UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |
☐ | Filed by a Party other than the Registrant |
Check the appropriate box:
☐ | Preliminary Proxy Statement |
☐ | CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14a-6(e)(2)) |
Definitive Proxy Statement |
☐ | Definitive Additional Materials |
☐ | Soliciting Material under Section 240.14a-12 |
LITTELFUSE, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
Payment of Filing Fee (check the appropriate box)(Check all boxes that apply):
No fee |
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Fee paid previously with preliminary |
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8755 West Higgins Road, Suite 500
Chicago, IL 60631
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
APRIL22, 2021
27, 2023
The 20212023 Annual Meeting of Stockholders of Littelfuse, Inc. (the "Company"“Company”) will be held on Thursday, April 22, 202127, 2023 at 9:00 a.m. Central Daylight Time. Due to the ongoing public heath impact of the COVID-19 outbreak, and to support the health and well-being of our stockholders, this year'sThis year’s Annual Meeting will be a virtual meeting held via live webcast on the internet. Stockholders will be able to attend the Annual Meeting and submit questions during the live webcast by visiting www.virtualshareholdermeeting.com/LFUS2021LFUS2023 and entering the 16-digit control number included in the Notice of Internet Availability of Proxy Materials, on the proxy card or in the instructions that accompanied the proxy materials.
At the Annual Meeting, stockholders will be asked to consider and vote on the following matters, each as fully described in the attached Proxy Statement:
1. | To elect eight directors to serve a term of one year and until their successors are duly elected and qualified; |
2. | To conduct an advisory (non-binding) vote on the compensation of our named executive officers (“NEOs”); |
3. | To conduct an advisory (non-binding) vote on the frequency of future advisory votes on the compensation of our NEOs; |
4. | To approve the First Amendment to the Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan to increase the number of shares authorized for issuance under the Plan, and to make certain other changes to the Plan; |
5. | To approve and ratify the appointment by the Audit Committee of Grant Thornton LLP as the Company’s independent auditors of the Company’s consolidated financial statements for the fiscal year ending December 30, 2023; and |
6. | To transact such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. |
Stockholders of record at the close of business on February 25, 202128, 2023 will be entitled to attend and vote at the meeting.
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| | Ryan K. Stafford | |||
Corporate Secretary | |||||
March 16, 2023
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting
of Stockholders to Be Held on April22, 2021: 27, 2023:
Yourvote is important. Pleasereview our proxy materials, including the enclosed Proxy Statement,
andvoteyour sharesby using the Internetortelephone or by signing, dating and returning the
enclosed proxy card.If you attend theAnnualMeeting, you may revoke your proxy and
vote online if you so desire.The Proxy Statement and the2020 2022 Annual Reportfor the
fiscal year endedDecember 26, 2020,31, 2022, areavailable at
www.proxyvote.com.
| | 2023 Proxy Statement |
2023 PROXY STATEMENT
TABLE OF CONTENTS
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2023 PROXY STATEMENT
TABLE OF CONTENTS(Continued)
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| APPENDIX A: | | | | ||
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We are furnishing this Proxy Statement to the stockholders of Littelfuse, Inc. in connection with the solicitation by the Board of Directors of Littelfuse, Inc. (the "Board"“Board”) of proxies to be voted at our annual meeting of stockholders to be held on April 22, 2021,27, 2023 (the "Annual Meeting"“Annual Meeting”). Due to the ongoing public heath impact of the COVID-19 outbreak and to support the health and well-being of our stockholders, theThe Annual Meeting will be a virtual meeting held via live webcast on the internet.
When used in this Proxy Statement, the terms "we," "us," "our," "the Company"“we,” “us,” “our,” “the Company” and "Littelfuse"“Littelfuse” refer to Littelfuse, Inc.
The Notice of Internet Availability of Proxy Materials is first being mailed to stockholders on or about March 12, 202116, 2023 to notify stockholders of record that the proxy materials (this Proxy Statement, proxy card, and the 20202022 Annual Report) are available online at www.proxyvote.com.www.proxyvote.com. A copy of the Form 10-K and other proxy materials are available in hard copy by request, free of charge. Copies of exhibits to the 20202022 Annual Report on Form 10-K may also be obtained upon payment to us of the reasonable expense incurred in providing such exhibits. We encourage all stockholders to access their proxy materials online to reduce the environmental impact and the cost of our proxy solicitation. You may request a paper copy of the proxy materials using any of the following methods:
1. | By Internet: go to www.proxyvote.com |
2. | By Phone: 1-800-579-1639 |
3. | By Email: sendmaterial@proxyvote.com |
4. | By Written Request: Littelfuse, Inc., Attention: Legal Department, 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631. |
We encourage you to access and review all of the important information in the proxy materials before voting.
Stockholders of record at the close of business on February 25, 2021,28, 2023, the record date for the Annual Meeting, will be entitled to notice of, to vote at, and attend the Annual Meeting. On February 25, 2021,28, 2023, we had outstanding 24,548,69724,797,973 shares of our common stock, par value $0.01 per share. Each outstanding share of common stock entitles the holder to one vote per share on each matter submitted to a vote at the meeting.
A list of the stockholders of record entitled to vote at the meeting will be available for examination by stockholders for any purpose germane to our Annual Meeting during ordinary business hours for a period of at least ten days prior to the meeting at our headquarters located at 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631.
Yes, all stockholders attending the 20212023 Annual Meeting will be able to submit a question during the meeting. You must be logged into the virtual meeting at www.virtualshareholdermeeting.com/LFUS2021LFUS2023 and follow the instructions on the meeting page on how to post a question or comment. If your question is properly submitted during the meeting, your question may be answered during the meeting or we may hold your question and respond to it after the meeting. Questions on similar topics may be combined and answered together.
The Annual Meeting will be held entirely online. You will be able to attend the Annual Meeting as well as vote and submit your questions during the live webcast of the meeting by visiting www.virtualshareholdermeeting.com/LFUS2021LFUS2023 and entering your 16-digit control number included in the Notice and Access Card,of Internet Availability, on your proxy card or in the instructions that accompanied your proxy materials.
| 2023 Proxy Statement | | | 1 |
If you do not plan to attend the Annual Meeting, you may also vote by phone or mail, as described below:
By Phone: Call 1-800-690-6903 |
By Mail: Sign, date and return your proxy card to the address listed on the proxy card. |
All shares entitled to vote and represented by properly executed and unrevoked proxies will be voted at the Annual Meeting in accordance with the instructions given therein. If no instructions are indicated on a properly executed proxy (other than broker non-votes), the shares represented by that proxy will be voted as recommended by the Board.
If your shares are registered directly in your name with the Company’s transfer agent, EQ Shareowner Services, you are considered a stockholder of record with respect to those shares. If your shares are held in a bank or brokerage account, you are considered the beneficial owner of those shares.
If you are a stockholder of record, you will receive only one notice or proxy card for all the shares you hold in certificate form, or book-entry form.
If you are a beneficial owner, you will receive voting instructions from the bank, broker or other nominee through which you own your shares.
If you are a beneficial owner and do not provide voting instructions to your bank, broker or other nominee, the following applies:
Non-Discretionary Items. The election of directors, and the advisory vote on executive compensation, the advisory vote on the frequency of future executive compensation votes, and the approval of the amendment to the Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan are non-discretionary items and may not be voted on by brokers, banks or other nominees that have not received specific voting instructions from beneficial owners. This is called a "broker“broker non-vote."”
Discretionary Items. The ratification of the appointment of the Company’s independent registered public accounting firm (Grant Thornton LLP) is a discretionary item. Generally, banks, brokers and other nominees that do not receive voting instructions from beneficial owners may vote on this proposal in their discretion.
Any stockholder giving a proxy has the right to revoke it at any time prior to the time it is voted. A proxy may be revoked by (1) written notice to us sent to the attention of our Corporate Secretary at 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631, (2) execution of a subsequent proxy, (3) voting on the Internet or by telephone, or (4) attending the Annual Meeting and voting online. All shares represented by effective proxies will be voted at the annual meetingAnnual Meeting or at any postponements or adjournment thereof.
| | 2023 Proxy Statement | | | 2 |
Stockholders are being asked to vote on the following matters at the Annual Meeting. The voting standard and our Board’s voting recommendation for each matter is described below:
| Proposal | | | Voting Standard* | | | Board Recommendation | | |
Proposal 1: Election of Director Nominees | | | Majority of votes cast** | | | FOR ALL the nominees for director | | ||
| Proposal 2: Advisory Voteon Executive Compensation | | | Majority of votes cast | | | FOR | | |
| Proposal3: Advisory Vote Regarding Frequency of Executive Compensation Vote | | | Plurality of votes cast | | | EVERY YEAR | | |
| Proposal 4: Approval of the First Amendment to the Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan | | | Majority of votes cast | | | FOR | | |
| Proposal 5: Approval andRatification of the Appointment of Grant Thornton LLP as Independent Auditors | | | Majority of votes cast | | | FOR | |
votes cast for purposes of Proposal 3 means that the frequency of advisory votes (One Year, Two Years or Three Years) that receives the most votes will be deemed the advisory vote of our stockholders.
**Except in the event of a contested election of directors. In the event of a contested election, directors shall be elected by plurality of votes cast. Also, our Corporate Governance Guidelines include a resignation policy, which provides, among other things, that if a director nominee does not receive a majority of the votes cast:
⯀ | such nominee must tender his or her resignation within ten days; |
⯀ | the Nominating and Governance Committee of the Board must recommend to our Board whether such resignation should be accepted or rejected; and |
⯀ | our Board must take final action no later than 90 days after the stockholder vote. |
Abstentions will not be included in vote totals and will have no effect on Proposal 1 – the election of director nominees.nominees – or Proposal 3 – advisory vote regarding frequency of executive compensation vote. Abstention votes on each of Proposal 2, 4 and 35 will have the same effect as a vote "Against."
“Against.”
Broker non-votes will not be included in vote totals and will have no effect on the outcome of any of the proposals to be voted on at the Annual Meeting.
We retain an independent inspector of election from Broadridge Financial Solutions to attend our virtual Annual Meeting and to certify the results of the vote.
A quorum of stockholders is required for the transaction of business at our Annual Meeting. Our bylaws provide that a majority of all of the shares of common stock entitled to vote, whether present in person or represented by proxy, constitutes a quorum for the transaction of business at the meeting. Abstentions and "broker non-votes"“broker non-votes” will also be considered as present for purposes of determining the presence or absence of a quorum at the Annual Meeting.
If you experience technical difficulties, please contact the technical support telephone number posted on the Virtual Shareholder Meeting login page.
| | 2023 Proxy Statement | | | 3 |
If we experience technical difficulties during the meeting (e.g., a temporary or prolonged power outage), our meeting Chairman will determine whether the meeting can be promptly reconvened (if the technical difficulty is temporary) or whether the meeting will need to be reconvened at a later time or another day (if the technical difficulty is more prolonged). In any situation, we will promptly notify stockholders of the decision via the investor relations section of our website at investor.littelfuse.com.
