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
(Amendment No. )
Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐
Check the appropriate box:
☐ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material under §240.14a-12
(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 all boxes that apply):
☒ No fee required
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INNOVATION WITH PURPOSE 2023 NOTICE OF ANNUAL MEETING AND PROXY STATEMENT
2024 notice of annual meeting and proxy statement
LETTER TO SHAREHOLDERS
allegro
Manchester, NH
June 26, 2024
Dear Shareholder,
You are cordially invited to attend the 2024 Annual Meeting of Shareholders (the “Annual Meeting”) of Allegro MicroSystems, Inc. (the “Company”) at 8:30 a.m. Eastern time on Thursday, August 8, 2024. The Annual Meeting will be a completely virtual meeting, which will be conducted via live webcast. We believe that the online, virtual meeting format enables the Annual Meeting to be accessible for all of our shareholders.
Holders of record of the Company’s outstanding shares of common stock, as of the close of business on June 12, 2024 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement or adjournment of the Annual Meeting. The Annual Meeting may be continued or adjourned from time to time without notice other than by announcement at the Annual Meeting.
Every shareholder’s vote is important. Whether or not you plan to attend the Annual Meeting online, it is important that your shares of common stock be represented and voted at the Annual Meeting. Therefore, I urge you to promptly submit your proxy even if you plan to attend the Annual Meeting. To submit a proxy to vote your shares over the Internet or by telephone, please follow the instructions on your proxy card, Notice of Internet Availability of Proxy Materials or voting instruction form. If you decide to attend the Annual Meeting, you will be able to vote online, even if you have previously submitted your proxy.
On behalf of the Board of Directors, thank you for your support of Allegro MicroSystems, Inc.
Sincerely,
Yoshihiro (Zen) Suzuki
Chairman of the Board of Directors
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ALLEGRO MICROSYSTEMS, INC.
NOTICE OF 2024 ANNUAL MEETING OF SHAREHOLDERS
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Date and Time August 8, 2024 (Thursday) 8:30 a.m. Eastern time |
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Location Online at: meetnow.global/MSCDKJU |
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Who Can Vote
Shareholders as of
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Time |
8:30 a.m., Eastern time on Thursday, August 8, 2024. |
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Place |
You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting by visiting: meetnow.global/MSCDKJU at the meeting date and time. Beneficial holders may be required to register in advance to attend the Annual Meeting. See the attached proxy statement for additional information. There is no physical location for the Annual Meeting. |
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Items of Business |
1.
To elect Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma as Class I Directors to serve until the 2027 Annual Meeting of Shareholders, and until each such director’s respective successor is elected and qualified;
2.
To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending March 28, 2025;
3.
To approve, on an advisory basis, the Company’s executive compensation; and
4.
To transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting.
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Voting |
Your vote is very important. Please submit your proxy even if you plan to attend the Annual Meeting. To submit a proxy to vote your shares over the Internet or by telephone, please follow the instructions on your proxy card, Notice of Internet Availability of Proxy Materials or voting instruction form. |
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Who Can Vote |
Holders of record of our outstanding shares of common stock as of the close of business on June 12, 2024 are entitled to notice of and to vote at the Annual Meeting, or any continuation, postponement or adjournment of the Annual Meeting. A complete list of such shareholders will be open to the examination of any shareholder for a period of ten days prior to the Annual Meeting for a purpose germane to the Annual Meeting at the Company’s offices during ordinary business hours at 955 Perimeter Road, Manchester, New Hampshire, 03103. |
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TABLE OF CONTENTS
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3 |
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) |
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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS |
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15 |
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26 |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER MATTERS |
27 |
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28 |
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33 |
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37 |
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT |
69 |
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71 |
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74 |
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74 |
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74 |
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75 |
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76 |
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PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation by the Board of Directors (the “Board”) of Allegro MicroSystems, Inc. (“we,” “us,” “our,” the “Company” or “Allegro”) of proxies to be voted at our Annual Meeting of Shareholders to be held on Thursday, August 8, 2024 (the “Annual Meeting”), at 8:30 a.m. Eastern time, and at any continuation, postponement, or adjournment of the Annual Meeting. In order to provide accessibility to the meeting to all shareholders, the Annual Meeting will be a completely virtual meeting conducted via live, online webcast. You will be able to attend and participate in the Annual Meeting online, vote your shares electronically and submit your questions during the Annual Meeting by visiting: meetnow.global/MSCDKJU at the meeting date and time. In order to attend, if you hold your shares through an intermediary, such as a bank, broker, or other nominee, you must register in advance prior to the deadline of 5:00 p.m. Eastern time on August 5, 2024. Please refer to “ How can I attend the Annual Meeting? ” for information on how to register. There is no physical location for the Annual Meeting.
Holders of record of our outstanding shares of common stock, $0.01 par value per share (“Common Stock”), as of the close of business on June 12, 2024 (the “Record Date”), will be entitled to notice of and to vote at the Annual Meeting and any continuation, postponement, or adjournment of the Annual Meeting, and will vote as a single class on all matters presented at the Annual Meeting. As of the Record Date, there were 193,784,314 shares of Common Stock outstanding and entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote on any matter presented to shareholders at the Annual Meeting.
This proxy statement and the Company’s Annual Report to Shareholders for the fiscal year ended March 29, 2024 (the “2024 Annual Report”) will be released on or about June 26, 2024 to our shareholders as of the Record Date.
Information contained on, or that can be accessed through, our website is not incorporated by reference in this proxy statement and does not form a part of this proxy statement. The inclusion of links and website addresses in this proxy statement are textual references only.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON AUGUST 8, 2024
This proxy statement and our 2024 Annual Report are available at investors.allegromicro.com/financials/annual-reports.
Proposals
At the Annual Meeting, our shareholders will be asked:
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Proposals |
Board Vote Recommendation |
For Further Details |
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To elect Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma as Class I Directors to serve until the 2027 Annual Meeting of Shareholders, and until each such director’s respective successor is elected and qualified |
“FOR” each director nominee |
Page 15 |
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To ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for the fiscal year ending March 28, 2025 |
“FOR” |
Page 23 |
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To approve, on an advisory basis, the Company’s executive compensation |
“FOR” |
Page 25 |
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To transact such other business as may properly come before the Annual Meeting or any continuation, postponement, or adjournment of the Annual Meeting |
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We do not know of any other business that will be presented at the Annual Meeting. However, if any other matter properly comes before the shareholders for a vote at the Annual Meeting, the proxy holders named on the Company’s proxy card will have the discretionary authority to vote your shares in accordance with their best judgment.
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PROXY STATEMENT SUMMARY
Recommendations of the Board
The Board recommends that you vote your shares as indicated below. If you return a properly completed proxy card, or vote your shares by telephone or Internet, your shares of Common Stock will be voted on your behalf as you direct. If not otherwise specified, the shares of Common Stock represented by the proxies will be voted, and the Board recommends that you vote:
If any other matter properly comes before the shareholders for a vote at the Annual Meeting, the proxy holders named on the Company’s proxy card will have the discretionary authority to vote your shares in accordance with their best judgment.
Information About This Proxy Statement
Why You Received this Proxy Statement. You have received these proxy materials because the Board is soliciting your proxy to vote your shares at the Annual Meeting. This proxy statement includes information that we are required to provide to you under the rules of the Securities and Exchange Commission (“SEC”) and that is designed to assist you in voting your shares.
Notice of Internet Availability of Proxy Materials. As permitted by SEC rules, we are making this proxy statement and our 2024 Annual Report available to our shareholders electronically via the Internet. On or about June 26, 2024, we mailed to our shareholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access this proxy statement and our 2024 Annual Report and vote online. If you received a Notice by mail, you will not receive a printed copy of the proxy materials in the mail unless you specifically request them. Instead, the Notice instructs you on how to access and review all of the important information contained in the proxy statement and 2024 Annual Report. The Notice also instructs you on how you may submit your proxy over the Internet. If you received a Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting such materials contained on the Notice.
Printed Copies of Our Proxy Materials. If you received printed copies of our proxy materials, then instructions regarding how you can vote are contained on the proxy card or voting instruction form included in the materials.
Householding. The SEC’s rules permit us to deliver a single set of proxy materials to one address shared by two or more of our shareholders. This delivery method is referred to as “householding” and can result in significant cost savings. To take advantage of this opportunity, we have delivered a single copy of the 2024 Annual Report, proxy statement or Notice, as applicable, to multiple shareholders who share an address, unless we received contrary instructions prior to the mailing date. We agree to deliver promptly, upon written or oral request, a separate copy of the 2024 Annual Report, proxy statement or Notice, as requested, to any shareholder at the shared address to which a single copy of those documents was delivered. If you prefer to receive separate copies of the 2024 Annual Report, proxy statement or Notice, or separate copies of proxy materials in the future, contact our transfer agent at (800) 736-3001 or write them at Computershare, P.O. Box 43006, Providence, RI 02940-3006.
If you are currently a shareholder sharing an address with another shareholder and wish to receive only one copy of future proxy materials for your household, please contact Computershare at the above phone number or address.
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FISCAL YEAR 2024 BUSINESS HIGHLIGHTS
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Total Net Sales |
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Automotive net sales grew 17% over the prior year, led by continued momentum in e-Mobility applications
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Industrial net sales grew 7% over the prior year, led by growth in broad-based industrial applications
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Other net sales declined 44% over the prior year, driven by lower demand for consumer and smart home products
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Magnetic sensor sales increased 9% over the prior year
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Power product sales increased 7% over the prior year
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$1,049 million |
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8% growth year-over-year |
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Gross Margins |
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Gross margins for the year on both a GAAP and non-GAAP basis declined slightly due to product and channel mix
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54.8 % |
56.3 % |
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GAAP basis |
Non-GAAP basis (1) |
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GAAP gross margin declined from 56.1% in FY23 to 54.8% in FY24 |
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Net Cash Provided by Operating Activities |
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Net cash provided by operating activities was 17% of total net sales
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$182 million |
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The company ended the year with $222 million in cash, cash equivalents and restricted cash |
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(1) Non-GAAP gross margin is a non-GAAP financial measure. Refer to Appendix A for additional information regarding this measure, including a reconciliation to the most directly comparable GAAP financial measure. |
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Innovation with purpose is the driving force behind everything we do at Allegro, including our commitment to environmental, social and governance (“ESG”) initiatives across the Company. Our ESG strategy revolves around five signature initiatives: (1) maximizing the positive impact of our products, (2) minimizing our impact on the planet, (3) building a diverse and innovative workforce, (4) engaging our supply chain to advance sustainability, and (5) cultivating opportunities in our local communities. By striving to operate responsibly across all facets of our business, we aim to generate long-term value for our ecosystem of employees, customers, supply chain partners, and shareholders.
We are moving the world toward a safer, more sustainable future.
Our ESG strategy aligns with our core values and our commitment to innovate with purpose.
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Our Values |
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Integrity is the foundation of what we do at Allegro. We seek to honor the spirit of our values, doing the right thing for the right reason at all times. |
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Innovate With Purpose We meet each challenge with thoughtful, impactful innovation - which leads to a better tomorrow |
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Collaborate Globally We work together as one team - which leads to the best business decisions |
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Exceed Customer Expectations We anticipate and exceed our customers’ needs - which leads to stronger business partnerships |
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Empower With Trust We encourage and trust employees to make sound decisions - which leads to a strong, enabled workforce |
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Achieve With Excellence We are never satisfied with the status quo - which leads to higher standards of performance |
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Develop Timely Solutions We proactively develop solutions and resolve issues effectively - which leads to greater success |
Guided by our core values, we are committed to innovation with purpose.
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Sustainability |
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We are driving innovation to shape a more efficient and sustainable future. Our solutions empower the development of safe and eco-friendly technologies for tomorrow, starting today. By engineering our products with a focus on minimizing environmental impact and promoting social responsibility, we help enable our customers to tackle global challenges head-on, from reducing carbon emissions and boosting energy efficiency to advancing clean, renewable energy sources. |
Our sensor and power semiconductors address critical global challenges related to energy efficiency, vehicle emissions, and clean and renewable energy. We apply our deep technology know-how to deliver magnetic sensing integrated circuits (“ICs”) and power IC solutions to:
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ENVIRONMENTAL, SOCIAL GOVERNANCE
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Making an Impact: Product Highlights |
We possess a long track record of innovations that have measurably improved the energy efficiency of powertrain, safety and comfort systems.
Two key technologies contributing to avoided emissions in automotive applications are our onboard chargers and DC/DC converters in xEV powertrain, as well as electric power steering (“EPS”) systems enablement. For xEV powertrain, current sensor ICs and high-voltage gate driver ICs enhance vehicle efficiency by reducing ohmic losses and enabling use of GaN or SiC transistors. For EPS, a combination of up to 15 ICs per car enables EPS systems to save upwards of 12 gallons of gas per vehicle per year compared to hydraulic steering systems.
These two technologies in automotive applications have resulted in an estimated cumulative avoided emissions of 8.9 million tons* of CO2 since the beginning of calendar year 2021 through the end of 2023. This number is expected to continue to grow as a result of the projected growth in the hybrid electric vehicle and electric vehicle (“EV”) markets.
Additionally, Allegro’s speed-sensor ICs were used to create the first speed and direction crank sensor for stop/start engine control. These sensors are used to control a variety of functions, including a fuel injection and ignition timing function that increases the efficiency of a vehicle’s gasoline use in miles per gallon by approximately five percent.
* Estimated avoided emissions based on vehicles sold with Allegro products and U.S. Department of Energy data for emissions produced/reduced. Sources included: U.S. Department of Energy Alternative Fuels Data Center: Emissions from Electric Vehicles (https://afdc.energy.gov/vehicles/electric_emissions.html), Automotive News Europe: Electric Steering turns on the Power (https://europe.autonews.com/article/20080303/ANE03/237416432/electric-steering-turns-on-the-power), and market data provided by Strategy Analytics Powered by TechInsights.
Sustainability is at the forefront of Allegro’s approach to semiconductor design and manufacturing. We strive to integrate sustainable practices throughout our supply chain and operations, prioritizing responsible resource use and fostering thriving local communities. Our commitment to social responsibility extends across our supply chain, accompanied by an effort to provide transparent disclosure of the environmental impact of our business activities. By embedding sustainability into many aspects of our processes, we strive to minimize our ecological footprint while upholding ethical business standards.
Additional information on the environmental policies and the codes of conduct listed below can be found on the “Sustainability” section of our website, allegromicro.com/en/about-allegro/corporate-responsibility/sustainability.
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ENVIRONMENTAL, SOCIAL GOVERNANCE
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Corporate Initiatives Certifications |
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Membership Reporting |
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Member of Responsible Business Alliance since 2018
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Disclosure to Carbon Disclosure Project (CDP) since 2018, reporting on Climate Change and Water Security. Our latest CDP submission is publicly available on our website at allegromicro.com/en/about-allegro/corporate-responsibility/sustainability.
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Certifications at our Manufacturing Facility in the Philippines |
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Certified in Quality Management Systems (IATF16949:2016 Automotive, ISO 26262, and ISO 9001)
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Certified in Occupational Health Safety Management System (ISO 45001)
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Certified in Environmental Management Systems (ISO 14001)
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Initiatives Across our Global Sites |
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Infrastructure - Installing energy-conscious and eco-friendly infrastructure where possible in our facilities, such as LED lighting and low-flow water systems, as well as EV charging stations |
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Initiatives at our Manufacturing Facility in the Philippines |
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Energy - Successfully completed several energy saving initiatives, which help saved approximately 4.47 GWh of electricity during fiscal year 2024 |
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The 60kW photovoltaic solar panels at our facility continue to abate our need for externally sourced electricity by approximately 101,500 kWh/year
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The water-cooled chiller for air-conditioning lowers our energy needs by approximately 2.9 GWh/year
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Heat load reduction projects that divert ambient heat, resulting in approximately 810,300 kWh/day lower energy needs
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Interconnection of the site’s vacuum systems, resulting in approximately 580,600 kWh/year lower energy needs
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Lighting optimization and conversion to lower wattage, resulting in approximately 52,000 kWh/year lower energy needs
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Water Waste - Successfully completed two water conservation initiatives, resulting in significant water recycling and reduction of organic acid waste in fiscal year 2024 |
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Recycled approximately 3,780,000 gallons of water from our saw operation and recovery of final risk reject of deionized (DI) water system
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ENVIRONMENTAL, SOCIAL GOVERNANCE
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Social Responsibility |
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We invest in our employee innovators. Our global team collaborates to move the world towards a safer and more sustainable future. That is why we foster a culture of inclusion, development, and engagement. |
At Allegro, we pursue innovation with purpose, and our success stems from the dedication, talent, and commitment of our employees. As an equal opportunity employer, we are committed to fostering a diverse, inclusive, and globally collaborative environment that fuels our innovation. We invest in the growth and development of our existing employees while actively recruiting new talent from a diverse range of backgrounds and experiences across all functions and geographies. The diversity within our teams, coupled with individuals’ unique ideas and contributions, empowers us to work cohesively toward achieving Allegro’s vision and mission.
We are committed to cultivating a diverse workforce comprised of individuals with different backgrounds, passions and skill sets as we collaborate to innovate with purpose. We understand that a holistic commitment to diversity necessitates more than recruiting a diverse range of talent – it requires the cultivation of a workforce that is safe, creative and collaborative and where there are equitable opportunities for every employee. In fiscal year 2024, Allegro’s Diversity, Equity and Inclusion (“DEI”) Council provided comprehensive DEI education and specific annual training on topics such as unconscious bias, inclusive language and microaggressions. The DEI Council also focused on examining equitable hiring practices and providing interview training. We also established a third employee resource group, Veterans@Allegro, joining Women@Allegro and Early@Allegro. We have organizational metrics to monitor senior leadership, management, hiring and technical hiring by gender globally. We measure our population and hiring by race and ethnicity in the U.S.
Percentage of Gender and Racial/Ethnic Group Representation
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Management |
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Technical Staff |
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All Other (Non-
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Gender* |
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M: 73.8% F: 26.2% |
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M: 79.7% F: 20.2% U: 0.1% |
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M: 44.7% F: 55.3% |
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Racial/Ethnic Group (U.S. only) |
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Black |
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0.4 |
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2.8 |
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2.2 |
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Hispanic |
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3.0 |
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2.8 |
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4.3 |
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Asian |
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21.0 |
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28.3 |
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25.1 |
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White |
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75.2 |
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65.3 |
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67.9 |
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Two or More |
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0.4 |
% |
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0.8 |
% |
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0.5 |
% |
* M = Male, F = Female, U = Undeclared
Additionally:
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ENVIRONMENTAL, SOCIAL GOVERNANCE
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Making an Impact: Program Highlights in Fiscal Year 2024 |
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We paid nearly $80K in tuition reimbursement for employees. |
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Our student debt assistance program has made a significant impact, contributing over $730K towards employee student debt reduction since its inception. This year alone, we have provided over $150K in assistance, saving employees both principal and interest on their loans. |
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Nearly 87% of our employees participated in our robust and ever-expanding learning management system, with over 166K course completions. |
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To date, we have supported nearly 90 students in the pursuit of higher education, which equates to over $400K in scholarship awards. |
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Globally we matched nearly $80K in charitable donations. |
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To date, our U.S. Dollars for Doers program has provided nearly $20K in support of organizations where employees have volunteered their personal time. |
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Allegro demonstrated its commitment to humanitarian aid by providing a $10K donation to the Japan Red Cross following a severe earthquake. |
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Allegro’s first global engagement survey resulted in a 93% response rate, representing over 4,300 employees. The survey results measured positively to the industry benchmark in several areas. |
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During fiscal year 2024, our teams recognized and celebrated the achievements of their peers over 500 times using our innovative High-Five program. |
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Community Impact |
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We are committed to being a responsible corporate citizen in communities in which we operate |
Our employees form the core of our organization, and we are committed to nurturing their passions, philanthropic endeavors, and community engagements, while prioritizing the well-being of Allegro employees and their families. While our vision is global, we empower our teams to drive local impact where they live and work. This localized approach is a key component of one of our ESG signature initiatives, aimed at supporting and uplifting our communities through cultivating opportunities for their betterment and advancement. We take pride in supporting the causes championed by our employees and matching their charitable contributions. Some of our community-focused programs include:
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ENVIRONMENTAL, SOCIAL GOVERNANCE
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Governance |
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Our management and Board are committed to furthering our ESG program and are highly engaged in the work to maintain alignment of our long-term strategy and operations with these core values and goals. |
Our ESG Steering Committee leads our sustainability efforts and has executive sponsorship from our SVP, General Counsel and Secretary. The ESG Steering Committee is a cross-functional team comprised of leaders and subject matter experts from across the Company that collaborates with our full-time ESG team to manage and oversee communications about sustainability topics with employees, investors, customers, suppliers, and other stakeholders. In addition, the committee works to monitor and assess our sustainability developments and to expand our awareness of ESG priorities by fostering a culture of commitment to sustainability within Allegro. As part of this work, they consider current and emerging ESG trends that may affect the Company or are otherwise relevant to our organization and stakeholders and make recommendations for how we can address these trends to ensure compliance and the success of our forward-looking initiatives.
On a quarterly basis, senior management reports on key ESG activities to the Board’s Nominating and Corporate Governance Committee (the “NCGC”). The NCGC provides direct oversight on ESG initiatives and reviews regular updates on our ESG strategy. Each year, our Board dedicates one of their scheduled meetings to matters related to the governance and promotion of ESG topics and initiatives at Allegro. The Board is engaged in our ESG strategy and involved in instituting a formal accountability process for our five goals that help inform our ESG strategy: maximize the positive impact of our products; minimize our impact on the planet; engage our supply chain to advance sustainability; build a diverse and innovative workforce; and cultivate opportunities in local communities.
Allegro appointed two accomplished women leaders to its Board in the last nine months. With these additions, three of our 11 Board members are women. This strategic move reflects the Company’s commitment to fostering equity and diversity at all levels of the organization, which aligns with our broader ESG objectives.
Additionally, Allegro formalized its enterprise risk management (ERM) program in fiscal year 2024 to systematically identify and manage the top risks facing the Company, including any ESG risks. Launching the ERM program involved compiling a risk register, evaluating risks based on impact/likelihood, and designing a program to assign risk owners to implement mitigation plans and regularly engage in formal risk review sessions. Under the ERM program, risks are reported quarterly to the Board’s Audit Committee and annually to the Board. An annual risk register review will be conducted to reassess the established baseline. This structured ERM program enables proactive risk management across the company.
Cybersecurity
Our cybersecurity program seeks to foster Allegro employees’ understanding of how and why they must remain vigilant in promoting comprehensive data protection throughout the Company. When it comes to data protection, we know it is up to all of us to do our part to keep Allegro and other stakeholders safe. We also have incident response procedures in place and are compliant with the EU General Data Protection Regulation (GDPR). By maintaining these procedures and a posture of vigilance, we collectively work to protect Allegro employees, data, and resources and promote a culture of data protection throughout the Company. Additionally, our VP, Chief Digital and Information Officer briefs the Board’s Audit Committee quarterly on cybersecurity matters and the Board periodically and as needed.
The Allegro cybersecurity team strives to provide the tools and education required to accomplish our cybersecurity goals. They provide training programs to our employees, host regular awareness campaigns about Company information security policies and security practices, disseminate tips and how-to information, and provide employees with a centralized digital
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ENVIRONMENTAL, SOCIAL GOVERNANCE
cybersecurity portal. We host cybersecurity trainings for our employees. We also routinely conduct unplanned phishing tests.
We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information, and our cybersecurity risk management program is integrated into our overall ERM program. Our cybersecurity team has the duty of carrying out cybersecurity risk assessments to our critical systems and information on a regular basis. The results from risk assessment activities are reviewed to prioritize the mitigation of identified risks, and the need for risk mitigation may influence business or operational strategy, project roadmaps and timelines, or other decision-making, as needed.
