* Less than 1%









The information provided in the above table as to each director and Named Executive Officer, individually, and all directors and executive officers as a group, is based, in part, on information received from such individuals.

Security Ownership of Certain Beneficial Owners



Set forth below is a table indicating those persons whom the management of the Company believes to be beneficial owners of more than 5% of the Company’s Common Stock as of March 31, 2016.April  30,  2017.







Section 16(a) Beneficial Ownership Reporting Compliance



Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors, officers and persons who own more than 10% of the Common Stock, to file reports of ownership and changes in ownership of any class of the Company’s equity securities. To the Company’s knowledge, during the fiscal year ended March 31, 2016,2017, all of its directors, officers and persons who hold more than 10% of the Common Stock complied on a timely basis with all applicable Section 16(a) filing requirements, other than six reports for Willing King and one report each for Kurt Cummings, Keith Thomas, and Peter Venuto regarding, in each case, de minimis acquisitions of Common Stock through the Company's retirement plan.

requirements.

Board of Directors – Governance



The Board has adopted Corporate Governance Guidelines to assist it in the performance of its duties and the exercise of its responsibilities in accordance with the listing requirements of the New York Stock Exchange (“NYSE”).  The guidelines are available on the Company’s website at www.avx.com in the “Corporate Information – Corporate Governance” section.  The Board has also adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees.  The code is available on the Company’s website at www.avx.com in the “Corporate Information – Corporate Governance” section. 



Because a majority of the Company’s shares are owned by Kyocera, the Company is considered a “controlled company” under the applicable rules of the NYSE.  Accordingly, the Company is not required to, and does not have a Board of Directors with a majority of independent directors or Nominating/Corporate Governance and Compensation Committees composed entirely of independent directors.  Nevertheless, the Board has determined that Messrs. Christiansen, DeCenzo and Stach are independent under NYSE listing standards.  In addition to the NYSE’s standards, the Board has determined that an independent director is one who is free from any relationship that would interfere with his or her exercise of independent

business judgment, receives no compensation from the Company or its subsidiaries other than director’s fees and is not an affiliate of the Company or its subsidiaries.  The AVX/Kyocera Foundation, which may be considered an affiliate of the Company, donated $18,000 and $21,500 to CCU during each of the fiscal years ended March 31, 2017 and 2016, and 2015respectively, for educational purposes.purposes, and $5,000 to the Women’s Leadership Conference chaired by Mr. DeCenzo’s wife, Terry DeCenzo, for the fiscal year ended March 31, 2017.  The Board considered Mr. DeCenzo’s position at CCU and hasMrs. DeCenzo’s position at the Women’s Leadership Conference and determined that such donationspositions do not impair Mr. DeCenzo’s independence.

Board of Directors – Leadership Structure



The Board of Directors of AVX Corporation is responsible for overseeing the business, property and affairs of the Company.  Members of the Board are kept informed of the Company’s business through discussions with the Chief Executive Officer, participating in presentations regarding the operations made by the business managers, by reviewing materials provided to them and by participating in meetings of the Board and its Committees.



Through March 31, 2016,2017, the Board was composed of nine Directors, three of whom are independent. The Board has determined that Messrs. Christiansen, Stach and DeCenzo are independent under the applicable rules of the NYSE.  Donald Christiansen, one of the independent Directors, has served as Presiding Director since 2008. Tetsuo KubaJohn Sarvis has served as Chairman of the Board since 2015.2016. The Chairman oversees the actual Board meetings. The Presiding Director organizes and presides over all executive sessions of the Non-Management Directors, which are those attended solely by independent directors.  The other principal responsibilities of the Presiding Director include:





The Board is composed of qualified and experienced leaders with the ability to provide oversight to the Company.  We believe that all directors and director nominees have demonstrated seasoned leadership and are familiar with Board processes.



The Board believes that there is no single best organizational model that is the most effective in all circumstances and that the shareholders’ interests are best served by allowing the Board to retain the flexibility to determine the optimal organizational structure for the Board and Company at a given time, including who should best serve as Chairman and whether the roles of Chief Executive Officer and Chairman should be combined. The members of the Board possess considerable experience and unique knowledge of the challenges and opportunities the Company faces and are in the best position to evaluate the needs of the Company, the risks facing the Company and how best to maximize the capabilities of the directors and management to meet those needs.



The appointment by the Board of an experienced independent Presiding Director provides additional strength and balance to our Board leadership structure.

Board of Directors – Director Nomination Process



The Company’s Corporate Governance Guidelines provide that the Board as a whole is responsible for nominating and considering individuals for election to the Board by the shareholders based on candidates suggested by members of the Board, management and shareholders.  As indicated above, the Company has not established a separate Nominating and Governance committee because it is a “controlled company” under the applicable rules of the NYSE.  The Board does not currently operate under a formal written charter when discharging its nominating functions.  The Company has a policy of including a diverse mix of both men and women from corporate and non-corporate environments in the pool of potential candidates for director nominations, and the Board considers diversity of gender, business, academic and leadership experience as factors in assessing the Board makeup and appropriate skills and characteristics required of Board members.