The proxy accompanying this proxy statement is solicited on behalf of our Board, for use at the Annual Meeting. We will bear the cost of soliciting proxies. Copies of solicitation materials will be furnished to brokerage firms, fiduciaries and custodians holding shares in their names that are beneficially owned by others to forward to such beneficial owners. The Company may reimburse such persons for the costs they incur to forward the solicitation material to such beneficial owners. In addition to solicitation by mail, our officers and employees may solicit proxies by telephone or in person.
What is Householding?
Under SEC rules, only one copy of this proxy statement is being delivered to stockholders residing at the same address, unless one or more of the stockholders have notified the Company of their desire to receive multiple copies of the proxy statement. This process, which is commonly referred to as "householding,"“householding,” potentially means extra convenience for stockholders and cost savings for companies.
If you receive notice from your broker that it will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, please notify your broker directly or direct your written request to our Corporate Secretary at 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631, or call our corporate office at 1-773-628-2128.1-773-628-1000. Upon such request, Littelfuse will undertake to promptly deliver a separate copy of the proxy statement and annual report to any stockholder that elects not to participate in householding.
If you are receiving more than one copy of the proxy materials at a single address and would like to participate in householding, please contact your broker directly or direct your written request to our Corporate Secretary at 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631, or call our corporate office at 1-773-628-1000 to request information about eliminating duplicate mailings.
We will announce the preliminary voting results at the Annual Meeting. The Company will report the final results on a Current Report on Form 8-K, to be filed with the SEC within four business days following the Annual Meeting.
| 2023 Proxy Statement | | | 4 |
The Board currently consists of tennine members. All of our current directors, except for Mr. John Major,Dr. Nathan Zommer, who will be retiring at the 20212023 Annual Meeting, are standing for re-election. Therefore, we are asking our stockholders to elect nineeight directors at the annual meeting to serve a term of one year and until their successors have been duly elected and qualified. The nominees for director, all of whom are now serving as directors, are listed below together with certain biographical information as of February 25, 2021.28, 2023.
| Name | | | Position | | |
Kristina A. Cerniglia | | | Director | | ||
| Tzau-Jin Chung | | | Director | | |
| Cary T. Fu | | | Director | | |
| Maria C. Green | | | Director | | |
| Anthony Grillo | | | Director | | |
| David W. Heinzmann | | | Director | | |
| Gordon Hunter | | | Chairman of the Board | | |
| William P. Noglows | |||||
| Lead Independent Director | |
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR ALL
OF THE DIRECTOR NOMINEES
| Committee Membership: Audit Compensation | | | ||||||
Kristina A. Cerniglia, | | | Director since 2018 | | |||||
Ms. Cerniglia has served as Senior Vice President & Chief Financial Officer for Briggs & Stratton, a global producer of engines for outdoor power equipment, and a designer, manufacturer and marketer of lithium-ion battery, standby generator, energy storage system, lawn and garden, turf care and job site products since June 2022. Prior to that, she served as Senior Vice President and Chief Financial Officer for Hillenbrand, Inc. (NYSE:HI), a global diversified industrial company with multiple market-leading brands that serve a wide variety of industries across the globe, In nominating Ms. Cerniglia for election as a director, our Board focused on her 30 years of diverse financial and industry experience and leadership as important attributes to help enhance and shape our growth strategy. | |
| | 2023 Proxy Statement | | | 5 |
| Committee Membership: Compensation Chair Nominating and Governance Technology | |||||
| | Tzau-Jin Chung, | | | Director since 2007 | |
Mr. Chung has served as a Founding Senior Partner of Core Industrial Partners LLC, a private equity firm investing in lower to middle market manufacturing companies in North America, since 2017. From 2013 to May 2016, Mr. Chung served as president and chief executive officer of Navman Wireless and Teletrac Inc., a global market leader in GPS-based fleet management solutions. From 2007 to December 2012, Mr. Chung was chief executive officer of Navman Wireless. Previously, Mr. Chung served as president of the New Technologies Division of Brunswick Corporation (NYSE:BC) from 2002 to 2007. Mr. Chung served on the board of directors of MasterCraft Boat Holdings, Inc. (NASDAQ:MCFT) from December 2016 through October 2022, and has served on the board of directors of In nominating Mr. Chung for election as a director, our Board focused on his past experience in developing new products, corporate-wide strategic planning, mergers and acquisitions, information technology and his experience with operations in Asia as important attributes for his continuing to serve as one of our directors. | | |||||
| Committee Membership: Audit Chair Compensation |
| Cary T. Fu, | | | Director since 2012 | | |||
Mr. Fu is the co-founder of Benchmark Electronics, Inc. (NYSE:BHE), a solutions provider for high technology OEM customers. He served as chairman of the board of Benchmark from 2009 until his retirement in 2012, and served as a director from 1990 until 2012. Mr. Fu also served as the chief executive officer of Benchmark from 2004 to 2011, and was the president and chief executive officer from 2004 to 2006. From 1986 to 2004, Mr. Fu served in various capacities with Benchmark, including as executive vice president, treasurer and secretary. Mr. Fu In nominating Mr. Fu for election as a director, our Board focused on his past experience in the industry and unparalleled management experience. | | |||||||
| Committee Membership: Audit Nominating and Governance | |||||||
| | Maria C. Green, | | | Director since | | ||
Ms. Green served as the Senior Vice President and General Counsel of Ingersoll-Rand plc (NYSE:IR), a diversified manufacturing company, from 2015 until her retirement in June 2019. Prior to that, she served in various capacities at Illinois Tool Works (NYSE:ITW), a producer of engineered fasteners and components, equipment and consumable systems and specialty products, most recently as Senior Vice President, General Counsel and Secretary, from 1997 to 2015. Ms. Green has served on the boards of directors of Tennant Company (NYSE:TNC) since March 2019, In nominating Ms. Green for election as a director, our Board focused on her experience as a global public company leader, her comprehensive skills including strategic planning, acquisitions and enterprise risk management and her expertise in matters of corporate governance. | |
| | 2023 Proxy Statement | | | 6 |
| Committee Membership: Audit Nominating and Governance Chair | |||||
| | Anthony Grillo, | | | Director since 1991 | |
Mr. Grillo is the founder of American Securities Advisors, LLC and affiliates (now known as Ascribe Opportunities Management, LLC), an advisory and private equity investment firm established in 2005. Mr. Grillo served as Managing Director of Ascribe until his retirement in 2018. From 2001 through 2004, Mr. Grillo served as Senior Managing Director of Evercore Partners, Inc. (NYSE:EVR), an investment banking boutique providing advisory services to multinational corporations on significant mergers, acquisitions, divestitures, restructurings and other strategic corporate transactions, where he founded the restructuring practice for the firm. From 1999 through 2001, Mr. Grillo served as Senior Managing Director of Joseph Littlejohn & Levy, Inc., a private equity firm. From 1991 through 1999, Mr. Grillo was a Senior Managing Director of the Blackstone Group L.P., a private equity firm. Mr. Grillo has served on the board of directors of Oaktree Acquisition Corp. II (NYSE:OACB) since September 2020. He previously served on the board of directors of Oaktree Acquisition Corp. (NYSE:OAC) from June 2019 to January 2021. Mr. Grillo holds a In nominating Mr. Grillo for election as a director, our Board focused on his past experience in the financial markets and his experience with corporate acquisitions as important attributes for his continuing to serve as one of our directors. | | |||||
| Committee Membership: |
| David W. Heinzmann, | | | Director since 2017 | | |||
Mr. Heinzmann has served as our President and Chief Executive Officer and a member of the Board since January 2017. He previously served as our Chief Operating Officer from 2014 to 2017. Mr. Heinzmann began his career at Littelfuse in 1985 as a manufacturing engineer and since then has held positions of increasing responsibility. From 2004 through 2007, he served as Vice President and General Manager, Automotive segment, and then as Vice President, Global Operations until 2014. Mr. Heinzmann has served as a director of Gentherm Inc. (NASDAQ:THRM) since August 2020. He previously served on the board of directors of Pulse Electronics Corporation from 2014 until its acquisition by Yageo Corporation in May 2018. Mr. Heinzmann holds a In nominating Mr. Heinzmann for election as a director, our Board focused on his management and operational expertise and extensive experience with Littelfuse as a key driver for continued growth and evolution of the Company. | |
| | 2023 Proxy Statement | | | 7 |
| Committee Membership: Technology | |||||
| | Gordon Hunter, | | | Director since 2002 | |
Mr. Hunter has served as the Chairman of the Board since January 2018. He previously served as Executive Chairman of the Board from January 2017 through December 2017. Prior to that, Mr. Hunter served as a director from 2002 to 2003, served as Chief Operating Officer from 2003 to 2005, and served as our Chairman of the Board, President and Chief Executive Officer from 2005 until January 2017. Prior to joining Littelfuse, Mr. Hunter served as vice president, Intel communications group, and general manager, optical products group for Intel Corporation (NASDAQ:INTC) from 2002 to 2003. Prior to joining Intel in 2002, he served as president of Elo TouchSystems, a subsidiary of Raychem Corporation. Mr. Hunter also served in a variety of positions during a 20-year career at Raychem Corporation, including vice president of commercial electronics and a variety of sales, marketing, engineering and management positions. Mr. Hunter has served on the board of directors of Veeco Instruments, Inc. (NASDAQ:VECO) since In nominating Mr. Hunter for election as a director, our Board focused on his leadership, vision and execution as Chairman and former Chief Executive Officer in growing and reshaping the Company and setting and communicating the proper cultural and behavioral tone as important attributes for his continuing to serve as one of our directors. | | |||||
| Committee Membership: |
| William P. Noglows, | | | Director since 2007 | | |||
Mr. Noglows In nominating Mr. Noglows for election as a director, our Board focused on his experience as chief executive officer of a leading public company and his expertise in developing technology as important attributes for his continuing to serve as one of our directors. | |
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| | | 8 |
Director Compensation
For the 20202022 fiscal year, non-employee directors received an annual retainer of $75,000,$85,000, paid in quarterly installments, plus reimbursement of reasonable expenses relating to attendance atof meetings. Our directors are also reimbursed for the costs associated with attending one continuing education program every three years. No fees are paid to directors who are employee directors. Additional annual retainers are paid to our Board leadership, as shown below:
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Board Leadership Role | | | Annual Retainer | | ||
| Lead Director | | | $20,000 | | |
| Board Chairman | | | $ | | |
| Audit Committee Chairperson | | | $20,000 | | |
| Compensation Committee Chairperson | | | $15,000 | | |
| Nominating and Governance Committee Chairperson | | | $ | | |
| Technology Committee Chairperson | | | $10,000 | |
In addition to cash compensation, each non-employee director received an annual equity grant under the Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan (the "Long-Term Plan"“Long-Term Plan”) valued at approximately $140,000.$165,000. The equity grant is comprised of (1) one-third stock options that vest equally on the first three annual anniversaries of the grant date, have an exercise price equal to the fair market value of our common stock on the date of grant, and expire seven years from the grant date, and (2) two-thirds restricted stock units ("RSUs"(“RSUs”) that are granted upon the non-employee director’s election or reelection to the Board at the Company’s annual meeting and that vest equally on the first three annual anniversaries of the grant date. On April 23, 2020,28, 2022, each non-employee director was granted 1,432815 stock options having a per share exercise price of $132.08$231.64 and 807498 RSUs.