In fiscal year 2024, Allegro’s cybersecurity and legal teams engaged in a comprehensive review of the Company’s incident response capabilities and adopted a new cybersecurity incident response plan. The response plan establishes clear guidelines and procedures to detect, respond to, and recover from cyber incidents. Additionally, we have retained outside advisors to assist us in conducting tabletop exercises to evaluate our incident response plan and response capabilities, with our most recent tabletop exercises for our core incident response team and for senior management taking place in early 2024.
Underscoring our commitment to robust cybersecurity practices and data protection, Allegro pursued TISAX (Trusted Information Security Assessment Exchange) certification in fiscal year 2024 and is currently pending formal certification.
We intend to monitor our activities and achievements in these areas and report on them on our ESG webpage located at allegromicro.com/en/about-allegro/corporate-responsibility. We encourage our employees, community members, shareholders and other stakeholders to check this webpage for updates as we work to further our efforts and realize important results in these critical areas. References to websites or policies in this proxy statement are provided for reference and general information only, and the contents of such websites or policies are not incorporated by reference into this filing.
This proxy statement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Certain statements contained in this proxy statement, particularly pertaining to our ESG performance, goals, and initiatives, are subject to additional risks and uncertainties, including regarding gathering and verification of information and related methodological considerations; our ability to implement various initiatives under expected timeframes, cost, and complexity; our dependency on third-parties to provide certain information and to comply with applicable laws and policies; and other unforeseen events or conditions. These factors, as well as others, may cause results to differ materially and adversely from those expressed in any of our forward-looking statements.
Additionally, our discussion of various items herein, including our discussion of ESG matters, may include information that is not necessarily “material” under the federal securities laws for SEC reporting purposes. For many ESG matters, this is informed by various ESG standards and frameworks (including standards for the measurement of underlying data), and the interests of various stakeholders. Much of this information is subject to assumptions, estimates or third-party information that is still evolving and subject to change. Our disclosures or underlying methodologies may evolve as well, including our methodologies for measuring and reporting on avoided emissions, and we cannot guarantee that our approach will align with the preferences of any particular stakeholder. For example, our disclosures based on any standards may change due to revisions in framework requirements, availability or quality of information, changes in our business or applicable government policies, or other factors, some of which may be beyond our control. We also expressly disclaim any duty to update disclosures if our information or methodologies change in the future, except as expressly required by law.
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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS
The Record Date for the Annual Meeting is June 12, 2024. You are entitled to vote at the Annual Meeting only if you were a shareholder at the close of business on the Record Date. Each outstanding share of Common Stock is entitled to one vote for all matters before the Annual Meeting. Holders of Common Stock vote as a single class on any matter that is submitted to a vote of shareholders, unless otherwise required by law or our Third Amended and Restated Certificate of Incorporation. At the close of business on the Record Date, there were 193,784,314 shares of Common Stock outstanding and entitled to vote at the Annual Meeting.
A “registered” holder is a shareholder of the Company that holds shares in his or her own name. A “beneficial” holder is a shareholder of the Company that holds shares in “street name,” meaning the shares are held in the name of a bank, broker, or other nominee on a person’s behalf.
Yes. If your shares are held by a bank, brokerage firm, dealer, or other similar organization, you are considered the beneficial owner of those shares held in “street name.” If your shares are held in street name, these proxy materials are being provided to you by your bank, brokerage firm, or other nominee, along with a voting instruction form, if you received printed copies of our proxy materials. As the beneficial owner, you have the right to direct your bank, brokerage firm, or other nominee how to vote your shares, and the bank, brokerage firm, or other nominee is required to vote your shares in accordance with your instructions. Alternatively, you may vote your shares by attending the Annual Meeting and voting during the virtual Annual Meeting. Please see the section below entitled “ How can I attend the Annual Meeting? ” for instructions on how to attend the virtual Annual Meeting and vote your shares.
A quorum must be present at the Annual Meeting for any business to be conducted. The holders of a majority in voting power of our Common Stock issued and outstanding and entitled to vote, present in person, or by remote communication, if applicable, or represented by proxy, shall constitute a quorum for the transaction of business at the Annual Meeting.
The Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted exclusively by live, online webcast. You are entitled to participate in the Annual Meeting if you were a registered or beneficial holder as of the close of business on the Record Date. No physical meeting will be held.
If you are a registered holder as of the Record Date, you will be able to attend the Annual Meeting online and ask a question or vote during the Annual Meeting by visiting meetnow.global/MSCDKJU. Please follow the instructions on your proxy card that you received. During the Annual Meeting, you will be able to vote your shares electronically by clicking on the “Vote” link on the meeting center site.
If you are a beneficial holder as of the Record Date with shares that are held in “street name” through a bank, broker, or other nominee and want to attend the Annual Meeting online (with the ability to ask a question and/or vote, if you choose to do so), you must register in advance using the following instructions.
To register to attend the Annual Meeting online, you must submit proof of your proxy power (a “Legal Proxy”) reflecting your ownership of the Company’s Common Stock as of the Record Date, along with your name and email address to our transfer agent, Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m. Eastern time on August 5, 2024. You will receive a confirmation of your registration by email after Computershare receives your registration materials.
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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS
Requests for registration should be directed to Computershare using either of the following:
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By email: |
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Forward the email from your bank, broker, or other nominee granting you a Legal Proxy, or attach an image of your Legal Proxy, to: legalproxy@computershare.com |
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By mail: |
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Computershare |
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Allegro MicroSystems, Inc. Legal Proxy |
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P.O. Box 43001 |
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Providence, RI 02940-3001 |
Advance registration for the Annual Meeting is only required if you are a beneficial holder.
It means that your shares are held in more than one account at the transfer agent and/or with banks, brokers or other nominees. Please vote all of your shares. To ensure that all of your shares are voted, for each Notice or set of proxy materials, please submit your proxy by phone, via the Internet, or by signing, dating, and returning the enclosed proxy card in the enclosed envelope.
Whether or not you expect to attend the Annual Meeting online, we urge you to vote your shares as promptly as possible to ensure your representation and the presence of a quorum at the Annual Meeting. If you vote prior to the Annual Meeting, you may still decide to attend the Annual Meeting and vote your shares electronically during the Annual Meeting.
Registered Holders
Registered holders may vote online, by telephone and by mail prior to the Annual Meeting. Registered holders may vote online at www.envisionreports.com/ALGM, 24 hours a day, seven days a week. Registered holders may vote by telephone by calling 1-800-652-8683, 24 hours a day, seven days a week. Registered holders will need the control number included in their Notice or proxy card in order to vote online or by telephone. Registered holders that received a copy of the proxy card by mail may also vote by mail by completing, signing and dating the proxy card and returning it in the prepaid envelope to Proxy Services c/o Computershare Investor Services, P.O. Box 43006, Providence, RI 02940-3006. Registered holders submitting their vote by mail should sign their name exactly as it appears on the proxy card. Votes submitted by proxy cards must be received no later than 11:59 p.m. Eastern time on August 7, 2024.
Registered holders may also vote at the Annual Meeting. Please see the section above entitled “ How can I attend the Annual Meeting? ” for more information about how to attend the Annual Meeting online. During the Annual Meeting, registered Holders that attend will be able to vote their shares electronically by clicking on the “Vote” link on the meeting center site.
Beneficial Holders
If you are a beneficial holder with shares that are held in “street name” through a bank, broker, or other nominee, you will receive instructions on how to vote from the bank, broker, or other nominee. You must follow their instructions in order for your shares to be voted. Internet and telephone voting may also be offered to shareholders owning shares through certain banks, brokers, and other nominees.
Beneficial holders may also vote at the Annual Meeting. Please see the section above entitled “ How can I attend the Annual Meeting? ” for more information about how to attend the Annual Meeting online. During the Annual Meeting, beneficial holders that attend will be able to vote their shares electronically by clicking on the “Vote” link on the meeting center site.
If you are a registered holder, you may revoke your proxy and change your vote:
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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS
Your most recent proxy card or Internet or telephone proxy is the one that is counted. Your attendance at the Annual Meeting by itself will not revoke your proxy unless you give written notice of revocation to the Secretary of the Company before your proxy is voted or you vote online at the Annual Meeting.
If your shares are held in “street name,” you may change or revoke your voting instructions by following the specific directions provided to you by your bank, broker or other nominee, or you may vote online at the Annual Meeting.
A representative of Computershare will act as Inspector of Elections, supervise the voting, decide the validity of proxies, and receive and tabulate proxies. As a matter of policy, we keep confidential all shareholder meeting proxies, ballots and voting tabulations that identify individual shareholders. In addition, the vote of any shareholder is not disclosed except as may be necessary to meet legal requirements.
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote in accordance with the recommendations of the Board. See “ Recommendations of the Board ” above. For beneficial holders, proxies submitted without voting instructions could result in broker non-votes for certain matters. See “ What are broker non-votes and do they count for determining a quorum? ” below for additional information.
We do not know of any other business that will be presented at the Annual Meeting. However, if any other matter properly comes before the shareholders for a vote at the Annual Meeting, the proxy holders named on the Company’s proxy card will have the discretionary authority to vote your shares in accordance with their best judgment.
In order to make the meeting accessible to all shareholders, our Board has decided to hold a virtual Annual Meeting. With this live, online webcast format, we believe we will provide our shareholders with substantially the same opportunities to participate as you would have at an in-person meeting.
The virtual meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most up-to-date version of applicable software and plugins. Please note, Internet Explorer is not a supported browser. Participants should ensure that they have a strong WiFi connection at the location where they intend to participate in the meeting. We encourage you to access the Annual Meeting prior to the start time. If you need further assistance accessing the meeting, you may call 1-888-724-2416.
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QUESTIONS AND ANSWERS ABOUT THE 2024 ANNUAL MEETING OF SHAREHOLDERS
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Proposal |
Votes required |
Effect of Votes Withheld /
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Proposal 1: Election of Directors |
A plurality of the votes cast. This means that the four nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors. |
Votes withheld and broker non-votes will have no effect on the outcome because they are not considered votes cast. |
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Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm |
The affirmative vote of the holders of a majority in voting power of the votes cast. |
Abstentions and broker non-votes, if any, will have no effect on the outcome because they are not considered votes cast. We do not expect any broker non-votes on this proposal. |
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Proposal 3: Advisory Vote on Executive Compensation |
The affirmative vote of the holders of a majority in voting power of the votes cast. |
Abstentions and broker non-votes will have no effect on the outcome because they are not considered votes cast. |
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A “vote withheld,” in the case of the proposal regarding the election of directors, or an “abstention,” in the case of the proposals regarding the ratification of the appointment of PwC as our independent registered public accounting firm and the approval, on an advisory basis, of our executive compensation represent a shareholder’s affirmative choice to decline to vote on such proposal. Votes withheld and abstentions are counted as present and entitled to vote for purposes of determining a quorum. Votes withheld have no effect on the election of directors. Abstentions have no effect on the ratification of the appointment of PwC or the approval, on an advisory basis, of our executive compensation.
Generally, broker non-votes occur when shares held by a broker in “street name” for a beneficial owner are not voted with respect to a particular proposal because the broker: (1) has not received voting instructions from the beneficial owner; and (2) lacks discretionary voting power to vote those shares. A broker is entitled to vote shares held for a beneficial owner on routine matters, such as the ratification of the appointment of PwC as our independent registered public accounting firm, without instructions from the beneficial owner of those shares. On the other hand, absent instructions from the beneficial owner of such shares, a broker is not entitled to vote shares held for a beneficial owner on non-routine matters, such as the election of directors and the approval, on an advisory basis, of our executive compensation. Broker non-votes do count for purposes of determining whether a quorum is present.
We plan to announce preliminary voting results at the Annual Meeting, and we will report the final results in a Current Report on Form 8-K, which we intend to file with the SEC after the Annual Meeting.
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PROPOSALS TO BE VOTED ON
Proposal 1: Election of Directors
We currently have 11 directors on our Board. At the Annual Meeting, four Class I Directors, Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma, are to be elected to hold office until the 2027 Annual Meeting of Shareholders and until each such director’s respective successor is elected and qualified or until each such director’s earlier death, resignation or removal.
The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the four nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors. Votes withheld and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.
As set forth in our Third Amended and Restated Certificate of Incorporation, the Board is currently divided into three classes with staggered, three-year terms. At each annual meeting of shareholders, the successors to directors with expiring terms will be elected to serve from the time of election and qualification until the third annual meeting following election. The current class structure is as follows: Class I, whose term currently expires at the Annual Meeting and whose subsequent term will expire at the 2027 Annual Meeting of Shareholders; Class II, whose term will expire at the 2025 Annual Meeting of Shareholders; and Class III, whose term will expire at the 2026 Annual Meeting of Shareholders. The current Class I Directors are Katsumi Kawashima, Joseph R. Martin, Vineet Nargolwala and Mary G. Puma; the current Class II Directors are Yoshihiro (Zen) Suzuki, David J. Aldrich, Kojiro (Koji) Hatano and Paul Carl (Chip) Schorr IV; and the current Class III Directors are Richard R. Lury, Susan D. Lynch and Jennie M. Raubacher. In preparation for the initial public offering of our Common Stock in 2020 (the “IPO”), we entered into a stockholders agreement with Sanken Electric Co., Ltd. (“Sanken”) and OEP SKNA, L.P. (the “OEP Investor”), a fund affiliated with One Equity Partners (“OEP”). The stockholders agreement was amended and restated by the parties as of June 16, 2022 (as amended and restated, the “Stockholders Agreement”). Pursuant to the rights provided in the Stockholders Agreement, Messrs. Hatano, Kawashima and Lury were each designated by Sanken, and Mary G. Puma was jointly designated by Sanken and the OEP Investor. The OEP Investor’s rights to nominate directors under the Stockholders Agreement passed to the NCGC in February 2024 when the OEP Investor ceased to beneficially own at least five percent of the outstanding shares of Common Stock. As a result, the NCGC designated the other members of the Board. Based on Sanken’s aggregate voting power, we expect that Sanken will control the election of directors to the Board. For more information regarding the Stockholders Agreement, see “ Corporate Governance—Stockholders Agreement ” on page 29.
The division of our Board into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control of our Company. Our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of voting stock of the Company entitled to vote at an election of directors; provided, however, that the directors who were originally designated for nomination in accordance with the Stockholders Agreement may be removed with or without cause, but only in accordance with, and to the extent provided by, the terms of the Stockholders Agreement.
If you submit a proxy but do not indicate any voting instructions, the persons named as proxies will vote the shares of Common Stock represented thereby for the election of each of Messrs. Kawashima, Martin and Nargolwala and Ms. Puma as a Class I Director. In the event that any of the nominees should become unable to serve, or for good cause will not serve, as a director, it is intended that votes will be cast for a substitute nominee designated by the Board, or the Board may elect to reduce its size. The Board has no reason to believe that any of Messrs. Kawashima, Martin or Nargolwala or Ms. Puma will be unable to serve if elected. Each of the nominees has consented to being named in this proxy statement and to serve if elected.
Vote Required
The proposal regarding the election of directors requires the approval of a plurality of the votes cast. This means that the four nominees receiving the highest number of affirmative “FOR” votes will be elected as Class I Directors.
Votes withheld and broker non-votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.
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RECOMMENDATION OF THE BOARD OF DIRECTORS |
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The Board unanimously recommends a vote FOR the election of each of the below Class I Director nominees. |
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15 |
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PROPOSAL ONE: ELECTION OF DIRECTORS
Nominees For Class I Director (terms to expire at the 2027 Annual Meeting)
The principal occupations and business experience, for at least the past five years, of each Class I Director nominee for election at the Annual Meeting are as follows:
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Katsumi Kawashima |
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Age: 59
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Mr. Kawashima has served as a member of our Board since June 2022. Since April 2022, Mr. Kawashima has served as Head of Corporate Design at Sanken. Mr. Kawashima has also served as a Senior Vice President of Sanken since June 2023. Prior to that, he was a Senior Corporate Officer of Sanken from June 2022 to June 2023, and a Corporate Officer of Sanken from June 2021 to June 2022. From April 2021 to March 2022, Mr. Kawashima served as Director of the General Affairs and Human Resources Division at Sanken, and from April 2018 to March 2021, he was the Deputy Director of this same division. Prior to joining Sanken, he was Senior Manager of the Market Planning Division of Resona Holdings, Inc. from April 2016 to March 2018. Mr. Kawashima has served on the board of directors of Sanken since June 2022 and also serves on the board of directors of a number of Sanken affiliates. Mr. Kawashima received his B.S. in Physics from Tokyo University of Science, Tokyo, Japan in 1989. We believe Mr. Kawashima’s institutional knowledge and insight, acquired through numerous years of service to Sanken and its affiliates, make him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: Sanken Electric Co., Ltd. |
PAST FIVE YEARS: None |
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Joseph R. Martin |
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Age: 76 Board Committees : Audit (Chair) NCGC Strategy |
Mr. Martin has served as a member of our Board since 2017. Previously, he served as Co-Chairman of Fairchild Semiconductor Corporation, and prior to that as its Senior Executive Vice President and Chief Financial Officer. He also served as the Vice Chairman of Fairchild’s board of directors. Mr. Martin has also previously served on the board of directors of other public companies, including Azenta Inc. (Chairman), Bionik Labs, ChipPac Inc. (chair of the Audit Committee), Collectors Universe (chair of the Nominating and Governance Committee) and Soitec Semiconductor (chair of the Audit Committee). Mr. Martin also serves on the board of trustees of Embry-Riddle Aeronautical University. Mr. Martin received a B.S. in Aeronautics in 1974 and was awarded an honorary Ph.D. in 2018, both from Embry-Riddle Aeronautical University. Mr. Martin received an M.B.A. from the University of Maine in 1976. Mr. Martin holds an Executive Master’s Professional Certification from the American College of Corporate Directors, a director education and credentialing organization. We believe Mr. Martin’s extensive public company board experience and his knowledge and insight into the semiconductor industry, make him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: None |
PAST FIVE YEARS: Azenta Inc. (until February 2024); Bionik Labs (until 2023); Collectors Universe (until 2020) |
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16 |
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PROPOSAL ONE: ELECTION OF DIRECTORS
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Vineet Nargolwala |
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Age: 51 Board Committee : Strategy |
Mr. Nargolwala has served as our President and Chief Executive Officer and as a member of our Board since joining the Company in June 2022. Mr. Nargolwala is a technology executive with over 25 years of global executive leadership experience. Prior to joining the Company, Mr. Nargolwala previously served as Executive Vice President of Sensing Solutions at Sensata Technologies, a leading industrial technology company that develops sensors and sensor-based solutions for the automotive, heavy vehicle and off-road, industrial, and aerospace industries, from March 2020 to May 2022. Mr. Nargolwala joined Sensata as Vice President, Sensors Americas in February 2013 and was later promoted to Senior Vice President, Performance Sensing, North America, Japan and Korea in April 2016. In February 2019, he was appointed Senior Vice President, General Manager, Global Safety Mobility, and in September 2019, he was appointed Senior Vice President, Sensing Solutions. Prior to Sensata, he was with Honeywell International Inc. (“Honeywell”) for over nine years in business strategy and PL leadership roles of increasing responsibility. Prior to Honeywell, Mr. Nargolwala was at Nortel Networks in product management and engineering roles. He has been a member of the board of Brady Corporation, an international manufacturer and marketer of complete solutions that identify and protect people, products and places, since February 2022. Mr. Nargolwala holds a bachelor’s degree in Electrical Engineering from Maharaja Sayajirao University in Baroda, India, a master’s degree in Electrical Engineering from the University of Texas and a Master of Business Administration from Cornell University. We believe Mr. Nargolwala’s experience and insight, acquired through his over 25 years as a technology executive, make him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: Brady Corporation |
PAST FIVE YEARS: None |
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PROPOSAL ONE: ELECTION OF DIRECTORS
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Mary G. Puma |
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Age: 62 Board Committees : Strategy (Chair) Compensation |
Ms. Puma has served as a member of our Board since October 2023. Ms. Puma has more than 40 years of technology experience, including 25 years in the semiconductor industry. Ms. Puma was the Executive Chairperson of Axcelis Technologies, Inc. (“Axcelis”) from May 2023 until May 2024, and previously served as President and Chief Executive Officer of Axcelis from January 2002 to May 2023. Prior to becoming CEO of Axcelis, she served as the company’s President and Chief Operating Officer beginning in July 2000. In 1998, Ms. Puma was appointed General Manager and Vice President of Axcelis’s predecessor, the Implant Systems Division of Eaton Corporation, a global diversified industrial manufacturer, after having joined in 1996 as general manager of Eaton’s Commercial Controls Division. Prior to Eaton, Ms. Puma spent 15 years in various marketing and general management positions at General Electric Company. Beginning in August 2023, Ms. Puma joined the board of directors of Ciena Corporation, a publicly traded networking systems and software company. Ms. Puma is also a director of SMART Global Holdings, Inc., a publicly traded memory-focused company engaging in the design and development of enterprise solutions. Until her retirement in 2023, Ms. Puma served on the board of directors of Nordson Corporation. Since December 2022, she has served as Chairperson of the Board of Semiconductor Equipment and Materials International, a global industry association serving the manufacturing supply chain for the micro- and nano-electronics industries. Ms. Puma holds a Bachelor of Arts degree in Economics from Tufts University and a Master of Science degree from the MIT Sloan School of Management. We believe Ms. Puma’s extensive experience in our industry, acquired through her over 25 years of service to Axcelis and its predecessor, make her well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: Ciena Corporation; SMART Global Holdings, Inc. |
PAST FIVE YEARS: Axcelis Technologies, Inc. (until May 2024); Nordson Corporation (until 2023) |
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PROPOSAL ONE: ELECTION OF DIRECTORS
Continuing members of the Board:
The principal occupations and business experience, for at least the past five years, of each Class II Director (terms expiring at the 2025 Annual Meeting) and Class III Director (terms expiring at the 2026 Annual Meeting) are as follows:
Class II Directors
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Yoshihiro (Zen) Suzuki |
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Age: 65 Chairman of the Board Board Committee : Strategy |
Mr. Suzuki has served as our Chairman and a member of our Board since 2018 and has served on our Board since 2001. From July 2013 until his retirement in June 2022, Mr. Suzuki served as a director and Senior Vice President at Sanken. Mr. Suzuki previously served as the Chairman and Chief Executive Officer of Polar Semiconductor, LLC (“PSL”) from July 2005 until his retirement in May 2022. In addition, from 2005 until his retirement in May 2022, Mr. Suzuki served as a member of the board of directors of PSL and its predecessor entity. Mr. Suzuki has served as a consultant to PSL since July 2022. From 2013 to 2018, Mr. Suzuki served on the board of directors of Sanken North America Inc. Mr. Suzuki has also served on the board of directors of a variety of other Sanken affiliates and has over 40 years of experience with Sanken and its affiliates. After joining Sanken in 1982, Mr. Suzuki held various senior leadership positions and general management roles, including Chief Executive Officer of Sanken North America, Inc. Mr. Suzuki has also served as an Honorary Advisor at the Institute of Management Studies in Japan since January 2024. Mr. Suzuki received his B.S. in Physics and Engineering Science from Chuo University, Tokyo, Japan in 1982. We believe Mr. Suzuki’s institutional knowledge and insight, acquired through numerous years of service to Sanken and its affiliates, as well as his experience as a member of our Board, make him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: None |
PAST FIVE YEARS: Sanken Electric Co., Ltd. (until 2022) |
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David J. Aldrich |
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Age: 67 Board Committees : Compensation (Chair) NCGC |
Mr. Aldrich has served as a member of our Board since 2021. Mr. Aldrich served in numerous senior leadership positions at Skyworks Solutions, Inc. (“Skyworks”), an innovator of high-performance analog semiconductors connecting people, places and things, including as its Chairman from 2014 to 2021, Executive Chairman from 2016 to 2018, its Chief Executive Officer from 2014 to 2016, and its President and Chief Executive Officer from 2000 to 2014. From 2000 to May 2021, Mr. Aldrich also served as a member of the board of directors of Skyworks. Since 2007, Mr. Aldrich has served as a member of the board of directors of Belden, Inc., a publicly traded manufacturer of networking, connectivity, and cable products, and has served as chairman of the board since 2021. Mr. Aldrich is also currently chairman of the board of indie Semiconductor, a publicly traded automotive semiconductor and software company, a position he has held since 2021 and is a director of Mobix Labs, Inc., a publicly traded semiconductor company developing connectivity solutions, since February 2021. From 2017 until its 2021 acquisition by Cisco Systems, Inc., Mr. Aldrich served as a member of the board of directors of Acacia Communications, Inc., a publicly traded optical networking strategy and technology company. Mr. Aldrich received his B.A. in Political Science from Providence College in 1979 and an M.B.A. from the University of Rhode Island in 1981. We believe that Mr. Aldrich’s knowledge and insight, gained through his executive roles at Skyworks and through his service as a board member of multiple public companies, make him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: Belden, Inc., indie Semiconductor, Inc., Mobix Labs, Inc. |
