NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
August
20, 2010
To
the Shareholders of Supertex, Inc.:
NOTICE IS HEREBY GIVEN that the Annual
Meeting of Shareholders of Supertex, Inc., a California corporation (the
"Company"), will be held on Friday, August 20, 2010 at 10:00 a.m., local time,
at the principal offices of the Company located at 1235 Bordeaux Drive,
Sunnyvale, California 94089, for the following purposes, as more fully described
in the Proxy Statement accompanying this Notice:
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1.
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Election
of Directors. To elect directors to serve for the ensuing year and until
their successors are elected.
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2.
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Ratification
of Accounting Firm. To ratify the appointment of PricewaterhouseCoopers
LLP as
independent registered public accounting firm of the Company for fiscal
year 2011.
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3.
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Other
Business. To transact such other business as may properly come before the
meeting or any adjournment thereof.
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The names
and biographies of the nominees for directors and a description of the other
items to be voted on as well as other matters are set forth in the enclosed
Proxy Statement which should be considered as part of this notice.
Only
shareholders of record at the close of business on June 25, 2010 are entitled to
vote at the meeting.
All shareholders are cordially invited
to attend the meeting in person. However, to ensure
your representation at the meeting, you are urged to mark, sign, date, and
return the enclosed proxy card as promptly as possible in the enclosed
postage-prepaid envelope or to submit the proxy via the Internet or by
telephone. Any shareholder attending the meeting may vote in person
even if such shareholder returned a proxy. Please note, however, that
if your shares are held on record by a broker, bank or other nominee, and you
wish to vote at the meeting, you must obtain from the record holder a proxy in
your name.
| By Order of the Board of Directors |
| Henry C. Pao | |||
| President & CEO | |||
| Sunnyvale, California | |||
| July 7, 2010 |
PROXY
STATEMENT
SOLICITATION
OF PROXY, REVOCABILITY AND VOTING
General
The enclosed Proxy is solicited on
behalf of the Board of Directors (the “Board” or “Board of Directors”) of
Supertex, Inc., a California corporation (the "Company"), for use at the 2010
Annual Meeting of Shareholders to be held on August 20, 2010 at 10:00 a.m.,
local time (the “Annual Meeting”), or at any adjournment thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders.
The Annual Meeting will be held at the
principal offices of the Company located at 1235 Bordeaux Drive, Sunnyvale,
California 94089. The Company's telephone number at that address is
(408) 222-8888.
These proxy solicitation materials were
first sent on or made available on or about July 15, 2010 to all shareholders
entitled to vote at the Annual Meeting.
Revocability
of Proxies
Any proxy given pursuant to this
solicitation may be revoked by the person giving it at any time before its use
(i) by delivering to the Secretary of the Company at the Company’s principal
executive offices, 1235 Bordeaux Drive, Sunnyvale, California 94089 a written
notice of revocation or a duly executed proxy bearing a later date or (ii) by
attending the meeting and voting in person. Attendance at the meeting
will not, by itself, revoke a proxy.
Solicitation
The Company will bear the entire cost
of preparing, assembling, printing and mailing this Proxy Statement, the
accompanying proxy and any additional material that may be furnished to
shareholders. Copies of solicitation material will be furnished to
brokerage houses, fiduciaries and custodians to forward to beneficial owners of
stock held in the names of such nominees. The Company may retain the
services of an outside proxy solicitation firm at an estimated cost of $10,000
to $20,000. The solicitation of proxies may also be made by the use
of mail and through direct communication with certain shareholders or their
representatives by officers, directors and employees of the Company, who will
receive no additional compensation for such
solicitation.
Voting
Only shareholders of record at the
close of business on June 25, 2010 (the "Record Date") are entitled to notice of
and to vote at the meeting. On the Record Date, 12,982,205 shares of
the Company's common stock, no par value, were issued and
outstanding. Therefore, the presence at the Annual Meeting, either in
person or by proxy, of a majority or 6,491,103 shares of common stock will
constitute a quorum for the transaction of business at the Annual
Meeting. Every shareholder voting at the election of directors may
cumulate such shareholder's votes and give one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of votes to
which the shareholder's shares are entitled, or distribute the shareholder's
votes on the same principle among as many candidates as the shareholder thinks
fit, provided that votes cannot be cast for a greater number of candidates than
the number of directors to be elected. However, no shareholder shall
be entitled to cumulate votes unless the candidate's name has been placed in
nomination prior to the voting and the shareholder, or any other shareholder,
has given notice at the meeting prior to the voting of the intention to cumulate
the shareholder's votes. On all other matters, each share has one
vote. The five director candidates who receive the most votes will be
elected to fill the seats on the Board. Approval of each of the
proposals requires the favorable vote of a majority of the votes “represented
and voting” on that proposal at the Annual Meeting (the “Votes Cast”) provided
that the favorably voting shares comprise at least a majority of the required
quorum, which for this meeting means at least 3,245,552 shares. An
automated system administered by the Company's transfer agent, Registrar and
Transfer Company, tabulates the votes.
1
Quorum;
Abstentions; Broker Non-Votes
The required quorum for the transaction
of business at the Annual Meeting is a majority of the shares of common stock
issued and outstanding on the Record Date. Shares that are voted
"FOR", "AGAINST" or "WITHHELD FROM" a matter are treated as being present at the
meeting for purposes of establishing a quorum and are also treated as Votes Cast
with respect to such matter.
While there is no definitive statutory
or case law authority in California as to the proper treatment of abstentions,
the Company believes that, in the absence of contrary controlling authority,
abstentions should be counted for purposes of determining the presence or
absence of a quorum for the transaction of business, but should not be counted
as Votes Cast with respect to a proposal, since the shareholder has expressly
declined to vote on such proposal. Similarly, broker non-votes will
be counted for purposes of determining the presence or absence of a quorum for
the transaction of business, but will not be counted for purposes of determining
the number of Votes Cast with respect to the proposal on which the broker has
expressly not voted. A broker “Non-Vote” occurs when a nominee
holding shares for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary power with respect to that item
and has received no instruction from the beneficial owner.
Accordingly, in general abstentions and
broker “non-votes” will not affect the outcome of the voting on a proposal that
requires a majority of the Votes Cast. However, the number of shares
voting in favor of any proposal must constitute at least a majority of the
required quorum for the Annual Meeting. Many brokers are subject to rules which
prohibit them from voting on certain proposals unless they receive specific
instruction from the beneficial owner to vote on such matters. Such rules
currently prohibit the brokers to vote with respect to proposals related to the
election of directors, such as Proposal 1, absent such instruction but such
rules currently do not prohibit the brokers to vote on Proposal 2 related to
ratification of accountants in the absence of such instructions if and as they
choose. As a result, if your shares are not registered in your name
but rather in the name of a bank brokerage firm, or other nominee, you are a
street name shareholder and your failure to instruct your broker how to vote
your shares as to Proposal 1 means that your shares will not be voted on
Proposal 1 and will not count as Votes Cast.
Voting
via the Internet and by Telephone
Shareholders whose shares are
registered in the name of a bank or brokerage firm, or other nominee (“street
name shareholders”) may be eligible to vote electronically through the Internet
or by telephone. Many banks and brokerage firms participate in the Broadridge
Financial Solutions, Inc. online and telephone program. This program provides
eligible street name shareholders the opportunity to vote via the Internet or by
telephone. Voting forms will provide instructions for street name shareholders
whose banks or brokerage firms participate in Broadridge’s online and telephone
program.
Shareholders whose shares are
registered in their name (“registered shareholders”) may vote electronically
through the Internet or by telephone by following the instructions included with
their proxy card. A registered shareholder not wishing to vote
electronically through the Internet or by telephone should complete and return
the enclosed paper proxy card. Signing and returning the proxy card or
submitting the proxy via the Internet or by telephone does not affect the right
to vote in person at the Annual Meeting (see Revocability of
Proxies).
Internet
and Electronic Availability of Proxy Materials
As permitted by the Securities and
Exchange Commission (the “SEC”), the Company is arranging for a Notice of
Internet Availability of Proxy Materials (the “Notice of Availability”) to be
sent via email or by US Postal Service to street name shareholders. All street
name shareholders will have the ability to access this Proxy Statement and the
Company’s Annual Report on Form 10-K for the fiscal year ended April 3, 2010 as
filed with the SEC on June 12, 2010 on a website referred to in the Notice of
Availability or to request a printed set of these materials at no charge.
Instruction on how to access these materials over the Internet or to request a
printed copy may be found in the Notice of Availability.
2
This Proxy Statement and the accompanying form of Proxy are being mailed to
registered shareholders on or about July 15, 2010.
Any shareholder may request to receive
proxy materials in printed form by mail or electronically by email on an ongoing
basis. Choosing to receive future proxy materials by email will save the Company
the cost of printing and mailing documents to shareholders and will reduce the
impact of annual meeting on the environment. A shareholder’s election to receive
proxy materials by email will remain in effect until the shareholder terminates
it.
Procedure
and Deadline for Director Nominations by Shareholders for 2011 Annual
Meeting
The By-Laws of the Company require
advance notification of the intent of any shareholder to nominate a person for
the position of Director of the Company. The Audit and Corporate Governance
Committee may also consider nominees timely proposed by the shareholders in
recommending the nominees for director.
Nominees for election to the Board of
Directors are recommended by the Audit and Corporate Governance Committee of the
Board; nominations may also be made by any shareholder of record who complies
with the following provisions. Shareholder nominations shall be made pursuant to
written notice to the Secretary of the Company delivered or received at 1235
Bordeaux Drive, Sunnyvale, California 94089 (or such other corporate offices as
may be specified) no less than 120 calendar days before the one-year anniversary
of the date that the Company’s proxy statement was released to shareholders in
connection with the previous year’s annual meeting. Nominations for election to
the Board at our 2011 Annual Meeting of Shareholders must be received no later
than March 17, 2011. Such notice shall set forth: (i) as to each person whom the
shareholder proposed to nominate for election or re-election as director (a) the
name, age, business address, and residence address of the person, (b) the
principal occupation or employment of the person over at least the last five
years, (c) the class and number of shares of capital stock of the Company which
are beneficially owned by the person, (d) a statement as to the person’s
citizenship, (e) a description of all arrangements or understandings between the
person and the nominating shareholder pursuant to which such nomination is being
made, (f) the consent of such person to serve as a director of the Company if so
elected, and (g) any such other information concerning the person as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission; and (ii) as to the shareholder giving
notice, (a) the name and record address of the shareholder and (b) the class,
series, and number of shares of capital stock of the Company which are
beneficially owned by the shareholder.
Procedure
and Deadline for Shareholders to Make Proposals for 2011 Annual
Meeting
The By-Laws of the Company require
advance notification of the intent of any shareholder to make a proposal at the
Company’s annual meeting. In order for a shareholder of record to propose
business to be included in our Proxy Statement for the 2011 Annual Meeting of
Shareholders or presented at the 2011 Annual Meeting, in addition to other
requirements, such shareholder must give written notice to the Secretary of the
Company delivered or received at 1235 Bordeaux Drive, Sunnyvale, California
94089 (or such other corporate offices as may be specified) no less than 120
calendar days before the one-year anniversary of the date that the Company’s
proxy statement was released to shareholders in connection with this year’s
annual meeting. Proposals that are intended to be presented at our 2011 Annual
Meeting of Shareholders must be received no later than March 17, 2011. Such
notice shall set forth (a) a brief description of the business desired to be
brought before the meeting, (b) the name and record address of the shareholder
proposing such business, (c) the class, series, and number of shares of capital
stock of the Company which are beneficially owned by the shareholder, (d) any
material interest of the shareholder in such business, and (e) any such other
information concerning the shareholder making such proposal and the proposal
itself as would be required by the appropriate rules and regulations of the
Securities and Exchange Commission to be included in a proxy statement
soliciting proxies for the proposal.
