components of our executive
officers and non-associate directors against the compensation
paid to similarly situated positions at a peer group of
companies. The consultants services were limited to
comparing each element of compensation for a particular position
against similar elements in the peer group. The peer group for
benchmarking (which was first developed in 2007) consisted
of the following 34 companies in the solar, renewable
energy, hi-tech and high precision manufacturing, and electronic
components manufacturing sectors with revenues ranging from
$70 million to $9.7 billion, with whom the Company
competes for talent.
18
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Advanced Energy Industries Inc.
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Ametek Inc.
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Applied Materials Inc.
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Asyst Technologies Inc.
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Axcelis Technologies Inc.
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Brooks Automation Inc.
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BTU International Inc.
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C&D Technologies Inc.
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Cymer Inc.
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Energy Conversion Devices Inc.
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Enersys Inc.
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Evergreen Solar Inc.
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FEI Co.
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FSI International Inc.
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Gerber Scientific Inc.
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GSI Group Inc.
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KLA-Tencor Corp.
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La Barge Inc.
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LSI Industries Inc.
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Magnetek Inc.
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Mattson Technology Inc.
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Newport Corp.
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Novellus Systems Inc.
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Nvidia Corp.
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Photronics Inc.
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Powell Industries Inc.
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Power-One Inc.
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Sunpower Corp.
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Teradyne Inc.
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Ultratech Inc.
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Varian Semiconductor Eq. Inc.
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Veeco Instruments Inc.
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Vicor Corp.
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Zygo Corp.
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When performing the benchmarking for executive compensation, the
consultant size adjusted the raw market data 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. The consultant then ran
regressions using sales to develop a range of market-based pay
for the top executives 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, and thus, reasonable in the aggregate.
Individual
Compensation Review
Individual performance has a strong impact on the compensation
of all associates, including the chief executive officer and the
other executive officers. With respect to the chief executive
officer, the independent directors, under the direction of the
chair of the compensation committee, meet with the chief
executive officer in an executive session annually at the
beginning of the year to agree upon the chief executive
officers performance objectives (both individual and
Company objectives) for the year. At the end 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 of the chief executive officer based on his
achievement of the
agreed-upon
objectives, contribution to the Companys performance and
other leadership accomplishments. This evaluation is shared with
the chief executive officer by the chair of the compensation
committee and is provided to the compensation committee for its
consideration in setting each element of the chief executive
officers compensation. For the other executive officers,
including the other named executive officers, the compensation
committee receives a performance assessment and compensation
recommendation from the chief executive officer and also
exercises its judgment based on the boards interactions
with the executive officer. As with the chief 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 to the chief executive officer and
the executive officers for the previous year and sets the base
salary for the coming year for the chief executive officer and
the other executive officers, the performance objectives for the
chief executive officer and the parameters for the corporate
goals for the Company generally.
19
Compensation
Considerations by Compensation Elements
The following is a summary of objectives of the primary
components of our executive compensation.
The following is a discussion of the compensation
committees considerations in establishing each of the
components for the executive officer compensation for 2008.
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, their individual
performance and their skill set, including the market value of
that skill set. For details relating to the employment
agreements, see Executive Compensation-Employment
Agreements and Arrangements. In general, the Company
sought to establish or maintain base salaries for 2008 at or
around market (50th percentile of our peer group) base
salary levels for each of the named executive officers. As
discussed under our compensation objectives, we believe that as
associates progress to higher levels in the organization, a
greater proportion of overall compensation should be directly
linked to Company performance and stockholder returns. First
Solar is a hardworking company in a dynamic industry where daily
activities routinely require extraordinary effort. Establishing
the fixed portion of our compensation at or around the
50th percentile of our peer group allows us to weight a
higher percentage of total compensation on performance-based
compensation. The compensation committee currently intends to
maintain the base salaries of its named executive officers at
approximately market base salary levels in the future.
As discussed above in Compensation Committee
Practices-Total Compensation Review, in 2008, the Company
retained a consultant to benchmark the compensation of our
executive officers (including our named executive officers then
employed by the Company). In 2008, after reviewing this data and
evaluating individual performance, the compensation committee
adjusted the base pay of certain executive officers, including
an increase
20
in base salary for Mr. Ahearn, from $450,000 to $525,000;
for Mr. Sohn from $375,000 to $412,500; and for
Mr. Meyerhoff, from $360,000 to $376,200. In 2009, after
evaluating market data and individual performance, the
compensation committee further adjusted the base pay of certain
executive officers, including an increase in base salary for
Mr. Meyerhoff, from $376,200 to $391,248; for Mr. Sohn
from $412,500 to $462,500; and for Mr. Carrington from
$400,000 to $413,328.
Cash
Incentive Compensation
We use cash incentive compensation to reward achievement of our
annual operational and strategic objectives. When taken together
with our base salary, our total annual cash compensation is in
the broad middle range of our peer group if target performance
is attained but can be above that range due to higher payouts
under the annual bonus plan if our performance exceeds our
targets.
Annual
Bonus
The annual bonus program provides cash incentive
awards under the Companys 2006 Omnibus Incentive
Compensation Plan. The bonuses paid for 2008 to named executive
officers appear in the Summary Compensation Table under the
Non-Equity Incentive Plan Compensation
column. Because all our associates participate in the annual
bonus program, the program is designed to encourage teamwork and
a focus on our mutual success by tying rewards to our collective
performance. In 2008, we added an additional performance hurdle
element applicable only to our senior leadership team, including
all of our named executive officers, based on achievement of
enumerated strategic objectives. Bonuses for 2008 were prorated
for named executive officers, and for other associates, if they
were not employed by the Company for the full fiscal year.
The target bonus percentages for 2008 (which are expressed as a
percentage of a base salary) were established based on job
responsibilities, internal relativity and peer group data. Our
objective was to set bonus targets such that total annual cash
compensation (salary and annual bonus) are 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. As discussed above in Compensation Committee
Practices-Total Compensation Review in 2008, the Company
retained a consultant to benchmark the compensation of our
executive officers (including our named executive officers).
This evaluation included a separate evaluation of the target
annual bonus component of total compensation. After reviewing
all of the factors, and as permitted under the Companys
2006 Omnibus Incentive Compensation Plan, the compensation
committee adjusted the target bonus percentage of certain
executive officers, including an increase in the target bonus
percentage for Mr. Ahearn, from 85% to 100%; for
Mr. Sohn from 70% to 80%; and for Mr. Meyerhoff, from
60% to 70%. The target bonus percentage for each of
Mr. Gaffney and Mr. Carrington is 80%. With the
exception of Mr. Ahearns employment agreement, the
target bonus percentages are incorporated into the terms of the
executives employment agreements. For Mr. Ahearn, the
compensation committee retained the contractual authority to
establish the terms of his annual bonus (including the target
bonus percentage) each year. See Executive
Compensation-Employment Agreements and Arrangements.