PAST FIVE YEARS: Acacia Communications, Inc. (until 2021), Skyworks Solutions, Inc. (until 2021) |
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PROPOSAL ONE: ELECTION OF DIRECTORS
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Kojiro (Koji) Hatano |
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Age: 57 |
Mr. Hatano has served as a member of our Board since 2022. Mr. Hatano has served as General Manager of U.S. Business Enhancement for Sanken since April 2022 and has also served as Corporate Officer of Sanken since June 2022. In addition, he has served as Chairman and Chief Executive Officer of PSL since May 2022. Mr. Hatano also served as Manager of Business Performance for the Company from January 2006 until December 2022. In addition, since May 2021, Mr. Hatano has served as a member of the board of directors of PSL, and he has served on the board of directors of Sanken Electric Europe Limited since March 2020. Mr. Hatano received his B.A. in Social Science from Waseda University, Tokyo, Japan in 1991. We believe Mr. Hatano’s institutional knowledge and insight, acquired through numerous years of service to the Company and Sanken and its affiliates, as well as his experience on other company boards, make him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: None |
PAST FIVE YEARS: None |
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Paul Carl (Chip) Schorr IV |
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Age: 57 Board Committee : Strategy |
Mr. Schorr has served as a member of our Board since 2017. Mr. Schorr is the Managing Partner of Niobrara Capital, and founder and Chairman of First Global Reserve (aka Numium). Mr. Schorr is also an investor in and a manager of PS Investment Aggregator, L.P. Mr. Schorr served as a Senior Managing Director at OEP from 2015 until January 2024. From 2011 to 2015, Mr. Schorr served as Chairman and Managing Partner of Augusta Columbia Capital, a private equity firm of which he was a founder, which was acquired by OEP in 2015. In addition, Mr. Schorr was a Senior Managing Director at The Blackstone Group Inc. from 2005 to 2011, where he served as the Global Head of Technology Investing. Mr. Schorr was also a Managing Partner at Citigroup Venture Capital Equity Partners from 1996 to 2005. Throughout his career, Mr. Schorr has served on the boards of directors of numerous companies across a variety of industries. Since 2010, Mr. Schorr has served on the board of directors of Ameritas Mutual Holding Company and Ameritas Life Insurance Corp. Mr. Schorr has also served on the board of directors of Emso Asset Management Limited, a London-based alternative asset manager focused on emerging markets, since 2014. Mr. Schorr served on the board of directors of One Equity Partners Open Water I Corp., a special purpose acquisition company, from 2021 until the company went private in December 2022. Mr. Schorr also serves on the board of directors of various non-profit organizations including Jazz at Lincoln Center, the Whitney Museum in New York City, and the Snowmass Chapel. Mr. Schorr received a B.S.F.S. from The School of Foreign Service of Georgetown University in 1989. Mr. Schorr received his M.B.A. from Harvard Business School in 1993. We believe Mr. Schorr’s extensive experience in leadership positions at financial institutions and his knowledge and insight in the technology sector, as well as his board experience, make him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: None |
PAST FIVE YEARS: One Equity Partners Open Water I Corp. |
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20 |
|
PROPOSAL ONE: ELECTION OF DIRECTORS
Class III Directors
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Richard R. Lury |
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Age: 76 Board Committees : NCGC (Chair) Compensation |
Mr. Lury has served as a member of our Board since 2007. Mr. Lury served on the board of directors of Sanken and various committees from June 2015 to June 2022. Mr. Lury has also served on the board of directors for Hitachi Zosen Corporation, a Japanese industrial and engineering corporation since June 2016. Mr. Lury was previously a partner at Kelley Drye Warren LLP, a New York-based law firm, which he joined in September 1989 and at which he practiced as a member of the Corporate Department and Chair of the Japan Practice Group until his retirement from the firm in 2015. Although retired, Mr. Lury retains Life Partner status with the firm. Mr. Lury received his B.A. in Political Science and International Relations from the University of Pennsylvania in 1969. Mr. Lury received his J.D. from Syracuse University College of Law in 1972. We believe Mr. Lury’s extensive legal expertise as an attorney and his insight gained as a member of the board of directors of Sanken, makes him well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: Hitachi Zosen Corporation |
PAST FIVE YEARS: Sanken Electric Co., Ltd. |
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Susan D. Lynch |
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Age: 62 Board Committee : Audit |
Ms. Lynch has served as a member of our Board since 2021. From August 2019 to September 2023, Ms. Lynch served as the Senior Vice President and Chief Financial Officer at V2X (formerly Vectrus, Inc.). From April 2016 to July 2019, Ms. Lynch was the Executive Vice President and Chief Financial Officer for Sungard Availability Services, which was involved in a pre-negotiated Chapter 11 bankruptcy restructuring in May of 2019. Before joining Sungard AS, from 2007 to 2015, Ms. Lynch was the Executive Vice President and Chief Financial Officer for Hitachi Data Systems (now Hitachi Vantara). From 2005 to 2007, Ms. Lynch was Vice President and Chief Financial Officer of Raytheon Technical Services. Before joining Raytheon, Ms. Lynch held a number of roles of increasing financial responsibility with Honeywell from 1984 to 2005. Ms. Lynch also serves on the board of directors of Onto Innovation Inc., a publicly traded company that designs, develops, manufactures and supports metrology and inspection tools for the semiconductor industry, since March 2024. Ms. Lynch received her B.A. in accounting and business administration from MidAmerica Nazarene University. We believe Ms. Lynch’s knowledge and insight, gained through more than 25 years of financial experience through senior leadership roles in the technology, aerospace and defense, and industrial manufacturing industries make her well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: Onto Innovation Inc. |
PAST FIVE YEARS: None
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21 |
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PROPOSAL ONE: ELECTION OF DIRECTORS
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Jennie M. Raubacher |
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Age: 48 Board Committees : Audit Strategy |
Ms. Raubacher has served on our Board since April 2024. Ms. Raubacher has over 25 years’ experience in investment banking focused on the technology and telecom sectors, and has advised numerous C-suite executives and boards of directors around the world on strategic and financing transactions. Ms. Raubacher served as Managing Director at Wells Fargo Company (“Wells Fargo”), and led Wells Fargo’s global semiconductor and electronics investment banking practice from 2011 until March 2024. Prior to joining Wells Fargo in 2011, Ms. Raubacher was an investment banker focused on the technology, media and telecom sectors from 1998 to 2011 at Lehman Brothers and Barclays Capital (which acquired Lehman Brothers). Ms. Raubacher serves on the Women’s Leadership Council of the GSA (Global Semiconductor Alliance). Ms. Raubacher received her A.B. magna cum laude from Harvard University and her M.B.A. from Stanford University. We believe Ms. Raubacher’s extensive experience in leadership positions at financial institutions and her knowledge and insight in the technology sector make her well qualified to serve as a member of our Board. |
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OTHER PUBLIC COMPANY BOARDS |
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CURRENT: None |
PAST FIVE YEARS: None |
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22 |
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Proposal 2: Ratification of Appointment of Independent Registered Public Accounting Firm
Our Audit Committee has appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for the fiscal year ending March 28, 2025. Our Board has directed that this appointment be submitted to our shareholders for ratification at the Annual Meeting. Although ratification of our appointment of PwC is not required, we value the opinions of our shareholders and believe that shareholder ratification of our appointment is a good corporate governance practice.
PwC has been engaged as our independent registered public accounting firm since June 7, 2022, including for the fiscal year ended March 29, 2024. Prior to that, Grant Thornton LLP served as our independent registered public accounting firm, including for the fiscal year ended March 25, 2022. Neither of the accounting firms nor any of either firm’s members have any direct or indirect financial interest in or any connection with us in any capacity other than as our auditors, providing audit and non-audit related services. We expect representatives of PwC to be present at the Annual Meeting. Representatives of PwC will have an opportunity to make a statement if they so desire and are expected to be available to respond to appropriate questions from shareholders.
In the event that the appointment of PwC is not ratified by the shareholders, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm, but it will not be obligated to do so. Even if the appointment of PwC is ratified, the Audit Committee retains the discretion to appoint a different independent registered public accounting firm at any time if it determines that such a change is in the best interest of the Company.
Changes in Certifying Accountant
On June 7, 2022, our Audit Committee dismissed Grant Thornton LLP as the Company’s independent registered public accounting firm. The reports of Grant Thornton LLP on the Company’s consolidated financial statements and internal control over financial reporting, which were included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 25, 2022, and the report on the Company’s consolidated financial statements, which was included in the Company’s Annual Report on Form 10‑K for the fiscal year ended March 26, 2021, did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the Company’s fiscal years ended March 25, 2022 and March 26, 2021, and the subsequent interim period through June 7, 2022, there were: (i) no disagreements within the meaning of Item 304(a)(1)(iv) of Regulation S-K between the Company and Grant Thornton LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to Grant Thornton LLP’s satisfaction, would have caused Grant Thornton LLP to make reference thereto in Grant Thornton LLP’s reports; and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
We previously provided Grant Thornton LLP with a copy of the above disclosures, as included in our Current Report on Form 8-K filed with the SEC on June 10, 2022, and requested that Grant Thornton LLP furnish us with a letter addressed to the SEC stating whether Grant Thornton LLP agreed with the statements made by us in response to Item 304(a) of Regulation S-K and, if not, stating the respects in which it does not agree. A copy of Grant Thornton LLP’s letter, dated June 9, 2022, is attached as Exhibit 16.1 to that Current Report on Form 8-K.
On June 7, 2022, our Audit Committee approved the engagement of PwC as the Company’s independent registered public accounting firm for the fiscal year ending March 31, 2023. During the Company’s fiscal years ended March 25, 2022 and March 26, 2021, and the subsequent interim period through June 7, 2022, neither the Company nor anyone on its behalf has consulted with PwC regarding: (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that PwC concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing, or financial reporting issue; (ii) any matter that was the subject of a disagreement within the meaning of Item 304(a)(1)(iv) of Regulation S-K; or (iii) any “reportable event” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
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23 |
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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Vote Required
This proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast. Abstentions are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal. Because brokers have discretionary authority to vote on the ratification of the appointment of PwC, we do not expect any broker non-votes in connection with this proposal.
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RECOMMENDATION OF THE BOARD OF DIRECTORS |
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The Board unanimously recommends a vote FOR the Ratification of the Appointment of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for the fiscal year ending March 28, 2025. |
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24 |
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Proposal 3: Advisory Vote on the Company’s Executive Compensation
Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we are providing our shareholders with the opportunity to vote to approve, on a non-binding, advisory basis, the overall compensation of our named executive officers as disclosed in the “ Executive and Director Compensation ” section of this proxy statement. This advisory vote is commonly referred to as “say-on-pay.”
A substantial percentage of our named executive officers’ compensation is directly tied to stock performance and the attainment of financial and other performance measures the Board believes promote long-term shareholder value and position us for long-term success. As described more fully in the Compensation Discussion and Analysis, the mix of fixed and performance-based compensation, the terms of our incentive compensation programs, and the weighting of variable compensation more heavily toward equity awards, are all designed to enable us to attract and retain top talent and align the interests of our executive officers with those of our shareholders, while balancing risk and reward. The Compensation Committee and the Board believe the design of the programs, and the compensation awarded to the named executive officers under the current programs, fulfills these objectives.
Although the vote is advisory and non-binding, the Board and the Compensation Committee will carefully consider the outcome of the vote in connection with their ongoing evaluation of the Company’s compensation programs. We currently intend to hold say-on-pay votes on executive compensation annually until the next vote to determine the frequency of such an advisory vote in 2028. Accordingly, we anticipate the next say-on-pay vote will be held at the Company’s 2025 Annual Meeting of Shareholders.
We are asking our shareholders to approve the compensation of our named executive officers by voting “FOR” the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion, is hereby APPROVED.”
Vote Required
This proposal requires the affirmative vote of the holders of a majority in voting power of the votes cast. Abstentions and broker non‑votes are not considered to be votes cast and, accordingly, will have no effect on the outcome of the vote on this proposal.
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RECOMMENDATION OF THE BOARD OF DIRECTORS |
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The Board unanimously recommends a vote “FOR” the approval, on an advisory basis, of the Company’s executive compensation. |
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25 |
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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The Audit Committee has reviewed the audited consolidated financial statements of the Company for the fiscal year ended March 29, 2024 and has discussed these financial statements with management and PricewaterhouseCoopers LLP, the Company’s independent registered public accounting firm for the fiscal year ended March 29, 2024. The Audit Committee has also discussed with the independent registered public accountants the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission.
The Company’s independent registered public accounting firm also provided the Audit Committee with the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence. In addition, the Audit Committee discussed with the independent registered public accounting firm its independence from the Company.
Based on its discussions with management and the independent registered public accounting firm, and its review of the representations and information provided by management and the independent registered public accounting firm, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10‑K for the fiscal year ended March 29, 2024.
June 12, 2024
Joseph R. Martin (Chair)
Susan D. Lynch
Jennie M. Raubacher
The Audit Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and it shall not otherwise be deemed filed under such Acts.
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26 |
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INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES AND OTHER MATTERS
The following table summarizes the fees of PwC, our independent registered public accounting firm, billed to us for each of the last two fiscal years:
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Fiscal Year Ended |
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|||||
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Fee Category |
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March 29, 2024 |
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March 31, 2023 |
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Audit Fees |
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$ |
2,937,650 |
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|
$ |
2,630,000 |
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Audit-Related Fees |
|
|
285,000 |
|
|
|
— |
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|
Tax Fees |
|
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305,000 |
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|
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— |
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All Other Fees |
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900 |
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|
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9,150 |
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Total Fees |
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$ |
3,528,550 |
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|
$ |
2,639,150 |
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Audit Fees
Audit fees consist of fees billed for professional services performed by PwC for the audit of our annual financial statements and the review of quarterly financial statements and audit services provided in connection with other statutory or regulatory filings.
Audit-Related Fees
Audit-related fees consist of services that are reasonably related to the performance of the audit or review of the Company’s financial statements and related services and which are not reported under “Audit Fees”. Audit-related fees in fiscal year 2024 were for professional services associated with acquisition due diligence.
Tax Fees
Tax fees consist of services for tax compliance and consulting.
All Other Fees
All other fees consist of license fees for an accounting research software license.
Audit Committee Pre-Approval Policy and Procedures
The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit the Company’s financial statements. The Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accountants.
On an ongoing basis, management communicates specific projects and categories of services for which the advance approval of the Audit Committee is requested. The Audit Committee reviews these requests and advises management if the Audit Committee approves the engagement of the independent registered public accountants. On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services as compared to the approved amounts. The Audit Committee may also delegate the ability to pre-approve audit and permitted non-audit services to a subcommittee consisting of one or more members, provided that such pre-approvals are reported on at a subsequent Audit Committee meeting. All services performed for the fiscal year ended March 29, 2024 were pre-approved by the Audit Committee.
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27 |
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CORPORATE GOVERNANCE
General
Our Board has adopted Corporate Governance Guidelines, a Code of Business Conduct and Ethics, and charters for our NCGC, Audit Committee, Compensation Committee, and Strategy Committee to assist the Board in the exercise of its responsibilities and to serve as a framework for the effective governance of the Company. You can access our current committee charters, our Corporate Governance Guidelines, and our Code of Business Conduct and Ethics in the “Governance” section under “Documents Charters” in the investor relations section of our corporate website located at investors.allegromicro.com , or by writing to our Secretary at our offices at 955 Perimeter Road, Manchester, New Hampshire, 03103.
Board Composition
Our business and affairs are managed under the direction of our Board. Our Board currently consists of 11 members: Vineet Nargolwala, Yoshihiro (Zen) Suzuki, David J. Aldrich, Kojiro (Koji) Hatano, Katsumi Kawashima, Richard R. Lury, Susan D. Lynch, Joseph R. Martin, Mary G. Puma, Jennie M. Raubacher and Paul Carl (Chip) Schorr IV. Our Board is divided into three classes, with the directors in each class serving for a three-year term, and one class being elected each year by our shareholders.
When considering whether directors have the experience, qualifications, attributes or skills, taken as a whole, to enable our Board to satisfy its oversight responsibilities effectively in light of our business and structure, our Board focuses primarily on each person’s background and experience, as reflected in the information discussed in each director’s individual biography set forth in Proposal One above and in the director skills and experience matrix set forth below. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business.
Board Skills and Experience Matrix
The NCGC regularly reviews the skills, experience and background that it believes are desirable to be represented on the Board. The following identifies some of these key qualifications and skills and includes which directors possess these skills: board skills and experience matrix experience, skills or director) automotive industry senior management (public or private) finance / accounting international business legal/ regulatory / compliance corporate governance and public company board semiconductor / technology industries sales marketing operations / manufacturing / supply chain esg / climate / sustainability key no experience some experience substantial experience expert-level experience
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28 |
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CORPORATE GOVERNANCE
Stockholders Agreement
In connection with our IPO, we entered into a stockholders agreement with certain stockholders of the Company, including Sanken and the OEP Investor. The stockholders agreement was amended and restated by the parties as of June 16, 2022 (the amended and restated agreement is referred to in this proxy statement as the “Stockholders Agreement”). Pursuant to the Stockholders Agreement, the parties agreed that:
Pursuant to the Stockholders Agreement, Sanken generally has the right to remove and replace directors that it has designated. Each of Sanken and the OEP Investor also agreed to vote, or cause to be voted, all of their outstanding shares of our Common Stock at any annual or special meeting of shareholders in which directors are elected, and to otherwise take all necessary action (as defined in the Stockholders Agreement) so as to cause the election or appointment of the designees described above. Additionally, pursuant to the Stockholders Agreement, the Company has agreed to take all commercially reasonable actions to cause (1) our Board to be comprised of the number of directors described above; (2) the individuals designated in accordance with the terms of the Stockholders Agreement to be included in the slate of nominees to be elected at the next annual or special meeting of our shareholders at which directors are to be elected, and at each annual meeting of our shareholders thereafter at which a director’s term expires; and (3) the individuals designated in accordance with the terms of the Stockholders Agreement to fill the applicable vacancies on our Board. The Stockholders Agreement allows for our Board to reject the nomination, appointment or election of a particular director if such nomination, appointment or election would constitute a breach of the Board’s fiduciary duties to our shareholders or does not otherwise comply with any requirements of our Third Amended and Restated Certificate of Incorporation or our Second Amended and Restated Bylaws (the “Bylaws”).
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29 |
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CORPORATE GOVERNANCE
In addition, the Stockholders Agreement provides Sanken with a consent right (subject to certain ownership minimums) over our entry into any transaction with the OEP Investor, any of their respective affiliates or any of our affiliates. The Stockholders Agreement also includes a covenant between Sanken and the OEP Investor that gives the OEP Investor the right to require Sanken to vote all of its shares in favor of any matter that our Board has determined is advisable and in the best interests of the shareholders and has recommended that the shareholders adopt. The Stockholders Agreement further provides that neither Sanken nor the OEP Investor will directly sell a portion of its Common Stock representing greater than 10% of our outstanding shares of Common Stock to a material competitor of the Company or of the other shareholder in a privately negotiated sale solely between such selling shareholder and such competitor, without the prior written consent of the OEP Investor (in the case of a sale by Sanken) or Sanken (in the case of a sale by the OEP Investor).
The Stockholders Agreement will terminate upon the earlier to occur of (a) each of (i) Sanken and its affiliates and (ii) the OEP Investor and its affiliates ceasing to own any shares of our Common Stock, and (b) the unanimous written consent of the parties thereto. In addition, the rights and obligations of Sanken and the OEP Investor under the Stockholders Agreement will terminate upon Sanken and its affiliates (in the case of Sanken) or the OEP Investor and its affiliates (in the case of the OEP Investor) ceasing to own any shares of our Common Stock. Notwithstanding the foregoing, because the OEP Investor and its affiliates cease to beneficially own, directly or indirectly, at least five percent (5%) of the issued and outstanding shares of Common Stock, any right or benefit to which the OEP Investor was entitled as a result of holding at least five percent (5%) of the issued and outstanding shares of Common Stock automatically became a right or benefit of the NCGC for so long as the Stockholders Agreement remains in effect, and the NCGC has the right to enforce any such rights or benefits mutatis mutandis as though it were the OEP Investor under any applicable provision (but without regard to any share ownership requirements set forth therein), leaving all of Sanken’s and the Company’s obligations in respect of any such provisions in full force and effect. Further, if the OEP Investor ceases to own any shares of Common Stock, the Stockholders Agreement shall remain in effect, and all other rights and obligations of the OEP Investor and its affiliates shall automatically become a right or obligation of the NCGC for so long as the Stockholders Agreement remains in effect, and the NCGC shall have the right to enforce any such rights mutatis mutandis as though it were the OEP Investor under any applicable provision, and accordingly all of Sanken’s and the Company’s obligations in respect of any such provisions shall remain in full force and effect.
Director Independence
Our Common Stock is listed on the Nasdaq Global Select Market (“Nasdaq”). Under Nasdaq rules, a director will only qualify as an “independent director” if that company’s board of directors affirmatively determines that such person does not have a relationship with the company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Our Board undertook a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise that director’s ability to exercise independent judgment in carrying out that director’s responsibilities. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board has determined that none of David J. Aldrich, Richard R. Lury, Susan D. Lynch, Joseph R. Martin, Mary G. Puma and Jennie M. Raubacher, representing six of our 11 directors, has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under Nasdaq rules. Additionally, Paul Carl (Chip) Schorr IV was independent during fiscal year 2024, and Andrew G. Dunn was independent during the period he served on the Board in fiscal year 2024.
In making these determinations, our Board considered the current and prior relationships that each director has with our Company and all other facts and circumstances our Board deemed relevant in determining their independence, including their beneficial ownership of our capital stock and relationships with certain of our significant shareholders, and the transactions involving them described in the section entitled “ Certain Relationships and Related Person Transactions. ”
Director Candidates
Other than director candidates designated by Sanken pursuant to the Stockholders Agreement, the NCGC is primarily responsible for searching for qualified director candidates for election to the Board and filling vacancies on the Board. To facilitate the search process, the NCGC may solicit current directors and executives of the Company for the names of potentially qualified candidates. The NCGC may also consult with outside advisors or retain search firms to assist in the search for qualified candidates or consider director candidates recommended by our shareholders. Once potential candidates are identified, the NCGC reviews the backgrounds of those candidates, evaluates candidates’ independence
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30 |
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CORPORATE GOVERNANCE
from the Company and potential conflicts of interest and determines if candidates meet the qualifications desired by the NCGC for candidates for election as a director. Mary Puma , who was elected to the Board in October 2024 and jointly designated by Sanken and the OEP Investor under the Stockholders Agreement, was identified as a potential director candidate and presented to the NCGC and the Board by a third-party recruiting firm, which was engaged by the NCGC to assist the NCGC in (i) identifying director candidates that meet the Company’s director qualifications set forth below, (ii) coordinating interviews with those qualified candidates selected by the NCGC for further consideration, and (iii) completing the due diligence work of the NCGC, as needed. Once identified as a candidate, the NCGC evaluated Ms. Puma following the process described below and recommended that she be elected to the Board.