3
PROPOSAL
1: ELECTION OF DIRECTORS
Nominees
The nominees for the upcoming election
of directors include three independent directors, as defined in the listing
standards of the NASDAQ Stock Market, Inc. (“NASDAQ”), and two members of the
Company’s senior management. Each director serves a one-year term, as
described below, with all directors subject to annual election.
The Board of Directors, based on the
recommendation of the Audit and Corporate Governance Committee, has nominated
the persons listed on the following page to serve as directors for the term
beginning at the Annual Meeting of Shareholders on August 20,
2010. Unless proxy cards are otherwise instructed, the person named
as proxy will vote all proxies received FOR the election of each
nominee in this section.
If any director nominee is unable or
unwilling to serve as a director at the time of the Annual Meeting, the person
named as proxy may vote either (1) for a substitute nominee designated by the
present Board to fill the vacancy, or (2) for the balance of the nominees,
leaving a vacancy. Alternatively, the Board may reduce the size of
the Board. The Board has no reason to believe that any of the
following nominees will be unwilling or unable to serve if elected as a
director. The term of office of each person elected as a director
will continue until the next Annual Meeting of Shareholders and until such
person's successor has been elected and qualified. The names and
biographical information for each nominee are set forth as follows (ages are as
of April 3, 2010):
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Name
of Nominee
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Age
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Principal
Occupation
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Director
Since
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Henry
C. Pao (1)
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72
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President
and Chief Executive Officer of the Company
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1976
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Benedict
C. K. Choy (2)
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64
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Senior
Vice President of the Company
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1986
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W.
Mark Loveless (1) (3)
(4)
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58
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Partner,
Burr, Pilger and Mayer, LLP
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2000
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Elliott
Schlam (3)
(4)
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69
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President,
Elliott Schlam Associates
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2000
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Milton
Feng (1) (3)
(4)
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59
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Chair
Professor of Electrical and Computer Engineering, Research Professor of
Microelectronics and Nanotechnology Laboratory Research Professor of
Coordinate Science Laboratory, University of Illinois,
Champaign-Urbana
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2001
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___________________________________________________________________
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(1)
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Member
of the Board’s Compensation
Committee.
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(2)
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Mr.
Choy did not serve on the board from August 20, 2004 through January 18,
2006.
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(3)
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Member
of the Board’s Executive Compensation
Committee.
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(4)
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Member
of the Board’s Audit and Corporate Governance
Committee.
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There is
no family relationship between any director, nominee or executive officer of the
Company.
Henry C. Pao is a founder of
Supertex and has served as President, Chief Executive Officer, and as a Director
since the Company's formation in 1976. He also served as Chief
Financial Officer until October 2006. Previously, he worked at Fairchild
Semiconductor, Raytheon, Sperry Rand, and IBM. He received B.S.,
M.S., and Ph.D. degrees in Electrical Engineering from the University of
Illinois at Champaign-Urbana. Our board of directors has concluded that Mr. Pao
should serve on our board based on his industry experience and deep knowledge of
our Company gained from his serving as our President and Chief Executive Officer
over the past 34 years.
Benedict C. K. Choy, a founder
of the Company, joined Supertex in fiscal 1976 as Vice President, Device
Technology and Process Development, and has served as Senior Vice President
since February 1988. Previously, he worked at Fairchild Semiconductor, National
Semiconductor, and Raytheon. He has a B.S. degree in Electrical Engineering from
the University of California, Berkeley. Mr. Choy has been a member of the board
of directors since1986 except for a brief period from August 20, 2004 through
January 18, 2006 Our board of directors determined that Mr. Choy should serve on
our board based on his extensive knowledge of relevant technology and of our
Company gained from his serving as our senior technology officer over the
past 34 years.
4
W. Mark Loveless has been a
partner of Burr, Pilger & Mayer, an accounting and consulting firm
headquartered in San Francisco, CA, since May 2002. From March 2001
to May 2002, Mr. Loveless was an independent financial
consultant. From November 1999 to March 2001, Mr. Loveless served as
the Chief Financial Officer of NPoint Inc., an embedded software company located
in Los Gatos, CA. Prior to joining NPoint, Inc. in November 1999, Mr.
Loveless had been with PricewaterhouseCoopers LLP since 1978. Mr. Loveless was a
Business Assurance Partner from 1990 to 1999 with PricewaterhouseCoopers LLP in
San Jose, CA in their Technology Sector where he spent considerable time working
with mergers and acquisitions, public offerings, and accounting systems and
controls. Mr. Loveless is a Certified Public Accountant and holds a B.S. degree
in Business Administration and an MBA degree in Finance. Mr. Loveless'
qualifications to serve on our Board of Directors include his extensive
understanding of accounting and tax issues, especially those facing high
technology companies. He has advised and audited high technology
companies for over 20 years as well as worked in industry as a chief financial
officer.
Elliott Schlam is an
internationally recognized authority on the flat panel display industry and has
been President of Elliott Schlam Associates since 1989. His consulting firm
provides investment advice to the financial community and strategic, technical
and marketing guidance to corporate management as well as patent advice and
expert witness services to the legal community. He has helped public and private
concerns evaluate and exploit their technologies for the computer, television,
HDTV, signage, industrial, military and other markets, as well as raise project
related and equity investments and enter into joint development activities with
strategic partners. He has consulted for numerous successful Fortune 100
and start-up companies and was previously VP of Sales and Marketing
for Sigmatron Nova, Inc. as well as director of display R&D,
manufacturing methods and technology insertion for the U.S. Army. He is
currently a principal in New Visual Media Group, LLC, developing energy
efficient display and dynamic window products. He is a Fellow of the Society for
Information Display and has been elected to “Who’s Who in the East”, “Who’s Who
in Technology Today”, “American Men and Women of Science”, “Who’s Who in Optical
Science and Technology”, “America’s Registry of Outstanding
Professionals”, “Who’s Who in Executives and Professionals” and
“United Who’s Who”. He received a Ph.D. in
Electrical Engineering from New York University. Mr. Schlam’s strategic and
marketing consulting experience help balance the expertise brought by our
outside directors. In addition, several of the Company’s products and
markets involve or serve flat panel displays where his experience and reputation
as an authority has proven beneficial.
Milton
Feng is a leading authority in III-V compounds semiconductor and
opto-electronic devices. He is currently the Dr. Nick Holonyak
Jr. Endowed Chair Professor of Electrical and Computer Engineering
and the research professor of Microelectronics and Nanotechnology
Laboratory as well as of the Coordinate Science Laboratory at the
University of Illinois, Champaign-Urbana, where he has been a professor since
1991. He is a Fellow of IEEE and received the prestigious IEEE David
Sarnoff Award in 1997. He was also awarded the Dr. Pan Wen Yuan Award
in 2000. He has published 165 journal
papers, 167 conference papers, and is a holder of 10 patents
in microelectronics and opto-electronics area. He received a Ph.D. in
Electrical Engineering from the University of Illinois. Dr. Feng
worked as a Section Head at the Torrance Research Center, Hughes Aircraft,
and as a Director at the Ford Microelectronics in Colorado Springs
before returning to the University of Illinois as a faculty member. The board of
directors believes that Dr. Feng’s technical expertise helps supplement and
balance that of Dr. Pao and Mr. Choy and that his contacts in the academic world
and knowledge of emerging technology add a valuable perspective to the board of
directors.
Vote
Required and Board of Director’s Recommendation
The five (5) nominees receiving the
highest number of affirmative votes of the shares, entitled to be voted, shall
be elected as directors. Votes withheld from any director are counted
for purposes of determining the presence or absence of a quorum, but have no
other legal effect under California law.
The
Board of Directors recommends that the shareholders vote “FOR” the nominees
listed above.
5
BOARD
OF DIRECTORS AND COMMITTEES
Corporate
Governance
We are committed to the principles of
sound corporate governance. Our Board of Directors has adopted corporate
governance guidelines to assist it in fulfilling its responsibilities to
shareholders and to our employees, customers, suppliers, and local communities
in which we operate. Our corporate governance guidelines together with our
current committee charters are available free of charge in the “Corporate
Governance” section of our website at www.supertex.com.
Written requests should be directed in writing to Supertex, Inc., 1235 Bordeaux
Drive, Sunnyvale, CA 94089, Attention: Investor
Relations.
Our
policies and procedures reflect corporate governance initiatives that are in
compliance with the corporate governance requirements of the Sarbanes-Oxley Act
of 2002 and the listing requirements of the NASDAQ, including:
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·
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The
board of directors has adopted clear corporate governance
policies;
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·
|
Three
of our five board members are independent of us and our
management;
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·
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The
independent directors meet regularly without the presence of
management;
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·
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All
members of the audit and corporate governance committee and the executive
compensation committee are independent
directors;
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·
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The
board of directors has elected W. Mark Loveless as lead director to
preside over the executive sessions of the independent
directors;
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·
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The
charters of the board committees clearly establish their respective roles
and responsibilities;
|
|
·
|
We
have a hotline available to all employees, and our audit and corporate
governance committee has procedures in place for the anonymous submission
of any employee complaint, including those relating to accounting,
internal controls, or auditing matters;
and
|
|
·
|
We
have a Code of Business Conduct and Ethics that applies to the Board of
Directors and all of our employees, agents and contractors, including the
Chief Executive Officer, Chief Financial Officer and
Controller. This code is available, free of charge, in the
“Corporate Governance” section of our website at www.supertex.com
or written requests should be directed to Supertex, Inc., 1235 Bordeaux
Drive, Sunnyvale, CA 94089, Attention: Investor
Relations.
|
Board
Responsibilities and Structure
The
primary responsibility of the Board is to provide effective governance over the
Company’s affairs for the benefit of the Company’s shareholders, employees,
customers and suppliers, and local communities. The Board’s
responsibilities include but are not limited to: (a) evaluating the overall
performance of Supertex and its business; (b) reviewing strategic plans,
approving capital spending, and budgets; (c) monitoring risks such as litigation
and competitive threats and evaluating management’s plans for dealing with such
risks; (d) evaluating the performance of the Chief Executive Officer; (e)
establishing compensation policies for the Chief Executive Officer and other
executive officers; (f) reviewing succession plans and development programs for
members of management; (g) reviewing corporate policies regarding legal and
ethical conduct; and (h) evaluating itself in terms of size, independence, and
overall effectiveness.
6
It is the
policy of the board of directors that a majority of the directors be
independent. Currently, three of our five directors meet the
standards of independence as defined by current NASDAQ listing standards and SEC
rules. The Board has determined that Directors W. Mark Loveless,
Elliott Schlam and Milton Feng are independent Directors. Henry C. Pao and
Benedict C.K. Choy are employed by the Company and thus do not meet the
independence standards.
The Board has
an Audit and Corporate Governance Committee, an Executive Compensation
Committee, and a Compensation Committee, and the Board has adopted a written
charter for each of these committees. The Board has no nominating
committee; however the Board has delegated to the Audit and Corporate Governance
Committee the functions of a nominating committee.