Annual
Bonus Targets
The performance measures used to measure attainment of bonus
eligibility for the named executive officers were based on a
combination of annual operational objectives and long-term
strategic objectives, as described below. We have not disclosed
the specific targets we used for our annual operational
objectives and our long-term strategic objectives because they
go to the heart of our proprietary business plan and we believe
doing so would cause competitive harm.
2008 Operational Objectives. For all
associates, including the named executive officers, the
compensation committee assessed Company performance based on
accomplishment of certain operational objectives established at
the beginning of 2008. The objectives were based on operating
goals set forth in our confidential annual operating plan for
production volume, module conversion efficiency, watts per
module, cost per watt, total watts sold and plant expansion and
organizational build-out. Each operational objective was
assigned a percentage weighting based on the importance of the
factor to the overall performance of the Company. In addition,
each operational
21
metric had a target goal with higher targets (or stretch
targets) that would result in multipliers between 1.0 and 2.0,
and a minimum threshold for each metric which would result in
multipliers between 0.5 and 1.0 times, to the metrics
weighting. A 1.0 multiplier was assigned to performance at a
level that, while not certain at the time targets were set, we
expected we could and should be able to 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 only a 50% chance of achieving by year end). If the
minimum threshold level of performance was not achieved, the
multiplier for the metric was zero. In 2008, the target bonus
percentage multiplier for the 2008 operational objectives was
calculated at 1.75 because we achieved or substantially exceeded
the target metrics on all six performance metrics.
Senior Leadership Strategic Objectives. For
the Companys senior executive leadership only (including
the named executive officers), the compensation committee
assessed the Companys achievement of two strategic
objectives which we refer to as the Senior Leadership Strategic
Objectives. These strategic objectives were established at the
beginning of 2008 at the same time as the 2008 operational
objectives. The purpose of the Senior Leadership Strategic
Objectives was to ensure that the Company continues to make
progress on its long-term objectives in addition to achieving
the annual operating goals. The strategic objectives were
(i) achieving sufficient progress on the Companys
cost efficiency initiatives, and (ii) completion of over
one hundred other enumerated corporate strategic and tactical
goals. The enumerated corporate goals were each placed in one of
three equally weighted categories: (1) critical to the
business, (2) essential for growth and (3) related to
core values. On the second metric (i.e., the enumerated
corporate goals), partial credit was given for partial
completion of the corporate goals so long as the corporate goals
were achieved at a predetermined threshold level. The highest
multiplier for achievement of both strategic objectives was 1.0,
which equated to 100% of the bonus percentage payable to all
associates. The multiplier for partial attainment of the
strategic objectives could be as low as 0.165%. Evaluation of
the accomplishment and performance level of progress toward cost
efficiency initiatives and the enumerated corporate goals was
based on a qualitative rather than a quantitative analysis. In
2008, the multiplier for the strategic objectives was determined
to be .50.
The calculated target bonus percentage multiplier for the senior
leadership team was .875. That is 1.75 (based on achievements of
the corporate organizational objectives) multiplied by .5 (based
on achievement of the strategic objectives). However, in
reviewing the 2008 results, the compensation committee approved
managements recommendation to adjust the target bonus
multiplier to 1.0 based on the compensation committees
determination that the calculated multiplier did not adequately
capture progress made by management during 2008 in meeting the
Companys cost-efficiency initiatives.
22
The chart below illustrates in graphic form how the annual bonus
was calculated in 2008 for our senior leadership team including
our named executive officers, using a hypothetical base salary
and target bonus percentage.
Equity-Based
Compensation
We are a firm proponent of equity-based compensation because we
believe that (i) offering equity-based compensation 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. 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),
(ii) for current associates, the associates
individual performance (associates must maintain a certain
performance level to receive an equity grant), and
(iii) the region where the associate is located (so that
the amount is reflective of the compensation practices
particular to the region). In addition, certain associates
receive annual equity compensation grants as part of their
annual compensation. The annual grant was made in April 2008 as
described below. Grants made to the named executive officers are
more particularly described in the Grants of Plan Based
Awards table and the Outstanding Equity Awards at
Fiscal Year-End table.
Equity-based compensation granted to new associates, typically
restricted stock units but occasionally stock options, is
granted in accordance with our 2006 Omnibus Plan, and any
options are issued with exercise prices no less than fair market
value as of the date of grant. 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. Since the adoption of the 2006 Omnibus Plan, we
have not granted, nor do we anticipate granting, any awards
outside of the 2006 Omnibus Plan, including any further awards
under the 2003 Plan. Our practice is not to time the date of
awards made under the 2006 Omnibus Plan.
In 2008, our equity-based compensation grants consisted
primarily of grants of restricted stock units. In April 2008, we
granted an aggregate of 182,961 restricted stock units under the
2006 Omnibus Plan (which represents approximately 0.22% of our
issued and outstanding common stock as of December 27,
2008) to 444 associates, including Messrs. Ahearn,
Meyerhoff and Sohn, representing approximately 21.7% of our
associates at the time of the grant (Messrs. Gaffney and
Carrington, who each received new hire equity grants, did not
receive an April 2008
23
grant). Equity grants to our named executive officers are more
particularly described in the Grants of Plan Based
Awards table and the Outstanding Equity Awards at
Fiscal Year-End table. The restricted stock units granted
in April 2008 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.
In deciding to make a broad based restricted stock unit grant we
considered many factors including:
(i) Eligibility Pool We revisited and
reconfirmed that we wanted to make grants to all exempt
associates in the United States (including those named executive
officers then employed by the Company) and to equivalent job
categories outside of the United States.
(ii) Form of Equity Compensation We
chose restricted stock units over options for competitive
reasons (i.e., market data indicates that hi-tech companies were
moving from options to restricted stock units) and because
restricted stock units provide a more meaningful benefit in
todays economic environment than stock options as stock
market volatility can quickly cause options to go underwater.
(iii) Performance Vesting We gave
serious consideration to whether to adopt performance vesting
for restricted stock units, particularly for our senior
leadership team, however we declined to adopt it. Given the
multi-year period over which we would expect the restricted
stock units to vest, and the dynamic nature of our industry, we
could not comfortably identify a long-term value creation metric
that we could assure would be meaningful throughout the vesting
period. We will revisit this in 2009. In lieu of adopting
performance vesting, we decided at the time of our April 2008
grant to begin adding performance concepts into the equity
compensation component by multiplying 50% of the target equity
compensation grant to be made in 2009 by the senior leadership
bonus multiplier used to determine the 2008 annual bonus.
Because the 2008 multiplier was determined to be 1.0, it will
not have an impact on 2009 equity compensation grants made to
the senior leadership team in 2009.