In evaluating the suitability of individual candidates (both new candidates and current Board members), the NCGC, in recommending candidates for election, and the Board, in approving (and, in the case of vacancies, appointing) such candidates, may take into account many factors, including: personal and professional integrity, ethics and values; experience in corporate management, such as serving as an officer or former officer of a publicly held company; the categories of skills and experience identified in the director skills and experience matrix; strong finance experience; relevant social policy concerns; experience relevant to the Company’s industry; experience as a board member or executive officer of another publicly held company; relevant academic expertise or other proficiency in an area of the Company’s operations; diversity of expertise and experience in substantive matters pertaining to the Company’s business relative to other Board members; diversity of background and perspective, including, but not limited to, with respect to age, gender, race, place of residence and specialized experience; practical and mature business judgment, including, but not limited to, the ability to make independent analytical inquiries; and any other relevant qualifications, attributes or skills. The Board evaluates each individual in the context of the Board as a whole, with the objective of assembling a group that can best perpetuate the success of the business and represent shareholder interests through the exercise of sound judgment using its diversity of experience in these various areas. In determining whether to recommend a director for re-election, the NCGC may also consider the director’s past attendance at meetings and participation in and contributions to the activities of the Board.
Shareholders may recommend individuals to the NCGC for consideration as potential director candidates by submitting the names of the recommended individuals, together with appropriate biographical information and background materials, to the NCGC, c/o Secretary, Allegro MicroSystems, Inc., 955 Perimeter Road, Manchester, New Hampshire, 03103. In the event there is a vacancy, and assuming that appropriate biographical and background material has been provided on a timely basis, the NCGC will evaluate shareholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.
Communications from Shareholders
The Board will give appropriate attention to written communications that are submitted by shareholders and will respond if and as appropriate. Our Secretary is primarily responsible for monitoring communications from shareholders and for providing copies or summaries to the directors as our Secretary considers appropriate.
Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that our Secretary considers to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs or personal grievances. Shareholders who wish to send communications on any topic to the Board should address such communications to the Board of Directors in writing: c/o Secretary, Allegro MicroSystems, Inc. 955 Perimeter Road, Manchester, New Hampshire, 03103.
Board Leadership Structure and Role in Risk Oversight
Our Bylaws and Corporate Governance Guidelines provide our Board with flexibility to combine or separate the positions of Chairman of the Board and Chief Executive Officer in accordance with its determination that utilizing one or the other structure would be in the best interests of our Company. Currently, the roles are separated, with Yoshihiro Suzuki serving as Chairman of the Board and Vineet Nargolwala serving as President and Chief Executive Officer and as a director. Our Board has determined that separating the roles of Chairman of the Board and Chief Executive Officer allows our Chief Executive Officer to focus on the strategic management of our day-to-day business, while allowing the Chairman to focus on leading the Board in its fundamental role of providing advice to, and independently overseeing, management. The Board recognizes the time, effort, and energy that the Chief Executive Officer is required to devote to the position in the current business environment, as well as the commitment required to serve as our Chairman. The Board believes that having separate positions, with a non-executive director serving as the Chairman, is the appropriate leadership structure for our Company at this time and allows the Board to fulfill its role with appropriate independence. For these reasons and because
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31 |
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CORPORATE GOVERNANCE
of the strong leadership of Mr. Suzuki and Mr. Nargolwala, our Board has concluded that our current leadership structure is appropriate at this time.
However, our Board will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate. Our Corporate Governance Guidelines provide that whenever our Chairman of the Board is also a member of management or is a director that does not otherwise qualify as an independent director, the independent directors may elect a lead director. The Board does not currently have a lead director.
Our Board has an active role, as a whole and also at the committee level, in overseeing the management of our risks. Our Board is responsible for overseeing our risk management process. Our Board focuses on our general risk management strategy, the most significant risks facing us, and oversees the implementation of risk mitigation strategies by management. Our Audit Committee is also responsible for discussing our policies with respect to risk assessment and risk management and is responsible for overseeing the management of risks relating to accounting matters and financial reporting. Our Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements. Our NCGC is responsible for overseeing the management of risks associated with the independence of our Board and potential conflicts of interest. Although each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through discussions with committee members and regular reports from management about such risks, as well as the actions taken by management to adequately address those risks.
Code of Business Conduct and Ethics
Our Board has adopted a written Code of Business Conduct and Ethics that applies to our directors, officers and employees (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions). A copy of the Code of Business Conduct and Ethics is posted on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents Charters.” In addition, we have or intend to post on our website all disclosures that are required by law or Nasdaq rules concerning any amendments to, or waivers from, any provision of the code.
Attendance by Members of the Board at Meetings
There were five meetings of the full Board during the fiscal year ended March 29, 2024, not including special meetings convened in which only a subset of the Board were invited participants. During the fiscal year ended March 29, 2024, each director attended at least 75% of the aggregate of (i) all meetings of the Board and (ii) all meetings of the committees on which the director served during the period in which he or she served as a director.
Under our Corporate Governance Guidelines, which are available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents Charters,” a director is expected to spend the time and effort necessary to properly discharge his or her responsibilities. Accordingly, a director is expected to regularly prepare for and attend meetings of the Board and all committees on which the director serves (including separate meetings of the non-management and independent directors), with the understanding that, on occasion, a director may be unable to attend a meeting. A director who is unable to attend a meeting of the Board or a committee of the Board is expected to notify the Chairman of the Board or the chair of the appropriate committee in advance of such meeting, and, whenever possible, participate in such meeting via teleconference in the case of an in-person meeting. We do not maintain a formal policy regarding director attendance at the Annual Meeting; however, it is expected that directors will attend, absent compelling circumstances. The 2023 virtual annual meeting was attended by Messrs. Suzuki, Aldrich, Hatano, Kawashima and Nargolwala and Ms. Lynch.
|
|
32 |
|
COMMITTEES OF THE BOARD
Our Board has established four standing committees — Audit, Compensation, NCGC, and Strategy — each of which operates under a written charter that has been approved by our Board.
The current members of each of the Board committees and committee chairs are set forth in the following chart.
|
Name |
|
Audit |
|
Compensation |
|
Nominating and
|
|
Strategy |
|
David J. Aldrich |
|
|
|
Chair |
|
X |
|
|
|
Richard R. Lury |
|
|
|
X |
|
Chair |
|
|
|
Susan D. Lynch |
|
X |
|
|
|
|
|
|
|
Joseph R. Martin |
|
Chair |
|
|
|
X |
|
X |
|
Vineet Nargolwala |
|
|
|
|
|
|
|
X |
|
Mary G. Puma |
|
|
|
X |
|
|
|
Chair |
|
Jennie M. Raubacher |
|
X |
|
|
|
|
|
X |
|
Paul Carl (Chip) Schorr IV |
|
|
|
|
|
|
|
X |
|
Yoshihiro (Zen) Suzuki |
|
|
|
|
|
|
|
X |
|
Number of meetings in fiscal year 2024* |
|
14 |
|
9 |
|
5 |
|
5 |
* Does not include special committee meetings convened for specific purposes
Audit Committee
Our Audit Committee’s responsibilities include:
In addition to the foregoing, the Audit Committee is responsible under our Whistleblower Policy for receiving reports on and evaluating reported concerns, not just those related to accounting, auditing or internal controls.
The Audit Committee charter is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents Charters.” The members of the Audit Committee are Joseph R. Martin, Susan D. Lynch, and Jennie M. Raubacher. Mr. Martin serves as the chair of the Audit Committee. Our Board has affirmatively determined that each of Mr. Martin and Mses. Lynch and Raubacher qualifies as an “independent director” for purposes of serving on the Audit Committee under Rule 10A-3 under the Exchange Act and Nasdaq rules.
The members of our Audit Committee meet the requirements for financial literacy under the applicable Nasdaq rules. In addition, our Board has determined that each of Mr. Martin and Mses. Lynch and Raubacher qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K.
|
|
33 |
|
COMMITTEES OF THE BOARD
Compensation Committee
Our Compensation Committee is responsible for assisting the Board in the discharge of its responsibilities relating to the compensation of our executive officers, including the compensation of the named executive officers identified on page 37 of this proxy statement. Our Compensation Committee’s responsibilities include:
Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees, as appropriate. To the extent permitted by and consistent with applicable law and the provisions of a given equity-based plan, the Compensation Committee may delegate to one or more executive officers of the Company the power to grant options or other stock or other equity-based awards pursuant to equity-based plan to employees of the Company or any subsidiary of the Company who are not officers (as defined in Rule 16a-1(f) under the Exchange Act) or directors of the Company. The Compensation Committee may consider, in its discretion, the Chief Executive Officer’s recommendations when making decisions regarding the compensation of non-employee directors and executive officers (other than the Chief Executive Officer). Pursuant to the Compensation Committee’s charter, which is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents Charters,” the Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. In the fiscal year ended March 29, 2024, the Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”) to provide guidance in reviewing our executive compensation program, including the composition of our peer group. Meridian consulted with the members of our management regarding various aspects of executive and director compensation, including with respect to our long-term incentive program.
The members of our Compensation Committee are David J. Aldrich, Richard R. Lury and Mary G. Puma. Mr. Aldrich serves as the chair of the Compensation Committee. Our Board has determined that each of Messrs. Aldrich and Lury and Ms. Puma qualifies as an “independent director” for purposes of serving on the Compensation Committee under Nasdaq rules, including the additional independence considerations for members of a compensation committee, and are “non-employee directors” as defined in Rule 16b-3 of the Exchange Act.
Compensation Committee Interlocks and Insider Participation
During all or a portion of our fiscal year ending March 29, 2024, Richard R. Lury, Mary G. Puma and Paul Carl (Chip) Schorr IV served on our Compensation Committee. During the fiscal year ended March 29, 2024, no such member of our Compensation Committee was an officer or employee of the Company, was formerly an officer of the Company or had related person transactions with the Company that required disclosure. During the fiscal year ended March 29, 2024, none of the Company’s executive officers served on the board of directors or the compensation committee of any other entity that had one or more of its executive officers serving on our Board or Compensation Committee.
|
|
34 |
|
COMMITTEES OF THE BOARD
Nominating and Corporate Governance Committee
Our NCGC’s responsibilities include:
Pursuant to the NCGC charter, which is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents Charters,” the NCGC has the authority to retain or obtain the advice of independent legal counsel and other advisors to assist in carrying out its responsibilities. The NCGC leads a biennial evaluation of our Board and its committees. The next evaluation of the Board and its committees is scheduled to place in fiscal year 2025.
The members of the NCGC are Richard R. Lury, David J. Aldrich and Joseph R. Martin. Mr. Lury serves as the chair of the NCGC. Our Board has determined that each of Messrs. Aldrich, Lury and Martin qualifies as an “independent director” under Nasdaq rules.
Strategy Committee
Our Strategy Committee’s responsibilities include:
The Strategy Committee’s charter is available on our investor relations website at investors.allegromicro.com in the “Governance” section under “Documents Charters.” The members of our Strategy Committee are Mary G. Puma, Joseph R. Martin, Vineet Nargolwala, Jennie M. Raubacher, Paul Carl (Chip) Schorr IV and Yoshihiro (Zen) Suzuki. Ms. Puma serves as the chair of the Strategy Committee.
Shareholder Engagement
We value our shareholders’ interests. We maintain an active dialogue with our shareholders to ensure we understand issues that are important to our shareholders and address their interests in a meaningful and effective way. We engage with our shareholders on a regular basis to discuss a range of topics, including our performance, strategy, risk management, compensation practices and ESG issues.
|
|
35 |
|
COMMITTEES OF THE BOARD
Board Diversity Matrix
The table below provides certain information with respect to the composition of our Board. Each of the categories listed in the table has the meaning ascribed to it in Nasdaq Listing Rule 5605(f).
|
Board Diversity Matrix (as of June 26, 2024) |
||||
|
Total number of directors |
|
|
11 |
|
|
|
Female |
Male |
Non-Binary |
Did Not Disclose Gender |
|
Part I: Gender Identity |
|
|
|
|
|
Directors |
3 |
8 |
- |
- |
|
Part II: Demographic Background |
|
|
|
|
|
African American or Black |
- |
- |
- |
- |
|
Alaskan Native or Native American |
- |
- |
- |
- |
|
Asian |
1 |
4 |
- |
- |
|
Hispanic or Latinx |
- |
- |
- |
- |
|
Native Hawaiian or Pacific Islander |
- |
- |
- |
- |
|
White |
2 |
4 |
- |
- |
|
Two or More Races or Ethnicities |
- |
- |
- |
- |
|
LGBTQ+ |
|
|
- |
|
|
Did Not Disclose Demographic Background |
|
|
- |
|
Board Composition
The following charts show the composition of the 11 members of our Board of Directors by age, tenure, gender, and racial or ethnic diversity.
|
Age |
Tenure |
Gender |
Race / Ethnicity |
|
|
(in years) |
|
|
70s 18% 40s 10% 50s 36% 60s 36% 4 to 8 36% 8+ 18% 1 to 3 46% female 9% male 91% racially or ethnically diverse 45% not racially or ethnically diverse 55%
60s 70s 40s 50s 36% 18% 10% 36% 8+ 4 to 8 0 to 3 18% 18% 64% female male 27% 73%racially or ethnically diverse not racially or ethnically diverse 45% 555
|
|
36 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes the philosophy, policies, practices, and material decisions underlying the compensation reported in the executive compensation tables included in this proxy statement for the following executive officers of the Company (the “NEOs” or “named executive officers”):
|
Executive Officers |
|
|
Vineet Nargolwala |
President and Chief Executive Officer (the “CEO”) |
|
Derek P. D’Antilio |
Senior Vice President, Chief Financial Officer and Treasurer 1 |
|
Michael C. Doogue |
Senior Vice President, Chief Technology Officer |
|
Max R. Glover |
Senior Vice President of Worldwide Sales |
|
Sharon S. Briansky |
Senior Vice President, General Counsel and Secretary |
1. Following the end of the 2024 fiscal year, Mr. D'Antilio was promoted to Executive Vice President, Chief Financial Officer and Treasurer, effective in June 2024.
The total compensation of each NEO is reported in the Fiscal Year 2024 Summary Compensation Table presented on page 53 of this proxy statement.
Executive Summary
2024 Business Results
Allegro delivered record fiscal year 2024 sales of more than $1 billion, a company first, representing 8% year-over-year growth. We also achieved record level design wins of more than $1 billion. E-Mobility, which includes the increasing electrification of vehicles and higher adoption of advanced driver assistance systems and features, continues to drive Allegro’s above-market growth and accounted for more than half of fiscal year 2024 design wins. Emphasizing our ongoing commitment to innovation, since our IPO, we kicked off a record number of products in fiscal year 2024, while introducing over thirty new products to the market, including initial products in our Power-Thru TM isolated gate driver portfolio. We also extended our leadership position in magnetic sensing with our acquisition of Crocus Technology International Corp. and are seeing strong interest from customers for our highly differentiated XtremeSense TM TMR technology.
The following sets forth certain details of our financial results for fiscal year 2024 and the returns delivered to shareholders, compared to certain benchmarks, for fiscal year 2024 and the year-over-year change from fiscal year 2023:
|
|
|
Revenue
|
|
GAAP Gross Margin |
|
Non-GAAP Gross Margin 1 |
|
GAAP Diluted EPS |
|
EBITDA
|
|
Adjusted EBITDA
|
|
Non-GAAP Diluted EPS 1 |
|
Fiscal Year 2024 Result |
|
$1,049.4 |
|
54.8% |
|
56.3% |
|
$0.78 |
|
$273.8 |
|
$364.2 |
|
$1.35 |
|
Year-Over-Year Change |
|
8% |
|
(130) bps |
|
(50) bps |
|
(20)% |
|
4% |
|
11% |
|
5% |
The following compares, for the period beginning October 29, 2020, the initial trading date of our Common Stock on Nasdaq, and ending on March 29, 2024, the last day of our fiscal year 2024, the cumulative total stockholder return for our Common Stock, the Nasdaq Composite Index and the Philadelphia Semiconductor Index (the “SOX Index”), and assumes reinvestment of any dividends. The shareholder return in the table below is not necessarily indicative of, nor is it intended to forecast, the potential future performance of our Common Stock, and we do not make or endorse any predictions as to future shareholder returns. We selected these comparative groups due to industry similarities and the fact that they include several direct competitors.
|
|
37 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
|
Shareholder value creation |
|
October 29, 2020 |
|
|
March 26, 2021 |
|
|
March 25, 2022 |
|
|
March 31, 2023 |
|
|
March 29, 2024 |
|
|||||
|
Allegro’s Result |
|
$ |
100.00 |
|
|
$ |
142.77 |
|
|
$ |
164.86 |
|
|
$ |
271.13 |
|
|
$ |
152.32 |
|
|
Nasdaq Composite Index |
|
$ |
100.00 |
|
|
$ |
117.46 |
|
|
$ |
126.67 |
|
|
$ |
109.26 |
|
|
$ |
146.43 |
|
|
Philadelphia Semiconductor Sector Result |
|
$ |
100.00 |
|
|
$ |
136.02 |
|
|
$ |
154.37 |
|
|
$ |
141.48 |
|
|
$ |
214.80 |
|
Important 2024 Compensation Actions
Our Compensation Committee, which consists entirely of independent directors, sets the compensation of our NEOs. In fiscal year 2024, the Compensation Committee took the following actions with respect to the compensation of our NEOs:
As illustrated below, our executive compensation program utilizes annual and long-term incentive awards, including awards that are contingent on Company performance relative to our key performance metrics. The pay mix charts set forth below are based on target compensation and include annualized base salary, target annual bonus under the AIP, and annual long-term equity-based awards at target. The “Other NEO” average includes Messrs. D’Antilio, Doogue and Glover, and Ms. Briansky. variable, at risk compensation 90% base salary aip (Target) lti (annual equity award target fy2024 ceo compensation 78% 10% 12% 40% 60% fy2024 ceo target lti psus rsus variable, at risk compensation 82% fy2024 other neo avg compensation 68% 18% 14% base salary aip (target) lti (annual equity award target) 40% 60$ fy2024 other neo avg lti psus rsus
Compensation Philosophy and Objectives
The overall objective of our compensation program is to encourage and reward the creation of sustainable, long-term value for our stakeholders. We pursue this objective via:
|
|
38 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Governance and Best Practices
We are committed to maintaining strong governance standards with respect to our compensation programs, procedures, and practices. For example:
|
|
What we do |
|
√ |
Our executive compensation decisions are made by the non-employee members of our Board or by our Compensation Committee, which is made up exclusively of independent members. |
|
√ |
Our Compensation Committee has retained an independent executive compensation consulting firm to provide objective analysis, advice and information. |
|
√ |
We make a significant portion of each NEO’s overall compensation dependent on our performance measures against pre-determined targets for short- and long-term financial performance measures, targets that we believe are challenging, yet achievable. |
|
√ |
We impose a limit on the maximum pool funding under our AIP and cap payouts on our PSUs, including a cap on TSR-based metrics at 100% of target for instances of negative absolute TSR. |
|
√ |
We provide a significant portion of each NEO’s overall compensation opportunity in the form of at-risk, equity-based incentive awards to establish a strong link between an NEO’s compensation and our stock price performance. |
|
√ |
Our NEOs and members of our Board who receive compensation from the Company for their Board service are subject to robust stock ownership guidelines. |
|
√ |
Our Policy for Recovery of Erroneously Awarded Compensation (the “Clawback Policy”) provides for recovery of incentive-based compensation received by covered officers that exceeds the amount of incentive-based compensation that would have been received based on a restated financial measure in the event of a financial restatement. |
|
√ |
We conduct an annual “say-on-pay” vote. |
|
|
What we don’t do |
|
X |
We do not provide our NEOs with material executive perquisites. |
|
X |
We do not permit hedging or pledging of the Company’s equity securities by any officers, directors, or employees. |
|
|
39 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
|
X |
We do not provide any tax gross ups to our NEOs, including in the event of a change in control of the Company (a “change in control”) or otherwise. |
|
X |
We do not provide for single-trigger vesting of unvested equity awards in the event of a change in control. |
|
X |
We currently have no outstanding stock option awards, but if we choose to grant option awards in the future, we do not permit the repricing or back-dating of stock option awards. |
Role of the Compensation Committee, Compensation Consultant and Management
In setting executive compensation, the Compensation Committee considers a number of factors, including the CEO’s recommendations (other than with respect to his own compensation), the recommendations and competitive market data and analysis provided by the Compensation Committee’s independent compensation consultant, Company performance and each executive’s impact on that performance, each executive’s relative scope of responsibility and potential, each executive’s individual performance and demonstrated leadership, and each executive’s professional experience and tenure with the Company. The Compensation Committee also considers prior fiscal year adjustments to executive compensation, historical payments under our AIP and our historical equity award grant practices. The Compensation Committee has the final authority to approve annual compensation packages for all executives, with the exception of the compensation for the CEO, which the Compensation Committee recommends to the non-employee members of the Board for approval.
Prior to the start of each fiscal year, we develop Company performance metrics aligned with our annual operating plan for our employees, including our NEOs. These goals represent key performance objectives that are incorporated into the AIP framework and then submitted to the Compensation Committee for consideration and approval. After our fiscal year-end financial results are available, the Compensation Committee approves annual bonus payout amounts under our AIP for our executives for the just-completed fiscal year, with the exception of the annual bonus payout amount for the CEO, which the Compensation Committee recommends to the non-employee members of the Board for approval.
The Compensation Committee has engaged Meridian Compensation Partners, LLC (“Meridian”), an independent compensation consulting firm, to provide research and analysis and to make recommendations on the form and level of executive compensation. The Compensation Committee sought input from Meridian on executive compensation matters for the 2024 fiscal year, including the design and competitive position of our executive compensation program, our peer group (see below for additional information on our peer group), appropriate compensation levels, and evolving compensation trends.
Based on its consideration of the various factors set forth in the rules promulgated by the SEC and Nasdaq rules, the Compensation Committee has determined that the work performed by Meridian has not raised any conflict of interest.
Competitive Positioning
We perform a competitive market analysis of our executive compensation programs annually and director compensation programs biennially to ensure that the total compensation packages of our executive officers and the eligible, non-employee members of our Board are within a reasonably competitive range of companies of similar industry, size and complexity. In connection with its fiscal year 2024 compensation actions and decisions, the Compensation Committee considered a competitive market analysis prepared by Meridian in February of 2023 (see below for more information on the competitive market analysis). The Meridian analysis determined that the NEOs’ target cash compensation, comprised of annual base salary, plus annual target bonus under the AIP, was in aggregate below the 50th percentile relative to competitive market data in the aggregate. The analysis also found that the grant date fair values of equity incentive awards that we granted during fiscal year 2023 were also below the 50th percentile in aggregate.
The Compensation Committee considered these results in its compensation program decision-making for fiscal year 2024.
Competitive Market Analysis
In February 2023, Meridian conducted a competitive market analysis to support the Compensation Committee in connection with its executive and non-employee director compensation decisions for fiscal year 2024. To develop an understanding of the competitive marketplace, the Compensation Committee reviewed the executive compensation practices of a group of publicly traded companies based on compensation data gathered from publicly available filings. Meridian worked with the Compensation Committee to review and select the Company’s peer group.