Board
Leadership
The
Company’s bylaws do not require that the Company have a Chairman of the Board
and the Board has never elected one. In the absence of a Chairman of
the Board, the President, who is the chief executive officer of the Company,
presides at Board meetings. The Board does not have a policy
regarding having a Chairman of the Board or, should the Board determine to have
a Chairman of the Board, regarding the separation of the roles of President and
Chairman of the Board as the Board believes it is in the best interests of the
Company and its shareholders to make those determinations based on the position
and direction of the Company and the size and composition of the
Board. The Board has determined that at this time there is no need to
change its structure and elect a Chairman of the Board given the Board’s small
size and long history of working together.
The Board
has appointed W. Mark Loveless to serve as the lead director of the
Board. The Board believes it is in the best interest of the Company’s
shareholders to have an independent director serve as the lead director of the
Board to ensure a greater role for the independent directors in the oversight of
the Company and active participation of the independent directors in
establishing Board priorities and procedures. The primary
responsibilities of the lead director include presiding at all meetings of the
Board at which the President is not present, including executive sessions of the
independent directors, and serving as a liaison between the management members
of the Board and the independent directors. The lead director also
has the authority to call meetings of the independent directors of the
Board. The Board’s decision to have a lead director stemmed in part
from its role of risk oversight of the Company described below and its
assessment that having a focal point for the independent directors to interface
with Company management could help lower oversight risk which might be attendant
with its leadership structure.
Risk
Oversight
Companies
face a variety of risks, including operational risks (such as markets,
competition, technology, manufacturing, personnel, internal controls, etc.);
investment and liquidity risk; regulatory risk; and business interruption risk
(such as from a natural disaster). For a more detailed discussion of
these risks facing the Company, we encourage you to review our Annual Report on
Form 10-K for the fiscal year ended April 3, 2010, especially Item
1A. The Board believes an effective risk management system will
timely identify the material risks that the Company faces, communicate necessary
information with respect to material risks to senior executives and, as
appropriate, to the Board or relevant Board committee, implement appropriate and
responsive risk management strategies consistent with the Company’s risk profile
and resources, and integrate risk management into the Company’s
decision-making.
The Board
retains the ultimate oversight over the Company’s risk
management. The Board has designated the Audit and Corporate
Governance Committee to take the active lead in overseeing company-wide risk
management. In this regard, the Audit and Corporate Governance
Committee is responsible for periodically evaluating the Company’s risk
management process and system in light of the nature of the material risks the
Company faces and the adequacy of the Company’s policies and procedures designed
to address risk, including insurance. The Audit and Corporate
Governance Committee makes periodic reports to the Board regarding briefings
provided by management and advisors and recommends to the Board any changes
deemed appropriate by the Audit and Corporate Governance Committee. The Board
has designated the Executive Compensation Committee to take the lead in
overseeing a risk assessment of the Company’s compensation policies and
practices to ensure that the Company’s compensation policies and practices do
not motivate imprudent risk taking.
7
In addition
to the formal compliance program, the Board encourages management to promote a
corporate culture that incorporates risk management into the Company’s corporate
strategy and day-to-day business operations. The Board also
continually works, with the input of the Company’s executive officers, to assess
and analyze the most likely areas of future risk for the Company.
Board
Meetings
The Board
held three meetings during the fiscal year
ended April 3, 2010, and in addition took actions by unanimous written
consent. All directors attended three Board meetings as well as the
meetings of the various committees on which such directors serve.
Board
Attendance at Annual Meetings
Although
the Company does not have a formal policy regarding Board attendance at annual
meetings of shareholders, all Board
members are encouraged
to attend. Two members of the Board attended the 2009 annual meeting that was
held on August 14, 2009.
Committee
Membership
Below is a
summary of our committee structure and membership information.
|
Directors
|
Audit
and Corporate Governance Committee
|
Executive
Compensation Committee
|
Compensation
Committee
|
|||
|
Henry
C. Pao
|
--
|
--
|
Chair
|
|||
|
Benedict
C.K.Choy
|
--
|
--
|
--
|
|||
|
W.
Mark Loveless
|
Chair
and Financial Expert
|
Chair
|
Member
|
|||
|
Elliott
Schlam
|
Member
|
Member
|
--
|
|||
|
Milton
Feng
|
Member
|
Member
|
Member
|
Audit
and Corporate Governance Committee
The current
members of the Audit and Corporate Governance Committee are: W. Mark Loveless,
Elliott Schlam, and Milton Feng, each of whom is (1) “independent” as that term
is defined in Section 10A of the Exchange Act of 1934, as amended (the “Exchange
Act”); (2) “independent” as defined by current NASDAQ listing requirements; and
(3) financially literate and has the requisite financial sophistication as
required by the NASDAQ rules applicable to issuers listed on the NASDAQ Global
Market.
8
Audit Committee Financial
Expert. The board of directors has determined that W.
Mark Loveless meets the criteria of an “audit committee financial expert” within
the meaning of the SEC’s regulations. In fiscal year 2010, the Audit
and Corporate Governance Committee held four meetings. All members of the Audit
and Corporate Governance Committee attended all meetings.
On behalf of the Board of Directors,
the Audit and Corporate Governance Committee (1) retains the Company’s
independent accountants; (2) reviews the arrangements for and scope of the audit
by the Company’s independent accountants and reviews their independence; and (3)
generally oversees the integrity and quality of the Company’s financial
accounting and reporting practices and its system of internal accounting
controls. It is not the duty of the Audit and Corporate Governance
Committee to plan or conduct audits or to determine that the Company’s financial
statements are complete and accurate and are in accordance with generally
accepted accounting principles. Management is responsible for the
Company’s financial statements and the reporting process, including the system
of internal controls. The independent auditors are responsible in
their report for expressing an opinion on the conformity of those financial
statements with generally accepted accounting principles.
As further described below under
“Nomination of Directors”, the Audit and Corporate Governance Committee is also
chartered to oversee the corporate governance compliance and director
nominations. Specifically, they are: (1) to identify individuals
qualified to become Board members and to nominate directors for election; (2) to
lead the Board in its annual review of the Board's performance; (3) to recommend
to the Board director nominees for each committee; and (4) to review and make
recommendations to the Board concerning corporate governance
matters.
9
Report
of the Audit and Corporate Governance Committee of the Board of
Directors
Notwithstanding
anything to the contrary set forth in any of the Company's previous filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Audit and Corporate Governance
Committee Report shall not be incorporated by reference into any such filings,
nor shall it be deemed to be soliciting material or deemed filed with the
Securities and Exchange Commission under the Securities Act of 1933, as amended,
or under the Securities Exchange Act of 1934, as amended.
The
Audit and Corporate Governance Committee is comprised entirely of outside,
independent directors. On behalf of the Board of Directors, the Audit
and Corporate Governance Committee retains the Company’s independent registered
public accounting firm (“External Auditors”), reviews the arrangements for and
scope of the audit by the Company’s External Auditors and reviews their
independence, and generally oversees the integrity and quality of the Company’s
financial accounting and reporting practices and its system of internal
accounting controls. It is not the duty of the Audit and Corporate
Governance Committee to plan or conduct audits or to determine that the
Company’s financial statements are complete and accurate and are in accordance
with generally accepted accounting principles. Management is
responsible for the Company’s financial statements and the reporting process,
including the system of internal controls. The External Auditors are
responsible in their report for expressing an opinion on the conformity of those
financial statements with generally accepted accounting principles. During the
fiscal year ended April 3, 2010, the Committee met four times, and discussed the
interim financial information contained in each quarterly earnings announcement
with the chief financial officer, controller and PricewaterhouseCoopers LLP, our
External Auditors, prior to public release.
In
discharging its oversight responsibility as to the audit process, the Committee
obtained from PricewaterhouseCoopers LLP the written disclosures and the letter
from the External Auditors required by the Rule 3526, “Communication with Audit
Committee Concerning Independence”, of the Public Company Accounting Oversight
Board, has discussed with the PricewaterhouseCoopers LLP their independence and
has satisfied itself as to the auditors' independence. The Committee
also discussed with management, and PricewaterhouseCoopers LLP the quality and
adequacy of the Company's internal controls over financial
reporting. The Committee reviewed with PricewaterhouseCoopers LLP
their audit plans, audit scope and identification of audit risks.
The
Committee discussed with PricewaterhouseCoopers LLP all matters required to be
discussed as described in Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees" and, with and without management present,
discussed and reviewed the results of the External Auditors’ examination of the
financial statements.
The
Committee reviewed the audited financial statements of the Company as of and for
the fiscal year ended April 3, 2010, with management and PricewaterhouseCoopers
LLP. Based on this review and the above-mentioned discussions with
management and PricewaterhouseCoopers LLP, the Committee recommended to the
Board that the Company's audited financial statements be included in its Annual
Report on Form 10-K for the fiscal year ended April 3, 2010, for filing with the
Securities and Exchange Commission. The Audit and Corporate
Governance Committee has also approved, subject to shareholder ratification, the
selection of the Company’s independent accountants for fiscal 2011.
Each of
the members of the Audit and Corporate Governance Committee is independent as
defined in Rule 4200(a)(14) of the National Association of Securities Dealers'
Marketplace Rules.
Respectfully
submitted by the members of the Audit and Corporate Governance
Committee
| W. Mark Loveless | |||
| Elliott Schlam | |||
| Milton Feng |
10
Executive
Compensation Committee
The current members of the Executive
Compensation Committee are W. Mark Loveless, Elliott Schlam, and Milton Feng,
each of who is “independent” as defined by current NASDAQ listing standards and
SEC rules. No meetings of the Executive Compensation Committee were held during
fiscal year 2010 as the committee instead acted by unanimous written consent
after informal communications among its members.
The purpose of the Executive
Compensation Committee is to evaluate and approve the compensation of the CEO
and other executive officers and to provide oversight of the Company’s
compensation policies, plans and benefits programs, including the granting of
stock options to all employee directors and executive officers. The
Executive Compensation Committee also acts as the Administrator of the Company’s
Non-Qualified Deferred Compensation Plan and the Employee Stock Purchase Plan
and helps administer the Company’s Profit-Sharing Bonus Incentive
Plan.
Compensation
Committee
The current members of the Compensation
Committee are Henry C. Pao, Mark Loveless, and Milton Feng. No
meetings of this committee were held in fiscal year 2010, as the committee
instead acted by unanimous written consent after informal communications among
its members.
The purpose of the Compensation
Committee is to evaluate and make recommendations to the Board of Directors with
respect to all cash-based compensation and all stock compensation of employees
and consultants, other than employee directors and executive
officers. The Compensation Committee also serves as the Stock Option
Committee under the Company’s Stock Option Plan for granting of options to all
employee and consultants, other than employee directors and executive officers,
and helps administer the Company’s Profit-Sharing Bonus Incentive
Plan.
Compensation
Committee Interlocks and Insider Participation
Messrs. Loveless, Schlam and Feng serve
as members of the Executive Compensation Committee. No interlocking
relationship exists between the Board of Directors or Executive Compensation
Committee and the board of directors or compensation committee of any other
entity, nor has any interlocking relationship existed in the past.
Compensation
of Outside Directors
The Company currently pays cash
compensation to its lead director for serving on the Board in an amount of
$2,000 for each physical Board meeting attendance and $1,000 for each telephonic
meeting. The Company pays cash compensation to the other outside Directors in an
amount of $1,500 for each physical Board meeting attendance and $750 for each
telephonic meeting. The Chairman of the Audit and Corporate
Governance Committee receives an additional $1,500 for each Audit and Corporate
Governance Committee meeting, while the Audit and Corporate Governance Committee
members receive $1,000 for each meeting. The Company also reimburses all outside
Directors for travel and other necessary out-of-pocket expenses incurred in the
performance of their services as directors. In addition, the Company
pays its outside directors an annual retainer of $20,000 for the “Audit
Committee Financial Expert” and $12,000 for the other outside directors. The
Compensation Committee, conferring with the Company’s executive officers,
selected these compensation amounts after analyzing the director compensation
policies of comparable companies. The Compensation Committee does not
delegate any of its authority as to determining director compensation, and no
compensation consultants are used.