Non-employee directors may elect to defer receipt of their cash fees under the Littelfuse Deferred Compensation Plan for Non-employee Directors (the "Directors Plan"“Directors Plan”) and defer payout of their equity grants and any related dividend distributions. All deferrals are deposited with a third-party trustee, where they (and any distributions thereon) are invested in Littelfuse common stock. Deferrals under the Directors Plan are generally paid out when the director ceases to be a director or on the date specified by the director at the time of the non-employee director’s deferral election. Deferred payments owed to Mr. Hunter as a result of his prior service as a non-employee director are expected to be delayed an additional six months following his separation from service as both a director and employee of Littelfuse as required by law due to his status as a "specified employee"“specified employee” under Section 409A of the Internal Revenue Code of 1986, as amended.
| 2023 Proxy Statement | | | 9 |
The following table sets forth compensation earned by or paid to non-employee directors during 2020:2022:
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | All Other Compensation ($) | Total | ||||||||||||||||||
Kristina A. Cerniglia | $70,313 | $103,570 | $44,936 | $0 | $218,819 | ||||||||||||||||||
Tzau-Jin Chung | $84,375 | $103,570 | $44,936 | $0 | $232,882 | ||||||||||||||||||
Cary T. Fu | $89,063 | $103,570 | $44,936 | $0 | $237,569 | ||||||||||||||||||
Maria C. Green (4) | $64,063 | $103,570 | $44,936 | $0 | $212,569 | ||||||||||||||||||
Anthony Grillo | $70,313 | $103,570 | $44,936 | $0 | $218,819 | ||||||||||||||||||
Gordon Hunter | $117,188 | $103,570 | $44,936 | $0 | $265,694 | ||||||||||||||||||
John E. Major | $89,063 | $103,570 | $44,936 | $869,892 | (5) | $1,107,461 | |||||||||||||||||
William P. Noglows | $79,688 | $103,570 | $44,936 | $0 | $228,194 | ||||||||||||||||||
Nathan Zommer | $70,313 | $103,570 | $44,936 | $66,664 | (6) | $285,483 |
| Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(2) | | | All Other Compensation ($) | | | Total | |
| Kristina A. Cerniglia | | | $85,000 | | | $113,265 | | | $57,368 | | | $0 | | | $255,633 | |
| Tzau-Jin Chung | | | $100,000 | | | $113,265 | | | $57,368 | | | $0 | | | $270,633 | |
| Cary T. Fu | | | $105,000 | | | $113,265 | | | $57,368 | | | $0 | | | $275,633 | |
| Maria C. Green | | | $85,000 | | | $113,265 | | | $57,368 | | | $0 | | | $255,633 | |
| Anthony Grillo | | | $97,000 | | | $113,265 | | | $57,368 | | | $0 | | | $267,633 | |
| Gordon Hunter | | | $160,000 | | | $113,265 | | | $57,368 | | | $0 | | | $330,633 | |
| William P. Noglows | | | $105,000 | | | $113,265 | | | $57,368 | | | $0 | | | $275,633 | |
| Nathan Zommer (3) | | | $85,000 | | | $113,265 | | | $57,368 | | | $0 | | | $255,633 | |
(1) | On April 28, 2022, each director received an annual RSU award of 498 shares of common stock. The amounts shown reflect the grant date fair value of restricted stock unit awards computed in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, based on assumptions described in Note 12 to our audited financial statements included in our Annual Report on Form 10-K for fiscal year ended December 31, 2022. As of December 31, 2022, each director held the following outstanding RSUs (including RSUs that have been deferred under the Long-Term Plan): Ms. Cerniglia, 1,031 shares; Mr. Chung, 8,339 shares; Mr. Fu, 1,031 shares; Ms. Green, 1,701 shares; Mr. Grillo, 1,805 shares; Mr. Hunter, 1,031 shares; Mr. Noglows 3,499 shares; and Dr. Zommer, 1,031 shares. |
(2) | On April 28, 2022, each director received an annual stock option award of 815 shares with a per share exercise price equal to $231.64 (determined based on the closing stock price on that date reported by NASDAQ). The amounts shown reflect the grant date fair value of stock option awards computed in accordance with FASB ASC Topic 718, based on assumptions described in Note 12 to our audited financial statements included in our Annual Report on Form 10-K for fiscal year ended December 31, 2022. As of December 31, 2022, each director held the following outstanding option awards: Ms. Cerniglia, 3,732 shares; Mr. Chung, 3,732 shares; Mr. Fu, 4,532 shares; Ms. Green, 2,821 shares; Mr. Grillo, 6,677 shares; Mr. Hunter, 4,532 shares; Mr. Noglows, 6,677 shares; and Dr. Zommer, 3,732 shares. |
(3) | Pursuant to Section 8 of the Littelfuse, Inc. Corporate Governance Guidelines, Dr. Zommer reached the mandatory retirement age of 75, and effective April 27, 2023, Dr. Zommer will be retiring as a member of the Board. |
| | 2023 Proxy Statement | | | 10 |
Below are key characteristics of our Board of Directors as of the fiscal year ended December 26, 2020. As of December 26, 2020, each director held the following outstanding RSUs (including RSUs that have been deferred under the Long-Term Plan): Ms. Cerniglia, 1,164; Mr. Chung, 8,628 shares; Mr. Fu, 1,320 shares; Ms. Green 807 shares; Mr. Grillo, 2,094 shares; Mr. Hunter, 1,320 shares; Mr. Major, 1,632 shares; Mr. Noglows, 3,788 shares; and Dr. Zommer, 1,320 shares.
⯀ | Members of the Board of Directors: 9 |
⯀ | Independent Directors: 7 |
⯀ | Lead Independent Director |
⯀ | Diverse Board Members (Race and Gender) |
22% female
33% underrepresented minorities
⯀ | Required Committees Consist of Entirely Independent Members |
⯀ | Regular Non-Management Executive Sessions |
⯀ | Mandatory Retirement Age: 75 |
⯀ | Robust self-evaluation process |
⯀ | Majority Voting in Uncontested Director Elections |
⯀ | ||||||||
Board Leadership
Mr. Hunter served as President and Chief Executive Officer until his retirement on January 1, 2017. He then served as Executive Chairman of the Board until January 1, 2018, when he transitioned into his current role as Chairman of the Board. Additionally, John MajorMr. Noglows serves as the independent Lead Director. Upon the retirement of Mr. Major at our 2021 annual meeting of stockholders, the Company will determine the appropriate director to assume the Lead Director position.
Among other things, the Lead Director convenes and chairs regular and special executive sessions of the independent directors and serves as a liaison between the independent directors and our Chief Executive Officer ("CEO"(“CEO”). We believe that our leadership structure allows the Board to have better control of the direction of management, while still retaining independent oversight.
The Board held teneight meetings during fiscal year 2020.2022. All of the directors attended at least 75% of the meetings of the Board and 100% of the meetings of the committees on which they served. Consistent with our policy, all of our directors attended our 20202022 annual meeting of stockholders. As a result of the COVID-19 travel restrictions in place at such time, directors attended our 2020 annual meeting of stockholders electronically. Independent members of our Board regularly meet in executive session without management present.
There is no arrangement or understanding between any of our directors and any other person or entity other than the company,Company, to which any director was or is to be selected as a director. The Board has affirmatively determined that each current board member, except Mr. Heinzmann and Dr. Zommer, (i) is "independent"“independent” within the definitions contained in the current NASDAQ listing standards and the rules and regulations of the SEC, and (ii) has no other "material relationship"“material relationship” with the Company that could interfere with his or her ability to exercise independent judgment. The Board specifically determined that, effective January 1, 2021, Mr. Hunter was an independent director under applicable rules considering, among other factors, that it has been over three years since he served as an employee of Littelfuse.
The Board further determined that (i) each Audit Committee member is "independent"“independent” within the enhanced requirements for audit committee members under NASDAQ and SEC rules, and (ii) each Compensation Committee member is a "non-employee director"“non-employee director” under SEC rules. Also, the Board has determined that Messrs. Fu and Grillo and Mmes.Ms. Cerniglia and Green are "audit“audit committee financial experts"experts” as defined by the SEC.
Skills, and Experience
We believe that our Board best serves the Company and our stockholders with a diversity of backgrounds, skillsets, industry experiences and expertise. We have balanced our board composition with new members who bring fresh perspectives and longer serving directors who bring continuity and experience to our business and the end markets we serve. To help ensure continued diversity on our Board we have:
| | 2023 Proxy Statement | | | 11 |
⯀ | 22% female members of the Board. |
⯀ | 33% underrepresented minority members of the Board. |
⯀ | Incorporated a mandatory retirement age into our Corporate Governance Guidelines where absent a finding of exceptional circumstances by a majority of the Nominating and Governance Committee, no person 75 years or older at the time of election or re-election will be nominated to serve as a director. |
⯀ | Maintained a robust evaluation process including individual interviews conducted by the Nominating and Governance Committee Chairperson with each director. |
⯀ | A Nominating and Governance Committee charter reflecting that we recognize the benefit of a Board of Directors that reflects the diversity of the Company’s stockholders, employees and customers and the communities in which we operate and we shall actively seek qualified candidates for nomination and election to the Board of Directors in order to reflect such diversity, including gender and ethnic diversity. |
The Nominating and Governance Committee charter reflectingrequires the committee to ensure that we recognizecandidates of diverse ethnic and/or gender backgrounds are considered when a new non-employee director is appointed or nominated, which the benefitcommittee implements by applying the factors described under Director Candidates below. The increase in diversity on our Board over the last few years evidences the effectiveness of a Boardour efforts—our last two independent director appointees have both been female, one of Directors that reflects thewhich is an underrepresented minority.