The Board has not adopted specific objective requirements for service on the Board.  Instead, the Board will consider various factors in determining whether to nominate an individual for election by the shareholders.  Among other things, the Board expects each director to:





The Board will consider candidates recommended by shareholders in the same manner as other candidates.



Shareholders and other interested parties who wish to communicate with the Board (including, in the case of shareholders, in order to recommend or nominate director candidates to the Board), individual Board members, the Chairman of the Board, the Presiding Director or the Non-Management Directors as a group may do so by either of the following means:



All questions and concerns will be received and processed by the Corporate Compliance Office.  Questions and concerns relating to AVX’s accounting, internal accounting controls or auditing matters will be referred to the Chairman of the Audit Committee.  Questions and concerns addressed to the Board will be referred to the Presiding Director.  Other questions and concerns will be processed by the Corporate Compliance Office and forwarded to the addressees or distributed at the next scheduled Board meeting, as appropriate.



To be timely, a shareholder’s proposal for the recommendation or nomination of directors must be received by the Company in the timeframes described under “Shareholder Proposals” elsewhere in this Proxy Statement.  A shareholder’s proposal for nomination must comply with the requirements of the Bylaws of the Company.  Among other things, the Bylaws require that a shareholder’s notice of a director nomination must include a representation that the nominee will not have any undisclosed voting arrangements with respect to such nominee’s actions as director and an agreement to complete a nominee questionnaire relating to such nominee’s independence and other information to be included in a proxy statement pursuant to Regulation 14A under the Exchange Act of 1934, as amended or otherwise requested by the Company.  Such notice of intent to make a nomination shall be accompanied by the written consent of each nominee to be named in the proxy statement and to serve as director of the Company if so elected.

Board of Directors – Risk Oversight



The Board takes an active role in risk oversight of the Company both as a full Board and through its Committees. Through detailed reviews, discussions and presentations by the heads of the Company’s various businesses and Corporate functions, the Board reviews and advises with respect to the Company’s business strategies, financial plans and cybersecurity with attention and focus on the risks to achievement of these strategies and plans. Such risks include those involving the leadership structure, those inherent in the Company’s businesses and compensation programs as well as the risks from external sources such as competitors, the economy, cybersecurity and regulatory and legislative developments.



These reviews, discussions and presentations are intended to assist the Board and management in its evaluation of the Company’s risk management practices and to promote a culture that actively identifies and manages risk.



The Audit Committee meets regularly with Company management with regard to the Company’s financial risk management processes, controls and capabilities and with the Company’s Chief Internal Auditorchief internal auditor with regard to significant control matters. In addition, the Audit Committee reviews the Company’s procedures regarding the receipt, retention and treatment of complaints regarding internal accounting, accounting controls or audit matters.



The Compensation Committee oversees the Company’s executive compensation arrangements.  The Compensation Committee considers the risks arising from the Company’s overall senior management and other employee compensation policies and practices in connection with administering the Management Incentive Plan and other employee benefit plans.



The Special Advisory Committee reviews and approves all material agreements and transactions not covered by such agreements between the Company and related parties.parties other than compensation arrangements discussed above.  The Special Advisory Committee operates under a written charter which sets forth the policies and procedures for such approvals.  In approving any such agreement or transaction pursuant to those procedures, the Special Advisory Committee must determine that, in its judgment, the terms thereof are equivalent to those to which an independent unrelated party would agree at arm’s-length or are otherwise in the best interests of the Company and its shareholders generally.  See “Relationship With Kyocera” below for more information.



Board of Directors - Meetings Held and Committees



The Board held four meetings during the fiscal year ended March 31, 2016.2017. During that period, all of the directors attended at least 75% of the meetings of the Board and meetings of the Committees of the Board on which they served except for Mr. Inamori.served. The directors are encouraged and expected to attend the Annual Meeting of Shareholders if reasonably possible. All of the directors, except for Mr. Inamori, attended the Company’s Annual Meeting of Shareholders held on July 22, 2015.    20, 2016.



As of May 27, 2016,June 9, 2017,  the Board had the following standing committees and no nominating committee:



Executive Committee. The Executive Committee has been delegated authority by the Board to exercise the powers of the Board in matters pertaining to the management of the business. The Executive Committee held no meetings during the fiscal year ended March 31, 2016.2017.  As of March 31, 2016,2017, the members of the Executive Committee were Messrs. InamoriKuba (Chairman),  Sarvis, Kuba, Yamaguchi, and Maeda.