(iv) Amount In determining the amount to
be granted to each associate, we referenced the peer group
compensation surveys described above in -Compensation
Committee Practices-Total Compensation Review with respect
to levels of equity-based performance compensation and
established a target grant for each salary grade equal to
approximately the 50th percentile for the equity component
of compensation. Individual performance was then assessed to
determine whether adjustments to the proposed restricted stock
unit grant were appropriate based on the associates
performance in 2007. The assessment of individual performance
included reference to each executives objectives set at
the beginning of the year and his or her general performance and
effectiveness in achieving corporate objectives. The objectives
set for associates, including the named executive officers, may
have had quantitative as well as qualitative objectives that
would reflect the associates expected contribution to
helping the Company achieve its objectives.
For the executive officers, including the named executive
officers, the chief executive officer made recommendations to
the compensation committee on the level of their restricted
stock grants with regard to the benchmarking data, the role and
responsibility of the associate and their individual
performance. The compensation committee then assessed the
performance of the chief executive officer and the named
executive officers in approving the annual component of their
long-term incentive compensation.
Sign-On
Bonuses
For certain roles we have granted individual incentives or
sign-on bonuses to attract the associate to the Company. Often
the sign-on bonus is necessary to compensate an associate for
the compensation from a prior employer he or she must forfeit to
join First Solar. This was the case for Mr. Gaffney (who
gave up a partnership at New York law firm Cravath,
Swaine & Moore, LLP, from which he had substantial
compensation and benefit entitlements) and Mr. Carrington
(who forfeited certain equity compensation from General
Electric, his former employer), the two named executive officers
hired in 2008.
In 2008, we agreed to pay Mr. Gaffney a $7.0 million
sign-on bonus. The bonus is payable in 20 equal quarterly
installments, commencing on March 31, 2008. Payment of the
sign-on bonus is subject to Mr. Gaffneys continued
employment. However, if Mr. Gaffneys employment is
terminated without cause, his payments will continue on the same
schedule until completed. In addition, we made a hiring grant to
Mr. Gaffney of (i) 100,000 stock options with
24
an exercise price of $267.14, which is scheduled to vest in five
equal annual installments commencing on December 31, 2008,
subject to Mr. Gaffneys continued employment with us,
and (ii) 26,203 restricted stock units, which is scheduled
to vest quarterly in 20 equal installments, subject to
Mr. Gaffneys continued employment. If
Mr. Gaffneys employment is terminated without cause,
he will become 100% vested in his new hire equity grants.
Mr. Gaffneys new hire equity grants also become 100%
vested upon a change in control of the Company.
In 2008, Mr. Carrington received a lump sum cash sign-on
bonus equal to $150,000, which was paid when he joined the
Company as well as a hiring grant of 17,500 restricted stock
units, scheduled to vest over four years commencing on the
anniversary of the grant date and each anniversary thereafter at
a rate of 20% per year for the first three years and 40% for the
last year, subject to Mr. Carringtons continued
employment with us. If Mr. Carringtons employment is
terminated without cause, Mr. Carrington will receive an
additional 12 months vesting of his new hire equity
grant. The new hire equity grant also becomes 100% vested upon a
change in control of the Company.
The equity compensation related sign-on bonuses were made
pursuant to and under the 2006 Omnibus Plan.
Broad-based
Benefits Programs and Other Compensation
401(k). Our named executives 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 50% of our associates contributions
to the Plan up to a maximum of 4% of an associates Plan
compensation, such that in 2008 an associate was required to
contribute at least 8% of Plan compensation in order to receive
the full matching contribution. Effective January 1, 2009,
we amended the Plan to provide for a matching contribution equal
to 100% of our associates contributions to the Plan up to
a maximum of 4% of an associates Plan compensation, such
that in 2009 an associate need only contribute 4% of Plan
compensation in order to receive the full matching contribution.
In 2008, Messrs. Meyerhoff, Sohn and Gaffney each received
the maximum matching contribution of $7,750; Mr. Carrington
received $4,310; and Mr. Ahearn did not participate in the
plan.
Other Benefits. Our named executive officers
each have vacation entitlements of four weeks per year. For
certain of our executives who relocated when they joined the
Company, we make payments related to their relocation which are
grossed-up.
In 2008, we made such payments to Mr. Carrington and
Mr. Sohn. These payments are described in more detail under
the Summary Compensation Table.
Employment
Agreements
We have entered into employment agreements with certain of our
executives, including each of our named executive officers, with
the goal of clarifying their terms of employment and eliminating
future disagreement regarding their employment terms. When we
have entered into such employment agreements with our
executives, it has been the compensation committees
judgment that such agreements were appropriate and necessary.
The employment agreements generally provide for base salary,
bonus, benefits and eligibility for equity-based compensation
awards, as well as rights to certain payments and benefits upon
certain terminations of employment. This year each of the
employment agreements was amended where necessary, to update
compensation terms (e.g., base salary, bonus), delete
obsolete provisions, standardize like provisions and bring them
into compliance with section 409A of the Code. In addition,
for all named executive officers (other than with respect to
Mr. Gaffneys new hire equity grant and
Mr. Carrington, whose agreement already provided this
protection), the employment agreements were revised to provide
that should their employment terminate due to death or
disability, then upon such termination of employment they would
be vested in an additional 12 months equity-based
compensation (i.e., the equity-based compensation that
would have vested within the 12 month period). We note that
this is the same amount of additional vesting that applies in
the event of an executives employment termination without
cause.
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 of Control-Potential Payments upon Termination of
Employment (Other Than in the Context of a Change of
Control).
25
Change of
Control Severance Agreements
We have previously entered into change in control severance
agreements (CIC Agreements) with our named executive
officers and certain other key officers and employees, which
were all amended in 2008 to comply with Section 409A of the
Code. The purpose of these agreements, which are substantially
identical, is to align the interest of the executives with our
stockholders in any potential change of control situation by
mitigating the uncertainty and questions a potential change in
control may raise among such executives and employees and
allowing them to focus their continued attention and dedication
to their assigned duties. The CIC Agreements also provide for
single trigger vesting of unvested equity-based
compensation upon a change in control of the Company thereby
ensuring that such executives and employees are fairly
compensated for the lost opportunity to realize the value of
awards that is typically precipitated by a change in control.
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 2008 amendments do not change the
financial terms of the CIC Agreements. For a further description
of compensation provided in the event of a change of control,
see Executive Compensation-Potential Payments Upon
Termination or Change of Control-Potential Payments upon a
Change of Control.
Tax and
Accounting Implications
Section 162(m) of the Code. With certain
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. The Company generally endeavors to avail
itself of this transition rule, and expects this transition rule
to continue to apply to amounts paid or awards granted until
2010. However, the Committee has not adopted a policy that all
compensation must be deductible, particularly where additional
compensation may be needed to attract executives to key
leadership positions in the Company. Certain sign-on
compensation for Mr. Gaffney will not be deductible.