In determining the peer group to be utilized in making compensation decisions for fiscal year 2024 (the “Peer Group”), the Compensation Committee and Meridian reviewed and considered factors such as industry, total revenue, market
|
|
40 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
capitalization, growth, and profitability margins. The Peer Group was selected based on the evaluation of all of these factors. The Peer Group consisted of the following 14 companies, which was the same group of 14 companies that comprised the peer group used for fiscal year 2023:
|
Peer Group |
|
|
Cirrus Logic, Inc. |
ON Semiconductor Corporation |
|
Diodes Incorporated |
Power Integrations, Inc. |
|
Lattice Semiconductor Corporation |
Rambus Inc. |
|
MACOM Technology Solutions Holdings, Inc. |
Semtech Corporation |
|
MaxLinear, Inc. |
Silicon Laboratories Inc. |
|
Microchip Technology Incorporated |
Synaptics Incorporated |
|
Monolithic Power Systems, Inc. |
Wolfspeed, Inc. |
As indicated in the table below, at the time of the competitive market analysis in February 2023, our revenue approximated the Peer Group 43rd percentile, our headcount the 79th percentile, and our market capitalization the 64th percentile.
|
Allegro Compared to Peer Group, Sorted from Highest to Lowest (as of February 2023) |
||
|
Revenue |
Headcount |
Market Cap |
|
ON Semiconductor Corporation |
ON Semiconductor Corporation |
Microchip Technology Incorporated |
|
Microchip Technology Incorporated |
Microchip Technology Incorporated |
ON Semiconductor Corporation |
|
Cirrus Logic, Inc. |
Diodes Incorporated |
Monolithic Power Systems, Inc. |
|
Diodes Incorporated |
Allegro MicroSystems, Inc. |
Lattice Semiconductor Corporation |
|
Monolithic Power Systems, Inc. |
Wolfspeed, Inc. |
Wolfspeed, Inc. |
|
Synaptics Incorporated |
Monolithic Power Systems, Inc. |
Allegro MicroSystems, Inc. |
|
MaxLinear, Inc. |
Semtech Corporation |
Silicon Laboratories Inc. |
|
Silicon Laboratories Inc. |
Silicon Laboratories Inc. |
Synaptics Incorporated |
|
Allegro MicroSystems, Inc. |
MaxLinear, Inc. |
Cirrus Logic, Inc. |
|
Wolfspeed, Inc. |
Synaptics Incorporated |
Power Integrations, Inc. |
|
Semtech Corporation |
Cirrus Logic, Inc. |
MACOM Technology Solutions Holdings, Inc. |
|
MACOM Technology Solutions Holdings, Inc. |
MACOM Technology Solutions Holdings, Inc. |
Rambus Inc. |
|
Lattice Semiconductor Corporation |
Lattice Semiconductor Corporation |
Diodes Incorporated |
|
Power Integrations, Inc. |
Power Integrations, Inc. |
MaxLinear, Inc. |
|
Rambus Inc. |
Rambus Inc. |
Semtech Corporation |
|
Allegro = 43rd percentile |
Allegro = 79th percentile |
Allegro = 64th percentile |
The Compensation Committee uses the market analysis as a reference point to ensure that our executive compensation program is competitive with market practice for our Peer Group. In the case of each executive officer, the Compensation Committee compares the overall compensation of each individual against the compensation data developed through the market analysis, if their position is sufficiently similar to the positions identified in the data to make the comparison meaningful. The Compensation Committee reviews a full array of competitive market data as part of this comparison process rather than isolating a particular percentile with respect to any portion of the executives’ pay. Ultimately, the Compensation Committee’s decisions with respect to each executive’s total compensation, and each individual compensation element, are based in large part on its assessment of the Company’s and individual’s performance, as well as other factors, such as internal equity across the organization.
|
|
41 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Compensation Elements
We use the following key elements to compensate our NEOs:
|
Compensation Element |
Purpose |
Timing of Payment(s) |
|
Base Salary Representing the only fixed element of total direct compensation |
•
Provide a competitive fixed rate of pay relative to similar positions in the market.
•
Enable the Company to attract and retain critical executive talent.
|
•
Paid bi-weekly throughout the year
|
|
Annual Incentive Plan (AIP) Cash-settled and tied to the achievement of short-term (one year or less) Company financial and / or strategic goals |
•
Focus executive officers on achieving progressively challenging short-term performance goals that align with the Company’s annual operating plan and result in long-term value creation.
|
•
Lump-sum payment in the first quarter of the following fiscal year for executives as of the end of the fiscal year
|
|
Long-Term Incentives Comprised of a selection of equity awards and vesting criteria tailored to promote long-term alignment of pay with shareholders |
•
Focus our executive officers on long-term relative and absolute performance goals that strongly align with and drive shareholder value creation, as well as support the Company’s leadership retention strategy.
|
•
Annual equity awards generally vest over a three-year period from date of grant
|
Variation in competitive positioning among executives is to be expected, to recognize differences in individual performance, tenure, or scope of responsibility relative to market. However, we generally position each compensation element within a competitive range (+/- 15% for base salary and AIP target compensation, +/- 20% for grant date fair value of long-term incentives) of the market 50th percentile.
Fiscal Year 2024 Base Salaries
NEO base salaries are an important part of their total compensation package and are intended to reflect their respective positions, duties, and responsibilities. Our Compensation Committee annually reviews and determines the base salaries of our executives. During fiscal year 2024, the Compensation Committee reviewed the base salaries of the NEOs, approving the adjustments shown in the table below, as applicable, for all NEOs (with the exception of the CEO, whose base salary adjustment was recommended by the Compensation Committee and approved by the non-employee members of the Board). In deciding whether to make any annual adjustments, the Compensation Committee considered factors, including each NEO’s performance, tenure, and job responsibilities, in addition to considering market information from our February 2023 competitive analysis.
|
Name |
|
FY 2023 Base Salary ($) |
|
|
FY 2024 Base Salary ($) |
|
|
Increase ($) |
|
|
Increase (%) |
|
|
Reason for Change |
||||
|
Vineet Nargolwala |
|
|
600,000 |
|
|
|
660,000 |
|
|
|
60,000 |
|
|
|
10.0 |
% |
|
Merit / Market adjustment 1 |
|
Derek P. D ’ Antilio |
|
|
400,000 |
|
|
|
425,000 |
|
|
|
25,000 |
|
|
|
6.3 |
% |
|
Merit |
|
Michael C. Doogue |
|
|
390,000 |
|
|
|
400,000 |
|
|
|
10,000 |
|
|
|
2.6 |
% |
|
Merit |
|
Max R. Glover |
|
|
385,000 |
|
|
|
400,000 |
|
|
|
15,000 |
|
|
|
3.9 |
% |
|
Merit |
|
Sharon S. Briansky |
|
|
375,000 |
|
|
|
400,000 |
|
|
|
25,000 |
|
|
|
6.7 |
% |
|
Merit |
Fiscal Year 2024 AIP
Each of our NEOs participates in our AIP, which is focused on rewarding our executive officers for annual operating performance that meets or exceeds pre-established goals. The Compensation Committee periodically reviews and determines each NEO’s target bonus opportunity (expressed as a percentage of base salary) under the AIP (with the exception of the CEO, whose target bonus opportunity is recommended by the Compensation Committee and approved by the non-employee members of the Board). During fiscal year 2024, the Compensation Committee reviewed each NEO’s target bonus opportunity, recommending that the Board approve the adjustment to Mr. Nargolwala’s target shown in the table below, in order to bring it to the market median level. The Compensation Committee considered the same factors as
|
|
42 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
in its deliberations relating to base salaries, as well as our desire to motivate achievement of short-term financial objectives via meaningful annual incentive opportunities. Each NEO’s target bonus opportunity was generally aligned to the market 50th percentile, as detailed in the February 2023 competitive analysis.
|
Name |
|
2023 Target AIP
|
|
|
2024 Target AIP
|
|
|
Increase
|
|
|
Reason for Change |
|||
|
Vineet Nargolwala |
|
|
110.0 |
% |
|
|
125.0 |
% |
|
|
15.0 |
% |
|
Market adjustment 1 |
|
Derek P. D ’ Antilio |
|
|
75.0 |
% |
|
|
75.0 |
% |
|
|
— |
% |
|
N/A |
|
Michael C. Doogue |
|
|
75.0 |
% |
|
|
75.0 |
% |
|
|
— |
% |
|
N/A |
|
Max R. Glover |
|
|
75.0 |
% |
|
|
75.0 |
% |
|
|
— |
% |
|
N/A |
|
Sharon S. Briansky |
|
|
70.0 |
% |
|
|
70.0 |
% |
|
|
— |
% |
|
N/A |
The actual amount of the annual bonuses paid under the AIP each year may be more or less than the applicable NEO’s target bonus opportunity, depending on Company performance against a set of pre-established performance metrics. For fiscal year 2024, these Company performance metrics included Performance EBIT (weighted 60%), revenue growth (weighted 30%), and a new metric for products released to market (“RTMs”) (weighted 10%). The RTM metric was added to increase the entire organization’s focus on advancing both the speed and volume of product development. The annual bonuses under the AIP are also subject to potential increase or reduction at the discretion of the Compensation Committee (or the Board in the case of the CEO), based on individual NEO performance during the fiscal year (the “Multiplier for Individual Performance”).
The table below illustrates AIP determinations at various levels of performance and the actual performance in fiscal year 2024 for each metric. For performance between points referenced in the table, straight line interpolation is used for the determination of actual achievement of performance metrics. target aip mix 60% 10% 30% performance ebit revenue rtm performance
|
|
Weighting |
Performance Metric |
Threshold |
Target |
Maximum |
Actual Performance |
Weighted Pool Funding |
|
|
60% |
Performance EBIT 1 |
Performance Goals ($M) |
$304.0 |
$346.6 |
$378.0 |
$306.2 |
48.6% |
|
|
% Pool Funding |
80.0% |
100.0% |
200.0 % |
81.0% |
||||
|
30% |
Revenue |
Performance Goals ($M) |
$1,017.0 |
1,130.0 |
$1,210.0 |
$1,046.4 |
25.6% |
|
|
% Pool Funding |
80.0% |
100.0% |
200.0% |
85.2% |
||||
|
10% |
RTM |
Performance Goals ($M) |
26 |
28 |
35 |
29 |
11.4% |
|
|
% Pool Funding |
33.0% |
100.0% |
200.0% |
114.3% |
||||
|
|
Total Pool Funding |
85.6% |
||||||
In May 2024, the Compensation Committee assessed the Company’s fiscal year 2024 achievement of the corporate performance objectives, as detailed in the table above. The sum of the Performance EBIT, revenue and RTM performance portions of the pool funding resulted in total pool funding at 85.6% of target. Additionally, the Compensation Committee did not choose to exercise upward or downward discretion based on individual performance for fiscal year 2024 AIP payout determinations, and so the Multiplier for Individual Performance for all NEOs was 1.0.
|
|
43 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
The table below illustrates the final AIP payout determinations for each NEO.
|
Name |
|
2024 Target AIP
|
|
X |
Pool Funding per Corporate Achievement |
|
X |
Multiplier for Individual Performance |
|
= |
Final AIP Payout ($) |
|
||||
|
Vineet Nargolwala |
|
|
825,000 |
|
|
|
85.6 |
% |
|
|
1.00 |
|
|
|
706,200 |
|
|
Derek P. D’Antilio |
|
|
318,750 |
|
|
|
85.6 |
% |
|
|
1.00 |
|
|
|
272,850 |
|
|
Michael C. Doogue |
|
|
300,000 |
|
|
|
85.6 |
% |
|
|
1.00 |
|
|
|
256,800 |
|
|
Max R. Glover |
|
|
300,000 |
|
|
|
85.6 |
% |
|
|
1.00 |
|
|
|
256,800 |
|
|
Sharon S. Briansky |
|
|
280,000 |
|
|
|
85.6 |
% |
|
|
1.00 |
|
|
|
239,680 |
|
The AIP payments with respect to fiscal year 2024 detailed above are expected to be paid to each NEO on June 28, 2024.
Fiscal Year 2024 Equity Compensation
We use equity awards as a form of long-term incentive compensation to motivate and reward executive officers for effectively executing longer-term strategic and financial objectives. The multi-year vesting provisions of these awards also support the Company’s leadership retention strategy. The value of these equity awards is based on the value of our Common Stock, and these awards help align the interests of our executive officers with those of the Company’s shareholders.
In fiscal year 2024, our annual equity awards consisted of a combination of RSUs and PSUs. Further details regarding awards granted during fiscal year 2024 are set forth below. The Compensation Committee elected to use PSUs as the primary equity vehicle for annual equity awards to NEOs to strengthen the alignment between rewards and the achievement of our longer-term strategic goals referenced in the PSUs.
For each eligible executive, the Committee considers the relative value of equity awards compared to the equity awards held by other executive officers, the desired incentive mix between PSU awards and RSU awards, a compensation analysis performed by Meridian, and the individual experience, skills and performance level of the executive officer to determine the size of equity awards.
|
|
44 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Annual Equity Awards
The annual equity awards granted to each of our NEOs consisted of RSUs (40% of each LTI award) and PSUs (60% of each LTI award). The RSUs are scheduled to vest in three equal installments on each of May 16, 2024, 2025, and 2026, subject to continued employment through the applicable vesting date. The PSUs vest based on achievement of four separate performance and service criteria, as outlined in the table below and described in greater detail following the table. psu award weighting (at target) 50% 15% 15% 20% relative tsr strategic product revenue cumulative performance ebitda cumulative cycle time
|
|
Performance Metric |
PSU Award Weighting (at target) |
Performance Period |
Additional Service-Based Vesting after Performance Period |
|
Relative Total Shareholder Return (“Relative TSR”) |
50% |
Three years (fiscal years 2024 through 2026) |
Earned shares (if any) based on this metric vest on May 16, 2026 |
|
|
Strategic Products Revenue |
20% |
One year (fiscal year 2024) |
Earned portion of PSU shares (if any) based on this metric vest 50% on May 16, 2024, and 50% on May 16, 2025 |
|
|
Cumulative Performance EBITDA |
15% |
One-third allocated to each of one-year (fiscal year 2024), two-year (fiscal years 2024 and 2025) and three-year (fiscal years 2024 through 2026) performance periods |
Earned portion of PSU shares (if any) based on this metric vest on May 16, 2026 |
|
|
Cumulative Cycle Time |
15% |
Three year (fiscal years 2024 through 2026) |
Earned portion of PSU shares (if any) based on this metric vest on May 16, 2026 |
PSUs by metric are earned as follows:
|
|
45 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
For the Relative TSR metric, target vesting at 100% of this portion of the award is achieved if the Company’s TSR equals the TSR of the median company in the SOX Index. The actual number of PSUs that will be earned can range from 0% - 200% of the target amount, with a threshold vest (fixed at 50% of the target number of PSUs for this portion of the award) achieved if the Company’s TSR equals the TSR of the 25 th percentile SOX Index company, and a maximum vest (fixed at 200% of the target number of PSUs for this portion of the award) achieved if the Company’s TSR equals or exceeds the TSR of the 75 th percentile SOX Index company. Straight line interpolation is used for vesting determinations for performance between threshold and target or between target and maximum. If the Company’s TSR is negative during the performance period, vesting is capped at target for this portion of the award, regardless of what the award formula would otherwise specify for this portion of the award.
|
Performance Metric |
|
|
|
|
|
Threshold |
|
|
|
|
|
Target |
|
|
|
|
|
Maximum |
|
|||||
|
|
|
Goal |
|
25th |
|
25th |
|
|
37.5th |
|
|
50th |
|
|
62.5th |
|
|
75th |
|
|||||
|
Relative TSR - TSR percentile rank vs. SOX Index |
|
Payout % (positive TSR) |
|
—% |
|
|
50.0 |
% |
|
|
75.0 |
% |
|
|
100.0 |
% |
|
|
150.0 |
% |
|
|
200.0 |
% |
|
|
|
Payout % (negative TSR) |
|
—% |
|
|
50.0 |
% |
|
|
75.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
The table below illustrates Strategic Products revenue PSU payout determinations at various levels of performance, including actual performance in fiscal year 2024, and the resulting payout (i.e., the percentage of target PSUs for this portion of the award that vested one half on May 16, 2024, with the remaining half to vest on May 16, 2025, subject to a recipient meeting the continued service requirement). For performance between points referenced in the table, straight-line interpolation was used for the PSU vesting determination.
|
Performance Metric |
|
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Actual Performance |
|
||||
|
Strategic Products revenue FY24 ($ millions) |
|
Goal ($ millions) |
|
$ |
573.9 |
|
|
$ |
637.7 |
|
|
$ |
682.3 |
|
|
$ |
604.3 |
|
|
|
|
Payout % |
|
|
80.0 |
% |
|
|
100.0 |
% |
|
|
200.0 |
% |
|
|
89.5 |
% |
The table below illustrates cumulative Performance EBITDA PSU payout determinations for the one-third of cumulative Performance EBITDA PSUs allocated to fiscal year 2024 performance, and the resulting payout (i.e., the percentage of PSUs allocated to fiscal year 2024 performance that vested on May 16, 2024 for this portion of the award. For performance between points referenced in the table, straight line interpolation was used for the PSU vesting determination.
|
Performance Metric |
|
|
|
Threshold |
|
|
Target |
|
|
Maximum |
|
|
Actual Performance 1 |
|
||||
|
Fiscal Year 2024 Cumulative Performance EBITDA |
|
Goal ($ millions) |
|
$ |
327.8 |
|
|
$ |
409.7 |
|
|
$ |
441.1 |
|
|
$ |
370.1 |
|
|
|
|
Payout % |
|
|
50.0 |
% |
|
|
100.0 |
% |
|
|
200.0 |
% |
|
|
75.8 |
% |
The table below illustrates how payouts for this portion of the award will be determined for each of (1) the two-year period encompassing fiscal years 2024 and 2025, and (2) the three-year period encompassing fiscal years 2024, 2025, and 2026.
|
Performance Metric |
|
Threshold |
|
Target |
|
Maximum |
||
|
Fiscal Years 2024-2025 Cumulative Performance EBITDA |
|
Goal |
|
80.0% of Plan 1 |
|
At Plan 1 |
|
107.3% of Plan 1 |
|
|
|
Payout % |
|
50.0% |
|
100.0% |
|
200.0% |
|
Fiscal Years 2024-2026 Cumulative Performance EBITDA |
|
Goal |
|
80.0% of Plan 1 |
|
At Plan 1 |
|
106.4% of Plan 1 |
|
|
|
Payout % |
|
50.0% |
|
100.0% |
|
200.0% |
|
|
46 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Average cumulative cycle time was added as a performance metric to the PSUs to incentivize the speed and efficiency of our product development process for viable products in our product development pipeline.
The table below illustrates how the payout for this portion of the award will be determined. The payout is binary based on either achievement at 100% if the average cycle time for 85% of the RTMs is less than or equal to the target of 110 weeks, otherwise the payout is zero.
|
Performance Metric |
|
|
|
Threshold / Maximum |
||
|
Average Cumulative Cycle Time for 85% of RTMs in FY24-FY26 (# weeks) |
|
Goal (# weeks) |
|
110.0 |
|
=110.0 |
|
|
|
Payout % |
|
—% |
|
100.0% |
Equity Awards Granted in Fiscal Year 2024
The table below summarizes all the equity awards granted to our NEOs in fiscal year 2024. There were no off-cycle awards made to any of the NEOs in fiscal year 2024.
|
Annual Equity Awards |
|
|||||||||||||||||||||||
|
|
|
PSUs At Target Level of Achievement
|
|
|
RSUs
|
|
||||||||||||||||||
|
Name |
|
Relative TSR PSUs |
|
+ |
Strategic Product Revenue PSUs |
|
+ |
Cumulative Performance EBITDA PSUs |
|
+ |
Cycle Time PSUs |
|
= |
Total PSUs |
|
|
Total RSUs |
|
||||||
|
Vineet Nargolwala |
|
|
41,920 |
|
|
|
16,768 |
|
|
|
12,576 |
|
|
|
12,576 |
|
|
|
83,840 |
|
|
|
55,893 |
|
|
Derek P. D’Antilio |
|
|
15,819 |
|
|
|
6,328 |
|
|
|
4,746 |
|
|
|
4,746 |
|
|
|
31,639 |
|
|
|
21,092 |
|
|
Michael C. Doogue |
|
|
11,864 |
|
|
|
4,746 |
|
|
|
3,560 |
|
|
|
3,560 |
|
|
|
23,730 |
|
|
|
15,819 |
|
|
Max R. Glover |
|
|
11,074 |
|
|
|
4,430 |
|
|
|
3,322 |
|
|
|
3,322 |
|
|
|
22,148 |
|
|
|
14,765 |
|
|
Sharon S. Briansky |
|
|
8,701 |
|
|
|
3,481 |
|
|
|
2,611 |
|
|
|
2,611 |
|
|
|
17,404 |
|
|
|
11,601 |
|
Performance-Based Equity Awards with Performance Periods Ending in 2024
The following portions of PSUs granted in prior years had performance periods ending at the end of the 2024 fiscal year:
|
Fiscal Year of PSU Grant |
|
PSU Award Component |
|
Performance Period |
|
Target Performance ($M) |
|
Actual Performance ($M) |
|
Payout (%) |
|
|
Shares Earned |
|
|
2022 |
|
Relative TSR |
|
FY2022 - FY2024 |
|
50th %ile, positive TSR |
|
36th %ile, positive TSR |
|
|
71.4 |
% |
|
(1) |
|
2022 |
|
Performance EBITDA |
|
FY2022 - FY2024 |
|
675.0 |
|
931.0 |
|
|
200.0 |
% |
|
(2) |
|
2023 |
|
Performance EBITDA |
|
FY2023 - FY2024 |
|
657.6 |
|
715.5 |
|
|
200.0 |
% |
|
(3) |
|
2024 |
|
Strategic Products Revenue |
|
FY2024 |
|
637.7 |
|
604.3 |
|
|
89.5 |
% |
|
(4) |
|
2024 |
|
Performance EBITDA |
|
FY2024 |
|
409.7 |
|
370.1 |
|
|
75.8 |
% |
|
(5) |
|
|
47 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Benefits and Perquisites
We maintain broad-based benefits for all employees, and our NEOs are eligible to participate on the same basis as other U.S.-based, full-time employees. The retirement plan, as well as our other benefits, are designed to be competitive in the labor market and to provide financial protection and security for employees and their families.
Health/Welfare Plans
We offer medical, dental, and vision insurance to our NEOs and pay a portion of the premiums for these benefits consistent with the arrangements for all of our other U.S.-based, full-time employees. We also provide our NEOs and other eligible employees, at our expense, with group life and accidental death and dismemberment insurance benefits; short-term and long-term disability insurance benefits; paid time off benefits; and other ancillary benefits.
Charitable Contributions Matching Program
Subject to certain limitations, we match charitable donations made by our NEOs (and other senior executives) to eligible charitable organizations, up to a $5,000 annual limit per person. All other global employees are eligible for a match under the program of up to a $2,000 annual limit per person.
Service Anniversary Awards
All global employees receive cash awards in recognition of continuous service to the Company upon the attainment of certain milestone years of service. The amount of a service award is fixed regardless of title, role or position with the Company, but varies based on geography.
Inventor Awards Program
Under our Inventor Awards Program, our employees, including our NEOs, are eligible to earn cash incentives associated with U.S. patents, including upon filing invention disclosures, issuances of first, second, and third patents associated with such invention disclosures, and in respect of an annual “innovation award” selected from patents issued in respect of invention filings in a given year. Incentives associated with the foregoing patent-related awards range from $100 to $5,000 per occurrence, depending on the particular type of award.