Audit Committee. The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act and operates under a written charter adopted by the Board of Directors. The Audit Committee is appointed by the Board of Directors to provide assistance to the Board in fulfilling its oversight responsibility relating to the integrity of the Company’s consolidated financial statements and the financial reporting processes; the systems of internal accounting and financial controls; the annual independent audit of the Company’s consolidated financial statements; the independent registered public accounting firm’s qualifications and independence; the performance of the Company’s internal audit function and independent registered public accounting firm and any other areas of potential financial risks to the Company specified by the Board of Directors. The Audit Committee is also responsible for hiring, retaining and terminating the Company’s independent registered public accounting firm. The Audit Committee met sevennine times during the fiscal year ended March 31, 2016.2017.  



The Audit Committee is composed of three members. The members of the Audit Committee are Messrs. Christiansen (Chairman), Stach and DeCenzo. Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements. The Board of Directors has determined that the Company has at least one “audit committee financial expert,” as defined by the SEC, serving on the Audit Committee. The “audit committee financial expert” designated by the Board is Mr. Christiansen. The Board of Directors has determined that all members of the Audit Committee are “independent” under the NYSE audit committee member independence requirements.



Compensation Committee. The Compensation Committee has the full power and authority of the Board with respect to the determination of compensation for all executive officers of the Company. The Compensation Committee, operating under a written charter adopted by the Board of Directors, also has full power and authority over any executive compensation plan approved by the Board for the Company and its subsidiaries, including the issuance of shares of Common Stock, as the Compensation Committee may deem necessary or desirable in accordance with such compensation plans. The Compensation Committee held fourtwo meetings  during the fiscal year ended March 31, 2016.2017.  As indicated above, the Company is not required to, and does not have, a Compensation Committee composed entirely of independent directors because it is a “controlled company” under the applicable rules of the NYSE. The members of the Compensation Committee are Messrs. Kuba (Chairman), Yamaguchi, Aoki,Kano, Stach and DeCenzo. To the extent permitted under Delaware law, the Board or the Compensation Committee may expressly delegate to any individual or group of individuals some or all of the Compensation Committee’s authority to grant awards under the Company’s equity incentive plans, except that no delegation of its duties and responsibilities may be made with respect to awards to executive officers.  The acts of such delegates shall be treated hereunder as acts of the Compensation Committee, and such delegates shall report to the Compensation Committee regarding the delegated duties and responsibilities.  Additional information regarding the Compensation Committee and its processes and procedures for the consideration and determination of executive compensation can be found in the Compensation Discussion and Analysis section in this Proxy Statement.



Special Advisory Committee. The Special Advisory Committee is composed of independent directors. The committee is required to review and approve all material agreements and significant transactions not covered by such agreements between the Company and related parties other than compensation arrangements discussed above (including any agreements and transactions between the Company and any related party that are or may be within the scope of applicable rules, regulations and guidance of the NYSE and Item 404 of Regulation S-K) and to meet periodically in an executive session without management. The Board has adopted a written charter for the Special Advisory Committee. The Special Advisory Committee held threetwo meetings during the fiscal year ended March 31, 2016.2017.  The members of the Special Advisory Committee are Messrs. Stach (Chairman), DeCenzo and Christiansen.

The Board has adopted written charters for the Audit, Compensation, and Special Advisory Committees.  The charters, as amended, are available on the Company’s website at www.avx.com in the “Corporate Information – Corporate Governance” section.

Director Compensation



The Board determines compensation for all directors. The following table and narrative provides information related to the compensation of directors during fiscal 2016.2017.















During the year ended March 31, 2016,2017, each director who was not an employee of the Company or Kyocera was paid an annual director’s fee of $32,500, an attendance fee of $2,700 per Board or$70,000, $5,000 for each committee meetingassignment, and reimbursement of travel expenses. The ChairmanChairmen of the Audit Committee and Special Advisory Committee also received an additional $5,500$10,000 per year. Each director who was an employee of Kyocera was paid an attendanceannual director’s fee of $2,700 per Board or committee meeting and reimbursement of travel expenses.$18,000.  In addition, each director who is not an employee of the Company is eligible to receive stock options pursuant to the 2014 Non-Employee Directors’ Stock Option Plans or restricted stock units pursuant to the 2014 Restricted Stock Unit Plan, as described below. Beginning in fiscal 2017, the Board has decided to change the method for compensating directors, and will provide annual director’s fees for Board and Committee service, and cease paying meeting attendance fees. 



AVX feels that it is important for members of the Board to be shareholders of the Company, to have an incentive to help the Company grow and prosper, and to share in that prosperity. 