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 limit). 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 change in control severance 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 to the extent that
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 of
control occurred and named executive officers employment
been terminated on December 27, 2008. See Executive
Compensation-Potential Payments Upon Termination or Change of
Control-Potential Payments upon a Change of Control. As of
that date, we estimated that Messrs. Ahearn and Carrington
were the only named executive officers who would have had
payments subject to tax gross up and deduction disallowance.
Accounting for Equity-Based Compensation. The
Company uses Financial Accounting Standard 123R 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 27, 2008 included in the
Companys Annual Report on
Form 10-K
filed with the Commission on February 25, 2009. For the
amounts expensed in respect of each named executive officer in
2008, see Compensation Committee Report-Executive
Compensation Options Exercised and Stock Vested.
26
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 and Mr. José H. Villarreal has served on the
compensation committee since his appointment to the board of
directors on September 24, 2007.
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.
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 27, 2008.
Submitted by the Members of the Compensation Committee
Michael Sweeney (Chair)
Paul H. Stebbins
José H. Villarreal
27
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 27,
2008, December 29, 2007 and December 30, 2006,
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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($)
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($)
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Michael J. Ahearn
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2008
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507,692
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2,309,579
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525,000
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552
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(15)
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3,342,823
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Chief Executive Officer,
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2007
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450,000
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583,357
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765,000
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1,798,357
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Chairman
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2006
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450,000
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200,000
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15,962
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(16)
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665,962
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Jens Meyerhoff(4)
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2008
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372,462
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1,542,214
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497,693
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263,340
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17,518
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(17)
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2,693,227
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Chief Financial Officer
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2007
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330,000
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535,307
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1,193,604
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365,836
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10,241
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(18)
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2,434,988
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2006
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218,767
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50,000
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(8)
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229,377
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91,896
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210,213
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(19)
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800,253
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Bruce Sohn(5)
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2008
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403,846
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1,943,157
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1,539,141
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330,000
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57,816
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(20)
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4,273,960
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President, Director
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2007
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295,190
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60,000
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(8)
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657,726
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(11)
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2,143,992
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413,266
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73,402
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(21)
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3,643,576
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2006
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John T. Gaffney(6)
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2008
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478,846
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1,400,000
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(9)
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2,644,690
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(12)
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4,682,690
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(14)
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384,445
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8,067
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(22)
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9,598,738
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Executive Vice President
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2007
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and Corporate Secretary
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2006
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John Carrington(7)
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2008
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261,538
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150,000
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(10)
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907,571
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(13)
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209,778
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22,178
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(23)
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1,551,065
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Executive Vice President,
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2007
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Global Marketing and Business Development
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2006
|
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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 in these columns reflect the dollar amount
recognized for financial statement reporting purposes for the
fiscal years ended December 27, 2008, December 29,
2007 and December 30, 2006, respectively, in accordance
with FAS 123R, of awards pursuant to the 2006 Omnibus Plan
and the 2003 Unit Option Plan, and thus may include amounts from
awards granted both in and prior to the stated year. The
assumptions used in the 2008, 2007 and 2006 calculations of
these amounts are included in Note 17, Share-based
Compensation to the Companys audited financial
statements for the fiscal year ended December 27, 2008
included in the Companys Annual Report on
Form 10-K
filed with the Commission on February 25, 2009. However, as
required, the amounts shown exclude the impact of estimated
forfeitures related to service-based vesting conditions. For a
discussion of specific stock and option awards during 2008, see
Grants of Plan-Based Awards below and the narrative
discussion that follows. None of our named executive officers
forfeited any equity based compensation in 2008. |
|
(3) |
|
For a description of Non-Equity Incentive Plan Compensation, see
the disclosure above under Cash Incentive
Compensation. |
|
(4) |
|
Mr. Meyerhoffs employment with us commenced on
May 22, 2006. |
|
(5) |
|
Mr. Sohn was compensated as a non-associate director until
March 11, 2007 and was compensated as a full-time associate
for the remainder of 2007. |
|
(6) |
|
Mr. Gaffneys employment with us commenced on
January 15, 2008. |
|
(7) |
|
Mr. Carringtons employment with us commenced on
May 5, 2008. |
|
(8) |
|
Represents a one-time cash bonus to cover the general costs
incurred in moving the associates place of residence to
Phoenix, Arizona. |
|
(9) |
|
Represents installments paid on a one-time cash sign-on bonus
equal to $7.0 million payable in 20 equal quarterly
installments, commencing on March 31, 2008. |
28
|
|
|
(10) |
|
Represents a one-time cash sign-on bonus. |
|
(11) |
|
Includes a sign-on stock grant on March 21, 2007 of
917 shares at a market price of $54.50 per share, as of
that date. The grant date fair value of these shares was $49,976. |