The Company also has an automatic
option grant program for outside directors under the Company’s Stock Option
Plan. Under this program, on the first business day of September of each year,
the Company will make an initial grant of non-statutory options to purchase
10,000 shares of the Company’s stock to any outside board member who had been
newly elected to the Board of Directors since the date of the last automatic
option grants and an annual option grant of non-statutory options to purchase
5,000 shares to each continuing outside board member who was not newly elected
to the Board at the meeting and has served at least six (6) months as an outside
director. The options have a ten-year term and an exercise price equal to the
closing trading price of Company stock on the last market trading day prior to
their date of grant and vest 20% immediately and 20% at each of the following
four anniversaries of their grant date, with one year of acceleration upon a
change of control.
11
The following table provides the total
compensation of outside Directors in fiscal year 2010.
FISCAL
2010 DIRECTOR COMPENSATION
|
Name
|
Fees
Earned in Cash ($) (1)
|
Option
Awards Expense ($) (2)
|
Total
($)
|
|||||||||
|
W.
Mark Loveless
|
$ | 29,000 | $ | 64,877 | $ | 93,877 | ||||||
|
Elliott
Schlam
|
17,500 | 64,877 | 82,377 | |||||||||
|
Milton
Feng
|
$ | 17,500 | $ | 64,877 | $ | 82,377 | ||||||
_______________________________________________________
(1) The
amounts listed under “Fees Earned in Cash” are based on the fees for fiscal 2010
that were earned by the named outside directors during the fiscal year 2010,
including the annual retainer fees, committee and chairman/financial expert fees
and attendance fees described in the narrative above.
(2)
Amounts in this column reflect the grant date fair value of stock option awards
which these three outside directors received during fiscal 2010 determined by
the Company in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 718, for accounting purposes,
and do not reflect whether the recipient has actually realized a financial
benefit from the award. Pursuant to SEC rules, these amounts exclude the impact
of estimated forfeitures related to service-based vesting conditions. Each of
the three outside directors was granted 5,000 non-statutory options during
fiscal year 2010. The numbers of options held by these three outside directors
as of April 3, 2010 were as follows: Mr. Loveless—25,000; Dr.
Schlam—25,000; and Dr. Feng—21,000.
Nomination
of Directors
The Board of Directors has as an
objective that its membership be composed of experienced and dedicated
individuals with diversity of backgrounds, perspectives and skills. The Audit
and Corporate Governance Committee nominates candidates for election to the
Board based on an evaluation of the candidate’s decision-making ability,
business experience and expertise, technological background, diversity of
expertise, personal integrity, reputation, ability and willingness of the
candidate to devote the necessary time to board service on an ongoing basis and
act on behalf of all shareholders, and independence as defined by NASDAQ listing
standards. The Audit and Corporate Governance Committee also reviews
the activities and associations of potential candidates to ensure that there is
no legal impediment, conflict of interest, or other consideration that might
hinder or prevent the potential candidate from fulfilling the duties of a
director.
Prior to
each annual meeting of shareholders, the Audit and Corporate Governance
Committee identifies nominees first by evaluating the current directors whose
term will expire at the annual meeting and who are willing to continue in
service. These candidates are evaluated based on the criteria described above,
including as demonstrated by the candidate’s prior service as a director, and
the needs of the Board with respect to the particular talents and experience of
its directors. In the event that a director does not wish to continue in
service, the Audit and Corporate Governance Committee determines not to
re-nominate the Director, a vacancy is created on the Board as a result of a
resignation or an increase in the size of the board or other event, the
Committee will consider various candidates for Board membership, including those
suggested by the Committee members, by other Board members, by any executive
search firm engaged by the Committee and by shareholders. Once identified,
candidates are initially interviewed by the Chairman of the Audit and Corporate
Governance Committee and our Chief Executive Officer, and then by all members of
the Audit and Corporate Governance Committee and at least one additional officer
of the Company and the lead director (if not a member of the Audit and Corporate
Governance Committee). When the Audit and Corporate Governance Committee
considers whether to nominate current members of the Board of Directors for
reelection by the shareholders, it also considers each member’s contributions to
the Board of Directors and the Company, the member’s knowledge of the Company
and issues presented to the Board of Directors, and the member’s preparation for
meetings and meeting attendance records.
12
The Audit and
Corporate Governance Committee does not currently use the services of a third
party consultant to assist in the identification or evaluation of potential
director candidates. However, it may engage a third party to provide
for such services in the future.
The Audit and
Corporate Governance Committee will consider prospective nominees for election
to the Board of Directors that are proposed by shareholders based on the same
criteria it uses for all director candidates. Any shareholder who
wants to recommend a prospective nominee for the Audit and Corporate Governance
Committee’s consideration should submit the candidate’s name and qualifications
to the Audit and Corporate Governance Committee Chairman via e-mail at audit@supertex.com,
or by fax to (408) 222-4805.
In addition,
as described above under Procedure and Deadline for Director Nominations by
Shareholders for 2011 Annual Meeting, the deadline for shareholders to nominate
a candidate for election as a director is that such nomination must be received
by the Audit and Corporate Governance Committee no later than March 17,
2011.
Director
Diversity
The board
does not have a formal policy requiring the Audit and Corporate Governance
Committee to consider the diversity of directors in its nomination process.
However, the Audit and Corporate Governance Committee seeks to have a slate of
candidates for election that represents a diverse set of views, experiences, and
backgrounds. Additionally, the Audit and Corporate Governance Committee
considers as one factor in its selection of directors the diversity of the board
as it relates to race, gender, and national origin.
Shareholder
Communications with the Board of Directors
If you wish
to communicate with the Board of Directors, you may send your communication in
writing to: Corporate Secretary, Supertex, Inc., 1235 Bordeaux Drive, Sunnyvale,
California 94089. You must include your name and address in the
written communication and indicate whether you are a shareholder of the
Company. The Corporate Secretary will review any communication
received from a shareholder, and all material communications from shareholders
will be forwarded to the appropriate director or directors or committee of the
Board based on the subject matter.
Certain
Relationship and Related Transactions
The Company’s
Code of Business Conduct and Ethics requires disclosure to the Chief Financial
or Executive Officer of any proposed transaction in which a related person, such
as an employee, officer, director, or 5% shareholder, or their immediate family
members, has a material interest. If such proposed transaction is material to
the Company then the Audit and Corporate Governance Committee would determine
whether to authorize the transaction taking into account such factors as the
nature of the proposed transaction and the related person’s interest and whether
the transaction is just and reasonable as to the Company. For the most
significant transactions, for example those involving more than $120,000 and
involving an executive officer or board member, then the full Board of Directors
would make this determination rather than the Audit and Corporate Governance
Committee. The Audit and Corporate Governance Committee or Board of Directors,
as the case may be, may determine to ratify interested person transactions that
have already been undertaken.
Security
Ownership of Certain Beneficial Owners and Management
The following
table sets forth the beneficial ownership of Common Stock of the Company as of
June 25, 2010 (i) by each person who is known by the Company to own beneficially
more than 5% of the Company's Common Stock; (ii) by each of the Company's
directors and nominees; (iii) by the Company's Chief Executive Officer, Chief
Financial Officer and each of the other three most highly compensated executive
officers; and (iv) by all directors and executive officers as a
group. Unless otherwise indicated below, the address of each
beneficial owner listed on the table is c/o Supertex, Inc., 1235 Bordeaux Drive,
Sunnyvale, California 94089. Beneficial ownership is determined in accordance
with the rules and regulations of the Securities and Exchange Commission. In
computing the number of shares beneficially owned by a person and the percentage
ownership of that person, shares of Common Stock subject to options held by that
person that are currently exercisable or exercisable within 60 days of June 25,
2010, are deemed outstanding. These shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of any other
person. As of June 25, 2010, there were 12,982,205 shares of Common
Stock outstanding:
13
|
Shares
Beneficially Owned (1)
|
|||||
|
Directors,
Officers and 5% Stockholders
|
Number
of Shares
|
Percentage
of Total
|
|||
|
Columbia
Wanger Asset Management LP
227
West Monroe Street, Suite 3000, Chicago, IL 60606
|
1,631,300
|
(2)
|
12.57%
|
||
|
Royce
& Associates, LLC
1414
Avenue of the Americas, New York, NY 20019
|
1,470,153
|
(3)
|
11.32%
|
||
|
Rima
Management, LLC
110
East 55th Street, Suite 1600, New York, NY 10022
|
769,636
|
(4)
|
5.93%
|
||
|
Push,
Inc.
2
Oxford Road, Kowloon, Hong Kong
|
754,028
|
(5)
|
5.81%
|
||
|
Henry
C. Pao
|
966,947
|
(6)
|
7.45%
|
||
|
Phillip
A. Kagel
|
31,600
|
(7)
|
|||
|
Benedict
C.K. Choy
|
194,455
|
1.50%
|
|||
|
Hernan
DeGuzman
|
11,750
|
(7)
|
|||
|
Michael
Lee
|
66,665
|
|
(7)
|
||
|
W.
Mark Loveless
|
17,600
|
(7)
|
|||
|
Elliott
Schlam
|
16,000
|
(7)
|
|||
|
Milton
Feng
|
12,000
|
(7)
|
|||
|
All
Directors and Executive Officers as a group (11 persons)
|
1,380,642
|
(8)
|
10.63%
|
||
__________________________________________________________
(1)
Except as indicated in the other footnotes to this table, and pursuant to
applicable community property laws, the persons named in the table have sole
voting and investment power with respect to all shares of common stock shown as
beneficially owned by them.
(2) Based
on a Form 13-F for the quarter ended March 31, 2010, filed with the SEC on May
13, 2010, pursuant to the Exchange Act, Columbia Wanger Asset Management LP
(“Columbia”) has beneficial ownership of these shares with the sole voting and
dispositive power over these shares. Based on a Form 13G/A filed with the SEC on
February 10, 2010, pursuant to the Exchange Act at a time when Columbia
beneficially owned 1,633,300 Company shares, 1,035,000 Company shares were held
by Columbia Acorn Trust which is advised by Columbia.
(3) Based
on a Form 13-F for the quarter ended March 10, 2010 filed with the SEC on May
17, 2010, pursuant to the Exchange Act, Royce and Associates LLC (“Royce”)
has beneficial ownership of these shares with the sole voting and dispositive
power over these shares. Based on a Form 13G/A filed with the SEC on January 7,
2010, pursuant to the Exchange Act at a time when Royce beneficially owned
1,421,198 Company shares, 782,053 Company shares were held by Royce Value Plus
Fund which is managed by Royce.
(4) Based
a Form 13-F for the quarter ended March 31, 2010, filed with the SEC on April
21, 2010, pursuant to the Exchange Act, Rima Management LLC (“Rima”) and Richard
Mashaal each have beneficial ownership of these shares, with shared
dispositive power over them and with Rima having sole voting power over them.