The 2014 Non-Employee Directors’ Stock Option Plan authorizes the issuance of up to 1,000,000 shares of Common Stock.  Prior toFollowing the amendment of the Plan in May 2016,  it provided for (i) the automatic grant of an option to purchase 15,000 shares of Common Stock to each director not employed by AVX (a “Non-Employee Director”) as of the date on which a Non-Employee Director is elected to the Board for the first time and every third anniversary thereafter and (ii) the grant of additional options to purchase shares of Common Stock from time to time upon prior approval by the Board. Following the amendment, the automatic grant feature of the Plan was eliminated.  Options granted under the Plan become exercisable 33 1/3% one year after the date of the grant and an additional 33 1/3% at the end of each of the following two years, provided that in order to exercise the options, the Non-Employee Director must continue to be a director at the date of exercise. However, if such Non-Employee Director’s service terminates due to retirement, death or disability, his options shall thereupon become fully vested and remain outstanding and exercisable until the earlier of one year after the date of such retirement, death or disability or the date of their original expiration. Options have an exercise price equal to the Fair Market Value (as defined in the plan) of the Common Stock on the date of grant.  The Board has indicated its intention to not grant any further options under the Plan after fiscal 2016, but reserves the right to do so.



The 2014 Restricted Stock Unit Plan (the “2014 RSU Plan”) approved by stockholdersshareholders at the July 2014 Annual Meeting authorizes the granting of awards in the form of restricted stock units to directors and employees that provide the participants the right to receive shares of Common Stock. The number of shares reserved and available for issuance under this plan is 3,000,000. The 2014 RSU Plan is administered by the Compensation Committee of the Board, or by the Board itself. NoDuring fiscal 2017,  each Non-Employee Director was granted 1,250 service-based restricted stock units were awardedthat vest 33 1/3% one year after the date of the grant and an additional 33 1/3% at the end of each of the following two years. However, if such Non-Employee Director’s service terminates due to any directors underretirement, death or disability, his units subject to time vesting shall thereupon become fully vested. In addition, each Non-Employee Director was granted 1,250 performance-based restricted stock units that vest 100% one year after the 2014 RSU Plan during fiscal 2016, or in any other prior fiscal years; howeverdate of the Board has begungrant that have a variable payout range of 0% to do so in fiscal 2017.

100%, which is determined according to the Company’s achievement of certain financial performance targets.

Equity Compensation Plan Information



The following table provides information as of March 31, 20162017 about the Common Stock that may be issued under all of the Company’s existing equity compensation plans.





Compensation Committee Interlocks and Insider Participation



During the fiscal year ended March 31, 2016,2017, the Compensation Committee was composed of Messrs. Kuba, Yamaguchi, Aoki, Stach and DeCenzo. During the fiscal year ended March 31, 2016,2017, Mr. Kuba was Chairman of the Board of Kyocera, Mr. Yamaguchi was President and Representative Director of Kyocera and Mr. Aoki was a Managing Executive Officer, General Manager and Director of Kyocera. Kyocera owns 121,800,000 shares, or approximately 73%, of the Company’s outstanding Common Stock as of March 31, 2016,2017, and has engaged in a significant number and variety of related company transactions with the Company.  The significant agreements between the Company and Kyocera are described under the caption “Relationship with Kyocera” below. For additional information concerning positions with Kyocera held by executive officers and directors of the Company, see “Proposal I – Election of Directors” above. Except as described above (or in other sections of this Proxy Statement indicated), during the fiscal year ended March 31, 2016,2017, no member of the Board or the Compensation Committee and none of our executive officers served as a member of a board of directors or compensation committee of any entity whose executive officers served on the Board or Compensation Committee.

Report of the Audit Committee



In accordance with its written charter, as adopted by the Board, the Audit Committee assists the Board in fulfilling its responsibility for oversight of the quality and integrity of the accounting, auditing and financial reporting practices of the Company.  During the fiscal year ended March 31, 2016,2017, the Audit Committee met sevennine times, and the Audit Committee discussed the interim financial information contained in each quarterly earnings announcement with Company management and representatives from the independent registered public accounting firm prior to each public release.

In discharging its oversight responsibility as to the audit process, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm its independence.  The Audit Committee also discussed with management and the independent registered public accounting firm the quality and adequacy of the Company’s internal controls. The Audit Committee reviewed with the independent registered public accounting firm its audit plans, audit scope, and identification of audit risks.



The Audit Committee reviewed and discussed with the independent registered public accounting firm all matters required to be discussed in accordance with standards adopted by the Public Company Accounting Oversight Board and, with and without management present, discussed and reviewed the results of the independent registered public accounting firm’s examination of the financial statements.



The Audit Committee reviewed and discussed the audited financial statements of the Company as of and for the fiscal year ended March 31, 2016,2017, with management and the independent registered public accounting firm.  Management has the responsibility for the preparation of the Company’s financial statements, and the independent registered public accounting firm has the responsibility for the examination of those statements.