|
(12) |
|
Represents a new hire grant of 26,203 restricted stock units at
a market price of $204.79, scheduled to vest quarterly in 20
equal installments commencing March 31, 2008, subject to
Mr. Gaffneys continued employment with us. The grant
date fair value of these shares was $5,366,112. |
|
(13) |
|
Represents a new hire grant of 17,500 restricted stock units at
a market price of $266.90 which vest over four years 20%, 20%,
20% and 40%, respectively, on the anniversary of the grant date
of July 28, 2008. The grant date fair value of these shares
was $4,670,750. |
|
(14) |
|
Represents a new hire grant of 100,000 stock options with an
exercise price of $267.14, the fair market value of our shares
on December 31, 2007, scheduled to vest in five equal
annual installments commencing on December 31, 2008. The
grant date fair value of this award was $11,016,200. |
|
(15) |
|
Represents premium paid by the Company for group term life
insurance. |
|
(16) |
|
Represents premiums paid by the Company for (a) self
elected medical/dental insurance of $14,918 and (b) self
elected long-term disability insurance of $1,044. |
|
(17) |
|
Represents the following payments: (a) $7,750 Company match
under 401(k) Plan; (b) contribution to personal medical
insurance of $9,528; and (c) contribution to group term
life insurance of $240. |
|
(18) |
|
Represents the following payments: (a) $714 Company match
under 401(k) Plan and (b) contribution to personal medical
insurance of $9,527. |
|
(19) |
|
Represents the following payments: (a) $1,084 Company match
under 401(k) Plan; (b) $98,481 reimbursement for relocation
expenses; (c) a tax
gross-up in
the amount of $95,911 with respect to relocation expenses and
signing bonus of $50,000 reflected under the Bonus
column for Mr. Meyerhoff; and (d) contribution to self
elected medical insurance of $14,737. |
|
(20) |
|
Represents the following payments: (a) $7,750 Company match
under 401(k) Plan; (b) $29,073 reimbursement for relocation
expenses; (c) a tax
gross-up in
the amount of $20,633 with respect to relocation expenses; and
(d) contribution to group term life insurance of $360. |
|
(21) |
|
Represents the following payments: (a) $3,779 Company match
under 401(k) Plan; (b) $39,616 reimbursement for relocation
expenses; and (c) a tax
gross-up in
the amount of $30,007 with respect to relocation expenses. |
|
(22) |
|
Represents the following payments: (a) $7,750 Company match
under 401(k) Plan and (b) contribution to group term life
insurance of $317. |
|
(23) |
|
Represents the following payments: (a) $4,310 Company match
under 401(k) Plan; (b) $14,167 reimbursement for relocation
expenses; (c) a tax
gross-up in
the amount of $3,563 with respect to relocation expenses; and
(d) contribution to group term life insurance of $138. |
29
Grants of
Plan-Based Awards
The following table sets forth summary information regarding all
grants of plan-based awards made to our named executive officers
during the year ended December 27, 2008. As of the end of
2008, none of the named executive officers held any
performance-based equity or non-equity incentive awards. Unless
otherwise noted in the table below, the restricted stock units
vest over four years 20%, 20%, 20% and 40%, respectively, on the
anniversary of the grant date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
Other Stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
Grant
|
|
|
|
|
|
|
|
|
|
Estimated Possible
|
|
|
Awards:
|
|
|
Awards:
|
|
|
Exercise
|
|
|
|
|
|
Date Fair
|
|
|
|
|
|
|
|
|
|
Payouts Under
|
|
|
Number
|
|
|
Number of
|
|
|
or Base
|
|
|
Market
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Non-Equity Incentive
|
|
|
of Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
Price on
|
|
|
Stock and
|
|
|
|
|
|
|
|
|
|
Plan Awards(1)
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
Grant
|
|
|
Option
|
|
|
|
Award
|
|
|
Grant
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Date
|
|
|
Awards
|
|
Name
|
|
Type
|
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
($/Sh)
|
|
|
($)(2)
|
|
|
Michael J. Ahearn
|
|
|
RSU
|
|
|
|
4/28/08
|
|
|
|
|
|
|
|
|
|
|
|
13,067
|
|
|
|
|
|
|
|
|
|
|
|
285.52
|
|
|
|
3,730,890
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
525,000
|
|
|
|
1,050,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jens Meyerhoff
|
|
|
RSU
|
|
|
|
4/28/08
|
|
|
|
|
|
|
|
|
|
|
|
5,051
|
|
|
|
|
|
|
|
|
|
|
|
285.52
|
|
|
|
1,442,162
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
263,340
|
|
|
|
526,680
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce Sohn
|
|
|
RSU
|
|
|
|
4/28/08
|
|
|
|
|
|
|
|
|
|
|
|
7,913
|
|
|
|
|
|
|
|
|
|
|
|
285.52
|
|
|
|
2,259,320
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
330,000
|
|
|
|
660,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John T. Gaffney
|
|
|
RSU
|
|
|
|
1/15/08
|
|
|
|
|
|
|
|
|
|
|
|
26,203
|
(3)
|
|
|
|
|
|
|
|
|
|
|
204.79
|
|
|
|
5,366,112
|
|
|
|
|
Options
|
|
|
|
1/15/08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
(4)
|
|
|
267.14
|
|
|
|
204.79
|
|
|
|
11,016,200
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
384,445
|
|
|
|
768,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Carrington
|
|
|
RSU
|
|
|
|
7/28/08
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
|
|
|
|
|
|
|
|
|
266.90
|
|
|
|
4,670,750
|
|
|
|
|
Annual Cash
|
|
|
|
|
|
|
|
209,778
|
|
|
|
419,556
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
For a description of Non-Equity Incentive Plan compensation, see
the disclosure above under Cash Incentive
Compensation. |
|
(2) |
|
The grant date fair value of the stock options was determined in
accordance with FAS 123R. 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 27, 2008 included in the Companys Annual
Report on
Form 10-K
filed with the Commission on February 25, 2009. |
|
(3) |
|
These restricted stock units vest quarterly in 20 equal
installments commencing March 31, 2008, subject to
Mr. Gaffneys continued employment with us. |
|
(4) |
|
These options vest in five equal annual installments commencing
on December 31, 2008, subject to Mr. Gaffneys
continued employment with us. The exercise price of $267.14 was
based on the closing market price on December 31, 2007. |
30
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information with respect to
outstanding option and stock awards held by our named executive
officers at December 27, 2008.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards(1)
|
|
|
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value
|
|
|
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Option
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
of Shares or
|
|
|
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Exercise
|
|
|
Option
|
|
|
|
|
|
Units of Stock
|
|
|
Units of Stock
|
|
|
|
Grant
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Price
|
|
|
Expiration
|
|
|
Grant
|
|
|
That Have Not
|
|
|
That Have
|
|
Name
|
|
Date
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
Date
|
|
|
Vested
|
|
|
Not Vested(2)
|
|
|
Michael J. Ahearn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/30/2007
|
|
|
|
20,000
|
|
|
|
2,700,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/2008
|
|
|
|
13,067
|
|
|
|
1,764,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33,067
|
|
|
|
4,464,376
|
|
Jens Meyerhoff
|
|
|
11/16/2006
|
|
|
|
12,500
|
|
|
|
93,751
|
(3)
|
|
|
20.00
|
|
|
|
11/16/2013
|
|
|
|
7/30/2007
|
|
|
|
14,000
|
|
|
|
1,890,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/16/2007
|
|
|
|
7,200
|
|
|
|
972,072
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/2008
|
|
|
|
5,051
|
|
|
|
681,936
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
12,500
|
|
|
|
93,751
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,251
|
|
|
|
3,544,148
|
|
Bruce Sohn
|
|
|
3/21/2007
|
|
|
|
42,500
|
|
|
|
97,500
|
(4)
|
|
|
54.50
|
|
|
|
3/21/2014
|
|
|
|
7/30/2007
|
|
|
|
16,000
|
|
|
|
2,160,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/16/2007
|
|
|
|
8,000
|
|
|
|
1,080,080
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4/28/2008
|
|
|
|
7,913
|
|
|
|
1,068,334
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
42,500
|
|
|
|
97,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,913
|
|
|
|
4,308,574
|
|
John T. Gaffney
|
|
|
1/15/2008
|
|
|
|
|
|
|
|
100,000
|
(5)
|
|
|
267.14
|
|
|
|
1/15/2015
|
|
|
|
1/15/2008
|
|
|
|
22,273
|
(6)
|
|
|
3,007,078
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22,273
|
|
|
|
3,007,078
|
|
John Carrington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7/28/2008
|
|
|
|
17,500
|
|
|
|
2,362,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
|
2,362,675
|
|
|
|
|
(1) |
|
Unless otherwise noted, the 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
on December 26, 2008 of $135.01. |
|
(3) |
|
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. |
|
(4) |
|
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. |
|
(5) |
|
These options vest in five equal annual installments commencing
on December 31, 2008, subject to Mr. Gaffneys
continued employment with us. |
|
(6) |
|
These restricted stock units vest quarterly in 20 equal
installments commencing March 31, 2008, subject to
Mr. Gaffneys 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 27, 2008 for
each of the named executive officers. All below listed stock
options were exercised under prearranged stock trading plans
adopted under
Rule 10b5-1
of the Securities Exchange Act of 1934.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
Michael J. Ahearn
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
$
|
1,425,000
|
|
Jens Meyerhoff
|
|
|
25,000
|
|
|
$
|
5,508,984
|
|
|
|
5,300
|
|
|
$
|
1,474,356
|
|
Bruce Sohn
|
|
|
42,750
|
|
|
$
|
9,884,941
|
|
|
|
6,000
|
|
|
$
|
1,669,840
|
|
John T. Gaffney
|
|
|
|
|
|
|
|
|
|
|
3,930
|
|
|
$
|
907,660
|
|
John Carrington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
(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 discussion of vesting of restricted stock
units, see the disclosure above under Equity-Based
Compensation. |
Pensions
or 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 Compensation Committee Report) that could be
characterized as nonqualified deferred compensation arrangements
under Section 409A of the Code.