The following table sets forth our Board’s diversity statistics as of the Company's stockholders, employees and customers and the communities in which we operate and we shall actively seek qualified candidates for nomination and election to the Board of Directors in order to reflect such diversity, including gender and ethnic diversity.February 28, 2023:
| Board Diversity Matrix (As of February 28, 2023) | | ||||||||||||
| | | Female | | | Male | | | Non-Binary | | | Did Not Disclose Gender | | |
| Part I: Gender Identity | | ||||||||||||
| Directors | | | 2 | | | 7 | | | – | | | – | |
| Part II: Demographic Background | | ||||||||||||
| African American or Black | | | 1 | | | – | | | – | | | – | |
| Alaskan Native or Native American | | | – | | | – | | | – | | | – | |
| Asian | | | – | | | 2 | | | – | | | – | |
| Hispanic or Latinx | | | – | | | – | | | – | | | – | |
| Native Hawaiian or Pacific Islander | | | – | | | – | | | – | | | – | |
| White | | | 1 | | | 5 | | | – | | | – | |
| Two or More Races or Ethnicities | | | – | | | – | | | – | | | – | |
| LGBTQ+ | | | – | | |||||||||
| Did Not Disclose Demographic Background | | | – | |
| 2023 Proxy Statement | | 12 |
In addition, the Board possesses a diverse set of skills encompassand industry experiences. Our directors’ skills and experience include financial, operational, technological and governance experiencematters as well as expertise across the company'sCompany’s products, end markets and geographies in which it operates. Described below is additional information reflecting the Board's commitment to diversitywe operate. The Board’s self-identified attributes in these areas are summarized in the director nomination process.chart below.
The Nominating and Governance Committee has a well-developed process to identify new director candidates. In addition, recommendations may be received by the Committee from various sources, including directors and Company contacts. The Nominating and Governance Committee considers diversity of gender, race, ethnicity, age, cultural background, geographical and professional experience in evaluating candidates for membership on the Board. In February 2020, we appointed Ms. Green as a non-employee director of our Board, and we continue to remainWe are committed to ensuring that candidates of diverse ethnic and/or gender backgrounds are considered when a new non-employee director is appointed or nominated. Other factors that the Nominating and Governance Committee takes into consideration when evaluating a director candidate, as it deems appropriate, include:
⯀ | Experience as an executive or director of a publicly traded company; |
⯀ | Familiarity with our business and our industry; |
⯀ | Availability to actively participate in meetings of the Board and attend the annual meeting of stockholders; |
⯀ | Knowledge and experience in the preparation or evaluation of financial statements; |
⯀ | Diversity of background, including gender and ethnic diversity, knowledge, skills and experience to create a well-rounded Board; |
⯀ | Satisfaction of the criteria for independence established by the SEC and NASDAQ listing standards, as they may be amended from time to time; and |
⯀ | Ability to interact in a productive manner with the other members of the Board. |
The Nominating and Governance Committee will consider director nominees recommended by stockholders using the same evaluation process as for any other nominee. Recommendations must comply with the procedures in our bylaws and be submitted to the Corporate Secretary at 8755 West Higgins Road, Suite 500, Chicago, Illinois 60631. Any recommendation must include:
⯀ | The name and address of the candidate; |
| | 2023 Proxy Statement | | | 13 |
⯀ | A brief biographical description, including his or her occupation for at least the last five years, and a statement of the qualifications of the candidate, taking into account the qualification factors set forth above; and |
⯀ | The candidate’s signed consent to be named in the Proxy Statement if nominated and to serve as a director if elected. |
To be considered by the Nominating and Governance Committee for nomination and inclusion in our proxy statement for the 20222023 annual meeting of stockholders, stockholder recommendations for director must have been received by us no later than November 12, 2021.16, 2022. Each stockholder recommendation must include the name and address of the nominating stockholder and the number of shares beneficially owned by such stockholder.
Proxy Access
A stockholder, or stockholder group of no more than 20 stockholders, that has owned at least three percent of our outstanding common stock continuously for at least three years may nominate directors to our Board and have the nominees included in our proxy materials to be voted on at our annual meeting of stockholders. The maximum number of stockholder nominees that will be included in our proxy materials with respect to any such annual meeting is the greater of (i) two directors or (ii) twenty percent of directors to be elected. A stockholder who seeks to nominate a director or directors to our Board must provide proper notice to the Company'sCompany’s Corporate Secretary as described in our bylaws and comply with all other procedures in our bylaws. See additional information under "Stockholder Proposals"“Stockholder Proposals” starting on page 48.67.
Board Evaluation
Our Board conducts an annual self-evaluation to assess its effectiveness and to identify opportunities for improvement as described below.
1. | Each director provides written responses to board and committee evaluations, assessing performance and identifying areas for improvement. |
2. | The Nominating and Governance Committee Chairperson conducts individual interviews with all members of the Board. |
3. | The Nominating and Governance Committee Chairperson reports to the Nominating and Governance Committee on the results of the individual interviews. |
4. | The Nominating and Governance Committee analyzes evaluation responses and reports on the results to the full Board. |
We have four standing committees: the Audit Committee, Compensation Committee, Nominating and Governance Committee and Technology Committee. Each of these committees has a written charter approved by our Board, copies of which are posted under the "Corporate Governance"“Corporate Governance” section of the Company’s website at https://investor.littelfuse.com/corporate-governance/governance-overview. Current membership of each committee is provided below, followed by a description of each committee’s responsibilities.
| ||||||||||||||
Director | ||||||||||||||
Compensation Committee
Nominating and Governance Committee
Technology Committee
Kristina A. Cerniglia
X
X
Tzau-Jin Chung
Chairman
X
X
Cary T. Fu
Chairman
X
Maria C. Green
X
X
Anthony Grillo
X
Chairman
David W. Heinzmann
Chairman
Gordon Hunter
X
William P. Noglows
X
Nathan Zommer
X
| | 2023 Proxy Statement | | | 14 |
Audit Committee
Meetings held in 2022: 6
The Audit Committee is responsible to, among other things:
⯀ | Engage, compensate, oversee, and if applicable, terminate, the independent registered public accounting firm (including resolving any disagreements with management regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company. |
⯀ | Review the adequacy and effectiveness of the accounting and financial controls and procedures of the Company. |
⯀ | Review the annual internal audit plan and performance of the internal audit function. |
⯀ | Review any legal or regulatory matters that may have a material effect on the financial statements of the Company or related Company compliance policies. |
⯀ | Review the Company’s risk assessment and risk management process. |
⯀ | Review the Company’s policies and procedures related to cybersecurity risks and incidents and related disclosure controls and protocols. |
⯀ | Review procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters. |
⯀ | Review swap transactions, reliance on end-user exception and related policies and procedures. |
⯀ | Prepare the Audit Committee report required to be included in |
Compensation Committee
Meetings held in 2022: 5
The Compensation Committee is responsible to, among other things:
⯀ | Review the Company’s compensation philosophy, practices and policies, and through an annual compensation risk assessment provide input to management regarding compensation arrangements that may incentivize unnecessary and excessive risk taking. |
⯀ | Review and recommend to the Board for its consideration and determination the compensation for the Chief Executive Officer and the other executive officers. |
⯀ | Review and recommend to the Board for its consideration and determination any employment agreements, severance agreements, change-in-control arrangements and any special or supplemental benefits for the executive officers of the Company. |
⯀ | Establish and certify the achievement of performance goals for performance-based compensation. |
⯀ | Evaluate Chief Executive Officer performance. |
⯀ | Review and recommend to the Board for its consideration and determination the director compensation fees and equity-based awards. |
⯀ | Review and report to the Board on the Company’s organizational structure, succession plans for executive officers and programs for development of individuals to assume positions of higher responsibility. |
⯀ | Review and recommend to the Board for its consideration and determination the appropriate stock ownership guidelines applicable to directors and executive officers. |
⯀ | Review (i) submission to stockholders of executive compensation matters, including advisory votes on executive compensation and the frequency of such votes, (ii) engagement with proxy advisory firms or other stockholder groups on executive compensation matters, and (iii) the results of such advisory votes from stockholders and consider any implications to the Company’s compensation programs. |
⯀ | Review our compensation discussion and analysis and recommend its inclusion in our Annual Report on Form 10-K and Proxy Statement each year. |
| | 2023 Proxy Statement | | | 15 |
The Compensation Committee has the authority under its charter to engage services of outside advisors to assist in carrying out its duties. Under this authority, the Compensation Committee retained Compensation Strategies, Inc. as its independent compensation consultant during the 2022 fiscal year to assist the Compensation Committee with compiling a comprehensive analysis of market data and analyzing its implications for executive compensation at the Company, as well as various other executive compensation matters such as providing an update on executive compensation trends and pending and enacted legislation relevant to the compensation of our executive officers. The Compensation Committee has assessed the independence of Compensation Strategies, Inc. and determined that Compensation Strategies, Inc. did not have any economic interests or other relationships that would conflict with its obligation to provide impartial and objective advice.
Nominating and Governance Committee
Meetings held in 2022: 6
The Nominating and Governance Committee is responsible to, among other things:
⯀ | Identify individuals qualified to serve on our Board and to recommend director nominees to the Board for nomination at our annual meeting of stockholders. |
⯀ | Evaluate and present to the Board of Directors on an annual basis its determination as to (a) the independence of each director and director nominee under the independence standards established by the SEC and NASDAQ listing standards, (b) the classification of each director and director nominee as |
⯀ | Initiate and oversee an annual self-evaluation of the Board and its committees. |
⯀ | Monitor the orientation and training needs of directors. |
⯀ | Review new legislation, rules, regulations and other developments affecting corporate governance and make recommendations to the Board, as appropriate. |
⯀ | Review all potential related party transactions that require the Committee’s approval. |
⯀ | Assist the Company’s oversight of its ethics and compliance program, including the Company’s compliance with legal and regulatory requirements other than those related to accounting or financial reporting and monitoring whether the Company’s Code of Conduct has been communicated by the Company to all directors, officers, and |
⯀ | Develop and annually assess the adequacy of the Corporate Governance Guidelines for the Company. |
⯀ | Provide oversight (“ESG”) matters, receive updates from management regarding the Company’s ESG activities, and review and approve the annual Sustainability Report published by the Company. |
Technology Committee
The Technology Committee is responsible to, among other things:
⯀ | Review the technology program scope, direction, quality, investment levels and execution of the technology strategies presented by the Company’s management. |
⯀ | Review significant emerging technology issues and trends that may affect the Company, its business and strategy. |
⯀ | Review the Company’s technology competitiveness, including the effectiveness of its technological efforts and investments in developing new products and business. |
The Board’s role in risk oversight includes receiving regular reports from members of management on areas of material risk to the Company, including operational, financial, legal, regulatory, compensation and strategic risks. These reports include communications from management when potentially significant new risks develop.
| | | | 16 |
Management prepares these reports based on an Enterprise Risk Management (ERM) process, which is in place to identify, monitor and mitigate risks that could dramatically impact the organization’s ability to meet strategic and performance objectives. The full Board, or the appropriate committee, receives these reports from management to enable it to understand our risk identification, risk management and risk mitigation strategies. These reports include, for example, information provided to the Audit Committee regarding the Company’s cybersecurity systems, policies, and procedures, results of penetration testing, and amount of money spent to improve cybersecurity, to allow the Audit Committee to fulfill its cybersecurity risk oversight role. All Board committees meet regularly and report to the full Board on risk management matters. This enables the Board and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.
Fundamentally, our business is positioned within the long-term sustainability megatrend, and our products help enable our customers’ applications that empower a more sustainable, safer, and connected world. Therefore, Littelfuse is committed to the long-term value of a robust sustainability strategy not only with respect to the markets we serve, but through a continuous improvement mindset around reducing our operational impact and doing the right thing to support our associates and the communities where we live and work.