Based on the above-mentioned review and discussions with management and the independent registered public accounting firm, the Audit 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 March 31, 2016,2017, for filing with the SEC.  The Audit Committee also reappointed the independent registered public accounting firm, PricewaterhouseCoopers LLP, for the fiscal year ending March 31, 2017.2018.



SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS:



Donald B. Christiansen, Chairman of the Audit Committee

Joseph Stach

David DeCenzo



Principal Independent Registered Public Accounting Firm Fees

As reflected in the table below, the Company incurred fees of $3,760,448$3,739,303 and $3,739,303$3,832,307 in fiscal 20152016 and 2016,2017, respectively, for services performed by PwC. Of these sums, $3,301,882 in fiscal 2015 and $3,273,908 in fiscal 2016 and $3,311,906 in fiscal 2017 were for audit and audit related services.  PwC did not perform any financial system consulting services in fiscal 20152016 or 2016.2017.











The Audit Committee of the Company’s Board of Directors determined that the provision of non-audit services by PwC to the Company during fiscal 20152016 and fiscal 20162017 was compatible with maintaining the independent registered public accounting firm’s independence.



It is the policy of the Audit Committee to pre-approve all audit and permitted non-audit services (and the related fees and terms) to be provided to the Company by the independent registered public accounting firm. The authority to pre-approve non-audit services may be delegated by the Audit Committee to one or more members of the Audit Committee, who shall present any decision to pre-approve an activity to the full Audit Committee at the first meeting following such decision. None of the non-audit services described above were approved by the Audit Committee pursuant to the exception provided by Rule 2-01(c)(7)(i) under Regulation S-X. 

Relationship With Kyocera

Relationship With Kyocera



Since January 1990, the Company’s business has included transactions with Kyocera.  During the three years ended March 31, 2016,2017, such transactions have involved the purchase of resale inventories, raw materials, supplies, and equipment, the sale of products for resale, raw materials, supplies and equipment, and the payment of dividends, as set forth in the table below (in thousands):





One principal strategic advantage for the Company is its ability to provide a broad product offering to its customers. The inclusion of products manufactured by Kyocera in that product offering ishas been a significant component of this advantage. In addition, the exchange of information with Kyocera relating to the development and manufacture of multi-layer capacitors and various other ceramic products benefits the Company. An adverse change in the Company’s relationship with Kyocera could have a negative impact on the Company’s results of operations. AVX and Kyocera have executed several agreements which govern the foregoing transactions and which are described below.

Kyocera notified AVX in February 2014 of its intent, effective April 1, 2015, to market its connector products in Asia using Kyocera’s sales force rather than continuing to have AVX resell such products in Asia. Sales of Kyocera connector products in Asia were $47.5 million and $1.1 million with operating profit of $1.9 million and $0.4 million for the fiscal years ended March 31, 2015 and March 31, 2016, respectively.



The Special Advisory Committee of the Board, composed of our independent directors (currently Messrs. Stach, DeCenzo, and Christiansen), reviews and approves any material agreements between AVX and Kyocera and any significant transactions between AVX and Kyocera not covered by such agreements. The committee is also responsible for reviewing and approving any other agreements and transactions between the Company and any related party that are or may be within the scope of applicable rules, regulations and guidance of the NYSE and Item 404 of Regulation S-K, if they arise. The Special Advisory Committee operates under a written charter which sets forth the policies and procedures for such approvals. In approving any such agreement or transaction pursuant to those procedures, the Special Advisory Committee must determine that, in its judgment, the terms thereof are equivalent to those to which an independent, unrelated party would agree at arm’s-length or are otherwise in the best interests of the Company and its shareholders generally. Each of the agreements described below contains provisions requiring that the terms of any transaction under such agreement be equivalent to those to which an independent unrelated party would agree at arm’s-length. 



Products Supply and Distribution Agreement.  Pursuant to the Products Supply and Distribution Agreement (the “Distribution Agreement”) (i) AVX will act as the non-exclusive distributor of certain Kyocera-manufactured products to certain customers in certain territories outside of Japan, and (ii) Kyocera will act as the non-exclusive distributor of certain AVX-manufactured products within Japan.  The Distribution Agreement has a term of one year, with automatic one-year renewals, subject to the right of termination by either party at the end of the then current term upon at least three months prior written notice. Each party has the ability to appoint a replacement distributor of its products with a minimum one year’s notice period.

Kyocera notified AVX pursuant to the Products Supply and Distribution Agreement in December 2016 of its intent, effective January 1, 2018, to market its manufactured passive and interconnect products globally using Kyocera’s sales force rather than continuing to have AVX resell such products in the Americas, Europe and Asia. Kyocera has indicated its intention to pay commissions to AVX on sales by Kyocera, in the applicable territories, of products designed into customer applications by AVX prior to January 1, 2018 of 2.0% in calendar year 2018, 1.5% in calendar  year 2019, and 1.0% in calendar year 2020. Sales of Kyocera resale products were $318.9 million and related operating profit was $17.1 million for the fiscal year ended March 31, 2017.