Employment
Agreements and Arrangements
Michael
J. Ahearn
Effective as of November 3, 2008, we entered into an
amended and restated employment agreement with Mr. Michael
J. Ahearn, our chief executive officer. Under the terms of his
employment agreement, Mr. Ahearn is entitled to an annual
base salary of $525,000 (subject to annual increases at our
discretion), is eligible to receive a discretionary annual bonus
and receives standard health benefits and four weeks of vacation
per year. Our employment agreement with Mr. Ahearn provides
that, in the event Mr. Ahearns employment is
terminated by us without cause, Mr. Ahearn will receive the
following: (a) severance equal to one year of his annual
base salary, payable over the 12 months following
termination, (b) continued medical benefits for the earlier
of 12 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 (and the
ability to exercise vested equity awards for one year plus
90 days after such employment termination). The additional
vesting in clause (c) also applies in the event
Mr. Ahearns employment terminates due to his death or
disability. In the event of termination of
Mr. Ahearns employment for any reason, he is entitled
to payment of his earned and unused (and unforfeited) vacation.
Mr. Ahearn must sign a release in order to receive
severance payments.
Mr. Ahearn is also subject to a separate confidentiality
agreement and a separate non-competition and non-solicitation
agreement, which provides that Mr. Ahearn will not compete
with the Company or solicit Company associates for two years
after termination of his employment.
Mr. Ahearn 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 of Control-Potential Payments upon a Change of
Control-Change in Control Severance Agreements.
Jens
Meyerhoff
Effective as of December 30, 2008, we entered into an
amended and restated employment agreement with Mr. Jens
Meyerhoff, our chief financial officer. Under the terms of his
employment agreement, Mr. Meyerhoff is entitled to an
annual base salary of $391,248 (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 70% of his annual base salary.
Mr. Meyerhoff also receives standard health benefits, or,
in lieu of such benefits and at Mr. Meyerhoffs
election, separate medical insurance benefits, with costs
reimbursed by us. 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 18 months of his annual base
salary, payable over the
18-month
period following termination of employment, (b) continued
medical benefits for 18 months, (c) certain relocation
benefits and (d) an additional 12 months service
credit for purposes of determining vesting of equity-based
compensation awards (and the ability to exercise vested equity
awards for one year plus 90 days after such employment
termination). The additional vesting in clause (d) also
applies in the event Mr. Meyerhoffs employment
terminates due to his death or disability. In the
32
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
18 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 -Potential Payments Upon Termination or
Change of Control-Potential Payments upon a Change of
Control-Change in Control Severance Agreements.
Bruce
Sohn
Effective as of November 11, 2008, we entered into an
amended and restated employment agreement with Mr. Bruce
Sohn, our president. Under the terms of his employment
agreement, Mr. Sohn is entitled to an annual base salary of
$462,500 (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 80% of his
annual base salary. Mr. Sohn receives standard health
benefits and four weeks of vacation per year. Mr. Sohn also
received $49,706 to cover ongoing expenses related to his
relocation to Phoenix. 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
medical benefits for 24 months and (c) an additional
12 months service credit for purposes of determining
vesting of equity-based compensation awards for 12 months
after termination of employment (and the ability to exercise
vested equity-based compensation awards for one year, plus
90 days after such employment termination). The additional
vesting in clause (c) also applies in the event
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 of Control-Potential Payments upon a Change of
Control-Change in Control Severance Agreements.
John
T. Gaffney
Effective as of December 29, 2008, we entered into an
amended and restated employment agreement with Mr. John T.
Gaffney, our executive vice president and corporate secretary,
in charge of legal and government affairs. Under the terms of
his employment agreement, Mr. Gaffney is entitled to
receive 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 80% of his annual base salary.
Mr. Gaffney receives standard health benefits and four
weeks of vacation per year. In addition, Mr. Gaffney
received a new hire grant of 26,203 restricted stock units,
scheduled to vest quarterly in 20 equal installments commencing
March 31, 2008, and 100,000 stock options with an exercise
price of $267.14, scheduled to vest in five equal annual
installments commencing on December 31, 2008. In addition,
we agreed to pay Mr. Gaffney a cash sign-on bonus equal to
$7 million payable quarterly in 20 equal quarterly
installments commencing on March 31, 2008. Payment of the
sign-on bonus installments and vesting of the new hire grant are
contingent upon Mr. Gaffneys continued employment,
unless the Company terminates Mr. Gaffneys employment
without cause. Our employment agreement with Mr. Gaffney
provides that, in the event Mr. Gaffneys employment
is terminated by us without cause, Mr. Gaffney will receive
the following: (a) a lump sum severance payment equal to
12 months of his annual base salary, (b) continued
medical benefits for 12 months, (c) continued payment
of the cash sign-on bonus installments, (d) full vesting of
his new hire grant of restricted stock units and stock options
(and the ability to exercise the stock options for 90 days
after such employment termination) and (e) an additional
12 months service credit for purposes
33
of determining vesting of any other equity-based compensation
awards (and the ability to exercise vested equity awards for one
year plus 90 days after such employment termination). The
additional vesting in clause (e) also applies in the event
Mr. Gaffneys employment terminates due to his death
or disability. In the event of termination of
Mr. Gaffneys employment for any reason, he is
entitled to payment of his earned and unused (and unforfeited)
vacation. In the event that the Company terminates
Mr. Gaffneys employment without cause, the Company
must continue to pay the sign-on bonus installments when
scheduled. Mr. Gaffney must sign a release in order to
receive severance payments.