The Nominating and Governance Committee of our Board of Directors provides oversight of our Sustainability Program and approves our annual sustainability report. Additional governance best practices are in place to support our sustainability program journey, including:
⯀ | Regular Nominating & Governance Committee and/or Board updates. |
⯀ | Quarterly senior leadership review of sustainability program progress and approval of overall strategy, including the CEO, CFO, CLO and CHRO. |
⯀ | Sustainability program oversight |
⯀ | Regular sustainability steering committee meetings to drive sustainability initiatives and progress. |
⯀ | Global ESG Policy that includes a |
⯀ | Robust environmental, social and governance |
In 2022, the Company published our second annual Sustainability Report (the “2021 Sustainability Report”) to further enhance our transparency to communicate our progress towards our key internal sustainability initiatives. Notably, the 2021 Sustainability Report included expanding our reporting framework beyond the GRI Sustainability Reporting Standards to also include the Sustainability Accounting Standards Board (SASB) and align our material topics with the United Nations Sustainable Development Goals (SDGs).
Based upon our materiality assessment, our strategic focus areas in our 2021 Sustainability Report continue to include:
• business ethics • training, education, and career development • health and safety in the workplace • economic performance | | | • innovation • water and wastewater management • diversity and equal opportunity • energy management | | | • climate change and greenhouse gas emissions • sustainable supply chain • community involvement • waste and hazardous material management |
The Company has further communicated several key goals around these strategic focus areas, including to:
⯀ | reduce our greenhouse gas emissions 38% by 2035; |
⯀ | provide a zero-injury workplace; |
⯀ | increase female leader representation to |
⯀ | increase the representation of Black or African American associates in the U.S. to at least 5% by 2026. |
| | 2023 Proxy Statement | | | 17 |
Information regarding our progress towards these initial goals, and on how we manage our material topics is available in our 2021 Sustainability Report, located on our website at https://www.littelfuse.com/about-us/sustainability.aspx. The contents of our 2021 Sustainability Report and website are not incorporated by reference in this Proxy Statement.
The Board maintains a stock ownership policy that requires our executive officers and directors to hold and maintain a minimum number of shares of common stock of the Company. The policy provides for the following:
⯀ | Each executive officer and non-employee director is required to reach specific stock ownership within five years of his or her election or appointment. The stock ownership requirements are established by the Compensation Committee on a periodic basis and are generally targeted at the following minimum amounts, calculated at the time the requirements are established: |
○ | Non-Employee Directors: 5 times annual retainer |
○ | Chief Executive Officer: 5 times base salary |
○ | Chief Financial Officer and Executive Vice Presidents: 3 times base salary |
○ | Senior Vice Presidents: 2 times base salary |
⯀ | Until such time as the director or executive officer achieves the required stock ownership level, the director or executive officer is required to retain 50% of the net after-tax shares of common stock acquired upon a stock option exercise or vesting of restricted stock units. |
⯀ | Failure of a director or executive officer to satisfy the applicable stock ownership level within the required compliance period may result in their removal of participation in the Company’s annual equity grants, and/or being subject to a 100% retention requirement. |
All of our directors are in compliance with the guidelines and requirements set forth in our stock ownership policy. The named executive officers’ compliance with the stock ownership policy is discussed further in the Compensation Discussion and Analysis Section starting on page 26.
Under our Insider Trading Policy, our directors, officers and employees are prohibited from holding our common stock in a margin account or otherwise pledging our common stock as collateral for a loan. Our Insider Trading Policy also prohibits directors, officers and employees from entering into hedging transactions, such as swaps, collars, forward sale contracts, exchange funds, and similar arrangements or instruments designed to hedge or offset decreases in the market value of Littelfuse securities, except in the case of exceptional circumstances approved in advance by the Board of Directors.
The Board has adopted Corporate Governance Guidelines. These guidelines address items such as the qualifications and responsibilities of our directors and director candidates and the corporate governance policies and standards applicable to the Board. In addition, the Board has adopted a Code of Conduct that applies to all our directors, principal executive officer, principal financial officer, principal accounting officer and controller, and all employees. The full text of our Corporate Governance Guidelines and our Code of Conduct is available on our website at: https://investor.littelfuse.com/corporate-governance/governance-overview. We will also disclose on this page of our website any amendments to, or waivers from, the Code of Conduct.
| | 2023 Proxy Statement | | | 18 |
The Board maintains a written Related Person Transactions Policy that governs the review, approval and ratification of transactions involving the Company and related persons where the amount involved exceeds $120,000. The Nominating and Governance Committee reviews and approves all proposed Related Person Transactions (as defined below).
Related persons include:
⯀ | any person who is, or at any time since the beginning of our last fiscal year was, a director, executive officer, or a nominee to become a director of |
⯀ | any person who is known to be the beneficial owner of more than 5% of any class of our voting securities; |
⯀ | any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of the director, executive officer, nominee, or more than 5% beneficial |
⯀ | any person (other than a tenant or employee) sharing the household of such director, executive officer, nominee, or more than 5% beneficial |
⯀ | any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or principal or in a similar position or in which such person has a 5% or greater beneficial ownership |
⯀ | any charitable or non-profit organization in which any of the foregoing persons is actively involved in fundraising or otherwise serves as a director, trustee or in a similar capacity. |
The policy defines a Related Person Transaction as a transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) or any series of similar transactions, arrangements or relationships in which the Company (including any of our subsidiaries) was, is or will be a participant, the amount involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest.
Our Executive Vice President, Mergers & Acquisitions, Chief Legal Officer and Corporate Secretary (“CLO”) determines for purposes of the policy whether a proposed transaction is a Related Person Transaction that must be approved by the Nominating and Governance Committee.
The Nominating and Governance Committee will consider all of the relevant facts and circumstances available to the Nominating and Governance Committee, including (if applicable) but not limited to:
⯀ | the benefits |
⯀ | the impact on a director’s independence in the event the Related Person is a director, an immediate family member of a director or an entity in which a director is a partner, stockholder or executive |
⯀ | the availability of other sources for comparable products or |
⯀ | the terms of the
The Nominating and Governance Committee will approve only those Related Person Transactions that are in, or are not inconsistent with, our best interests and the best interests of our stockholders, as the Nominating and Governance Committee determines in good faith. During 2022 the Company entered into a related party transaction with Automated Technology (Phil.), Inc., as described below. This transaction was reviewed by our Nominating and Governance Committee, and it was determined that it is not inconsistent with the best interests of the Company and its stockholders. Automated Technology (Phil.), Inc. The Company owns approximately 24% of the outstanding common shares of Automated Technology (Phil.), Inc. (“ATEC”), a supplier located in the Philippines that provides assembly and test services. For the year ended
December 31, 2022, ATEC rendered assembly and test services to the Company totaling approximately $11.5 million. As of December 31, 2022, the Company’s accounts payable balance to ATEC was $1.8 million. In addition, our director Dr. Zommer currently serves as a director of ATEC. Tzau-Jin Chung, Cary T. Fu, William P. Noglows, and Kristina A. Cerniglia served on the Compensation Committee during the 2022 fiscal year, and none of them is now or ever was an employee of the Company. None of our executive officers served as a member of the compensation committee, or on a board of directors performing equivalent functions, of any entity that had one or more of its executive officers serving as a director or member of our Compensation Committee. Stockholders wishing to communicate directly with the Board or individual directors should communicate in writing at the following address: Littelfuse, Inc. 8755 West Higgins Road, Suite 500 Chicago, Illinois 60631 Attention: Corporate Secretary All written communications are received and processed by the Corporate Secretary prior to being forwarded to the Chairman of the Board or other appropriate members of the Board. Directors generally will not be forwarded communications that are primarily commercial in nature, relate to improper or irrelevant topics, or request general information about the Company. In addition to internal reporting procedures, the Audit Committee has established communication procedures through an independent Ethics Helpline that can be accessed globally. The Ethics Helpline provides for communication, either anonymously or identified, from employees, vendors, and other interested parties to communicate concerns, including concerns with respect to our accounting, internal controls or financial reporting, to the Audit Committee and CLO. Concerns may be reported via telephone in the U.S. at 1-800-803-4135 or online at littelfuse.ethicspoint.com. We believe that effective corporate governance should include regular engagement with our stockholders. Regular engagement forums include investor conferences, non-deal roadshows, meetings, and phone calls. During 2022, we conducted our stockholder engagement efforts through a combination of in-person and virtual forums, and effectively executed our planned outreach events. We believe this hybrid of outreach will continue for the foreseeable future given favorable benefits of both forums. We request feedback during these engagements and share the responses with our Executive Leadership Team and Board, which also helps to better inform our stakeholder messaging. We believe that regular engagement with our stockholders helps to strengthen our relationships with stockholders and helps us to better understand stockholder views on our business strategy and performance, and corporate environmental, social, and governance practices.
The following table sets forth certain information with respect to the beneficial ownership of our common stock as of February 28, 2023, by (1) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, (2) each director, (3) each NEO, and (4) all of our directors and executive officers as a group. Information concerning persons known to us to be beneficial owners of more than 5% of our common stock is based upon our review of Schedules 13D, 13F and 13G, and amendments thereto, as filed with the SEC. Of the shares reported, none are subject to pledge or lien in a margin account or pursuant to a loan agreement.