AVX notified Kyocera pursuant to the Products Supply and Distribution Agreement in February 2017 of its intent, effective April 1, 2018, to market its manufactured products in Japan using AVX’s sales force rather than continuing to have Kyocera resell such products in this territory. AVX has indicated its intention to pay commissions to Kyocera on sales by AVX, in the applicable territory, of products designed into customer applications by Kyocera prior to April 1, 2018 of 2.0% in fiscal year 2019, 1.5% in fiscal year 2020, and 1.0% in fiscal year 2021. Sales of AVX resale products by Kyocera were $25.9 million for the fiscal year ended March 31, 2017.



Disclosure and Option to License Agreement.  Pursuant to the Disclosure and Option to License Agreement (the “License Agreement”), AVX and Kyocera exchange confidential information relating to the development and manufacture of multi-layered ceramic capacitors and various other ceramic products, as well as the license of technologies in certain circumstances.  The License Agreement has a term of one year with automatic one-year renewals, subject to the right of termination by either party at the end of the then current term upon at least six months prior written notice.



Materials Supply Agreement.  Pursuant to the Materials Supply Agreement (the “Supply Agreement”), AVX and Kyocera will from time to time supply the other party with certain raw and semi-processed materials used in the manufacture of capacitors and other electronic components.  The Supply Agreement has a term of one year, with automatic one-year renewals, subject to the right of termination by either party at the end of the then current term upon at least six months prior written notice.



Machinery and Equipment Purchase Agreement.  Pursuant to the Machinery and Equipment Purchase Agreement (the “Machinery Purchase Agreement”), AVX and Kyocera will, from time to time, design and manufacture for the other party certain equipment and machinery of a proprietary and confidential nature used in the manufacture of capacitors and other electronic components. The Machinery Purchase Agreement has a term of one year, with automatic one-year renewals, subject to the right of termination by either party at the end of the then current term upon at least six months prior written notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

Compensation Committee Report



The Compensation Committee believes the executive compensation program is appropriate to accomplish the program’s goal of attracting, retaining and motivating highly qualified management professionals.  The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and based on the review and discussions, the Compensation Committee recommends to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference in the Company’s Annual Report on Form 10-K for the year andending March 31, 2016.2017.



SUBMITTED BY THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS:



Tetsuo Kuba, Chairman of Compensation Committee

Goro Yamaguchi

Shoichi Aoki
Koichi Kano

Joseph Stach

David DeCenzo

Compensation Discussion and Analysis



The following discussion provides an overview and analysis of the Company’s compensation program and policies, the material compensation decisions it has made under those programs and policies with respect to its top executive officers in relation to the Company’s performance results, and the material factors that it considered in making those decisions. This discussion focuses on the compensation awarded to, earned by, and paid to the following individuals who are referred to as the “Named Executive Officers” throughout this Proxy Statement:







The Company’s executive officer compensation program is designed to enable the Company to attract, retain and motivate highly qualified management professionals who are encouraged to work as a team to accomplish the Company’s goals and objectives.  The Company’s compensation philosophy is to directly align executive officer compensation with the financial performance of the organization.  The Company believes that the relationship between executive officer compensation and Company performance will create a benefit for all shareholders.



The executive officer compensation program has been developed by the Compensation Committee using various factors over time, although the Committee does not set compensation levels based on any particular benchmarking against a peer group.  No outside consultant review of executive compensation was performed during the last three fiscal years.  The Chief Executive Officer has historically played a significant role in the recommendation of the amounts of base salary, salary adjustments, incentive compensation and equity-based compensation to be paid to other members of executive management.officers.  The key elements of the executive officer compensation program are base salary, annual incentive bonus and stock option and other stock awards, in addition to those benefits provided under the Company’s retirement, and deferred compensation, and medical plans.



The Compensation Committee reviews and approves each element of the Company’s executive officer compensation program and periodically assesses the effectiveness of the program as a whole.  The program covers the Chief Executive Officer, other Named Executive Officers, and all other designated senior managementexecutive officers of the Company.  Specifically, the Committee approves the salaries, cash awards under the Company’s 2014 Management Incentive Plan (“MIP”), the grant of stock options under the Stock Option Plans, the grant of restricted stock unit awards under the 2014 RSU Plan, and the provision of any significant special benefits or perquisites to the Named Executive Officers.executive officers. Each component of compensation, including those established for fiscal 2016,2017, is set on a discretionary, not formulaic, basis taking into account a subjective assessment of the individual’s overall responsibilities and performance rather than specific corporate performance goals for all Named Executive Officers.executive officers.