According to that Form 13-F, these shares are under the common
control of Richard Mashaal, as the Managing Member of Rima and as an employee of
Senvest International LLC, whose proprietary portfolio he manages. Based on a
Form 13-G filed with the SEC on January 26, 2010, pursuant to the Exchange Act
at a time when Rima and Mr. Mashaal each beneficially owned 672,552 Company
shares, Rima and Mr. Mashaal shared voting and dispositive power over the shares
and both Rima and Mr. Mashaal disclaimed beneficial ownership in the shares
except to the extent of their respective pecuniary interests
therein.
(5) Based
on a communication with Frank Pao, son of Yunni Pao, the Company believes Push.
Inc., a British Virgin Islands corporation owned 100% by Yunni Pao’s estate, has
beneficial ownership of these shares. Yunni Pao was the late father of Henry C.
Pao.
(6) Henry
C. Pao is the son of Yunni Pao and disclaims beneficial ownership of the shares
held by Yunni Pao’s estate.
(7)
Indicates less than 1% in beneficial ownership.
(8)
Includes options held by the Company's executive officers and directors (11
persons) to purchase an aggregate of 227,175 shares of Common Stock exercisable
within 60 days of June 25, 2010.
14
Compliance
with Section 16(a) of the Exchange Act
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act
requires the Company's officers and directors, and persons who own more than 10%
of the Company's Common Stock to file with the SEC and NASDAQ initial reports of
ownership on Form 3 and changes in ownership on Forms 4 or
5. Such officers, directors and 10% shareholders (“Reporting
Persons”) are also required by SEC rules to furnish the Company with copies of
all Section 16(a) forms they file. Specific due dates for these
reports have been established, and the Company is required to disclose in this
Proxy Statement any failure to file these reports on a timely
basis.
Based solely on our review of the
copies of such forms we have received, or written representations from certain
Reporting Persons, we believe that, during fiscal year 2010, all Reporting
Persons complied with all applicable filing requirements, except as described
below:
Each of the Company’s outside directors
filed one (1) late Form 4 that reported one (1) transaction. All of these late
filings were due to clerical errors.
Executive
Officers of the Company
The names and positions of the
Company's executive officers as of June 25, 2010 are as follows:
|
Name
|
Position
with the Company
|
Age
|
Officer
Since
|
|||||||||||
|
Henry
C. Pao
|
President
and Chief Executive Officer
|
72
|
1976
|
|||||||||||
|
Benedict
C. K. Choy
|
Senior
Vice President, Technology Development
|
64
|
1976
|
|||||||||||
|
William
Ingram
|
Vice
President, Wafer Fab Operations
|
63
|
1999
|
|||||||||||
|
Michael
Lee
|
Vice
President, I.C. Design
|
55
|
1999
|
|||||||||||
| William Petersen | Vice President, Worldwide Sales |
57
|
2001
|
|||||||||||
|
Michael
Tsang
|
Vice President, Standard Products |
51
|
2006
|
|||||||||||
|
Phillip
A. Kagel
|
Vice President, Finance & Chief Financial Officer |
60
|
2006
|
|||||||||||
| Hernan DeGuzman | Vice President, Marketing |
47
|
2010
|
|||||||||||
Officers
are appointed by the Board of Directors and serve at the discretion of the
Board. There is no family relationship between any of the directors
or executive officers of the Company.
Henry C. Pao is a founder of
Supertex and has served as President, Chief Executive Officer, and as a Director
since the Company's formation in 1976. He served as Chief Financial
Officer until October 2006. Previously, he worked at Fairchild Semiconductor,
Raytheon, Sperry Rand, and IBM. He received B.S., M.S., and Ph.D.
degrees in Electrical Engineering from the University of Illinois at
Champaign-Urbana.
Benedict C. K. Choy is a
founder of the Company, joined Supertex in fiscal 1976 as Vice President, Device
Technology and Process Development, and has served as Senior Vice President
since February 1988. Previously, he worked at Fairchild Semiconductor, National
Semiconductor, and Raytheon. He has a B.S. degree in Electrical Engineering from
the University of California, Berkeley. Mr. Choy was a member of the board of
directors from 1986 through August 20, 2004. In January 19, 2006, Mr.
Choy was appointed by the board as a member of the board of directors of the
Company to fill a vacated position and has served since.
William Ingram joined Supertex
in 1995 as its Director of Wafer Fab Operations, and was promoted to Vice
President, Wafer Fab Operations in 1999. Prior to joining Supertex,
he was Vice President of Technology Development at Crosspoint Solutions, before
which he held management positions at Fairchild and National
Semiconductor. He began his career at National after receiving his
B.S. degree in Electrical Engineering with honors from the North Carolina State
University.
15
Michael Lee re-joined Supertex
in October 1993 as Director of I.C. Design, and was promoted to Vice President,
I.C. Design in 1999. Before that, he had a combined total of fifteen
years of industry experience in I.C. Design. Mr. Lee began his career
at Supertex in 1978 as a Design Engineer after receiving his M.S. degree in
Electrical Engineering from the University of California, Berkeley.
William Petersen first
joined Supertex in 1984 as Sales Manager for the Central Region of the United
States. From 1990 through 1994, he was the Company’s National Sales
Manager, overseeing sales operations throughout the United
States. Mr. Petersen re-joined Supertex in September 1999 as Director
of Sales. He was promoted to Vice President of Worldwide Sales in
April 2001. Prior to working at Supertex, he worked at Siemens as
Central Area Manager from 1980-1984. Mr. Petersen attended the
University of Iowa.
Michael
Tsang joined Supertex in 1995 as a Product Engineer. He was promoted to
Product Engineering Director in 2000, and to Vice President in January 2006
managing our Power, Analog, Ringer, and Telecom (P.A.R.T.) Product Engineering
Department. Prior to joining Supertex, he held positions in Process Engineering,
Product Marketing Engineering, and Device Engineering at Siliconix. He holds a
Bachelor of Science degree in Electrical Engineering from California State
University, San Jose and an MBA from University of Southern California, Marshall
School of Business.
Phillip
A. Kagel joined Supertex in October 2006 as Vice President of Finance and
Chief Financial Officer. Previously, beginning in April 2005, he consulted for
Supertex on financial and accounting matters, with his engagement converting to
full-time beginning in April 2006, it being part-time initially so that he could
consult for other companies as well. He was Senior Vice President of
Finance and Chief Financial Officer of Ultra Clean Holdings from August 2004 to
March 2005 and Senior Vice President of Finance and Chief Financial Officer of
Sipex from February 2003 to April 2004. In addition, he consulted at
Riverstone Networks, Inc. from April 2004 to July 2004 and he held the positions
of Vice President, Controller and Vice President, Global Tax at Solectron from
August 1997 to November 2002. He holds a Bachelor of Science degree in
Mathematics from Brigham Young University and an MBA from the University of
Missouri.
Hernan DeGuzman joined
Supertex in July 2004 as Strategic Marketing Manager. He was elevated to Area
Sales Manager of Asia in January 2006, promoted to Vice President of Sales –
Asia in March 2010 and promoted to Vice President, Marketing in June 2010. Prior
to joining Supertex, he held sales management and field applications positions
at BAE Sales, Power Integrations, and Unitrode Corporation. Mr. De Guzman holds
a B.S. degree in Electrical Engineering from University of California at Los
Angeles and an M.S. degree in Electrical Engineering from University of Southern
California.
Compensation
Discussion & Analysis
Compensation
Philosophy. The Company attempts to apply a consistent
philosophy of compensation for all employees, including its named executive
officers. This philosophy is based on the premise that the
achievements of the Company result from the coordinated efforts of all
individuals working toward common objectives. The Company strives to
achieve those objectives through teamwork that is focused on meeting the defined
expectations of customers and shareholders. Therefore, the Company attempts to
foster teamwork through its compensation system while at the same time striking
a balance with the need to reward higher performing employees more than
lower-performing employees.
The Executive Compensation Committee
determines the cash and equity compensation of the Company’s executive officers
and employee directors. The Executive Compensation Committee does not
delegate any of its authority as to determining compensation, and no
compensation consultants were used in the past three years. The goals of the
Executive Compensation Committee are to align executive compensation with
business objectives and performance, and to enable the Company to attract,
retain and reward executive officers that contribute to the long-term success of
the Company. The Company's compensation program for the chief
executive officer and other named executive officers is based on the same four
principles applicable to compensation decisions for all employees of the
Company:
16
|
·
|
The
Company pays competitively. The Company is committed to
providing a compensation program that helps attract and retain the best
people in the industry.
|
|
·
|
The
Company pays for relative sustained performance. The named
executive officers are rewarded based upon corporate performance and
individual performance. Corporate performance is evaluated by
reviewing the extent to which strategic and business plan goals are met,
including such factors as operating profit, performance relative to
competitors and timely new product introductions. Individual
performance is measured by the named executive officer’s contributions and
efforts made to achieve set objectives in a timely
manner.
|
|
·
|
The
Company strives for fairness in the administration of
compensation. The Company strives to achieve a balance with
respect to compensation paid to the named executive officers within the
Company and in Silicon Valley, although the Company does not benchmark its
compensation to that of any specific company. The Company also
believes that the contributions of each named executive officer and other
members of the executive staff are vital to the success of the
Company. As such, the Executive Compensation Committee's
current policy is that the CEO's base salary does not have any bearing on
the base salary of the other named executive
officers.
|
|
·
|
The
Company believes that named executive officers should understand the
performance evaluation and the compensation administration
process. Twice each fiscal year as part of the process of
determining profit-sharing distributions, the Executive Compensation
Committee evaluates the accomplishments of the CEO and, with input from
the CEO, evaluates the accomplishments of the other named executive
officers in relation to key Company objectives. This evaluation
affects the Executive Compensation Committee’s decision on the elements of
base salary, profit-sharing bonus, and stock option grant of each named
executive officer. Each element is considered independently of
the others so that the decision as to one element does not affect the
decision as to the other elements. Company performance affects the size of
the overall profit-sharing pool.
|
Compensation
Components. The Company's compensation program consists of
cash and equity based compensation. This mixture allows the Company
to attract and retain highly skilled persons as named executive officers,
provide innovative and timely new products and responsive services to customers,
enhance shareholder value, motivate technological innovation and adequately
reward its named executive officers. These components
are:
Cash-Based
Compensation:
Salary. Base
salary is determined by reviewing the compensation levels for competitive
positions in the market and taking into account the performance review of each
named executive officer, described above. There is generally no automatic salary
increase annually. The Executive Compensation Committee evaluates salary
increases periodically on an as-needed basis based on individual
performance. In April, 2009, the Executive Compensation Committee
determined to increase the base salaries of the named executive officers other
than Mr. DeGuzman and to make one-time payments of corresponding retroactive
salary increases for prior fiscal years taking these factors into account and in
particular because it felt they had been undercompensated relative to their
peers in light of the Company’s performance during those prior fiscal years.
Other than these April 2009 increases, none of the named executive officers
received increases in base salary during fiscal 2010, except for Mr. DeGuzman,
who received an increase in base salary in December 2009 before he was promoted
to Vice President in March 2010.
Profit-Sharing Bonus Incentive
Plan. The Profit-Sharing Bonus Incentive Plan (the “Plan”) is
a discretionary incentive plan to encourage employees to perform to the best of
their ability and to continue their employment with the Company. The Plan is
funded by an accrual each fiscal quarter of up to 10% of operating profit before
taxes. The amount paid under the profit-sharing plan has varied from
approximately 6% to 9% of operating profits before taxes and other adjustments.