|
(1) | Shares beneficially owned includes all outstanding stock options, restricted stock units, and deferred restricted stock units exercisable for or convertible into our common stock either currently or within 60 days after February |
(2) | Applicable ownership percentage is based upon
the value of all unvested stock options, excluding the special retention award (actual value to be determined upon exercise) and all unvested RSUs, excluding the cliff vested award, which vest upon termination, and the value of his Supplemental Plan account balance. For Mses. Sethna and Chu, this amount also includes the value of each NEO’s Supplemental Plan account balance. We have two equity compensation plans that have been approved by our stockholders: the Littelfuse, Inc. Long-Term Incentive Plan that was approved by our stockholders at the April 2017 annual stockholder meeting and the Deferred Compensation Plan for Non-Employee Directors that was approved by our stockholders at the May 2005 annual stockholder meeting. Pursuant to our acquisition of IXYS on January 17, 2018, we assumed four equity compensation plans that have not been approved by our stockholders and pursuant to which we may continue to grant equity awards: IXYS Corporation 2009 Equity Incentive Plan, IXYS Corporation 2011 Equity Incentive Plan, IXYS Corporation 2013 Equity Incentive Plan, IXYS Corporation 2016 Equity Incentive Plan (together, the “IXYS Plans”). We also assumed two expired equity compensation plans that have not been approved by our stockholders and pursuant to which we have outstanding equity awards: the Zilog, Inc. 2002 Omnibus Stock Incentive Plan and Zilog, Inc. 2004 Omnibus Stock Incentive Plan (together, the “Zilog Plans”). The IXYS Corporation 2009 Equity Incentive Plan expired in June 2019 and equity awards remain outstanding under it. Information about our equity compensation plans that were either approved or not approved by our stockholders as of December 31, 2022, is as follows:
restricted stock units. The estimated total potential dilution from all combined Plans is 8.55%, which is calculated by dividing (i) the sum of number of shares subject to outstanding awards (756,839 as of February 28, 2023), the number of shares remaining available for future awards (633,889 as of February 28, 2023), and the number of new shares being requested in Proposal 4 beginning on page 58, by (ii) the number of issued and outstanding shares of the Company as of the record date (February 28, 2023). Note, included in the 633,889 shares available for future issuance, in addition to shares under the Long-Term Plan, as of February 28, 2023, the Company has an additional 171,046 shares available for issuance under plans assumed as part of the IXYS acquisition in 2018. IXYS Plans In connection with the acquisition of IXYS, we assumed the IXYS Corporation 2009 Equity Incentive Plan, IXYS Corporation 2011 Equity Incentive Plan, IXYS Corporation 2013 Equity Incentive Plan, IXYS Corporation 2016 Equity Incentive Plan and outstanding unvested stock options originally granted by IXYS Corporation under the IXYS Plans that were held by continuing employees. At the time of the acquisition of IXYS Corporation, these awards were converted to Littelfuse stock options, with adjustments made to the exercise price of the stock options and the number of shares subject to stock options as agreed upon in the Acquisition Agreement. These unvested options vest in accordance with their original terms, generally vesting in equal annual installments over a four-year period from the original grant date. The options, once granted, generally expire ten years from the date of grant. Under the IXYS Plans, we may grant to former employees of IXYS Corporation or its subsidiaries restricted stock awards, RSUs, stock options and stock appreciation rights with an exercise price that is no less than the fair market value on the date of grant. Equity awards granted under the IXYS Plans following the acquisition have been on similar terms and consistent with grants made pursuant to the Littelfuse, Inc Long-Term Incentive Plan. The IXYS Corporation 2009 and 2011 Equity Incentive Plans expired in June 2019 and June 2021 respectively, with no additional grants made after the expiration date. As of December 31, 2022, 171,606 shares remained available for issuance under the IXYS Plans. Zilog Plans In connection with the acquisition of IXYS Corporation, we assumed the Zilog, Inc. 2004 Omnibus Stock Incentive Plan and outstanding stock options originally granted by IXYS Corporation under the Zilog Plan that were held by continuing employees of Zilog. At the time of the acquisition of IXYS Corporation, these awards were converted to Littelfuse stock options, with adjustments made to the exercise price of the stock options and the number of shares subject to stock options as agreed upon in the Acquisition Agreement. These options vested in accordance with their original terms, generally in equal annual installments over a four-year period from the original grant date. The options generally expire ten years from the date of grant. The Zilog 2004 Omnibus Stock Incentive Plan expired in February 2014 and no additional grants have been made thereunder. Therefore, as of December 31, 2022, no shares remain available for issuance of new awards under the Zilog Plan and 12,086 stock options remain outstanding. As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are providing the following information for the fiscal year
Our median employee for the fiscal year 2022 is not the same employee that was used in the 2021 CEO Pay Ratio calculation. As a result of the
Methodology
The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that
PAY VERSUS PERFORMANCE The following table presents specified executive compensation and financial performance measures for the Company’s three most recently completed fiscal years.
The following graphs illustrates the relationship of Compensation Actually Paid (CAP) for our PEO and the average CAP for our Non-PEO NEOs in relationship to our Total Shareholder Return, Net Income and Adjusted EPS (the Company Selected Measure (CSM)). Additionally, the graphs also describe the relationship between our own TSR versus our peer group TSR. Compensation actually paid is influenced by numerous factors, including, but not limited to, share price volatility, new grant issuance and timing of vesting, as well as other factors.
The most important Financial Performance measures used by the Company to link Compensation Actually Paid to Company Performance for the most recently completed fiscal year for PEO and Non-PEO NEOs are as follows:
LITTELFUSE, INC. LONG TERM INCENTIVE PLAN Our Long-Term Plan was originally adopted by the Board of Directors on February 4, 2010 and approved by the Company’s stockholders on April 30, 2010; it was subsequently amended and restated on April 28, 2017 to, among other changes, increase the number of shares authorized for issuance under the plan. On March 3, 2023, the Board approved the First Amendment to the Amended and Restated Littelfuse, Inc. Long-Term Incentive Plan described in this proposal (the “Plan Amendment”), subject to stockholder approval, to be effective as of April 27, 2023. The Plan Amendment will be effective on the date of stockholder approval and after that date will apply to all awards made under the Long-Term Plan, as amended by the Plan Amendment (the “Amended Plan”) before, on or after that date. If approved, the additional shares being requested under the Amended Plan will be registered under the Securities Act of 1933. If our stockholders do not approve the Amended Plan, the present version of the Long-Term Plan will continue as currently in effect. A copy of the Plan Amendment is attached as Appendix A to this Proxy Statement. The proposed changes included in the Plan Amendment are summarized below under the heading “Summary of Changes to the Long-Term Plan.” The material terms of the Amended Plan, assuming the approval of this proposal by our stockholders, are summarized below under the heading “Description of the Amended Plan.” The Board believes the approval of the Plan Amendment is advisable and in the best interests of the Company and its stockholders because it assists in attracting and retaining employees, directors and consultants of the Company and its affiliates, motivates such individuals by means of performance-related incentives to achieve long-range performance goals, and enables such individuals to participate in the long-term growth and financial success of the Company. THE BOARD RECOMMENDS THAT YOU VOTE FOR THE FIRST AMENDMENT TO THE AMENDED AND RESTATED LITTELFUSE, INC. LONG-TERM INCENTIVE PLAN The Amended Plan is substantially identical to the Long-Term Plan that was previously approved by stockholders on April 28, 2017, with the following exceptions:
The following description of the Amended Plan is a summary and is qualified in its entirety by reference to the provisions of the Plan Amendment, which is attached as Appendix A to this Proxy Statement, and the Long-Term Plan, which is included as an exhibit to our Current Report on Form 8-K, filed on May 1, 2017. Administration. The Amended Plan requires that a committee of non-employee independent outside directors administer the Amended Plan. Currently, our Compensation Committee, which we refer to in this summary as the Committee, administers the Amended Plan. Among other powers and duties, the Committee determines the employees who will be eligible to receive awards and establishes the terms and conditions of all awards. Unless prohibited by applicable law or the applicable rules of a stock exchange, the Committee may delegate its authority and administrative duties under the Amended Plan and may delegate to an executive officer its authority to grant awards to non-officer employees, subject to certain rules in the Amended Plan. Shares Subject to the Amended Plan. The shares issuable under the Amended Plan are shares of our common stock that are (i) authorized but unissued or (ii) held in or acquired for the Littelfuse treasury. The total aggregate shares of common stock authorized for issuance during the term of the Amended Plan is limited to 3.03 million shares, all of which may be issued pursuant to incentive stock options, plus the 614,248 shares that had been reserved but unissued under prior plans that were superseded and replaced by the Long-Term Plan when it was originally adopted in 2010. Approximately 462,409 shares remained available for issuance as of the 2022 fiscal year end. The Committee must equitably adjust awards and the number of shares available under the Amended Plan in the event of a stock split, stock dividend, extraordinary cash dividend, split-up, spin-off, reclassification or other recapitalization affecting the common stock. Subject to certain limitations, the shares of common stock allocable to the portion of awards granted under the Amended Plan that have been forfeited, canceled, expired without becoming exercised or terminated and which have not been applied to pay the exercise price or taxes, may again be issued pursuant to new awards under the Amended Plan. Types of Awards. There are seven types of awards that may be made under the Amended Plan including incentive stock options (“ISOs”), nonqualified stock options (“NQSOs”), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), performance shares and performance units. Each award is subject to an award agreement approved by the Committee reflecting the terms and conditions of the award. For purposes of awards determined by reference to the fair market value of a share of our common stock, fair market value means the closing price of a share of our common stock on the relevant date, or if there are no sales on such date, on the next preceding day on which there were sales. Eligibility. Current and future U.S. and non-U.S. employees (including officers) and prospective employees as designated by the Committee (or our CEO pursuant to a delegation) and members of our Board may receive awards under the Amended Plan. However, only U.S. employees may receive ISOs. As of February 28, 2023, approximately 336 individuals consisting of 7 executive officers, 8 directors who are not executive officers, and approximately 321 employees who are not executive officers are eligible to receive awards under the Amended Plan. The closing price of Littelfuse common stock on the NASDAQ Global Select Market was $258.73 per share as of February 28, 2023. Stock Options. ISOs are options to purchase our common stock that receive tax benefits if they meet the requirements under Code Section 422, and NQSOs are options to purchase our common stock that do not meet those requirements. Option Grant: Each option award must be evidenced by an award agreement specifying the option exercise price, the term of the option, the number of shares of our common stock subject to the option, and such other provisions as the Committee determines, and which are not inconsistent with the terms of the Amended Plan (which need not be the same for each award or for each recipient). The award agreement must also specify whether the option is to be treated as an ISO within the meaning of Code Section 422. Options not designated as ISOs are considered to be NQSOs. Exercise of Options: Options granted under the Amended Plan are exercisable at such times as set forth in an award agreement. The exercise price of each option must be at least 100% of the fair market value of a share of our common stock on the date of grant. The exercise price of each ISO to any individual who owns more than
10% of the voting power of our stock must be at least 110% of the fair market value of a share of our common stock on the date of grant. The fair market value of shares with respect to which ISOs are exercisable for the first time by any individual during any one calendar year is limited to $100,000, and any ISOs that become exercisable in excess of that amount are deemed NQSOs. Payment of Exercise Price: The exercise price is payable in cash, by tendering shares of our common stock (which have been held for any minimum period needed to avoid adverse impacts for our financial reporting purposes), or, if permitted by the Committee or where it would not trigger a charge to our earnings for financial reporting purposes, by withholding shares that would be acquired on exercise, tendering other awards payable under the Amended Plan, or broker-assisted cashless exercise (if permitted by all applicable laws and regulations). Options are exercisable at such times and subject to the conditions, restrictions and contingencies specified by the Committee. Option Term: The maximum term of any option is ten years from the date of grant. With respect to ISOs granted to an individual who owns more than 10% of the voting power of our stock, the maximum term is 5 years from the date of grant. Stock Appreciation Rights. Each SAR represents the right to receive a payment in an amount equal to the increase in the fair market value of a share of our common stock on the date the recipient exercises the award over the fair market value of a share of our common stock at the date the award is granted (the “base price”). The Committee will determine, in its sole discretion, the number of SARs granted to any individual under the Amended Plan and any terms and conditions pertaining to the awards. SARs Grant: Each award of SARs must be evidenced by an award agreement specifying the base price, the term of the SAR, and such other provisions as the Committee determines, and which are not inconsistent with the terms of the Amended Plan (which need not be the same for each award or for each recipient). Base Price of SAR: The base price of each SAR granted under the Amended Plan must be at least equal to 100% of the fair market value of a share of our common stock on the date of grant. Settlement of SARs: SARs granted under the Amended Plan are exercisable (“settled”) at such times as set forth in an award agreement. Following exercise of a SAR, a participant is entitled to receive payment in an amount determined by multiplying: (a) the excess of the fair market value of a share on the date of exercise over the base price per share; by (b) the number of shares with respect to which the SAR is exercised. Payment to settle SARs may be in cash, shares of common stock, or a combination of cash and shares, as determined by the Committee. The Committee may provide a maximum dollar limit on the total payment due under a SAR. SAR Term: The maximum term of any SAR is ten years from the date of grant. Restricted Stock and Restricted Stock Units. An award of restricted stock is a grant of shares of our common stock subject to restrictions specified by the Committee that generally lapse upon vesting. Each RSU awarded entitles the recipient to receive, upon vesting of the award, one share of our common stock or cash in an amount equal to the fair market value of one share of our common stock on the date of vesting (or a combination of cash and shares, in the Committee’s discretion). Each award of restricted stock or RSUs must be evidenced by an award agreement that specifies the period of restriction for restricted stock or the vesting period for RSUs, the number of shares of restricted stock or RSUs granted, and such other provisions as the Committee shall determine, and which are not inconsistent with the terms of the Amended Plan (which need not be the same for each award or for each recipient). Unless otherwise provided in the award agreement, a recipient of a restricted stock or RSU award has no stockholder rights, such as voting or cash dividend rights, until vesting of the RSU or restricted stock and the recipient has become the shareholder of record for the shares of our common stock, if any. Performance Units and Performance Shares. Each performance share represents the recipient’s right to receive one share of our common stock, upon achievement of performance goals established by the Committee. Each performance unit entitles the recipient to receive a cash payment equal to the value of the performance unit, as determined by the Committee on the grant date, upon achievement of the performance goals established by the Committee. Recipients of performance shares or performance units earn the right to receive payment based on their achievement of the applicable performance goals during the performance period, as determined by the Committee.