 Base Salary Program

The base salary program is, in general and for fiscal 20162017 in particular, intended to provide base salary levels that are externally competitive and internally equitable, and to reflect each individual’s sustained performance and cumulative contribution to the Company. Each of the other senior management’sexecutive officer’s individual performance is reviewed by the Chief Executive Officer to arrive at annual merit increase recommendations taking into account the results of operations for the officer’s area of responsibility.  These executive officer merit increase recommendations, including those for the other Named Executive Officers, are then reviewed by the Compensation Committee for reasonableness based on general economic factors, such as increases in the cost of living.  The Chief Executive Officer’s base salary (including Mr. Sarvis’ initial base salary upon his appointment to the position as of April 1, 2015) and merit increases from year to year are established by the Compensation Committee taking these same considerations into account. The salary increases for the Named Executive Officers effective April 1, 20152016 took into account the Company’s operating performance in addition to the factors noted above.



Annual Cash Incentives - Management Incentive Plan

The MIP is intended to provide the executive officers, including the Named Executive Officers, and other senior management incentive to continue and increase their efforts with respect to, and remain in the employ of, the Company.



ThroughFor fiscal 2015,2016 and 2017, the MIP provided for annual cash incentive compensation based on the Company’s pre-tax financial results and a subjective analysis of each person’s individual performance.  Bonus awards were generally paid under the MIP during the summer following each fiscal year end if the Company’s financial results, excluding special, unusual, restructuring or extraordinary items, exceeded 90% of a pre-determined annual profit target.  The annual pre-tax profit target was established by the Compensation Committee. The target profits were typically based on improving on the prior year’s actual results taking into account general economic conditions. For the fiscal year ended March 31, 2014, the pre-tax profit target of $152 million was exceeded by 7% and limited bonus awards were earned under the MIP. For the fiscal year ended March 31, 2015, the pre-tax profit target of $157 million was exceeded by 39% and full bonus awards were earned under the MIP. The bonus awards through fiscal 2015 for the Chief Executive Officer were determined as a percentage of salary (up to 150% of base salary) based on the Company’s financial results related to target profits and were paid currently in the summer when they were determined. The other Named Executive Officers and other Corporate Officers’ individual bonuses were determined by the Chief Executive Officer based on a subjective evaluation of each person’s annual performance. These bonuses were derived from a pool determined as a percentage of combined Named Executive Officers (other than the Chief Executive Officer) and other Corporate Officers’ salaries (up to 100% of combined base salaries) based on the Company’s financial results related to target profits. For fiscal years prior to fiscal 2015, these bonuses were paid 75% currently in the summer when they were determined and 25% of the bonuses were earned and paid at the end of the following fiscal year, provided the officer was

employed by the Company at the end of the fiscal year. For fiscal 2015, the other Named Executive Officers’ bonuses were paid currently in the summer when they were determined.

For fiscal 2016, the amended MIP provides for annual cash incentive compensation based on the Company’s pre-tax financial results and a subjective analysis of each person’s individual performance.  Bonus awards are to be paid during the summer following each fiscal year end. The cash award pool for the Chief Executive Officer, the other Named Executive Officers and other Corporate Officers who participate in the MIPexecutive officers is based on 0.1% per participant of the Company’s annual pre-tax profit results, excluding special, unusual, restructuring or extraordinary items. The cash award for each participant will beis an allocated portion of the pool, not to exceed 200% of each participant’s base salary, as determined by the Compensation Committee after taking into account suggestions proposed by the Chief Executive Officer and a subjective analysis of each person’s individual performance.  The

amount of bonus earned by each of the Named Executive Officers for fiscal 2016 and 2017 is set forth in the Non-Equity Incentive Plan Compensation column of the Summary Compensation Table.



Long-Term Equity Incentives

The Stock Option Plans and 2014 RSU Plan are designed to reward executive officers, including Named Executive Officers, other senior managers, and other key employees directly for increases in the long-term price of the Common Stock.  Each of the Equity Plans directly links the compensation of such officers, senior managers, and key employees to gains by the shareholders and encourages adoption of a strong stakeholder orientation in their work. 

The Compensation Committee approves awards generally following each fiscal year end, but will consider grants at other times of the year if deemed necessary.  The Chief Executive Officer recommends to the Committee the potential recipients and the number of awards for each other key employee’s grant on a discretionary basis generally based on a subjective evaluation of that individual’s responsibilities and performance.  The Chief Executive Officer’s awards are established from year to year (including fiscal 2016)2017) by the Compensation Committee taking these same considerations into account.  The Committee reviews and approves the final awards. 