Mr. Gaffney is also subject to a separate confidentiality
agreement and a separate non-competition and non-solicitation
agreement, which provides that Mr. Gaffney will not compete
with the Company or solicit Company associates for
12 months after termination of his employment.
Mr. Gaffney 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 of Control-Potential Payments upon a Change of
Control-Change in Control Severance Agreements.
John
Carrington
Effective as of November 3, 2008, we entered into an
amended and restated employment agreement with Mr. John
Carrington, our executive vice president, global marketing and
business development. Under the terms of his employment
agreement, Mr. Carrington is entitled to an annual base
salary of $413,328 (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 80% of his annual base salary.
Mr. Carrington receives standard health benefits and four
weeks of vacation per year. In addition, when he commenced
employment with us, Mr. Carrington received a $150,000
sign-on bonus and a new hire grant of 17,500 restricted stock
units which vest over four years 20%, 20%, 20% and 40%,
respectively, on the anniversary of the grant date, subject to
Mr. Carringtons continued employment with us. Our
employment agreement with Mr. Carrington provides that, in
the event Mr. Carringtons employment is terminated by
us without cause, Mr. Carrington will receive the
following: (a) severance equal to one year of his annual
base salary, payable over the
12-month
period following termination, (b) continued medical
benefits for the earlier of 12 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 any equity-based
compensation awards (and the ability to exercise vested equity
awards for one year). The additional vesting in clause (c)
also applies in the event Mr. Carringtons employment
terminates due to his death or disability. In the event of
termination of Mr. Carringtons employment for any
reason, he is entitled to payment of his accrued and unused (and
unforfeited) vacation. Mr. Carrington must sign a release
in order to receive severance payments.
Mr. Carrington is also subject to a separate
confidentiality agreement and a separate non-competition and
non-solicitation agreement, which provides that
Mr. Carrington will not compete with the Company or solicit
Company associates for 12 months after termination of his
employment.
Mr. Carrington 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 of Control-Potential Payments upon a Change of
Control-Change in Control Severance Agreements.
Potential
Payments Upon Termination or Change of Control
Potential
Payments Upon Termination of Employment (Other Than in the
Context of a Change of Control)
The table below reflects the estimated amount of compensation
payable to each of the named executive officers of the Company
in the event of termination of such executives employment.
The amount of compensation payable to each named executive
officer upon voluntary termination without good reason,
voluntary termination with good reason, involuntary termination
without cause, termination with cause in the event of disability
or death of the executive, in each case, other than in
connection with a change in control, is shown below. The amounts
shown assume that such termination was effective as of
December 27, 2008, and thus includes amounts earned through
such time and are estimates of the amounts which would be paid
out to the executives upon their
34
termination. For purposes of the calculations below, we have
used a share value of $135.01 per share, which was the closing
price of our common stock on December 26, 2008. The actual
amounts to be paid out can only be determined at the time of
such executives separation from the Company.
For descriptions relating to these payments and benefits,
including any release, non-competition, non-solicitation or
similar requirements, see -Employment Agreements and
Arrangements. The amounts do not include amounts payable
pursuant to the Companys contracts, agreements, plans or
arrangements to the extent they do not discriminate in scope,
terms or operation, in favor of executive officers of the
Company and that are available generally to all salaried
associates, including payment of accrued rights such as payment
for accrued and unpaid vacation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
Voluntary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Involuntary
|
|
|
|
|
|
|
|
|
|
|
|
|
Without
|
|
|
With
|
|
|
Not for
|
|
|
Involuntary
|
|
|
Termination
|
|
|
Termination
|
|
|
|
Good
|
|
|
Good
|
|
|
Cause
|
|
|
for Cause
|
|
|
Due to
|
|
|
Due to
|
|
|
|
Reason
|
|
|
Reason
|
|
|
Termination
|
|
|
Termination
|
|
|
Death
|
|
|
Disability
|
|
Name and Principal Position
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Michael J. Ahearn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
525,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
9,665
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Treatment
|
|
|
|
|
|
|
|
|
|
|
1,027,966
|
(3)
|
|
|
|
|
|
|
1,027,966
|
|
|
|
1,027,966
|
|
Relocation Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
1,562,631
|
|
|
|
|
|
|
|
1,027,966
|
|
|
|
1,027,966
|
|
Jens Meyerhoff
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
564,300
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
14,292
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Treatment
|
|
|
|
|
|
|
|
|
|
|
5,164,923
|
(3)
|
|
|
|
|
|
|
5,164,923
|
|
|
|
5,164,923
|
|
Relocation Benefits
|
|
|
|
|
|
|
|
|
|
|
200,000
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
5,943,515
|
|
|
|
|
|
|
|
5,164,923
|
|
|
|
5,164,923
|
|
Bruce Sohn
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
825,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
28,037
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Treatment
|
|
|
|
|
|
|
|
|
|
|
3,439,081
|
(3)
|
|
|
|
|
|
|
3,439,081
|
|
|
|
3,439,081
|
|
Relocation Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
4,292,118
|
|
|
|
|
|
|
|
3,439,081
|
|
|
|
3,439,081
|
|
John Gaffney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
6,669,396
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
14,018
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Treatment
|
|
|
|
|
|
|
|
|
|
|
3,007,078
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Relocation Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
9,690,492
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Carrington
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Severance
|
|
|
|
|
|
|
|
|
|
|
400,000
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits
|
|
|
|
|
|
|
|
|
|
|
14,018
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Treatment
|
|
|
|
|
|
|
|
|
|
|
472,535
|
(3)
|
|
|
|
|
|
|
472,535
|
|
|
|
472,535
|
|
Relocation Benefits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
886,553
|
|
|
|
|
|
|
|
472,535
|
|
|
|
472,535
|
|
|
|
|
(1) |
|
Estimates based on aggregate payments to be made over severance
period as follows: (a) Messrs. Ahearn and Carrington
(12 months); (b) Mr. Meyerhoff (18 months);
(c) Mr. Sohn (24 months); and
(d) Mr. Gaffney (lump sum payment of
12 months salary plus continuation of quarterly
payments of $7.0 million sign-on bonus). |
|
(2) |
|
Estimates based on benefit elections and cost of continued
health and welfare benefits in 2009 multiplied by applicable
continuation periods as follows: (a) Messrs. Ahearn,
Carrington and Gaffney (12 months);
(b) Mr. Meyerhoff (18 months); and
(c) Mr. Sohn (24 months). |
35
|
|
|
(3) |
|
Estimated aggregate value of 12 months acceleration of the
vesting of equity-based compensation for Messrs. Ahearn,
Carrington, Meyerhoff and Sohn and full vesting of
Mr. Gaffneys new hire equity grant. |
|
(4) |
|
Estimated amount payable with respect to
Mr. Meyerhoffs post-termination relocation benefit
based on the assumption that relocation expenses will be
approximately the same as his relocation expenses related to his
move from California to Arizona upon the commencement of
employment. Actual amounts payable may vary as his relocation
benefit is not restricted with respect to location. |
Potential
Payments upon a Change of Control
Consequences
of change of control under equity-based compensation
plans
2006 Omnibus Incentive Compensation Plan. The
2006 Omnibus Plan provides that, unless otherwise provided in an
award agreement, in the event of a change of control (as defined
below) of the Company, 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 2006 Omnibus Plan
is defined as the occurrence of any of the following events:
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|
|
|
|
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;
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|
|
|
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, including the Estate of John
T. Walton and its beneficiaries, JCL Holdings, LLC and its
beneficiaries, JTW Trust No. 1 UAD
9/19/02 and
its beneficiaries, and Michael Ahearn and his family at the time
of such acquisition, with certain 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 2006 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).