In years where operating profits have been low, no profit-sharing distributions
have been made. To the extent the amount accrued in any fiscal
quarter is not distributed, it is generally carried over for potential
distribution in the future although the Board has the authority to reverse a
profit sharing accrual which it did in fiscal 2009. The Board
determines the amount of the accrual each fiscal half-year and determines
whether unusual events or transactions may be included.
17
Funds
accrued in the Plan are allocated into three parts: (1) Company’s matching
contributions to the 401(k) plan (as of 2010 up to $1,040 per employee); (2) a
sum to enable the Company to sponsor functions and activities intended to boost
employee morale as well as to cover other expenses rewarding employees; and (3)
bonus incentive distributions to employees for their performance in the relevant
half-year and their continued loyalty to the Company; with any unallocated
balance of the accrual generally carried over for potential use in the future
along with any unspent allocated amount. The bulk of the payments under the
Plan are generally bonus incentive distributions.
|
1.
|
401(k)
Match
|
The
401(k) match is typically made at the end of each fiscal quarter in an amount
determined and allocated among the plan participants, including the named
executive officers as provided in the Company’s 401(k) plan.
|
2.
|
Employee
Morale Boosting Allocation
|
The
allocation for employee morale boosting is typically a relatively small
component of the Plan and is either to reward certain employees for exemplary
performance or more often spent by the Company on certain morale boosting
functions for certain employees or sub-groups or groups of employees for meeting
certain goals or milestones. The amount of this allocation is
proposed by the management and approved by the Board.
|
3.
|
Profit
Sharing Bonus Incentive
Distributions
|
The
Executive Compensation Committee members have discussions with the CEO and
determine the amount to be used for bonus incentive distributions and the
percentage of this amount to be distributed to the officers as a
group. The amount distributed to all officers as a group generally
has been in the range of 25% to 35% of the total bonus incentive distributions,
typically being higher in the range for a highly profitable period and lower in
less profitable period. In years where operating profits have been low, no
profit-sharing distributions have been made. Distributions typically occur
around mid-December and mid-June after both Compensation Committees approve the
respective officer and non-officer sub-pool allocations.
The
Company believes that the level of profits it achieves is dependent upon the
performance of each employee. Therefore, high performing employees will receive
higher bonus incentive distributions relative to their position level and
ranking, while non-performers will not receive a
distribution. Accordingly, the Company awards bonus points to each
named executive officer primarily based on performance and office grade pursuant
to which it allocates and distributes the executive officer
sub-pool. The Executive Compensation Committee members determine the
performance ranking of the CEO and, with input from the CEO, the performance
ranking of the other officers including the other named executive officers. The
Company management then generates a proposed distribution of the executive
officer sub-pool which the Executive Compensation Committee considers and, after
any suggested modifications are made, ultimately approves.
In
order to be eligible for a bonus incentive distribution, the named executive
officers, as is the case with other officers and employees, must have
been a regular, full time employee for at least three full months during the
relevant fiscal half-year and must so remain at the time the distribution is
paid. An employee vests 12.5% for each full three-month period of
full-time employment and the vesting percentage is determined at the end of the
relevant fiscal half-year. As an example, if an employee completes at
least three months but less than six months of full-time employment during the
employee’s initial profit-sharing period, the employee receives 12.5% of what
would otherwise be the employee’s distribution (one-eighth). During the second
six month period, the employee receives 37.5% of what would otherwise be the
employee’s distribution (three-eighths), and so on until the employee is vested
100%.
18
Certain
employees who are internal sales persons receive sales commissions, and their
bonus incentive distributions are accordingly equitably adjusted by the
applicable Board committee. This occurred for Mr. DeGuzman.
Under the
Plan, during fiscal 2010, approximately $173,000 was used for the employee
401(K) match. Due to the reduced operating profit in fiscal 2010 compared to
prior periods, the Executive Compensation Committee determined in June, 2010,
that the Company would reduce the employee morale distributions to approximately
$10,000 and would not allocate any profit-sharing bonus incentive distributions
to employees or the named executive officers in connection with their services
provided in fiscal 2010, from the correspondingly reduced accrued pool until
December, 2010.
Under the
Plan, during fiscal 2009, approximately $212,000 was used for the employee
401(K) match, approximately $16,000 was used for employee morale boosting, and
we paid approximately $834,000 of profit-sharing bonus incentive distributions
to employees in connection with their services provided in fiscal 2009, of which
approximately $142,000 was distributed to the named executive officers as a
group. In these regards, we made a profit-sharing bonus incentive distribution
in connection with services rendered only during the first half of fiscal 2009
as our Executive Compensation Committee determined that we would not make a June
2009 distribution payment in connection with the services provided in the second
half of fiscal 2009 due to the reduced operating profit in that period compared
to prior periods.
Under the Plan,
during fiscal 2008, approximately $204,000 was used for the employee 401(K)
match, approximately $15,000 was used for employee morale boosting, and we paid
approximately $1,976,000 of profit-sharing bonus incentive distributions to
employees in connection with their services provided in fiscal 2008, of which
approximately $360,000 was distributed to the named executive officers as a
group.
|
|
Equity-Based
Compensation:
|
|
|
Historically,
the only equity-based compensation used by the Company has been stock
option grants. Stock options provide additional incentives to
the named executive officers and to all other officers, directors, and
certain management and technical employees to work to maximize shareholder
value. The options vest over a defined period to encourage such
employees to continue in the employment of the Company. In line
with its compensation philosophy, the Company grants stock options
commensurate with the employee's potential contribution to the Company,
measured by her or his qualifications and his previous work performance.
Stock options are granted to existing named executive officers for
performance and/or promotions, and as a part of the employment
compensation package to attract new named executive
officers. Only individual performance and/or expected
performance influence the size of option grants. Company performance does
not factor in.
|
|
|
By
historically granting options with an exercise price equal to market price
of Company stock at the date of grant, the Company ensures that executive
officers will not obtain value unless there is appreciation in the
Company’s stock. By generally granting options with a term of ten years
and with a typical vesting period of five years, options are a retention
tool. This approach is designed to focus named executive
officers and other key employees on sustainable growth of the Company and
the creation of shareholder value over the long term. The
vesting for named executive officers may not be at a constant rate for
each year during the vesting period, and in rare instances the vesting
period may be less than five years. In granting options to the named
executive officers, because the options vest over five years, the Company
plans to grant relatively large options every four to five years and to
grant smaller options in between only if the named executive officer has
performed materially above expectations. During fiscal 2010, the Company
did not grant stock options to the named executive officers as the Company
had granted all of them, except Mr. DeGuzman, a relatively large number of
options on December 1, 2008.
|
19
|
|
Stock
options are a major component of the compensation package of executive
management. The named executive officers are generally granted
options as part of their compensation package at the commencement of
employment. In determining follow-on individual stock options
for the named executive officers, the Executive Compensation Committee
considers individual performance, overall contribution to the Company,
retention, the number of unvested stock options and the total number of
stock options to be granted. Over the past ten years, option
grants have been made only on the first business day of June, September,
December and March of each year. These dates were chosen because they
occur long after the quarterly earnings releases and before the
end-of-quarter blackout period. Executives generally are able to exercise
their vested options at any time but may only sell the resulting stock
during non-blackout periods or under a 10b5-1 plan. The Company
has determined not to have any stock ownership requirement for its
executive officers and
directors.
|
Other:
|
|
Other
elements of the named executive officers’ compensation in the Summary
Compensation Table below consist of the Company match under its 401(k)
plan described under the Profit Sharing Incentive Bonus Plan discussion
above and the Company-paid premiums on life insurance policies, both of
which are available to all full-time employees on the same basis. In
addition, the named executive officers and other key employees are
eligible to participate in and thereby make voluntary contributions to the
Nonqualified Deferred Compensation Plan described on Page 24. Also,
Messrs. Pao and Choy each receives $600, and Mr. DeGuzman receives $500 as
a monthly car allowance. Mr. DeGuzman, who has been serving in Asia but
will shortly transfer back to the US, also received a monthly housing
allowance of $3,200 during his service in Asia. None of the
named executive officers has an agreement providing for severance benefits
or, in the event of a change of control, accelerated vesting of his
Company options.
|
Tax
Considerations:
Cash payments, including salary,
bonuses, and commissions are taxed at ordinary income rates when actually or
constructively received. The Company currently grants only
non-statutory options. Upon grant, there is no tax consequence for
the Company or the optionee. Upon any exercise, the employee is taxed at
ordinary income tax rates and the Company receives a compensation expense
deduction based on the spread between the then current fair market value of
Company stock and the option exercise price. Upon any subsequent sale
of the stock, the optionee is taxed at capital gains rates on any appreciation
since the date of exercise, which capital gain or loss is short-term or long
term depending on whether the stock has been held for a year or
more.
We generally intend to qualify
executive compensation for deductibility without limitation under section 162(m)
of the Internal Revenue Code. Section 162(m) provides that, for
purposes of the regular income tax and the alternative minimum tax, the
otherwise allowable deduction for compensation paid or accrued with respect to a
covered employee of a publicly-held corporation (other than certain exempt
performance-based compensation) is limited to no more than $1 million per
year. We do not expect that the non-exempt compensation to be paid to
any of our executive officers for fiscal 2009 or 2010 as calculated for purposes
of section 162(m) will exceed the $1 million limit.
Compensation
Programs and Risk
The
Company developed its three-prong compensation program (base salary, bonus
incentive distributions, and stock options) in part to avoid inappropriate
risk-taking which could be inadvertently promoted by compensation policies
biased either too much toward short-term or long-term incentives. The
bonus incentive distributions are short-term in nature while equity awards are
long-term. The Company does not offer significant
short-term incentives that might drive high-risk investments at the expense of
long-term Company value nor does the Company have a long-term cash incentive
bonus program which could incent behavior toward the achievement of certain
performance metrics at the expense of long-term Company value. Also,
the Company’s compensation programs, including its standard five-year vesting
schedule for option awards and two-year vesting for the profit sharing incentive
bonus plan, are weighted towards offering long-term incentives that reward
sustainable performance. And, the amount of compensation that the Company
actually pays is at a reasonable and sustainable level, as determined by a
review of the Company’s economic position and prospects, as well as the
compensation offered by comparable companies. As a result, the
Company has concluded that it has a balanced compensation program that does not
promote imprudent or excessive risk taking.
20
Compensation
of Executive Officers
Summary
of Officer Compensation
The
following table shows compensation earned by the Company's Chief Executive
Officer, Chief Financial Officer and each of the three other most highly
compensated executive officers (collectively the “named executive officers”) for
the fiscal year ended April 3, 2010. The Company did not pay any
named executive officer in the Summary Compensation Table any perquisites or
other personal benefits or property in excess of $10,000 during fiscal 2010
, 2009 or 2008. None of the
Company’s executive officers has employment or severance arrangements with the
Company and all serve at the pleasure of the Board.