Grant of Performance Award: Each award of performance units or performance shares must be evidenced by an award agreement that specifies the initial value of the award, the performance goals and the performance period, and such other provisions as the Committee determines, and which are not inconsistent with the terms of the Amended Plan. Stockholder/Dividend Rights: Unless otherwise provided in the award agreement, a recipient of performance shares or performance units has no stockholder rights, such as voting or cash dividend rights, until the award has vested and the recipient has become the stockholder of record for the shares of our common stock, if any. Performance Goals. Performance goals under the Amended Plan are based on performance measures, which may include any of the following: revenue; primary or fully-diluted earnings per share; earnings before interest, taxes, depreciation, and/or amortization; pretax income; operating income; cash flow from operations; total cash flow; return on equity; return on capital; return on assets; net operating profits after taxes; economic value added; capital expenditures; expense levels; stock price; debt levels; market share; total stockholder return or return on sales; or any individual performance objective which is measured solely in terms of quantitative targets related to Littelfuse or its business; or any combination thereof. In addition, the performance goals may be based in whole or in part upon the performance of Littelfuse and/or one or more of its affiliates, one or more of its divisions or units or, in such a case, any combination of the foregoing, on a consolidated or nonconsolidated basis, under one or more of these performance measures. These performance measures may be changed only if the Committee proposes a change for stockholder vote and stockholders approve a change. The performance goals that apply to any performance unit or performance share award must be established in writing by the Committee in the applicable award agreement. The Committee must certify attainment of these goals before any payout or vesting may be determined, and has the ability to adjust its determinations to decrease (but not increase) the payment under the award. If applicable tax and/or securities laws change to permit Committee sole discretion to alter the performance goals without obtaining stockholder approval of such changes, the Committee will have sole discretion to make such changes without obtaining stockholder approval. Limitations on Awards. The maximum number of shares that may be awarded pursuant to options, restricted stock, RSUs, and performance units and shares under the Amended Plan to any “covered employee,” as such term is defined in the regulations promulgated under Code Section 162(m), in any one calendar year is limited to 200,000 shares of our common stock unless, with respect to outstanding awards, if any, that remain subject, on a grand-fathered basis, to the exception for performance-based compensation from the tax deductibility limitations of Code Section 162(m) the Committee determines that the award of such shares will not be designed to comply with such exception. In addition, in any one calendar year, a “covered employee” may not receive a cash amount payable under the Amended Plan greater than $3,000,000, unless, with respect to outstanding awards, if any, that remain subject, on a grand-fathered basis, to the exception for performance-based compensation from the tax deductibility limitations of Code Section 162(m) the Committee determines that the award of such shares will not be designed to comply with such exception. The maximum number of shares that may be awarded pursuant to any award under the Amended Plan during any calendar year to any non-employee member of our Board is limited to 50,000. Vesting and Forfeiture. The Committee determines the time and conditions under which the award will vest or the period of restriction will lapse as part of making an award; provided that any time-based vesting must be at least one (1) year, except in limited cases (not to exceed 5% of outstanding awards) approved by the Compensation Committee. Vesting or the lapse of the period of restriction may, in the Committee’s discretion, be based solely upon continued employment or service for a specified period of time, or may be based upon the achievement of specific performance goals (company-wide, subsidiary-wide, divisional, and/or individual), or both. Vesting means the time at which an option or SAR holder may exercise his or her award, the end of the period of restriction with respect to restricted stock or RSUs, or the time at which the recipient of performance units or performance shares has satisfied the requirements to receive payment of the award (which can be no less than one year). Vesting or lapse provisions need not be uniform among awards granted at the same time or to persons similarly situated. Vesting and lapse requirements will be set forth in the applicable award agreement. The Committee, in its discretion, may accelerate vesting of any award at any time. When a participant terminates employment or service with us, all unvested awards are forfeited unless otherwise provided by the Committee. Extension Exercise Period. The Committee, in its discretion, may extend the period of time for which an option or SAR is to remain exercisable following a termination of service, but in no event beyond the expiration of the option or SAR.
Prohibition on Repricing. Except as required or permitted pursuant to a recapitalization or reorganization, in no event will the Committee amend an option or SAR to reduce the exercise or base price below the fair market value of the award on the date of grant or grant an option or SAR in exchange for the cancellation or surrender of an option or SAR with a higher per share exercise or base price. Limits on Transfers of Awards/Beneficiary Designation. All awards are exercisable only by the participant during the participant’s lifetime, and are transferable only by will or by the laws of descent and distribution; provided, however, that the Committee may permit a transfer of an award, other than an ISO, to a family member of an individual, subject to such restrictions as the Committee may provide. Participants may designate a beneficiary or beneficiaries to receive their benefits under the Amended Plan if they die before receiving any or all of such benefit. Deferrals. At the Committee’s discretion, cash or shares payable upon the satisfaction of any requirements with respect to RSUs, performance units, or performance shares may be deferred. Shares or cash payable upon the exercise of stock options or SARs or the vesting of restricted stock may not be deferred. Any deferrals must be timely elected to comply with policies and procedures established by the Committee and the requirements of Code Section 409A. Recapitalization. Upon a recapitalization, the Committee must adjust the number and kind of shares issuable and maximum limits for each type of award, adjust the number and kind of shares subject to outstanding awards, adjust the exercise or base price of outstanding options or SARs, and make any other equitable adjustments as needed to prevent dilution or enlargement of rights of awards. Reorganization. Upon a reorganization, the Committee may decide that awards will apply to securities of the resulting corporation (with appropriate adjustment as determined by the Committee), that some or all options and/or SARs will be immediately exercisable (to the extent permitted under federal or state securities laws), that options and/or SARs will be immediately exercisable and terminate after at least 30 days’ notice to holders (to the extent permitted under federal or state securities laws), and/or that some or all awards of restricted stock or RSUs will become immediately fully vested. Amendment and Termination. Our Board may amend, suspend or terminate the Amended Plan and any award agreement at any time, without the consent of stockholders or participants; provided, however, that any amendment to the Amended Plan must be submitted to the Corporation’s stockholders for approval if stockholder approval is required by applicable law. However, no amendment or termination may materially and adversely affect the rights of holders of outstanding awards without their consent unless necessary to comply with applicable law. The following summary of the federal income tax consequences relating to the Amended Plan is based on present U.S. federal tax laws and regulations. We cannot assure you that the laws and regulations will not change in the future and affect the tax consequences of the matters discussed in this section. This summary is not intended to be exhaustive and does not discuss the tax consequences of a participant’s death or the provisions of any income tax laws of any municipality, state or foreign country in which a participant may reside. Incentive Stock Options. An employee participant will generally have no tax consequences when he or she receives the grant of an ISO. In most cases, an employee participant also will not have income tax consequences when he or she exercises an ISO. An employee participant may have income tax consequences when exercising an ISO if the aggregate fair market value of the shares of the common stock subject to the ISO that first become exercisable in any one calendar year exceeds $100,000. If this occurs, the excess shares (the number of shares the fair market value of which exceeds $100,000 in the year first exercisable) will be treated as though they are NQSOs instead of ISOs. Additionally, subject to certain exceptions for death or disability, if an employee participant exercises an ISO more than three months after termination of employment, the exercise of the option will be taxed as the exercise of a NQSO. Any shares recharacterized as NQSOs will have the tax consequences described below with respect to the exercise of NQSOs. An employee participant recognizes income when selling or exchanging the shares acquired from the exercise of an ISO in the amount of the difference between the fair market value at the time of the sale or exchange and the exercise price the participant paid for those shares. This income will be taxed at the applicable capital gains rate if the sale or exchange occurs after the expiration of the requisite holding periods. Generally, the required holding periods expire two years after the date of grant of the ISO and one year after the date the common stock is acquired
by the exercise of the ISO. Further, the amount by which the fair market value of a share of the common stock at the time of exercise of the ISO exceeds the exercise price will likely be included in determining a participant’s alternative minimum taxable income and may cause the participant to incur an alternative minimum tax liability in the year of exercise. If an employee participant disposes of the common stock acquired by exercising an ISO before the holding periods expire, the participant will recognize compensation income. The amount of income will equal the difference between the option exercise price and the lesser of (i) the fair market value of the shares on the date of exercise and (ii) the price at which the shares are sold. This amount will be subject to income tax at ordinary income rates, but will not be subject to income or employment tax withholding. If the sale price of the shares is greater than the fair market value on the date of exercise, the participant will recognize the difference as gain and will be taxed at the applicable capital gains rate. If the sale price of the shares is less than the exercise price, the participant will recognize a capital loss equal to the excess of the exercise price over the sale price. Using shares acquired by exercising an ISO to pay the exercise price of another option (whether or not it is an ISO) will be considered a disposition of the shares for federal tax purposes. If this disposition occurs before the expiration of the required holding periods, the employee optionholder will have the same tax consequences as are described in the preceding paragraph. If the option holder transfers any of these shares after holding them for the required holding periods or transfers shares acquired by exercising an NQSO or on the open market, he or she generally will not recognize any income upon exercise. Whether or not the transferred shares were acquired by exercising an ISO and regardless of how long the option holder has held those shares, the basis of the new shares received from the exercise will be calculated in two steps. In the first step, a number of new shares equal to the number of older shares tendered (in payment of the option’s exercise) is considered exchanged under Code Section 1036 and the related rulings; and these new shares receive the same holding period and the same basis the option holder had in the old tendered shares, if any, plus the amount included in income from the deemed sale of the old shares and the amount of cash or other nonstock consideration paid for the new shares, if any. In the second step, the number of new shares received by the option holder in excess of the old tendered shares receives a basis of zero, and the option holder’s holding period with respect to such shares commences upon exercise. There will be no tax consequences to Littelfuse when it grants an ISO or, generally, when an employee participant