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
36
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:
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|
|
|
a lump-sum cash severance payment equal to two times the sum of
(i) the greater of the executives base salary in
effect immediately prior to the date of termination and the
executives base salary in effect immediately prior to the
change in control and (ii) the greater of the average
annual cash bonuses for the previous three calendar years (or
such shorter period as the executive was employed by us) and the
target annual bonus for the year of termination;
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|
|
a pro-rated target annual bonus;
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|
|
|
the continuation of, or reimbursement for, welfare and fringe
benefits for 18 months after termination of
employment; and
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|
|
|
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 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 27, 2008, using a $135.01 per share closing price.
The amounts do not include amounts payable pursuant to the
Companys contracts, agreements, plans or arrangements to
the extent they do not discriminate in scope, terms or
operation, in favor of executive officers of the Company and
that are available generally to all salaried associates,
including payment of accrued rights such as payment for accrued
and unpaid vacation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
Value of
|
|
|
Value of
|
|
|
Estimated
|
|
|
Estimated
|
|
|
|
|
|
|
Severance
|
|
|
Accelerated
|
|
|
Medical and
|
|
|
Value of
|
|
|
Value of
|
|
|
|
|
|
|
Payment
|
|
|
Equity
|
|
|
Welfare
|
|
|
Outplacement
|
|
|
280G Gross Up
|
|
|
|
|
|
|
Amount
|
|
|
Awards
|
|
|
Benefits
|
|
|
Assistance
|
|
|
Payment
|
|
|
Total
|
|
Name and Principal Position
|
|
($)
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
|
|
Michael J. Ahearn
|
|
|
2,625,000
|
|
|
|
4,464,376
|
|
|
|
15,646
|
|
|
|
20,000
|
|
|
|
2,089,613
|
|
|
|
9,214,635
|
|
Jens Meyerhoff
|
|
|
1,542,420
|
|
|
|
14,326,450
|
|
|
|
215,440
|
|
|
|
20,000
|
|
|
|
|
|
|
|
16,104,310
|
|
Bruce Sohn
|
|
|
1,898,266
|
|
|
|
12,158,299
|
|
|
|
22,176
|
|
|
|
20,000
|
|
|
|
|
|
|
|
14,098,741
|
|
John T. Gaffney
|
|
|
8,369,396
|
|
|
|
3,007,078
|
|
|
|
22,176
|
|
|
|
20,000
|
|
|
|
3,102,349
|
|
|
|
14,520,999
|
|
John Carrington
|
|
|
1,760,000
|
|
|
|
2,362,675
|
|
|
|
22,176
|
|
|
|
20,000
|
|
|
|
1,233,353
|
|
|
|
5,398,204
|
|
|
|
|
(1) |
|
Vesting of equity awards is a single-trigger
benefit, and awards vest upon a change of control. |
|
(2) |
|
Estimated value of medical and welfare benefits based on cost of
premium payments for health and welfare benefits in 2009, and,
in the case of Mr. Meyerhoff, his contractual relocation
benefit upon termination of employment. |
|
(3) |
|
Assumes maximum payment of $20,000 which may be made for
outplacement assistance. |
|
(4) |
|
Assumes highest applicable federal and state income tax rates. |
37
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 seven 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 seven 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 seven nominees:
Michael J. Ahearn
Craig Kennedy
James F. Nolan
J. Thomas Presby
Paul H. Stebbins
Michael Sweeney
José H. Villarreal
Required
Vote
The seven 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.
38
PROPOSAL NO. 2
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 26, 2009. During 2007 and
2008, 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 26, 2009 requires the affirmative votes of
a majority of the votes 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 26, 2009.
39
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 27, 2008, 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.
40
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 2010 proxy statement must submit the proposal
so that it is received by us no later than December 23,
2009. 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 March 6, 2010, but no earlier than
February 4, 2010, to be included in our materials relating
to that meeting. Proposals received after March 6, 2010
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 be required 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.
41
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 six meetings during
fiscal 2008.
The Audit Committee operates under a written Audit Committee
Charter that was approved by the Audit Committee and approved by
the Board, and is of the view that it has complied with its
charter.
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 27, 2008 (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.
The Committee has: (i) considered whether non-audit
services provided by PricewaterhouseCoopers LLP are compatible
with its independence, (ii) received the written
disclosures and the letter from PricewaterhouseCoopers LLP
required by the Independence Standards Board Standard
No. 1, as in effect on the date of this proxy statement,
and (iii) discussed with PricewaterhouseCoopers LLP its
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 27, 2008 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
42
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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 and FOR Proposal 2. |
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1. Election of Directors:
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01 - Michael J. Ahearn
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02 - Craig Kennedy
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03 - James F. Nolan
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04 - J. Thomas Presby
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+ |
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05 - Paul H. Stebbins
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06 - Michael Sweeney
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07 - José H. Villarreal |
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o Mark here to vote FOR all nominees |
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o Mark here to WITHHOLD vote from all nominees |
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01
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02
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03
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04
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05
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06
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07
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o
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For All EXCEPT - To withhold a vote for one or more nominees, mark
the box to the left and the corresponding numbered box(es) to the right. |
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o
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o
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o
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o
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o
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o
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For |
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Against |
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Abstain |
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2.
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Ratification of appointment of PricewaterhouseCoopers LLP as the Independent Registered Public Accounting Firm for the fiscal year ending December 26,
2009. |
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o
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o
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B |
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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n |
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1 |
U P X 0 2 |
1 |
6 |
7 7 2 |
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+ |
<STOCK#>
011F4D
▼
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, June 4, 2009, Phoenix,
Arizona
2009 Annual Meeting of First Solar, Inc. Stockholders
June 4, 2009, 10:00 a.m. (Local Time)
Desert Willow Conference Center, 4340 East Cotton Center Boulevard, Phoenix, Arizona 85040
The undersigned hereby appoints Michael J. Ahearn, Jens Meyerhoff, John T. Gaffney 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 June 4, 2009, at 10:00 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.