Retirement Plan
We currently maintain a 401(k) retirement savings plan (the “401(k) Plan”) for our U.S.-based employees, including our NEOs, who satisfy certain eligibility requirements. Our NEOs are eligible to participate in the 401(k) Plan on the same terms as other full-time employees in the U.S. The Internal Revenue Code of 1986, as amended (the “Code”) allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis or after-tax basis through contributions to the 401(k) Plan. During fiscal year 2024, we matched contributions made by participants in the 401(k) Plan up to five percent (5%) of the employee’s eligible compensation, up to the statutory eligible compensation limit, and these matching contributions were fully vested as of the date they were made.
Deferred Compensation Plan
We maintain an Executive Deferred Compensation Plan (the “DCP”) under which eligible employees, including our NEOs, are permitted to defer up to 90% of their base salary and/or up to 100% of any amount earned under the AIP. All deferrals are fully vested as of the date the deferral is made. During fiscal year 2024, we also made fully vested employer contributions to our NEOs’ (and other participants’) DCP accounts. The amounts of these contributions were designed to replace matching contributions to our 401(k) Plan for eligible wages paid over the applicable statutory limits and are capped at five percent (5%) of the participant’s annual eligible compensation that exceeds the statutory limit. Amounts deferred under the DCP may be notionally invested by participants in one or more of the investment choices offered in the DCP, all of which are investments offered in the 401(k) Plan and are subject to adjustment for earnings or losses resulting from these investments.
|
|
48 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
DCP accounts are generally distributable upon the first to occur of a participant’s termination of employment (subject to a six-month delay if required by applicable regulations), the participant’s death, or a change in control of the Company. Participants may also elect certain in-service or other fixed distribution dates and/or installment payments (including with respect to distributions following a termination of employment).
No Perquisites or Tax “Gross Ups”
We do not currently provide material perquisites to our NEOs, and we do not view perquisites or other personal benefits as a significant component of our executive compensation program. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive officer in the performance of the executive’s duties, to make our executive officers more efficient and effective, and for recruitment, motivation, or retention purposes. All future practices with respect to perquisites or other personal benefits will be approved by the Compensation Committee.
We do not provide tax “gross ups” to our named executive officers.
Compensation Policies
Prohibition on Option Re-Pricing and Backdating
We currently have no outstanding stock option awards, but if we choose to grant stock options in the future, options to purchase shares of our Common Stock will be granted with an exercise price equal to the closing market price of our Common Stock on Nasdaq on the effective date of grant. The Allegro MicroSystems, Inc. 2020 Omnibus Incentive Compensation Plan (the “2020 Plan”) prohibits re-pricing of equity awards without shareholder approval, except in connection with certain corporate transactions involving the Company (including, without limitation, any stock dividend, distribution, stock split, extraordinary cash dividend, recapitalization, change in control, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares of Company stock or other securities, or similar transactions).
Compensation Recovery
On November 6, 2023, the Compensation Committee adopted the Clawback Policy, effective as of October 2, 2023, to comply with the requirements of Section 10D of the Exchange Act, the rules promulgated thereunder by the SEC, and the Nasdaq listing standards regarding clawback provisions. The Clawback Policy provides that if the Company is required to prepare a restatement, the Company will be required to recover reasonably promptly from any current or former executive officer of the Company any amount of incentive-based compensation received during the three fiscal years preceding the date on which the Company is required to prepare an accounting restatement that exceeds the amount of incentive-based compensation that would have been paid based on the corrected financial reporting measure. For purposes of the Clawback Policy, a restatement means an accounting restatement to correct the Company’s material noncompliance with any financial reporting requirement under securities laws, including restatements that correct an error in previously issued financial statements (a) that is material to the previously issued financial statements or (b) that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
During the preparation of the third quarter fiscal year 2024 interim condensed consolidated financial statements, the Company identified and corrected an immaterial error in the classification of net sales by application (Automotive, Industrial and Other), whereby customer returns and sales allowances were incorrectly classified by application between Automotive, Industrial and Other in the prior periods (the “Revenue Revision”). There was no impact to previously reported total net sales or net income in any of the prior periods, but the Revenue Revision qualified as a restatement under the Clawback Policy. Company management prepared an analysis of the incentive-compensation measures utilized in fiscal years 2023, 2022 and 2021 and determined that: (1) adjustments to the financial reporting measures in the applicable years as a result of the Revenue Revision did not apply to any element of incentive-based compensation except Strategic Products revenue (and a similar measure for emerging products revenue in a prior fiscal year), and (2) Strategic Products revenue increased for each applicable year as a result of the Revenue Revision and would not have resulted in a lower payout amount for any applicable year. At a meeting on June 11, 2024, the Compensation Committee, as administrator of the Clawback Policy, reviewed management’s analysis and concluded that there was no erroneously awarded compensation under the Clawback Policy, and therefore recovery of erroneously awarded compensation was not required pursuant to the Clawback Policy.
|
|
49 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Anti-Hedging and Anti-Pledging Policies
Our Board has adopted an Insider Trading and Compliance Policy governing the purchase, sale, and/or other dispositions of our securities by our directors, officers, employees and other Covered Persons (as defined in the Insider Trading and Compliance Policy), that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the exchange listing standards applicable to us. The policy prohibits Covered Persons from purchasing financial instruments such as prepaid variable forward contracts, equity swaps, collars, and exchange funds, or otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s equity securities, or that may cause any Covered Person to no longer have the same objectives as the Company’s other shareholders. In addition, our Insider Trading Compliance Policy provides that no Covered Person may pledge Company securities as collateral to secure loans. This prohibition means, among other things, that these individuals may not hold Company securities in a “margin” account, which would allow the individual to borrow against their holdings to buy securities.
Stock Ownership Guidelines
The Company has robust stock ownership guidelines for directors and officers that require each non-employee director who receives compensation from the Company for their Board services (“Covered Directors”) and senior officers and certain other senior employees of the Company (“Covered Executives”) to own shares of our Common Stock. Our stock ownership guidelines are limited to Covered Directors because some non-employee directors serve as appointees of shareholders under the Stockholders Agreement and do not receive any shares of Common Stock or other compensation for their service on the Board. See the “ 2024 Director Compensation ” section of this proxy statement for additional information regarding Board compensation.
Under the guidelines, all current Covered Directors and Covered Executives, including each of our NEOs, must own shares of our Common Stock with a value equal to a certain multiple of the annual cash retainer for Board members, in the case of Covered Directors, or base salary, in the case of Covered Executives. Please refer to the table below for the applicable multiple for our Covered Directors, CEO and other Covered Executives. Equity interests that count towards the satisfaction of the ownership guidelines include unvested time-based RSUs, and vested shares, including shares owned outright, shares jointly owned, shares owned in retirement accounts, and shares owned in trust or other estate planning vehicles for the benefit of a Covered Director or Covered Executive’s immediate family members. Unearned performance awards and unexercised stock options, if we were to issue stock options, do not count towards the ownership guidelines. Covered Directors and Covered Executives have four years from the date of the Company’s IPO or, if later, the date they first become a member of the Board or an officer to meet the ownership levels. For purposes of these guidelines, shares are valued based upon the then-current market value, or if higher, the value on the date of acquisition. Based on an evaluation on the Record Date, all of our NEOs and all Covered Directors were either in compliance with our stock ownership guidelines or are expected to be in compliance within this time window.
|
Covered Person |
|
Multiple of Base Salary / Board Retainer |
|
Covered Director |
|
3x |
|
Chief Executive Officer |
|
6x |
|
Other Covered Executives |
|
3x |
Compensation Risk Assessment
Our Compensation Committee has reviewed our incentive compensation programs, discussed the concept of risk as it relates to our compensation program, considered various mitigating factors, and reviewed these items with its independent compensation consultant, Meridian. In addition, our Compensation Committee asked Meridian to conduct an independent risk assessment of our executive compensation program. Based on these reviews and discussions, the Compensation Committee does not believe our compensation program creates risks that are reasonably likely to have a material adverse effect on our business.
|
|
50 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Tax and Accounting Considerations
Section 162(m) of the Code generally limits the amount of remuneration that the Company may deduct in any calendar year for certain executive officers to $1 million. While the Compensation Committee will continue to consider the deductibility of compensation as a factor in making compensation decisions, it retains the flexibility to provide compensation that is consistent with the Company’s goals for its executive compensation program, even if such compensation would not be fully tax-deductible.
“Golden Parachute ” Payments
Sections 280G and 4999 of the Code provide that certain executive officers and other service providers who are highly compensated or hold significant equity interests may be subject to an excise tax if they receive payments or benefits in connection with a change in control of the Company that exceeds certain prescribed limits, and that we, or a successor, may forfeit a deduction on the amounts subject to this additional tax. We do not provide any tax gross ups to cover excise taxes under Section 4999 in connection with a change in control. Mr. Nargolwala’s employment agreement, entered into on May 2, 2022 (the “Employment Agreement”), contains a provision that provides that in the event that any payment or benefit received or to be received by Mr. Nargolwala in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Code, then such payments will be reduced if and to the extent that doing so will result in net after-tax payments and benefits for Mr. Nargolwala that are more favorable than the net after-tax payments and benefits payable to Mr. Nargolwala in the absence of such a reduction after the imposition of the excise tax. For additional details, see page 60.
Accounting for Share-Based Compensation
We follow Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718 Compensation – Stock Compensation for all stock-based awards (“ASC 718”). ASC 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and full value stock awards, based on the aggregate estimated grant date fair value of these awards. This calculation is performed for accounting purposes and reported in the compensation tables on pages 53 - 55 of this proxy statement. ASC 718 also requires companies to recognize the compensation cost of their stock-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.
|
|
51 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis as set forth in this Proxy Statement. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K for its fiscal year ended March 29, 2024 and included in the Company’s 2024 Proxy Statement filed in connection with the Company’s 2024 Annual Meeting of Shareholders.
June 11, 2024
Respectfully submitted by the Compensation Committee of the Board of Directors.
David J. Aldrich
Richard R. Lury
Mary G. Puma
The Compensation Committee Report shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference, and it shall not otherwise be deemed filed under such Acts.
|
|
52 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
EXECUTIVE COMPENSATION TABLES
2024 Summary Compensation Table
The following table contains information about the compensation earned by each of our NEOs during our most recently completed fiscal year ended March 29, 2024.
|
Name and Principal
|
|
Fiscal Year |
|
Salary
1
|
|
|
Bonus
|
|
|
Stock Awards 2 ($) |
|
|
Non-Equity Incentive Plan Compensation 3 ($) |
|
|
All Other Compensation
4
|
|
|
Total ($) |
|
||||||
|
Vineet Nargolwala |
|
2024 |
|
|
658,846 |
|
|
|
— |
|
|
|
5,547,401 |
|
|
|
706,200 |
|
|
|
89,156 |
|
|
|
7,001,603 |
|
|
President, Chief Executive Officer |
|
2023 |
|
|
484,615 |
|
|
|
217,000 |
|
|
|
8,365,115 |
|
|
|
1,052,384 |
|
|
|
9,400 |
|
|
|
10,128,514 |
|
|
Derek P. D’Antilio |
|
2024 |
|
|
424,519 |
|
|
|
— |
|
|
|
2,093,419 |
|
|
|
272,850 |
|
|
|
50,560 |
|
|
|
2,841,348 |
|
|
SVP, Chief Financial Officer and Treasurer |
|
2023 |
|
|
407,692 |
|
|
|
— |
|
|
|
3,124,457 |
|
|
|
600,000 |
|
|
|
33,522 |
|
|
|
4,165,671 |
|
|
|
|
2022 |
|
|
84,615 |
|
|
|
125,000 |
|
|
|
1,500,001 |
|
|
|
120,549 |
|
|
|
4,277 |
|
|
|
1,834,442 |
|
|
Michael C. Doogue |
|
2024 |
|
|
399,808 |
|
|
|
— |
|
|
|
1,570,091 |
|
|
|
256,800 |
|
|
|
51,497 |
|
|
|
2,278,196 |
|
|
SVP, Chief Technology Officer |
|
2023 |
|
|
390,611 |
|
|
|
— |
|
|
|
1,682,818 |
|
|
|
585,000 |
|
|
|
51,648 |
|
|
|
2,710,077 |
|
|
|
|
2022 |
|
|
364,808 |
|
|
|
— |
|
|
|
2,010,772 |
|
|
|
506,956 |
|
|
|
38,603 |
|
|
|
2,921,139 |
|
|
Max R. Glover |
|
2024 |
|
|
399,712 |
|
|
|
— |
|
|
|
1,465,447 |
|
|
|
256,800 |
|
|
|
43,372 |
|
|
|
2,165,331 |
|
|
SVP, Worldwide Sales |
|
2023 |
|
|
391,624 |
|
|
|
49,500 |
|
|
|
1,791,137 |
|
|
|
577,500 |
|
|
|
51,133 |
|
|
|
2,860,894 |
|
|
|
|
2022 |
|
|
363,173 |
|
|
|
151,000 |
|
|
|
1,519,516 |
|
|
|
623,446 |
|
|
|
35,077 |
|
|
|
2,692,212 |
|
|
Sharon S. Briansky |
|
2024 |
|
|
399,520 |
|
|
|
— |
|
|
|
1,151,496 |
|
|
|
239,680 |
|
|
|
46,436 |
|
|
|
1,837,132 |
|
|
SVP, General Counsel and Secretary |
|
2023 |
|
|
381,635 |
|
|
|
250,000 |
|
|
|
2,232,994 |
|
|
|
525,000 |
|
|
|
32,487 |
|
|
|
3,422,116 |
|
|
|
53 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
|
Name |
|
Fiscal Year 2024
|
|
|
Charitable Contribution Company Match ($) |
|
|
Nonqualified Plan Company Contribution ($) |
|
|
Patent Award Payments ($) |
|
|
Company HSA Contribution ($) |
|
|
Service Anniversary Award* ($) |
|
|
Total of All Other Compensation ($) |
|
|||||||
|
Vineet Nargolwala |
|
|
17,250 |
|
|
|
4,000 |
|
|
|
66,706 |
|
|
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
89,156 |
|
|
Derek P. D’Antilio |
|
|
15,755 |
|
|
|
— |
|
|
|
33,605 |
|
|
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
50,560 |
|
|
Michael C. Doogue |
|
|
12,298 |
|
|
|
3,100 |
|
|
|
31,849 |
|
|
|
1,050 |
|
|
|
1,200 |
|
|
|
2,000 |
|
|
|
51,497 |
|
|
Max R. Glover |
|
|
10,755 |
|
|
|
— |
|
|
|
31,417 |
|
|
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
43,372 |
|
|
Sharon S. Briansky |
|
|
11,514 |
|
|
|
5,000 |
|
|
|
28,722 |
|
|
|
— |
|
|
|
1,200 |
|
|
|
— |
|
|
|
46,436 |
|
*In fiscal year 2024, Mr. Doogue received a cash award of $2,000 under the Company's service anniversary reward program in recognition of his 25 years of continuous service to the Company.
Grants of Plan-Based Awards in Fiscal Year 2024
The following table contains information relating to all grants of plan-based awards made to our NEOs during the 2024 fiscal year.
|
|
|
|
|
|
Estimated Future Payouts Under Non-Equity Incentive Plan Awards 1 |
|
|
Estimated Future Payouts Under Equity Incentive Plan Awards 2 |
|
|
|
|
|
|
|
||||||||||||
|
Name |
|
Grant Date |
|
|
Target
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
All Other Stock Awards: Number of Shares
3
|
|
|
Grant Date Fair Value of Stock Awards
4
|
|
||||||
|
Vineet Nargolwala |
|
|
|
|
|
825,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,893 |
|
|
|
2,120,022 |
|
||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
2,096 |
|
|
|
83,840 |
|
|
|
155,104 |
|
|
|
|
|
|
3,427,379 |
|
||
|
Derek P. D’Antilio |
|
|
|
|
|
318,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,092 |
|
|
|
800,020 |
|
||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
791 |
|
|
|
31,639 |
|
|
|
58,532 |
|
|
|
|
|
|
1,293,399 |
|
||
|
Michael C. Doogue |
|
|
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,819 |
|
|
|
600,015 |
|
||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
594 |
|
|
|
23,730 |
|
|
|
43,901 |
|
|
|
|
|
|
970,076 |
|
||
|
Max R. Glover |
|
|
|
|
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,765 |
|
|
|
560,037 |
|
||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
554 |
|
|
|
22,148 |
|
|
|
40,974 |
|
|
|
|
|
|
905,410 |
|
||
|
Sharon S. Briansky |
|
|
|
|
|
280,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,601 |
|
|
|
440,026 |
|
||||
|
|
|
5/15/2023 |
|
|
|
|
|
|
436 |
|
|
|
17,404 |
|
|
|
32,197 |
|
|
|
|
|
|
711,470 |
|
||
|
|
54 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
|
|
55 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Outstanding Equity Awards at Fiscal Year-End 2024
The following table details the number of stock awards outstanding for each NEO as of March 29, 2024. None of our NEOs held any option awards as of March 29, 2024.
|
|
|
|
|
Stock Awards |
|
|||||||||||||||
|
Name |
|
Grant Date |
|
Number of
|
|
|
|
Market Value of Shares or Units of Stock that Have Not Vested
1
|
|
|
Equity Incentive
|
|
|
|
Equity Incentive Plan
|
|
||||
|
Vineet Nargolwala |
|
6/13/2022 |
|
|
74,593 |
|
2 |
|
|
2,011,027 |
|
|
|
|
|
|
|
|
||
|
|
|
8/1/2022 |
|
|
47,658 |
|
3 |
|
|
1,284,860 |
|
|
|
|
|
|
|
|
||
|
|
|
8/1/2022 |
|
|
55,602 |
|
4 |
|
|
1,499,030 |
|
|
|
55,600 |
|
4 |
|
|
1,498,976 |
|
|
|
|
5/15/2023 |
|
|
55,893 |
|
5 |
|
|
1,506,875 |
|
|
|
|
|
|
|
|
||
|
|
|
5/15/2023 |
|
|
18,186 |
|
6 |
|
|
490,295 |
|
|
|
62,880 |
|
6 |
|
|
1,695,245 |
|
|
Derek P. D’Antilio |
|
2/2/2022 |
|
|
36,497 |
|
7 |
|
|
983,959 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
19,166 |
|
8 |
|
|
516,715 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
22,360 |
|
4 |
|
|
602,826 |
|
|
|
22,361 |
|
4 |
|
|
602,853 |
|
|
|
|
5/15/2023 |
|
|
21,092 |
|
5 |
|
|
568,640 |
|
|
|
|
|
|
|
|
||
|
|
|
5/15/2023 |
|
|
6,864 |
|
6 |
|
|
185,053 |
|
|
|
23,729 |
|
6 |
|
|
639,734 |
|
|
Michael C. Doogue |
|
11/2/2020 |
|
|
5,893 |
|
9 |
|
|
158,875 |
|
|
|
|
|
|
|
|
||
|
|
|
5/7/2021 |
|
|
8,875 |
|
10 |
|
|
239,270 |
|
|
|
|
|
|
|
|
||
|
|
|
5/7/2021 |
|
|
22,817 |
|
11 |
|
|
615,146 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
16,611 |
|
8 |
|
|
447,833 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
19,378 |
|
4 |
|
|
522,431 |
|
|
|
19,379 |
|
4 |
|
|
522,458 |
|
|
|
|
5/15/2023 |
|
|
15,819 |
|
5 |
|
|
426,480 |
|
|
|
|
|
|
|
|
||
|
|
|
5/15/2023 |
|
|
5,147 |
|
6 |
|
|
138,763 |
|
|
|
17,798 |
|
6 |
|
|
479,834 |
|
|
Max R. Glover |
|
11/2/2020 |
|
|
5,893 |
|
9 |
|
|
158,875 |
|
|
|
|
|
|
|
|
||
|
|
|
5/7/2021 |
|
|
9,682 |
|
10 |
|
|
261,027 |
|
|
|
|
|
|
|
|
||
|
|
|
5/7/2021 |
|
|
31,805 |
|
11 |
|
|
857,463 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
17,889 |
|
8 |
|
|
482,287 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
20,868 |
|
4 |
|
|
562,601 |
|
|
|
20,870 |
|
4 |
|
|
562,655 |
|
|
|
|
5/15/2023 |
|
|
14,765 |
|
5 |
|
|
398,064 |
|
|
|
|
|
|
|
|
||
|
|
|
5/15/2023 |
|
|
4,805 |
|
6 |
|
|
129,543 |
|
|
|
16,611 |
|
6 |
|
|
447,833 |
|
|
Sharon S. Briansky |
|
2/2/2022 |
|
|
18,249 |
|
12 |
|
|
491,993 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
12,777 |
|
8 |
|
|
344,468 |
|
|
|
|
|
|
|
|
||
|
|
|
5/16/2022 |
|
|
14,908 |
|
4 |
|
|
401,920 |
|
|
|
14,907 |
|
4 |
|
|
401,893 |
|
|
|
|
6/3/2022 |
|
|
3,988 |
|
7 |
|
|
107,516 |
|
|
|
|
|
|
|
|
||
|
|
|
5/15/2023 |
|
|
11,601 |
|
5 |
|
|
312,763 |
|
|
|
|
|
|
|
|
||
|
|
|
5/15/2023 |
|
|
3,776 |
|
6 |
|
|
101,801 |
|
|
|
13,053 |
|
6 |
|
|
351,909 |
|
|
|
56 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
|
|
57 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Option Exercises and Stock Vested in Fiscal Year 2024
The following table sets forth information for our NEOs regarding the value realized during the 2024 fiscal year related to shares acquired upon vesting of previously granted stock awards. None of our NEOs held any option awards during the fiscal year ended March 29, 2024.
|
|
|
Stock Awards |
|
|||||
|
Name |
|
Number of Shares
|
|
|
Value Realized on
|
|
||
|
Vineet Nargolwala |
|
|
151,601 |
|
|
|
6,187,992 |
|
|
Derek P. D’Antilio |
|
|
37,733 |
|
|
|
1,269,385 |
|
|
Michael C. Doogue |
|
|
159,616 |
|
|
|
4,931,928 |
|
|
Max R. Glover |
|
|
214,121 |
|
|
|
6,415,566 |
|
|
Sharon S. Briansky |
|
|
33,490 |
|
|
|
1,208,457 |
|
Nonqualified Deferred Compensation Table
We maintain the DCP for our executives, and all of our NEOs are eligible to participate. The following table contains information regarding the DCP for the fiscal year ended March 29, 2024.
|
Name |
|
Executive Contributions in Last FY
|
|
|
Registrant Contributions in Last FY
1
|
|
|
Aggregate Earnings in
|
|
|
Aggregate Withdrawals/ Distributions
|
|
|
Aggregate Balance at Last FYE ($) |
|
|||||
|
Vineet Nargolwala |
|
|
23,077 |
|
|
|
66,706 |
|
|
|
7,399 |
|
|
|
— |
|
|
|
97,182 |
|
|
Derek P. D’Antilio |
|
|
500,567 |
|
|
|
33,605 |
|
|
|
156,728 |
|
|
|
— |
|
|
|
764,804 |
|
|
Michael C. Doogue |
|
|
— |
|
|
|
31,849 |
|
|
|
180,710 |
|
|
|
— |
|
|
|
680,618 |
|
|
Max R. Glover |
|
|
— |
|
|
|
31,417 |
|
|
|
13,543 |
|
|
|
— |
|
|
|
99,233 |
|
|
Sharon S. Briansky |
|
|
79,808 |
|
|
|
28,722 |
|
|
|
10,269 |
|
|
|
— |
|
|
|
219,990 |
|
Potential Payments upon Termination or Change in Control
Overview
The information provided in the following tables reflects the amount of incremental compensation required to be paid to each NEO in the event of a change in control of the Company, or a termination of the NEO’s employment. For purposes of the disclosure, we have assumed that all triggering event(s) took place on March 29, 2024, and we used the closing price per share on Nasdaq of our Common Stock on March 28, 2024 ($26.96), the last trading day of the 2024 fiscal year. Due to the number of factors that affect the nature and amount of benefits provided upon the occurrence of such events, actual
|
|
58 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
amounts paid or distributed may be different from the amounts disclosed below. Factors that could affect the actual amounts paid include:
Specifically excluded from the information and tables below are any amounts which are not contingent upon the occurrence of the triggering event(s) or payments pursuant to Company benefit plans that are generally available to all U.S. salaried employees of the Company and do not discriminate in scope or terms of operation in favor of our NEOs (e.g., term life insurance, long-term disability insurance, etc.).