Stock Option Plans



The Stock Option Plans provide that stock option grant awards in fiscal 2016 were generally consistent, for each employee and in total,options will be granted with the prior year grant awards.  The grantan exercise price that is equal to the fair market value of the underlying shares on the date of grant approval, which is defined in the plans as the closing price on that date.  The Company does not have any program or practice to time option grants to take advantage of the release of material, non-public information.  The vesting feature of the option awards is intended to address and mitigate the risk associated with employees giving undue attention to short-term business goals. There were no stock option grant awards in fiscal 2017.



Restricted Stock Unit Plan



The 2014 RSU Plan authorizes the granting of awards in the form of restricted stock units to directors and employees that provide the participants the right to receive shares of Common Stock. The number of shares reserved and available for issuance under the plan is 3,000,000. The 2014 RSU Plan is administered by the Compensation Committee of the Board, or by the Board itself. NoDuring fiscal 2017, each Named Executive Officer was granted service-based restricted stock units were awarded underthat vest 33 1/3% one year after the 2014 RSU Plan in fiscal 2015 or 2016.date of the grant and an additional 33 1/3% at the end of each of the following two years. In addition, each Named Executive Officer was granted performance-based restricted stock units that vest 100% one year after the date of the grant that have a variable payout range of 0% to 100%, which is determined according to the Company’s achievement of certain financial performance targets.



Family Income Assurance Plan

The Company has in effect a Family Income Assurance Plan for executive officers, including the Named Executive officers.  Coverage under this Company self-insured plan provides that, in the event of the death of an executive officer while employed by the Company, the officer’s surviving spouse, or estate, is entitled to receive the equivalent of two years base salary during the following 24 months.



Retirement and Other Benefits

Retirement, medical benefits and Board approved discretionary cash awards for executive officers, including the Named Executive Officers and other Corporate Officers, are largely the same as those provided to the general salaried employee population applicable to each geographic region.  The AVX Nonqualified Supplemental Retirement Plan was established to provide certain U.S. based senior management, including the Named Executive Officers, with supplemental retirement benefits, primarily to promote tax efficiency and replacement of benefit opportunities lost due to regulatory contribution limits.  Amounts contributed to this plan’s separate trust earn market-based returns depending upon the investment choices made by the participant.  The investment choices are generally the same as available under the AVX Corporation Retirement Plan.



Miscellaneous benefits offered to executive officers and other Corporate Officers are designed to provide a safety net of protection against the financial catastrophes that can result from liability suits, illness, disability or death.



Tax and Accounting Considerations



The accounting and tax treatment of compensation generally has not been a factor in determining the amounts or types of compensation for our executive officers.  Section 162(m) of the Internal Revenue Code (the “Code”) generally disallows a tax deduction to public companies for some forms of compensation over $1 million paid to executive officers unless certain conditions are met.  Certain compensation, including qualified performance-based compensation, will not be subject to the deduction limit if certain requirements are met.  We generally intend to structure future compensation so that executive compensation paid by the Company may be fully deductible in accordance with Section 162(m) of the Code.  However, the Compensation Committee reserves the right to approve compensation that may prove not to be deductible when it believes such payments are appropriate and in the best interests of our shareholders, after taking into consideration changing business conditions and the performance of our employees.

EXECUTIVE COMPENSATION



The following table shows cash compensation paid and certain other compensation paid or accrued by the Company for the last three fiscal years to each of the Company’s Chief Executive Officer, Chief Financial Officer and the next three most highly compensated executive officers (“Named Executive Officers”) in all capacities in which they served.



Summary Compensation Table

Fiscal Year Ended March 31, 20162017







The investments in the Supplemental Plan have no above-market or preferential earnings. See the Nonqualified Deferred Compensation table and related narrative herein for information related to the Supplemental Plan. 

Also reflects the value of automobile allowances and Company contributions to group life, disability, or excess liability insurance programs, respectively, as follows for fiscal 2016:2017: John Sarvis - $13,500$14,400 and $13,954;$13,442; Kurt Cummings - $14,000 $14,400 

and $6,430;$6,193; Peter Venuto - $11,700$12,000 and $5,998;$6,357;  Keith Thomas - $11,700$12,000 and $5,594;$4,752; and John Lawing - $12,000 and $8,349.$8,718. 



The Company also provides the Named Executive Officers with certain medical benefits generally available to all salaried employees. 

The following table sets forth information regarding grants of plan-based awards, including options to acquire shares of Common Stock, granted to the Named Executive Officers through fiscal 2016.2017.



Grants of Plan-Based Awards

Fiscal Year Ended March 31, 20162017



The following tables set forth information regarding unexercised options, both vested and unvested, for each Named Executive Officer outstanding at March 31, 2016. The Named Executive Officers do not hold any restricted stock unit awards.

Outstanding Equity Awards at Fiscal Year Ended March 31, 20162017





The following table sets forth information regarding equity awards for each Named Executive Officer outstanding at March 31, 2017.