FISCAL
2010 SUMMARY COMPENSATION TABLE
|
Name
and Principal Position
|
Year
|
Salary
(5)
|
Non-Equity
Incentive Plan Compensation
(6)
|
Option
Awards ($)
(7)
|
All other Compensation
($)
(8) (10)
|
Total
Compensation ($)
|
||||||||||||||||
|
Henry
C. Pao (1) (9)
(10)
|
2010
|
$ | 292,339 | $ | - | $ | - | $ | 7,200 | $ | 299,539 | |||||||||||
|
President,
CEO, Director
|
2009
|
286,823 | 45,000 | 585,940 | 7,200 | 924,963 | ||||||||||||||||
|
2008
|
286,823 | 124,800 | - | 7,200 | 418,823 | |||||||||||||||||
|
Phillip
A. Kagel (2)
(10)
|
2010
|
274,275 | - | - | - | 274,275 | ||||||||||||||||
|
CFO,
VP of Finance
|
2009
|
263,552 | 33,000 | 410,158 | - | 706,710 | ||||||||||||||||
|
2008
|
254,384 | 62,080 | - | - | 316,464 | |||||||||||||||||
|
Benedict
C. K. Choy (3) (8)
(10)
|
2010
|
279,591 | - | - | 7,200 | 286,791 | ||||||||||||||||
|
Director,
Senior Vice President,
|
2009
|
272,117 | 38,000 | 585,940 | 7,200 | 903,257 | ||||||||||||||||
|
Technology
Development
|
2008
|
262,257 | 98,280 | - | 7,200 | 367,737 | ||||||||||||||||
|
Hernan
DeGuzman (4) (8)
|
2010
|
148,403 | 55,778 | - | 44,400 | 248,581 | ||||||||||||||||
|
Vice
President, Marketing
|
|
|||||||||||||||||||||
|
Michael
Lee (10)
|
2010
|
246,128 | - | - | - | 246,128 | ||||||||||||||||
|
Vice
President, I.C. Design
|
2009
|
240,383 | 26,000 | 410,158 | - | 676,541 | ||||||||||||||||
|
2008
|
232,077 | 74,880 | 163,544 | - | 470,501 | |||||||||||||||||
|
(1)
|
The
executive’s salary includes $76,877 and $107,948 of compensation deferred
at the executive’s election in fiscal years 2009 and 2008, respectively.
His non-equity incentive plan compensation in fiscal 2009 includes $27,000
deferred, at the executive’s election, from the bonus he received and
earned in fiscal 2009. His
non-equity incentive plan compensation in fiscal 2008
includes $38,400 deferred, at the executive’s election, from the bonus he
received and earned in fiscal 2008 and $36,480 from the bonus he earned in
fiscal 2008 but received in fiscal
2009.
|
21
|
(2)
|
The
executive’s salary includes $20,724, $41,270 and $46,177 of compensation
deferred at the executive’s election in fiscal years 2010, 2009 and 2008,
respectively. His non-equity incentive plan compensation in fiscal 2009
includes $11,550 deferred, at the executive’s election, from the bonus he
received and earned in fiscal 2009. His
non-equity incentive plan compensation in fiscal 2008
includes $12,800 deferred, at the executive’s election, from the bonus he
received and earned in fiscal 2008 and $12,768 from the bonus he earned in
fiscal 2008 but received in fiscal 2009.
|
|
(3)
|
The
executive’s salary includes $14,288, $22,296 and $25,436 of compensation
deferred at the executive’s election in fiscal years 2010, 2009 and 2008.
His non-equity incentive plan compensation in fiscal 2009 includes $19,000
deferred, at the executive’s election, from the bonus he received and
earned in fiscal 2009. His
non-equity incentive plan compensation in fiscal 2008
includes $25,200 deferred, at the executive’s election, from the bonus he
received and earned in fiscal 2008 and $23,940 from the bonus he earned in
fiscal 2008 but received in fiscal 2009.
|
|
(4)
|
The
executive’s non-equity incentive plan compensation in fiscal 2010consists of sales
commission of
$55,778.
|
|
(5)
|
The
amounts for fiscal 2010 shown in this column reflect one more week of
compensation compared to those for fiscal 2009 and 2008 because fiscal
2010 consisted of 53 weeks, and fiscal 2009 and 2008 consisted of 52
weeks.
|
|
(6)
|
The
amounts shown in this column reflect the bonus incentive distributions
earned by the named executive officers during fiscal years 2010, 2009 and
2008 under the Company's Profit-Sharing Bonus Incentive Plan under which
all eligible employees participate, except the amount for Mr. DeGuzman,
which also includes the commission he received in fiscal
2010.
|
|
(7)
|
Amounts
shown in this column represent the grant date fair value of stock option
awards, which these named executive officers received during fiscal 2009
and 2008. These amounts reflect the value determined by the Company in
accordance with Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 718, for accounting purposes, and do
not reflect whether the recipient has actually realized a financial
benefit from the award. Pursuant to SEC rules, these amounts exclude the
impact of estimated forfeitures related to service-based vesting
conditions. The Company used the Black-Scholes option pricing
model which utilizes certain assumptions outlined in the footnotes to the
Company’s financial statements included in the Company’s Annual Report on
Form 10-K for the year ended April 3, 2010, except that we disregarded
adjustment for forfeiture.
|
|
(8)
|
The
amounts disclosed in this column include: $2,880 deferred for Dr. Pao, at
his election for both fiscal 2009 and 2008, $360 and $630 deferred for Mr.
Choy, at his election for fiscal 2010 and 2009, respectively. The amound
for Mr. DeGuzman also includes an annual housing allowance of
$38,400.
|
|
(9)
|
Dr.
Pao also was paid $25,509 during fiscal 2009 as payment for vacation days
he had accumulated over several years prior to fiscal 2007, but not taken,
which would have been in excess of the number of days of accrual allowed
by the Company’s policy.
|
|
(10)
|
In
April, 2009, four of the named executive officers were granted and paid
retroactive salary increases related to prior reporting periods. The
amounts shown in the above table under the “salary” heading have been
adjusted to reflect these retroactive salary increases. The amounts of
these payments and their application to prior fiscal years are as
follows:
|
|
(a)
|
Dr.
Pao received $54,871, of which $16,464 applied to each of fiscal 2009 and
2008, $14,957 applied to fiscal 2007, and $6,986 applied to fiscal
2006.
|
|
(b)
|
Mr.
Kagel received $17,936, of which $13,552 and $4,384 applied to fiscal 2009
and 2008, respectively.
|
|
(c)
|
Mr.
Choy received $24,682, of which $17,271 and $7,411 applied to fiscal 2009
and 2008, respectively.
|
|
(d)
|
Mr.
Lee received $23,774, of which $16,040 and $7,734 applied to fiscal 2009
and 2008, respectively.
|
Grants
of plan-based awards during fiscal 2010
The following table sets forth
information with respect to bonus incentive distributions under our Profit
Sharing Incentive Bonus Plan as well as stock options grants made during fiscal
year 2010 to our named executive officers, including the grant date fair value
of the stock option awards.
FISCAL
2010 GRANTS OF PLAN-BASED AWARDS
|
Name
|
Grant
Date
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards (1)
|
All
Other Option Awards: Number of Securities Underlying Options
(#)
|
Exercise
Price of Option Awards ($/Sh)
|
Grant
Date Fair Value of Option Awards ($)
|
|||||||||
|
Threshold
($)
|
Target
($)
|
Maximum
($)
|
||||||||||||
|
Henry
C. Pao
|
N/A
|
-
|
$45,800
|
N/A
|
-
|
N/A
|
-
|
|||||||
|
Phillip
A. Kagel
|
N/A
|
-
|
33,000
|
|
N/A
|
-
|
N/A
|
-
|
||||||
|
Benedict
C.K. Choy
|
N/A
|
-
|
38,000
|
N/A
|
-
|
N/A
|
-
|
|||||||
|
Hernan
DeGuzman
|
N/A
|
-
|
N/A
|
N/A
|
-
|
N/A
|
-
|
|||||||
|
Michael
Lee
|
N/A
|
-
|
26,000
|
N/A
|
-
|
N/A
|
-
|
|||||||
_____________________________________________________
22
|
(1)
|
The
Non-Equity Incentive Plan is a profit-sharing plan which is described
above in “Compensation Discussion and Analysis—Cash-Based
Compensation—Profit-Sharing Bonus Incentive Plan”. The
threshold payout would be zero (if the Company were to have little or no
profit) and the maximum payout is indeterminate (since the Company’s
profit does not have a readily ascertainable upper bound). The
target payout for fiscal 2010 is not determinable. Therefore, the entry in
the target column per SEC rules is to be a representative amount based on
the profit-sharing bonus incentive distribution made last year under the
Company’s profit-sharing bonus incentive plan. Accordingly, the amounts
shown in the target column are the profit-sharing bonus incentive
distributions made to the named executive officers in 2009. Mr. DeGuzman,
being the only exception, was not then an executive officer, so no target
is provided. N/A means not
applicable.
|
Outstanding
Equity Awards at Fiscal 2010 Year-End
The following table provides detailed
information about all outstanding equity awards for each named executive
officer:
OUTSTANDING
EQUITY AWARDS AS OF APRIL 3, 2010
|
Name
|
Grant
Date
|
Number
of Securities Underlying Unexercised Options (#)
Exercisable
|
Number
of Securities Underlying Unexercised Options (#)
Unexercisable
|
Option
Exercise Price ($)
|
Option
Expiration Date
|
||||||
|
Henry
C. Pao
|
9/1/2004
|
10,000
|
-
|
17.06
|
9/1/2011
|
(2)
|
|||||
|
9/4/2007
|
6,000
|
9,000
|
35.86
|
9/4/2017
|
(1)
|
||||||
|
12/1/2008
|
10,000
|
40,000
|
20.85
|
12/1/2018
|
(1)
|
||||||
|
Phillip
A. Kagel
|
6/1/2006
|
13,800
|
9,200
|
40.56
|
6/1/2013
|
(1)
|
|||||
|
12/1/2006
|
4,200
|
2,800
|
46.92
|
12/1/2013
|
(1)
|
||||||
|
12/1/2008
|
7,000
|
28,000
|
20.85
|
12/1/2018
|
(1)
|
||||||
|
Benedict
C.K. Choy
|
9/1/2004
|
10,000
|
-
|
17.06
|
9/1/2011
|
(2)
|
|||||
|
9/4/2007
|
6,000
|
9,000
|
35.86
|
9/4/2017
|
(1)
|
||||||
|
12/1/2008
|
10,000
|
40,000
|
20.85
|
12/1/2018
|
(1)
|
||||||
|
Michael
Lee
|
12/1/2003
|
8,000
|
-
|
17.34
|
12/1/2010
|
(3)
|
|||||
|
3/1/2006
|
7,820
|
2,000
|
33.67
|
3/1/2013
|
(4)
|
||||||
|
3/1/2006
|
180
|
-
|
33.67
|
3/1/2013
|
(5)
|
||||||
|
12/3/2007
|
3,200
|
4,800
|
33.95
|
12/3/2017
|
(1)
|
||||||
|
12/1/2008
|
7,000
|
28,000
|
20.85
|
12/1/2018
|
(1)
|
||||||
|
Hernan
DeGuzman
|
9/1/2004
|
10,750
|
-
|
17.06
|
9/1/2011
|
(1)
|
|||||
|
12/3/2007
|
1,000
|
1,500
|
33.95
|
12/3/2017
|
(1)
|
_________________________________________
|
(1)
|
These
options become exercisable at the rate of 20% of the underlying shares on
the 1st
anniversary of the grant date, with 20% vesting each year thereafter over
the following four years.
|
|
(2)
|
These
options become exercisable at the rate of 50% of the underlying shares on
the 4th
anniversary of the grant date, with 50% vesting the following
year.
|
|
(3)
|
These
options become exercisable at the rate of 20% of the underlying shares on
the 2nd
anniversary of the grant date, with 20% vesting each year thereafter over
the following four years.
|
23
|
(4)
|
These
options become exercisable at the rate of 1,940 shares of the underlying
shares on each of the 1st,
2nd
and 3rd
anniversary of the grant date, with 2,000 shares vesting each year
thereafter over the following two
years.
|
|
(5)
|
These
options become exercisable at the rate of 33.33% of the underlying shares
on the 1st
anniversary of the grant date, with 33.33% vesting each year thereafter
over the following two years.
|
Option
Exercises
The following table summarizes the
information concerning stock option exercises during the last fiscal year for
each named executive officer.