Severance and Employment Agreements
We entered into severance agreements with each of Messrs. Doogue and Glover on October 3, 2017 and October 1, 2019, respectively (together, the “Severance Agreements”). On September 30, 2020, the Company amended and restated these Severance Agreements.
We entered into severance agreements with Ms. Briansky (the “Briansky Severance Agreement”) and Mr. D’Antilio (the “D’Antilio Severance Agreement”) in connection with their hiring on December 6, 2021 and January 10, 2022, respectively. Both the Briansky Severance Agreement and the D’Antilio Severance Agreement were amended on May 15, 2023 to remove a tax gross up provision related to post-employment healthcare coverage. Mr. Nargolwala’s severance provisions are described in the Employment Agreement as of his hire on June 13, 2022.
The Severance Agreements (as amended and restated), the Briansky and D’Antilio Severance Agreements, and the Employment Agreement provide that if a NEO’s employment is terminated by the Company without “cause” or by the executive for “good reason” (each such term as defined in the applicable agreement) (a “Qualifying Termination”), subject to the executive’s execution of an effective general release of claims and continued compliance with applicable non-competition, non-solicitation and (in the cases of Messrs. Doogue and Glover) other restrictive covenants applicable to the executive pursuant to their respective pre-IPO share award agreement, we will pay or provide the executive with the following severance benefits:
|
Benefit upon Qualifying Termination under applicable NEO agreement |
Vineet Nargolwala |
Derek P. D’Antilio |
Michael C. Doogue / Max R. Glover / Sharon S. Briansky |
|
Cash Severance 1 |
Lump sum cash payment equal to 2.0 times his then-current base salary |
Lump sum cash payment equal to 2.0 times his then-current base salary and target bonus |
Lump sum cash payment equal to 1.0 times the NEO’s then-current base salary and target bonus |
|
Prorated Bonus 1 |
Cash payment equal to the amount of the executive’s target bonus in effect on the applicable date of termination, prorated for the number of days the executive was employed by the Company during the year of such termination |
||
|
Treatment of RSU Awards |
Accelerated vesting of outstanding RSU awards with respect to the number of shares that would have become vested on the next applicable vesting date following such Qualifying Termination |
Any then-outstanding incentive equity awards (then-held by the NEO) will be governed by the applicable equity incentive plan or award agreement |
|
|
Treatment of PSU Awards |
Prorated vesting of outstanding PSU awards, with the applicable performance conditions being deemed achieved at the greater of the target performance level or the trending performance level, as determined by the Compensation Committee |
Any then-outstanding incentive equity awards (then-held by the NEO) will be governed by the applicable equity incentive plan or award agreement |
|
|
Continued Company-paid Health Care Coverage |
For up to 12 months following termination |
For up to 18 months following termination |
|
|
|
59 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Potential Payments upon Termination not Involving a Change in Control
Our NEOs would be entitled to severance payments and benefits in the event their employment with us is terminated following an involuntary termination, which would include a termination of the officer’s employment by us without cause or a resignation for good reason, or a Qualifying Termination. For more information, refer to the discussion above under the heading “ Severance and Employment Agreements .” In addition, upon a Qualifying Termination outside of a 12-month period following a change in control of our Company, or a termination due to death or disability, an executive’s RSUs which are eligible to vest on the next vesting date following such termination will vest, and a prorated portion of such executive’s PSUs would vest as of the date of such termination, with the applicable performance conditions being deemed achieved at the greater of the target performance level or the trending performance level at the time of termination, as determined by the Compensation Committee.
Potential Payments upon Termination or a Change in Control
Under the terms of his Employment Agreement, if Mr. Nargolwala is terminated in a Qualifying Termination within 24 months of a Change in Control, he would receive all of the same benefits listed in the table in the “ Severance and Employment Agreements ” section above, except his lump sum cash severance amount would be equal to his multiplier times his annual base salary plus target bonus, and all of his equity would be treated in accordance with the following paragraph.
In addition, under the terms of the 2020 Plan, if an NEO has a Qualifying Termination within 12 months following a change in control of the Company, all outstanding equity incentive awards held by such executive under the 2020 Plan will vest, with the award agreement for outstanding PSUs specifying that performance for these awards shall be measured based on the greater of target or actual performance. “Cause” is defined under the 2020 Plan as the definition given to such term in a NEO’s severance or employment agreement.
Section 280G of the Code
The D’Antilio Severance Agreement and the Briansky Severance Agreement each provide that in the event that the cash severance and prorated bonus benefits set forth in the table in the “ Severance and Employment Agreements ” section above, the health care continuation coverage benefit, and/or any other any payment, coverage or benefit, including any accelerated vesting of Company equity compensation, provided in respect of Mr. D’Antilio’s or Ms. Briansky’s employment or termination of employment would constitute “parachute payments” within the meaning of Section 280G(b)(2) of the Code or would subject Mr. D’Antilio or Ms. Briansky to an excise tax under Section 4999 of the Code, then, provided that the requirements of Treas. Reg. Section 1.280G-1 QA-6(a)(2)(i) are met, the Company shall use its reasonable best efforts to obtain shareholder approval with respect to such parachute payments pursuant to Section 280G(b)(5)(B) of the Code, subject to Mr. D’Antilio’s or Ms. Briansky’s execution of a contingent waiver of his/her receipt of, or entitlement to retain, any such parachute payments, to the extent necessary to obtain such shareholder approval.
Mr. Nargolwala’s Employment Agreement contains a provision that provides that in the event that any payment or benefit received or to be received by Mr. Nargolwala, including the benefits set forth in the “ Severance and Employment Agreements ” section above, would be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), then the total payments due to Mr. Nargolwala shall be reduced to the extent necessary to ensure that no portion of the total payments are subject to the Excise Tax, but only if (i) the net amount of the total payments, as so reduced is greater than or equal to (ii) the net amount of the total payments without a reduction, in each case after taking into account the net amount of certain taxes and the phase out of itemized deductions and personal exemptions attributable to potential payments.
|
|
60 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Termination / Change in Control Table
The following table shows potential payments to our NEOs under the executive severance arrangements and with respect to their outstanding equity incentive awards for various scenarios involving a termination of employment or a change in control, assuming such event occurred on March 29, 2024 and, where applicable, using a price of our Common Stock of $26.96, which was the closing price of our Common Stock on Nasdaq on March 28, 2024, the last trading day of the 2024 fiscal year:
|
Name / |
|
Cash Severance |
|
|
Prorated Bonus |
|
|
Benefit Continuation |
|
|
Equity
|
|
|
Total |
|
|||||
|
Triggering Event |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|||||
|
Vineet Nargolwala |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Termination Following Change in Control |
|
|
2,970,000 |
|
|
|
825,000 |
|
|
|
27,839 |
|
|
|
10,354,635 |
|
|
|
14,177,474 |
|
|
Death/Disability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
6,354,530 |
|
|
|
6,354,530 |
|
|
Qualifying Termination |
|
|
1,320,000 |
|
|
|
825,000 |
|
|
|
27,839 |
|
|
|
6,354,530 |
|
|
|
8,527,369 |
|
|
Derek P. D’Antilio |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Termination Following Change in Control |
|
|
1,487,500 |
|
|
|
318,750 |
|
|
|
41,759 |
|
|
|
4,247,925 |
|
|
|
6,095,934 |
|
|
Death/Disability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,617,102 |
|
|
|
2,617,102 |
|
|
Qualifying Termination |
|
|
1,487,500 |
|
|
|
318,750 |
|
|
|
41,759 |
|
|
|
2,617,102 |
|
|
|
4,465,111 |
|
|
Michael C. Doogue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Termination Following Change in Control |
|
|
700,000 |
|
|
|
300,000 |
|
|
|
41,759 |
|
|
|
3,679,501 |
|
|
|
4,721,260 |
|
|
Death/Disability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,248,039 |
|
|
|
2,248,039 |
|
|
Qualifying Termination |
|
|
700,000 |
|
|
|
300,000 |
|
|
|
41,759 |
|
|
|
2,248,039 |
|
|
|
3,289,798 |
|
|
Max R. Glover |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Termination Following Change in Control |
|
|
700,000 |
|
|
|
300,000 |
|
|
|
41,759 |
|
|
|
3,998,626 |
|
|
|
5,040,385 |
|
|
Death/Disability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,551,508 |
|
|
|
2,551,508 |
|
|
Qualifying Termination |
|
|
700,000 |
|
|
|
300,000 |
|
|
|
41,759 |
|
|
|
2,551,508 |
|
|
|
3,593,267 |
|
|
Sharon S. Briansky |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Termination Following Change in Control |
|
|
680,000 |
|
|
|
280,000 |
|
|
|
27,169 |
|
|
|
2,613,044 |
|
|
|
3,600,213 |
|
|
Death/Disability |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,631,269 |
|
|
|
1,631,269 |
|
|
Qualifying Termination |
|
|
680,000 |
|
|
|
280,000 |
|
|
|
27,169 |
|
|
|
1,631,269 |
|
|
|
2,618,438 |
|
RSUs – With respect to RSUs, amounts in the table include an additional tranche of vesting for a Qualifying Termination and for a termination in connection with death or disability, and vesting in full for a termination following a Change in Control.
PSUs – Performance Valuation – PSUs are valued and presented in the table as follows:
PSUs – Number of Shares Included – The number of PSUs included in the table is based on the nature of the termination event, as follows:
|
|
61 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
2024 DIRECTOR COMPENSATION
The director compensation program provides for annual cash retainer fees and long-term equity awards for certain of our eligible non-employee directors. For details of our director compensation program, see “ Director Compensation Program ” below.
The following table contains information concerning the compensation paid or payable to our non-employee directors in respect of fiscal year 2024 services.
|
Name 1 |
|
Fees Earned or Paid in Cash
2
|
|
|
Stock
|
|
|
All Other Compensation 4 ($) |
|
|
Total
|
|
||||
|
Yoshihiro (Zen) Suzuki |
|
|
83,500 |
|
|
|
185,023 |
|
|
|
3,363 |
|
|
|
271,886 |
|
|
David Aldrich 5 |
|
|
75,000 |
|
|
|
185,023 |
|
|
|
5,000 |
|
|
|
265,023 |
|
|
Andrew Dunn 6 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Kojiro (Koji) Hatano 7 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Katsumi Kawashima 7 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Reza Kazerounian 8 |
|
|
37,885 |
|
|
|
185,023 |
|
|
|
— |
|
|
|
222,908 |
|
|
Richard Lury 9 |
|
|
78,500 |
|
|
|
185,023 |
|
|
|
— |
|
|
|
263,523 |
|
|
Susan Lynch 10 |
|
|
70,000 |
|
|
|
185,023 |
|
|
|
— |
|
|
|
255,023 |
|
|
Joseph Martin 11 |
|
|
93,885 |
|
|
|
185,023 |
|
|
|
5,000 |
|
|
|
283,908 |
|
|
Mary Puma 12 |
|
|
35,058 |
|
|
|
146,585 |
|
|
|
— |
|
|
|
181,643 |
|
|
Paul Carl (Chip) Schorr IV 13 |
|
|
14,712 |
|
|
|
94,522 |
|
|
|
— |
|
|
|
109,234 |
|
|
|
62 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
The table below shows the aggregate number of unvested RSUs held as of March 29, 2024 by each non-employee director who was serving as of March 29, 2024. None of our non-employee directors held any vested or unvested stock options as of March 29, 2024.
|
Name |
|
Unvested Restricted Stock Units Outstanding at 2024 Fiscal Year End 1 (#) |
|
|
|
Yoshihiro (Zen) Suzuki |
|
|
3,838 |
|
|
David Aldrich |
|
|
3,838 |
|
|
Andrew Dunn |
|
|
— |
|
|
Kojiro Hatano |
|
|
— |
|
|
Katsumi Kawashima |
|
|
— |
|
|
Richard Lury |
|
|
3,838 |
|
|
Susan Lynch |
|
|
3,838 |
|
|
Joseph Martin |
|
|
3,838 |
|
|
Mary Puma |
|
|
4,678 |
|
|
Paul Carl (Chip) Schorr IV |
|
|
3,326 |
|
Director Compensation Program
Compensation is made to each member of the Board who is not an employee of the Company, the OEP Investor or Sanken, or their respective subsidiaries (each, an “Eligible Director”).
|
Compensation for Eligible Directors |
|
Annualized Cash Retainer ($) |
|
|
|
Annual Cash Retainer (Other than Chairman of the Board) |
|
|
60,000 |
|
|
Annual Cash Retainer (Chairman of the Board) |
|
|
75,000 |
|
|
Additional Cash Retainer for Chair of Audit Committee |
|
|
25,000 |
|
|
Additional Cash Retainer for Chair of Compensation Committee |
|
|
20,000 |
|
|
Additional Cash Retainer for Chair of NCGC |
|
|
10,000 |
|
|
Additional Cash Retainer for Chair of Strategy Committee |
|
|
10,000 |
|
|
Additional Cash Retainer for member of Audit Committee |
|
|
10,000 |
|
|
Additional Cash Retainer for member of Compensation Committee |
|
|
8,500 |
|
|
Additional Cash Retainer for member of NCGC |
|
|
5,000 |
|
|
Additional Cash Retainer for member of Strategy Committee |
|
|
8,500 |
|
Each Eligible Director serving on the Board as of the date of the Annual Meeting will be granted an award of RSUs with a value of approximately $185,000, as determined by dividing the amount by the trailing 30-calendar day average closing price of the Company’s Common Stock on Nasdaq through and including the date prior to the applicable grant date.
|
|
63 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Eligible Directors elected or appointed to serve on the Board on a date other than the date of the Annual Meeting will be granted a prorated award in the first year of service on the Board.
Directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings
Subject to certain limitations, we match charitable donations made by our Eligible Directors to eligible charitable organizations, up to a $5,000 annual limit per person.
Pay Versus Performance
In accordance with Item 402(v) of Regulation S-K and the rules adopted by the SEC pursuant to Section 953(a) of the Dodd-Frank Act, we provide the following disclosure regarding executive compensation for our principal executive officers (“PEOs”) and non-PEO NEOs (“Non-PEO NEOs”) and Company financial performance for each of the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value of Initial Fixed $100
|
|
|
|
|
|
|
|
|||||||||||||
|
Year |
|
Summary Compensation Table Total
|
|
|
Summary Compensation Table Total for Vineet
|
|
|
Compensation Actually Paid to Ravi Vig
1,2,3
|
|
|
Compensation Actually Paid to Vineet Nargolwala
1,2,3
|
|
|
Average
|
|
|
Average Compensation Actually Paid to Non-PEO NEOs
1,2,3
|
|
|
Total Share-holder Return
|
|
|
Peer Group Total Share-holder Return
|
|
|
Net Income ($ Thousands) |
|
|
Performance EBIT ($ Thousands) ⁵ |
|
||||||||||
|
2024 |
|
|
|
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|
|
|
|
|
|
|
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|
(
|
) |
|
|
|
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|
(
|
) |
|
|
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2023 |
|
|
|
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|
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2022 |
|
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2021 |
|
|
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|
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|
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|
2021 |
2022 |
2023 2024 |
|
|
Michael C. Doogue |
Christopher E. Brown |
Max R. Glover |
Sharon S. Briansky |
|
Paul V. Walsh, Jr. |
Derek P. D’Antilio |
Thomas C. Teebagy, Jr. |
Derek P. D’Antilio |
|
|
Michael C. Doogue |
Paul V. Walsh, Jr. |
Michael C. Doogue |
|
|
|
|
Max R. Glover |
|
|
64 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
|
Year |
|
Summary Compensation Table Total for PEO ($) |
|
|
Exclusion of Stock Awards for PEO ($) |
|
|
Inclusion of Equity Values for PEO ($) |
|
|
Compensation
|
|
||||
|
2024 |
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
|
Year |
|
Average Summary Compensation Table Total for Non-PEO NEOs ($) |
|
|
Average Exclusion of Stock Awards for
|
|
|
Average Inclusion of Equity Values for Non-PEO NEOs ($) |
|
|
Average Compensation
|
|
||||
|
2024 |
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
(
|
) |
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
|
Year |
|
Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) |
|
|
Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO
|
|
|
Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO
|
|
|
Change in Fair
|
|
|
Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO
|
|
|
Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for PEO ($) |
|
|
Total - Inclusion of Equity Values for PEO ($) |
|
|||||||
|
2024 |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
Year |
|
Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) |
|
|
Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs
|
|
|
Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs
|
|
|
Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) |
|
|
Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs
|
|
|
Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Non-PEO NEOs
|
|
|
Total - Average Inclusion of Equity Values for Non-PEO NEOs
|
|
|||||||
|
2024 |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
(
|
) |
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company TSR
The following chart sets forth the relationship between Compensation Actually Paid (“CAP”) to our PEOs, the average of CAP to our Non-PEO NEOs, and the Company’s cumulative TSR over the four most recently completed fiscal years. This chart also compares our cumulative TSR over the four most recently completed fiscal years to that of the SOX Index over
|
|
65 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
the same period. TSR amounts reported in the graph assume an initial fixed investment of $100 and that all dividends, if any, were reinvested. cap vs. tsr and peer group tsr cap ($K) $60,000 $40,000 $20,000 $- $(20,000) fy 2021 fy 2022 fy 2023 fy 2024 0 100 200 300 tsr peo 1 - rv peo 2 - vn avg neo company tsr (FY21 indexed to $100) peer group tsr
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between CAP to our PEOs, the average of CAP to our Non-PEO NEOs, and our net income for each of the four most recently completed fiscal years. cap vs. net income cap ($K) $(10,000) $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 fy 2021 fy 2022 fy 2023 fy 2024 net income ($K) $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 peo 1 - rv peo 2 - vs avg neo net income ($K)
|
|
66 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Performance EBIT
The following chart sets forth the relationship between CAP to our PEOs, the average of CAP to our Non-PEO NEOs, and Performance EBIT during the four most recently completed fiscal years. cap ($K) cap vs. performance ebit $(10,000) $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 fy 2021 fy 2022 fy 2023 fy 2024 $- $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 peo 1 - rv peo 2 vn avg neo performance ebit ($K)
Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to be the most important in linking CAP to our PEOs and Non-PEO NEOs for 2024 to Company performance. The measures in this table are not ranked.
|
|
|
|
|
|
|
|
|
|
CEO Pay Ratio
As required by Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K, we are required to disclose the ratio of our CEO’s annual total compensation to the annual total compensation of our other employees.
The total compensation for fiscal year 2024 to our CEO was $7,001,603, as reported in the Summary Compensation Table on page 53. The annual total compensation for fiscal year 2024 for our median-compensated employee, determined to be an employee located in the Philippines, and identified as discussed below, was $10,410, as calculated in accordance with the rules applicable to the Summary Compensation Table. Based on this information, for fiscal year 2024, the ratio of the annual total compensation of our CEO to the total annual compensation of our median-compensated employee was approximately 673 to 1.
Methodology, Assumptions, and Estimates Used in Determining our Pay Ratio Disclosure
For our 2024 pay ratio, we evaluated our workforce as of December 31, 2023 and determined that neither the changes to the median-compensated employee’s compensation nor the changes to our employee population and compensation
|
|
67 |
|
EXECUTIVE AND DIRECTOR COMPENSATION
structure as a whole have significantly impacted our pay ratio disclosure from last year. Therefore, we have used the same median compensated employee identified pursuant to our 2023 identification process.
The annual total compensation of the median-compensated employee and the annual total compensation of the CEO were calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.
The pay ratio reported above is an estimate calculated in a manner consistent with SEC rules based on our internal records and the methodology described above. Because the SEC rules for identifying the median-compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their employee populations and compensation practices, the pay ratio reported above should not be used as a basis for comparison between companies. In addition, we expect the Company’s annually reported pay ratio may vary significantly year over year, given the size of the Company and the potential variability in Company employee compensation.
|
|
68 |
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to holdings of our Common Stock by (i) shareholders who beneficially owned more than 5% of the outstanding shares of our Common Stock, and (ii) each of our directors, each of our NEOs and all current directors and executive officers as a group as of June 12, 2024, unless otherwise indicated.
The number of shares beneficially owned by each shareholder as described in this proxy statement is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power. The percentage ownership of each individual or entity as of June 12, 2024 is computed on the basis of 193,784,314 shares of our Common Stock outstanding. In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of Common Stock subject to options, or other rights, held by such person that are currently exercisable or will become exercisable within 60 days of June 12, 2024, are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the address of each beneficial owner listed below is 955 Perimeter Road, Manchester, New Hampshire, 03103. We believe, based on information provided to us, that each of the shareholders listed below has sole voting and investment power with respect to the shares beneficially owned by the shareholder unless noted otherwise, subject to community property laws where applicable.
|
|
|
Shares of Common Stock
|
|
|||||
|
Name of beneficial owner |
|
Number |
|
|
Percentage |
|
||
|
5% Stockholders |
|
|
|
|
|
|
||
|
Sanken Electric Co., Ltd. 1 |
|
|
98,500,097 |
|
|
|
50.8 |
% |
|
FMR LLC 2 |
|
|
10,450,296 |
|
|
|
5.4 |
% |
|
Named Executive Officers and Directors |
|
|
|
|
|
|
||
|
David J. Aldrich 3 |
|
|
19,873 |
|
|
* |
|
|
|
Sharon S. Briansky |
|
|
36,821 |
|
|
* |
|
|
|
Derek P. D ’ Antilio |
|
|
52,788 |
|
|
* |
|
|
|
Michael C. Doogue 4 |
|
|
224,926 |
|
|
* |
|
|
|
Max R. Glover |
|
|
201,036 |
|
|
* |
|
|
|
Kojiro (Koji) Hatano |
|
|
— |
|
|
* |
|
|
|
Katsumi Kawashima |
|
|
— |
|
|
* |
|
|
|
Richard R. Lury 3 |
|
|
23,001 |
|
|
* |
|
|
|
Susan D. Lynch 3 |
|
|
16,711 |
|
|
* |
|
|
|
Joseph R. Martin 3 |
|
|
22,374 |
|
|
* |
|
|
|
Vineet Nargolwala 5 |
|
|
200,585 |
|
|
* |
|
|
|
Mary G. Puma 6 |
|
|
4,678 |
|
|
* |
|
|
|
Jennie M. Raubacher 7 |
|
|
2,171 |
|
|
* |
|
|
|
Paul Carl (Chip) Schorr IV 8 |
|
|
3,326 |
|
|
* |
|
|
|
Yoshihiro (Zen) Suzuki 3 |
|
|
200,755 |
|
|
* |
|
|
|
All executive officers and directors as a group (17 individuals) |
|
|
1,045,060 |
|
|
|
0.5 |
% |
* Represents beneficial ownership of less than 1%.
|
|
69 |
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
|
70 |
|
Policies and Procedures for Related Person Transactions
Our Board recognizes that transactions with related persons present a heightened risk of conflicts of interests and/or improper valuation (or the perception thereof). Our Board has adopted a written policy that provides that our Audit Committee will approve or ratify related person transactions required to be disclosed pursuant to Item 404 of Regulation S-K. Item 404 of Regulation S-K requires disclosure, subject to certain exceptions, of transactions in which we were or are to be a participant and the amount involved exceeds $120,000 and in which any “related person” as defined under Item 404(a) of Regulation S-K had or will have a direct or indirect material interest. The policy provides that the Audit Committee shall review the relevant facts and circumstances of each related person transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and the extent of the related person’s interest in the transaction, taking into account any conflicts of interest and/or corporate opportunity provisions of our corporate governance documents and, if applicable, whether such transaction will impair a director or director nominee’s independence. It is our policy that directors interested in a related person transaction will recuse themselves from any vote on a related person transaction in which they have an interest and that no director may participate in the approval of a related person transaction for which he or she is a “related person.” Each of the transactions described below that were entered into during the fiscal year ended March 29, 2024 were approved in accordance with our related person transaction policy. Transactions described below from before our IPO were entered into prior to the adoption of our related person transaction policy.
Related Person Transactions
In addition to the compensation arrangements, including employment, termination of employment and change in control arrangements, discussed in the section entitled “ Executive and Director Compensation, ” the following is a description of each transaction or agreement since March 31, 2023 and each currently proposed transaction in which:
The following descriptions include summaries of certain provisions of our related party agreements and are qualified in their entirety by reference to the full text of any such agreement filed as an exhibit to our 2024 Annual Report.
Related Party Agreements
Wafer Foundry Agreement
Effective January 26, 2023, the Company and Polar Semiconductor, LLC (“PSL”) entered into a Wafer Foundry Agreement for the fabrication of wafers (the “WFA”). The WFA replaced an existing Wafer Foundry Agreement with PSL, which was due to expire on March 31, 2023. The WFA has a three-year term, and auto renews for subsequent one-year terms, unless terminated by either party providing two years notice. Pursuant to the WFA, the Company will provide a rolling annual forecast for three years, the first two years of which will be binding. If the Company fails to purchase the forecasted number of wafers for either of the first two years, it will pay a penalty for any shortfall for the given year. The parties also agreed upon production lead-times, as well as wafer, alignment, and mask pricing for the first two years of the term. Any changes to such pricing are subject to mutual agreement. During the fiscal year ended March 29, 2024, the Company made aggregate purchases of approximately $60.4 million from PSL pursuant to the WFA. Accounts payable to PSL totaled $1.6 million during the year ended March 29, 2024.
Notes Receivable from PSL
On December 2, 2021, Allegro MicroSystems, LLC, our wholly owned subsidiary (“AML”) entered into a loan agreement with PSL wherein PSL provided an initial promissory note to AML for a principal amount of $7.5 million (the “Initial PSL Loan”). The Initial PSL Loan will be repaid in equal installments, comprising of principal and interest accrued at 1.26% per annum, over a term of four years with payments due on the first day of each calendar year quarter (April 1st, July 1st, October 1st, and January 1st). On July 1, 2022, PSL borrowed an additional $7.5 million under the same terms of the PSL
|
|
71 |
|
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Loan (the “Secondary PSL Loan” and, together with the Initial PSL Loan, the “PSL Promissory Notes”). The loan funds were used by PSL to procure a deep ultraviolet scanner and other associated manufacturing tools necessary to increase wafer fabrication capacity in support of the Company’s increasing wafer demand. As of March 29, 2024, the outstanding balance of the PSL Promissory Notes was approximately $8.4 million. During the year ended March 29, 2024, PSL made quarterly payments to AML totaling approximately $4.0 million, which included approximately $0.2 million of interest income.
Sale and Subscription Agreement with PSL
On April 25, 2024, the Company entered into a Sale and Subscription Agreement (the “Sale and Subscription Agreement”) with Sanken, PSL, and PS Investment Aggregator, L.P. (“Subscriber”). Pursuant to the terms and conditions of the Sale and Subscription Agreement, in exchange for equity interests in PSL, Subscriber and an affiliate of Subscriber will make aggregate capital contributions to PSL of $175 million (the “Transaction”). The Sale and Subscription Agreement also contemplates that following closing of the Transaction, the Company, Sanken and Subscriber shall contribute all their equity interests in PSL and PSL indebtedness, including the PSL Promissory Notes held by the Company, in exchange for limited partnership interests of a newly formed Delaware limited partnership that, following a series of reorganization transactions (the “Reorganization”), will be the ultimate parent indirectly holding all of PSL’s issued and outstanding equity units (“Polar Parent”). In connection with the Reorganization, the Company, Sanken and Subscriber shall enter into a new partnership agreement for Polar Parent to account for the Reorganization into a limited partnership structure. Following the Reorganization, it is expected that the Company’s ownership of Polar Parent will be approximately 10.2%. Sanken is the principal stockholder of the Company, beneficially owning, in the aggregate, approximately 51% of the Company’s issued and outstanding shares of common stock as of June 12, 2024. Prior to the Transaction, PSL is owned jointly by the Company and Sanken, with the Company holding 30% of PSL’s equity interests and Sanken holding the other 70%.
Distribution of Allegro Products in Japan
In July 2007, we entered into a distribution agreement with Sanken (the “Japan Distribution Agreement”) pursuant to which we appointed Sanken to act as the exclusive distributor of our products in Japan (subject to certain exceptions for any products we and Sanken agree to exclude).
On March 30, 2023, the Company entered into a termination of the distribution agreement with Sanken (the “Termination Agreement”). The Termination Agreement formally terminated the Japan Distribution Agreement, effective March 31, 2023. In connection with the termination of the Japan Distribution Agreement, and, as provided for in the Termination Agreement, the Company made a one-time payment of $5 million to Sanken in exchange for the cancellation of Sanken’s exclusive distribution rights in Japan. Concurrent with the Termination Agreement, AML and Sanken also entered into a short-term, nonexclusive distribution agreement (the “Short-Term Distribution Agreement”) and a consulting agreement (the “Consulting Agreement”), each of which were effective April 1, 2023. In addition, the Company allowed a one-time sales return from Sanken of resalable inventory of $4.2 million. The Short-Term Distribution Agreement provides for the management and sale of Company product inventory for a period of 24 months from April 1, 2023. Under the terms of the Consulting Agreement, Sanken agreed to continue to provide transition services for a period of six months from April 1, 2023 to a strategic customer as orders for the customer were transitioned from Sanken to the Company, and the Company agreed to pay Sanken for providing these transition services. No payments were made by the Company to Sanken under the Short-Term Distribution Agreement or the Consulting Agreement in the fiscal year ended March 29, 2024.
Transactions Involving Sanken
The Company sells products to, and purchases in-process products from Sanken. Net sales of the Company’s products to Sanken totaled approximately $6.2 million during the fiscal year ended March 29, 2024. There were no trade accounts receivable, net from Sanken as of March 29, 2024. Other accounts receivable from Sanken totaled approximately $0.2 million as of March 29, 2024.
Sublease Agreement
On April 1, 2023, our subsidiary, Allegro MicroSystems Japan GK (“Allegro Japan”), entered into a sublease agreement with Sanken pursuant to which Allegro Japan subleases certain office building space in Japan from Sanken. The sublease automatically renews on an annual basis unless either party provides notice to the other party otherwise, and the agreement can be terminated by either party upon providing six months’ notice. We made aggregate payments of approximately $0.2 million to Sanken under the sublease agreement during the fiscal year ended March 29, 2024.
|
|
72 |
|
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Stockholders Agreement
We are party to the Stockholders Agreement with Sanken and the OEP Investor. For more information, see “ Corporate Governance—Stockholders Agreement ” on page 29.
Relationships of our Directors with Sanken, PSL and Subscriber
Yoshihiro (Zen) Suzuki, our Chairman of our Board, has served as a consultant to PSL since July 2022. Katsumi Kawashima, a current member of our Board, serves as a Senior Vice President of Sanken since June 2023. He has also served as an officer of Sanken since June 2021 and as a member of the board of directors of Sanken since June 2022. Kojiro (Koji) Hatano, a member of our Board, has served as General Manager of U.S. Business Enhancement for Sanken since April 2022 and as a Corporate Officer for Sanken since June 2022. He became Chairman and Chief Executive Officer of PSL in May 2022. In addition, since May 2021, Mr. Hatano has served as a member of the board of directors of PSL, and he has served on the board of directors of another Sanken affiliate since March 2020. Paul Carl “Chip” Schorr IV, who serves on the Company’s Board, is also an investor in and a manager of the Subscriber. See “ Corporate Governance—Stockholders Agreement ” on page 29 for additional information.
Director and Officer Indemnification and Insurance
We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things, require us or will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person’s services as a director or executive officer. We have also purchased directors’ and officers’ liability insurance.
|
|
73 |
|
Shareholders who intend to have a proposal considered for inclusion in our proxy materials for presentation at our 2025 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Exchange Act must submit the proposal in writing to our Secretary at our offices at 955 Perimeter Road, Manchester, New Hampshire, 03103 not later than February 26, 2025.
Shareholders intending to present a proposal at the 2025 Annual Meeting of Shareholders, but not to include the proposal in our proxy statement, or to nominate a person for election as a director, must comply with the requirements set forth in our Bylaws. Our Bylaws require, among other things, that our Secretary receive written notice from the shareholder of record of their intent to present such proposal or nomination not earlier than the 120th day and not later than the 90th day prior to the anniversary of the preceding year’s annual meeting. Therefore, we must receive notice of a proposal or nomination for the 2025 Annual Meeting of Shareholders no earlier than April 10, 2025 and no later than May 10, 2025. The notice must contain the information required by the Bylaws, a copy of which is available upon written request to our Secretary. In the event that the date of the 2025 Annual Meeting of Shareholders is more than 30 days before or more than 60 days after August 8, 2025, then our Secretary must receive such written notice not earlier than the 120th day and not later than the close of business on the 90th day prior to the 2025 Annual Meeting or, if later, the close of business on the 10th day following the day the Company first publicly discloses the date of the 2025 Annual Meeting.
In addition to satisfying the foregoing requirements under our Bylaws, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice to the Company that sets forth the information required by Rule 14a-19 under the Exchange Act.
In connection with our solicitation of proxies for our 2025 Annual Meeting of shareholders, we intend to file a proxy statement and WHITE proxy card with the SEC. We reserve the right to reject, rule out of order, or take other appropriate action with respect to any proposal that does not comply with these or other applicable requirements.
OTHER MATTERS
Our Board is not aware of any matter to be presented for action at the Annual Meeting other than the matters referred to above and does not intend to bring any other matters before the Annual Meeting. However, if other matters should properly come before the Annual Meeting, it is intended that holders of the proxies named on the Company’s proxy card will use their discretion to vote thereon.
SOLICITATION OF PROXIES
The accompanying proxy is solicited by and on behalf of our Board, whose Notice of Annual Meeting is attached to this proxy statement, and the entire cost of our solicitation will be borne by the Company. In addition to the use of mail, proxies may be solicited by personal interview, telephone, e-mail and facsimile by our directors, officers and other employees who will not be specially compensated for these services. We will also request that brokers, nominees, custodians and other fiduciaries forward soliciting materials to the beneficial owners of shares held by the brokers, nominees, custodians and other fiduciaries. We will reimburse these persons for their reasonable expenses in connection with these activities.
Certain information contained in this proxy statement relating to the occupations and security holdings of our directors, and officers is based upon information received from the individual directors and officers.
|
|
74 |
|
ANNUAL REPORT ON FORM 10-K
A copy of Allegro’s Annual Report on Form 10-K for the fiscal year ended March 29, 2024, including financial statements and schedules thereto but not including exhibits, as filed with the SEC, will be sent to any shareholder of record as of June 12, 2024 without charge upon written request addressed to:
Allegro MicroSystems, Inc.
Attention: Secretary
955 Perimeter Road
Manchester, New Hampshire, 03103
A reasonable fee will be charged for copies of exhibits. You also may access this proxy statement and our Annual Report on Form 10-K at investors.allegromicro.com/financials/annual-reports . You also may access our Annual Report on Form 10-K for the fiscal year ended March 29, 2024 at investors.allegromicro.com .
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING ONLINE, WE URGE YOU TO VOTE YOUR SHARES VIA THE TOLL-FREE TELEPHONE NUMBER OR OVER THE INTERNET, AS DESCRIBED IN THIS PROXY STATEMENT. IF YOU RECEIVED PRINTED COPIES OF OUR PROXY MATERIALS, YOU MAY ALSO SIGN, DATE AND MAIL THE PROXY CARD IN THE ENCLOSED RETURN ENVELOPE. PROMPTLY VOTING YOUR SHARES WILL ENSURE THE PRESENCE OF A QUORUM AT THE ANNUAL MEETING AND WILL SAVE US THE EXPENSE OF FURTHER SOLICITATION.
By Order of the Board of Directors
Sharon S. Briansky, Senior Vice President, General Counsel and Secretary
Manchester, New Hampshire
June 26, 2024
|
|
75 |
|
APPENDIX A
Non-GAAP Financial Measures
In addition to the measures presented in our consolidated financial statements, we regularly review other measures, defined as non-GAAP financial measures by the SEC, to evaluate our business, measure our performance, identify trends, prepare financial forecasts and make strategic decisions. The key measures we consider include non-GAAP Gross Profit, non-GAAP Gross Margin, non-GAAP Operating Expenses, non-GAAP Operating Income, non-GAAP Net Income and non-GAAP Basic and Diluted Earnings per Share, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Performance EBIT, and Performance EBITDA (collectively, the “Non-GAAP Financial Measures”). These Non-GAAP Financial Measures provide supplemental information regarding our operating performance on a non-GAAP basis that excludes certain gains, losses and charges of a non-cash nature or that occur relatively infrequently and/or that management considers to be unrelated to our core operations. By presenting these Non-GAAP Financial Measures, we provide a basis for comparison of our business operations between periods by excluding items that we do not believe are indicative of our core operating performance, and we believe that investors’ understanding of our performance is enhanced by our presenting these Non-GAAP Financial Measures, as they provide a reasonable basis for comparing our ongoing results of operations. Management believes that tracking and presenting these Non-GAAP Financial Measures provides management and the investment community with valuable insight into matters such as: our ongoing core operations, our ability to generate cash to service our debt and fund our operations; and the underlying business trends that are affecting our performance. These Non-GAAP Financial Measures are used by both management and our board of directors, together with the comparable GAAP information, in evaluating our current performance and planning our future business activities.
The Non-GAAP Financial Measures are supplemental measures of our performance that are neither required by, nor presented in accordance with, GAAP. These Non-GAAP Financial Measures should not be considered as substitutes for GAAP financial measures such as gross profit, gross margin, net income or any other performance measures derived in accordance with GAAP. Also, in the future we may incur expenses or charges such as those being adjusted in the calculation of these Non-GAAP Financial Measures. Our presentation of these Non-GAAP Financial Measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items.
|
|
|
Fiscal Year Ended |
|
|||||
|
|
|
March 29,
|
|
|
March 31,
|
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Reconciliation of Non-GAAP Gross Profit |
|
|
|
|
|
|
||
|
GAAP Gross Profit |
|
$ |
574,529 |
|
|
$ |
546,079 |
|
|
Transaction-related costs |
|
|
1,089 |
|
|
|
— |
|
|
Purchased intangible amortization |
|
|
9,282 |
|
|
|
1,867 |
|
|
Restructuring costs |
|
|
167 |
|
|
|
— |
|
|
Stock-based compensation |
|
|
5,359 |
|
|
|
5,090 |
|
|
Total Non-GAAP Adjustments |
|
$ |
15,897 |
|
|
$ |
6,957 |
|
|
Non-GAAP Gross Profit |
|
$ |
590,426 |
|
|
$ |
553,036 |
|
|
Non-GAAP Gross Margin |
|
|
56.3 |
% |
|
|
56.8 |
% |
|
|
|
Fiscal Year Ended |
|
|||||
|
|
|
March 29,
|
|
|
March 31,
|
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Reconciliation of EBITDA and Adjusted EBITDA |
|
|
|
|
|
|
||
|
GAAP Net Income |
|
$ |
152,888 |
|
|
$ |
187,494 |
|
|
Interest Expense |
|
|
10,763 |
|
|
|
2,336 |
|
|
Interest Income |
|
|
(3,144 |
) |
|
|
(1,724 |
) |
|
Income tax provision |
|
|
41,909 |
|
|
|
23,852 |
|
|
Depreciation amortization |
|
|
71,382 |
|
|
|
50,808 |
|
|
EBITDA |
|
$ |
273,798 |
|
|
$ |
262,766 |
|
|
|
|
|
|
|
|
|
||
|
Transaction-related costs (benefit) |
|
|
22,438 |
|
|
|
(57 |
) |
|
Impairment of long-lived assets |
|
|
13,218 |
|
|
|
— |
|
|
Restructuring costs |
|
|
9,310 |
|
|
|
5,227 |
|
|
Stock-based compensation |
|
|
42,457 |
|
|
|
61,798 |
|
|
Other costs (benefit) |
|
|
3,020 |
|
|
|
(1,816 |
) |
|
Adjusted EBITDA |
|
$ |
364,241 |
|
|
$ |
327,918 |
|
|
Adjusted EBITDA Margin (% of net sales) |
|
|
34.7 |
% |
|
|
33.7 |
% |
|
|
76 |
|
APPENDIX A
|
|
|
Fiscal Year Ended |
|
|||||
|
|
|
March 29,
|
|
|
March 31,
|
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Reconciliation of Non-GAAP Net Income |
|
|
|
|
|
|
||
|
GAAP Net Income Attributable to Allegro MicroSystems, Inc. |
|
$ |
152,697 |
|
|
$ |
187,357 |
|
|
GAAP Basic Earnings per Share |
|
$ |
0.79 |
|
|
$ |
0.98 |
|
|
GAAP Diluted Earnings per Share |
|
$ |
0.78 |
|
|
$ |
0.97 |
|
|
Transaction-related costs (benefit) |
|
|
22,438 |
|
|
|
(57 |
) |
|
Transaction-related interest |
|
|
325 |
|
|
|
— |
|
|
Impairment of long-lived assets |
|
|
13,218 |
|
|
|
— |
|
|
Purchased intangible amortization |
|
|
11,034 |
|
|
|
1,957 |
|
|
Restructuring costs |
|
|
9,310 |
|
|
|
5,227 |
|
|
Stock-based compensation |
|
|
42,457 |
|
|
|
61,798 |
|
|
Other costs (benefit) |
|
|
3,020 |
|
|
|
(1,816 |
) |
|
Total Non-GAAP Adjustments |
|
|
101,802 |
|
|
|
67,109 |
|
|
Tax effect of adjustments to GAAP results |
|
|
9,135 |
|
|
|
(7,285 |
) |
|
Non-GAAP Net Income Attributable to Allegro MicroSystems, Inc |
|
$ |
263,634 |
|
|
$ |
247,181 |
|
|
Basic weighted average common shares |
|
|
192,573,169 |
|
|
|
191,197,452 |
|
|
Diluted weighted average common shares |
|
|
194,674,352 |
|
|
|
193,688,102 |
|
|
Non-GAAP Basic Earnings per Share |
|
$ |
1.37 |
|
|
$ |
1.29 |
|
|
Non-GAAP Diluted Earnings per Share |
|
$ |
1.35 |
|
|
$ |
1.28 |
|
|
|
|
Fiscal Year Ended |
|
|||||
|
|
|
March 29,
|
|
|
March 31,
|
|
||
|
|
|
(Dollars in thousands) |
|
|||||
|
Reconciliation of Performance EBITDA |
|
|
|
|
|
|
||
|
Adjusted EBITDA |
|
$ |
364,241 |
|
|
$ |
327,918 |
|
|
Acquisition-related adjustments |
|
|
5,824 |
|
|
|
4,383 |
|
|
Performance EBITDA |
|
$ |
370,065 |
|
|
$ |
332,301 |
|
|
|
|
Fiscal Year Ended |
|
|||||||||||||
|
|
|
March 29,
|
|
|
March 31,
|
|
|
March 25,
|
|
|
March 26,
|
|
||||
|
|
|
(Dollars in thousands) |
|
|||||||||||||
|
Reconciliation of Performance EBIT |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
GAAP Operating Income |
|
$ |
196,244 |
|
|
$ |
203,307 |
|
|
$ |
136,650 |
|
|
$ |
12,158 |
|
|
Transaction-related costs (benefit) |
|
|
22,438 |
|
|
|
(57 |
) |
|
|
(497 |
) |
|
|
4,944 |
|
|
Impairment of long-lived assets |
|
|
13,218 |
|
|
|
— |
|
|
|
— |
|
|
|
7,119 |
|
|
Purchased intangible amortization |
|
|
11,034 |
|
|
|
1,957 |
|
|
|
1,182 |
|
|
|
768 |
|
|
Restructuring costs |
|
|
9,310 |
|
|
|
5,227 |
|
|
|
4,655 |
|
|
|
7,968 |
|
|
Stock-based compensation |
|
|
42,457 |
|
|
|
61,798 |
|
|
|
33,548 |
|
|
|
49,870 |
|
|
Other costs |
|
|
3,897 |
|
|
|
5,944 |
|
|
|
2,618 |
|
|
|
13,856 |
|
|
Total Non-GAAP Adjustments |
|
|
102,354 |
|
|
|
74,869 |
|
|
|
41,506 |
|
|
|
84,525 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-GAAP Operating Income |
|
$ |
298,598 |
|
|
$ |
278,176 |
|
|
$ |
178,156 |
|
|
$ |
96,683 |
|
|
One-time contract cost |
|
|
— |
|
|
|
— |
|
|
|
2,472 |
|
|
|
— |
|
|
Acquisition-related adjustments |
|
|
7,577 |
|
|
|
4,383 |
|
|
|
— |
|
|
|
— |
|
|
Performance EBIT |
|
$ |
306,175 |
|
|
$ |
282,559 |
|
|
$ |
180,628 |
|
|
$ |
96,683 |
|
|
|
77 |
|
Allegro Microsystems innovation with purpose vote your vote matters
–
here
’
s how to vote! You may vote online or by phone instead of mailing this card. Online go to www.envisionreports.com/algm or scan the WR code
–
login details are located in the shaded bar below phone call toll free 1-800-652-vote (8683 within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/algm using black ink pen, mark your votes with an X as shown in this example. Please do not writ outside the designated areas. 2024 annual meeting proxy card If voting by mail, sign, detach and return the bottom portion in the enclosed envelope. Proposals
–
the board of directors recommend a vote for all the nominees listed, and for proposals 2 and 3. 1. To elect four individuals to the board of directors for three-year terms expiring in 2027: 01- Katsumi Kawashima for withhold 02
–
joseph r. martin for withhold 03
–
Vineet Nargolwala for withhold 043zxib
Notice of 2024 Annual Meeting of Shareholders Proxy Solicited by the Board of Directors for Annual Meeting
—
August 8, 2024 The Shareholder signing on the reverse side (the
“
undersigned
”
), having received t 2024 Annual Report, Notice of Annual Meeting of Shareholders and the Proxy Statement of Allegro MicroSystems, Inc. (the
“
Company
”
), hereby appoint(s) Vineet Nargolwala, Derek P. D
’
Antilio, and Sharon S. Briansky, and each of them, Proxies of the undersigned (with full power of substitution) to attend the Company
’
s Annual Meeting of Shareholders to be held on August 8, 2024, and all adjournments thereof (the
“
Meeting
”
), and to vote all shares of common stock of the Company that the undersigned would be entitled to vote, if personally present, in regard to all matters that may properly come before the Meeting. The undersigned hereby confer(s) upon the Proxies, and each of them, discretionary authority (i) to consider and act upon such business, matters or proposals other than the business set forth herein as may properly come before the Meeting, and (ii) with respect to the election of any substitute nominees designated by the Board of Directors of the Company in the event that any of the nominees are unavailable to serve. The Proxy, please print your comments below.