OPTION
EXERCISES FOR FISCAL 2010
|
Option
Awards
|
||||
|
Name
|
Number
of Shares Acquired on Exercise (#)
|
Value
Realized on Exercise ($)
|
||
|
Henry
C. Pao
|
-
|
$ -
|
||
|
Phillip
A. Kagel
|
-
|
-
|
||
|
Benedict
C.K. Choy
|
-
|
-
|
||
|
Hernan
DeGuzman
|
3,250
|
27,538
|
||
|
Michael
Lee
|
-
|
-
|
||
Nonqualified
Deferred Compensation Plan
The
following table provides information regarding the amount of contributions,
earnings and the aggregate balance of non-qualified deferred compensation for
our named executive officers in fiscal 2010.
NONQUALIFIED
DEFERRED COMPENSATION FOR FISCAL 2010
|
Name
|
Executive
Contributions in last FY ($)
|
Aggregate
Earnings (Loss) in Last FY ($) (4)
|
Aggregate
Balance at Last FYE ($)
|
|||
|
Henry
C. Pao
|
($25,722)
|
(1)
|
$
785,535,
|
$3,530,659
|
||
|
Phillip
A. Kagel
|
20,724
|
(2)
|
49,073
|
168,423
|
||
|
Benedict
C.K. Choy
|
14,658
|
(2)
|
327,017
|
1,178,684
|
||
|
Hernan
DeGuzman
|
-
|
(3)
|
-
|
-
|
||
|
Michael
Lee
|
-
|
12,970
|
22,766
|
__________________________________________________________________
|
(1)
|
The
executive officer received a refund of over contribution of $25,722 due to
clerical error in fiscal 2010.
|
|
(2)
|
Amount
is included as part of total compensation for fiscal 2010 in the Summary
Compensation Table.
|
|
(3)
|
The
executive officer does not participate in the Non-Qualified Deferred
Compensation Plan.
|
|
(4)
|
None
of the amounts in this column are included in the Summary Compensation
Table.
|
The Non-Qualified Deferred
Compensation Plan (the “NQDCP”) is a non-qualified deferred compensation plan
that covers a select group of senior management or highly compensated employees
of the Company. The NQDCP was adopted by the Company, effective
January 1, 1996. The NQDCP assets as of April 3, 2010 of $7,470,000 are included
at their fair value in short-term investments in the Company's consolidated
balance sheet as of April 3, 2010 and classified as trading
securities. Such assets shall at all times be subject to claims of
the general creditors of the Company. The Company’s liability
for the NQDCP as of April 3, 2010 amounts to $7,470,000 and this amount is
included in accrued salaries and employee benefits in the Company’s consolidated
balance sheet as of April 3, 2010.
24
The NQDCP is voluntary and is 100%
funded by each participant. Participants can defer up to 60% of the
combination of base salary, profit sharing bonus and commission. The
Company does not make a matching or other contribution to the
NQDCP. Investment of funds in the NQDCP is at the discretion of the
participant within the menu of available mutual fund options. The
Executive Compensation Committee is responsible for the general administration
and interpretation of the NQDCP and for carrying out its
provisions. The Company pays the administrative expenses of the
NQDCP.
Equity
Compensation Plan Information
The
table below shows information as of April 3, 2010, with respect to equity
compensation plans under which our equity securities are authorized for
issuance. Our current equity compensation plans, consisting of the
2001 Plan, 2009 Plan and ESPP, were approved by security holders. We
have no equity compensation plans that were not previously approved by our
shareholders.
|
Number
of Securities to be Issued upon Exercise of Outstanding Options, Warrants,
and Rights
|
Weighted-Average
Exercise Price of Outstanding Options, Warrants, and
Rights
|
Number
of Securities Remaining Available for Future Issuance under Equity
Compensation Plans (Excluding Securities Reflected in Column
(a)
|
||||
|
Plan
Category
|
(a)
|
(b)
|
(c)
|
|||
|
Equity
compensation plans approved by security holders
|
1,444,942
|
$27.31
|
1,329,639
(1)
|
|||
|
Equity
compensation plans not approved by security holders
|
0
|
N/A
|
0
|
(1)
Includes 212,350 shares reserved as of April 3, 2010 for future purchases
by employees through payroll deductions under the Company’s ESPP.
25
Report
of the Executive Compensation Committee of the Board of Directors
Notwithstanding
anything to the contrary set forth in any of the Company's previous filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings, including this Proxy
Statement, in whole or in part, the following Executive Compensation Committee
Report shall not be incorporated by reference into any such filings, nor shall
it be deemed to be soliciting material or deemed filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, or under the
Securities Exchange Act of 1934, as amended.
The Executive Compensation Committee of
the Board of Directors is generally responsible for reviewing compensation and
benefits, including stock options, of the named executive officers of the
Company.
The Executive Compensation Committee
reviewed and discussed the Compensation Discussion and Analysis, with
management. Based on the review and these discussions, the Executive
Compensation Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this proxy
statement.
Respectfully submitted by the members
of the Executive Compensation Committee
| W. Mark Loveless, Chairman | |
| Elliott Schlam, Member | |
| Milton Feng, Member |
26
PROPOSAL
2: RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Audit and Corporate Governance
Committee has selected PricewaterhouseCoopers LLP, as the independent registered
public accounting firm to audit the financial statements of the Company for the
fiscal year ending April 2, 2011, subject to shareholder ratification.
PricewaterhouseCoopers LLP was the Company's independent registered public
accounting firm for the fiscal year ended April 3, 2010. Representatives of
PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting to
make a statement if they desire to do so and are expected to be available to
respond to appropriate questions.
Accountants
Fees. The Audit and Corporate Governance Committee
pre-approves and reviews audit and permissible non-audit services to be
performed by the Company’s principal independent registered public accounting
firm, PricewaterhouseCoopers LLP, including fees charged for such
services. The Audit and Corporate Governance Committee approved the
provision of all of the services described below and determined that such
provision is compatible with maintaining the independence of
PricewaterhouseCoopers LLP. The following table sets forth the
aggregate fees billed or to be billed by PricewaterhouseCoopers LLP for fiscal
years 2010 and 2009:
|
Fiscal
Years
|
||||||||
|
Description
of Services
|
2010
|
2009
|
||||||
|
Audit
Fees (1)
|
$ | 737,000 | $ | 868,964 | ||||
|
Audit
Related (2)
|
3,500 | - | ||||||
|
Tax
Fees (3)
|
||||||||
|
Tax
Compliance
|
14,734 | 8,221 | ||||||
|
All
Other Fees (4)
|
1,500 | 1,650 | ||||||
|
Total
|
$ | 756,734 | $ | 878,835 | ||||
|
(1)
|
Audit
Fees represent the aggregate fees billed or to be billed for professional
services rendered for the audit of our annual financial statements, the
review of the financial statements included in our quarterly reports
during such period, and assistance and review of documents provided in
connection with statutory or regulatory filings, and Section 404
attestation.
|
|
(2)
|
Audit
Related Fees represent the fees billed for work paper review by
auditor.
|
|
(3)
|
Tax
Fees represent the aggregate fees billed or to be billed for professional
services rendered for tax return
compliance.
|
|
(4)
|
Other
fees represented fees billed for the research database subscriptions and
registration fee for professional education
seminars.
|
Pre-Approval Policies and
Procedures. It is the Company’s policy that all non-audit
services to be performed by the Company’s principal independent registered
public accounting firm must be approved in advance by the Audit and Corporate
Governance Committee. The Company’s policy on auditor independence requires
that, prior to engaging its principal independent registered public accounting
firm in any non-audit related activity other than that specifically authorized
by the Company’s policy on auditor independence, Company management reports to
the Audit and Corporate Governance Committee the nature of the proposed
activity, including the reasons why: (i) it is necessary or beneficial to the
Company to use its principal independent registered public accounting firm to
engage in such activity, and (ii) the steps being taken to ensure that the
engagement of its independent registered public accounting firm in such activity
will not, among other things, violate applicable laws or regulations of the
United States and applicable states, or the rules and regulations of the NASDAQ
Stock Market, on which the Company’s securities are listed. In order for the
Company to engage its principal independent registered public accounting firm in
the proposed activity, the Company must obtain Audit and Corporate Governance
Committee approval.
Board
Recommendation on Proposal 2: Vote Required
The ratification of the appointment of
PricewaterhouseCoopers LLP as the Company’s independent registered public
accounting firm for the fiscal year ending April 2, 2011, will be approved upon
the favorable vote of the majority of the Votes Cast on the Proposal, provided
that such favorable vote constitutes at least a majority of the required quorum
for the Annual Meeting.
27
Shareholder ratification of the
selection of PricewaterhouseCoopers LLP as the Company’s independent registered
public accounting firm is not required by the Company’s By-Laws or
otherwise. The Board of Directors is submitting the selection of
PricewaterhouseCoopers LLP to the shareholders for ratification as a matter of
good corporate practice. In the event the shareholders fail to ratify
the selection, the Audit and Corporate Governance Committee will reconsider
whether or not to retain that firm. Even if the selection is
ratified, the Audit and Corporate Governance Committee in its discretion may
direct the appointment of a different independent registered public accounting
firm at any time during the year if the Audit and Corporate Governance Committee
determines that such a change could be in the best interests of the Company and
its shareholders.
THE BOARD OF THE DIRECTORS RECOMMENDS
THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS ITS INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM OF THE COMPANY FOR THE YEAR ENDING APRIL 2, 2011. THE
VOTE REQUIRED TO APPROVE THIS PROPOSAL IS A MAJORITY OF THE SHARES PRESENT AND
VOTING AT THE MEETING (PROVIDED THE SHARES VOTING AFFIRMATIVELY ALSO CONSTITUTE
AT LEAST A MAJORITY OF THE REQUIRED QUORUM). UNLESS
OTHERWISE INDICATED ON YOUR PROXY, YOUR SHARES WILL BE VOTED FOR SUCH
RATIFICATION.
OTHER
MATTERS
The Company knows of no other matters
to be submitted to the Meeting. If any matters properly come before the Meeting,
it is the intention of the persons named in the enclosed proxy card to vote the
shares they represent as the Board of Directors may recommend.
It is important that your stock be
represented at the meeting, regardless of the number of shares which you
hold. You are, therefore, urged to mark, sign, date, and return the
accompanying Proxy as promptly as possible in the postage-paid envelope enclosed
for that purpose.
Any person who was a beneficial owner
of common stock on the record date for the 2010 Annual Meeting may obtain a copy
of the Company’s Annual Report on Form 10-K for the fiscal year ended April 3,
2010 filed with the Securities and Exchange Commission without charge (except
for exhibits to such annual report, which will be furnished upon payment of the
Company’s reasonable expenses in furnishing such exhibits). The
request for such materials should identify the person making the request and set
forth a good faith representation that as of June 25, 2010, record date, the
requesting person was entitled to vote at the 2010 Annual Meeting. The request
should be, as directed to Supertex, Inc., Attention: Investor Relations, 1235
Bordeaux Drive, Sunnyvale, California 94089.
| BY ORDER OF THE BOARD OF DIRECTORS OF | |||
| SUPERTEX, INC. |
| Henry C. Pao | |||
| President & CEO | |||
| Sunnyvale, California | |||
| July 7, 2010 |
28