exercises an ISO. However, to the extent that an option holder recognizes ordinary income when he or she exercises, as described above, Littelfuse generally will have a tax deduction in the same amount and at the same time. Nonqualified Stock Options. A participant generally has no income tax consequences from the grant of NQSOs. In the tax year when the participant exercises the NQSO, he or she recognizes ordinary income in the amount by which the fair market value of the shares at the time of exercise exceeds the exercise price for the shares, and that amount will be subject to employment taxes. If a participant exercises a NQSO by paying the exercise price with previously acquired common stock, he or she will have federal income tax consequences (relative to the new shares received) in two steps. In the first step, a number of new shares equivalent to the number of older shares tendered (in payment of the NQSO exercised) is considered to have been exchanged in accordance with Code Section 1036 and related rulings, and no gain or loss is recognized. In the second step, with respect to the number of new shares acquired in excess of the number of old shares tendered, the participant recognizes income on those new shares equal to their fair market value less any non-stock consideration tendered. The new shares equal to the number of the old shares tendered will have the same basis the participant had in the old shares and the holding period with respect to the tendered older shares will apply to the new shares. The excess new shares received will have a basis equal to the amount of income recognized on exercise, increased by any non-stock consideration tendered. The holding period begins on the exercise of the option. The gain, if any, realized at the later disposition of the common stock will either be short- or long-term capital gain, depending on the holding period. There will be no tax consequences to Littelfuse when granting a NQSO. Littelfuse generally will have a tax deduction in the same amount and at the same time as the ordinary income recognized by the participant. Stock Appreciation Rights. Neither the participant nor Littelfuse has income tax consequences from the issuance of a SAR. The participant recognizes taxable income at the time the SAR is exercised in an amount equal to the amount by which the cash and/or the fair market value of the shares of the common stock received upon that exercise
exceeds the base price. The income recognized on exercise of a SAR will be taxable at ordinary income tax rates and be subject to employment taxes. Littelfuse generally will be entitled to a tax deduction with respect to the exercise of a SAR in the same amount and at the same time as the ordinary income recognized by the participant. Restricted Stock. A holder of restricted stock will not recognize income at the time of the award, unless he or she specifically makes an election to do so under Code Section 83(b) within thirty days of such award. Unless the holder has made such an election, he or she will realize ordinary income and be subject to employment taxes in an amount equal to the fair market value of the shares on the date the restrictions on the shares lapse, reduced by the amount, if any, he or she paid for such stock. Littelfuse will generally be entitled to a corresponding deduction in the same amount and at the same time as the holder recognizes ordinary income. Upon the otherwise taxable disposition of the shares awarded after ordinary income has been recognized, the holder will realize a capital gain or loss (which will be long-term or short-term depending upon how long the shares are held after the restrictions lapse). If the holder made a timely election under Code Section 83(b), he or she will recognize ordinary income for the taxable year in which an award of restricted stock is received in an amount equal to the fair market value of all shares of restricted stock awarded (even if the shares are subject to forfeiture). That income will be taxable at ordinary income tax rates. At the time of disposition of the shares, if such an election was made, the holder will recognize gain in an amount equal to the difference between the sales price and the fair market value of the shares at the time of the award. Such gain will be taxable at the applicable capital gains rate. Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the ordinary income recognized by the participant. Restricted Stock Units. A holder of RSUs generally will not recognize income at the time of the award. Upon vesting and delivery of the cash or shares due upon settlement of an RSU, a holder will generally realize ordinary income and be subject to employment taxes in an amount equal to the fair market value of the shares distributed. Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the holder recognizes income. When the holder later disposes of his or her shares, the difference between the amount realized on sale and the amount recognized by the holder upon settlement of the RSU will be a capital gain or loss (which will be long-term or short-term depending upon how long the shares are held). Performance Shares. A holder of a performance share will generally recognize ordinary income and be subject to employment taxes in the year of vesting and payment of shares for performance under the Amended Plan. Similarly, Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the holder recognizes income. Performance Units. A holder of a performance unit will generally recognize ordinary income and be subject to employment taxes in the year of vesting and cash payment for performance under the Amended Plan. Similarly, Littelfuse will generally be entitled to a tax deduction in the same amount and at the same time as the holder recognizes income. Limitation on Company Deductions. No federal income tax deduction is allowed for Littelfuse for any compensation paid to a “covered employee” in any taxable year of Littelfuse to the extent that his or her compensation exceeds $1,000,000. For this purpose, “covered employees” are generally our Chief Executive Officer and the three other most highly compensated officers other than, for years prior to 2018, our Chief Financial Officer for the taxable year, and the term “compensation” generally includes amounts includable in gross income as a result of the exercise of stock options or SARs, payments pursuant to RSUs, performance shares or units, or the receipt of restricted stock. Prior to 2018 (and including tax years that began prior to January 1, 2018), this limitation did not apply to compensation qualifying as “performance based” under Code Section 162(m). While the Committee has generally attempted to maximize the amount of executive compensation that it would be permitted to deduct for tax purposes, the Committee believes that the primary purpose of our compensation program is to support Littelfuse’s business strategy and the long-term interests of our stockholders. Therefore, the Committee has maintained the flexibility to award compensation that may not be tax-deductible if doing so furthers the objectives of our executive compensation program. Under recent U.S. tax reform, the exception to Code Section 162(m) for performance-based compensation has been repealed for tax years beginning after December 31, 2017, subject to certain transition and grandfathering rules. In addition, our Chief Financial Officer will be included as a covered employee. Despite these new limits on the
deductibility of performance-based compensation, the Committee continues to believe that a significant portion of our named executive officers’ compensation should be tied to Littelfuse’s performance. Therefore, the changes to Code Section 162(m) have not significantly impacted the design of our compensation program going forward. Code Section 409A. Code Section 409A applies to certain “nonqualified deferred compensation” and would impose adverse consequences if an award under the Amended Plan is neither exempt from, nor compliant with, the requirements of Code Section 409A. Such adverse consequences include, but are not limited to, immediate income inclusion of the ordinary income that would be recognized if the rights are exercised at the date of vesting, a 20% tax on the amount required to be included in income, and interest at a penalty rate. Littelfuse intends that any awards granted under the Amended Plan be exempt from or structured to comply with Code Section 409A. However, if an award is subject to Code Section 409A, absent the participant’s consent, the Committee may amend such award, or take any other actions necessary to comply with, or exempt, such award from Code Section 409A. As of the date of this Proxy Statement, no awards have been made under the Amended Plan that are contingent upon stockholder approval of this proposal. Awards to be received by officers and other employees following the date of this Proxy Statement are not determinable because future benefits or amounts to be received by or allocated to each person named will depend on a variety of factors, including fair market value of the Company’s stock and the achievement of performance goals set by the Compensation Committee.
Subject to approval of the stockholders, the Audit Committee of the Board has appointed Grant Thornton LLP Although approval and ratification of the Audit Committee’s appointment of Grant Thornton is not required, we value the opinions of our stockholders and believe that stockholder approval and ratification of the appointment is a good corporate governance practice. In the event of a negative vote on this proposal, the Audit Committee will reconsider its appointment of Grant Thornton. Even if this appointment is approved and ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the best interests of Littelfuse and its stockholders. THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL AND RATIFICATION OF GRANT THORNTON LLP AS INDEPENDENT AUDITORS OF THE STATEMENTS FOR THE FISCAL YEAR ENDING Audit and Non-Audit Fees The following table presents the approximate fees for professional audit services rendered by Grant Thornton for the audit of our financial statements for professional services rendered for the fiscal years ended December
Audit Committee Pre-Approval Policies and Procedures All audit and non-audit services and the related fees are pre-approved by the Audit Committee, which considers, among other things, the possible effect of the performance of such services on the registered public accounting firm’s independence. The Audit Committee pre-approves the annual engagement of the principal independent registered public accounting firm, including the performance of the annual audit, statutory audits at foreign locations, quarterly reviews and tax services. The Chairperson of the Audit Committee has been delegated the authority to provide any necessary specific pre-approval for services that have not been previously
Notwithstanding anything to the contrary set forth in any of our previous or future filings under the Securities Act of 1933, as amended, or the Exchange Act that might incorporate by reference filings, including this Proxy Statement, in whole or in part, the following Report of the Audit Committee shall not be incorporated by reference into any such filings. The Audit Committee oversees our financial reporting process and compliance with the Sarbanes-Oxley Act of 2002 on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the Audit Committee reviewed the audited financial statements in our Annual Report on Form 10-K for the The Audit Committee also reviewed and discussed the audited financial statements with the independent auditors and discussed the applicable requirements of the Public Company Accounting Oversight Board The Audit Committee discussed with the independent auditors the overall scope and plans for their audits. The Audit Committee meets with the independent auditors, with and without management present, to discuss the results of their examinations, their evaluations of our internal control over financial reporting, and the overall quality of our financial reporting. The Audit Committee held 2022. In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board (and the Board has approved) that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December
Stockholder Proposals for Inclusion in the Our bylaws provide proxy access to eligible stockholders. The proxy access bylaw provision provides that a stockholder, or a group of up to twenty stockholders, that own three percent or more of the Other Stockholder Proposals for Presentation at the As to any proposal that a stockholder intends to present to stockholders without inclusion in our Proxy Statement for our 27, 2024. The chairman of the
We do not know of any matters to be acted upon at the Annual Meeting other than those discussed in this Proxy Statement. If any other items or matters are properly presented before the Annual Meeting, the proxy holders will vote on such matters in their discretion. A proxy granted by a stockholder will give discretionary authority to the proxy holders to vote on any matters introduced pursuant to these procedures, subject to applicable SEC rules.
APPENDIX A LITTELFUSE, INC. LONG-TERM INCENTIVE PLAN (AS AMENDED AND RESTATED EFFECTIVE AS OF APRIL 28, 2017) This First Amendment to the Littelfuse, Inc. Long-Term Incentive Plan, as previously amended and restated effective as of April 28, 2017 (the “Plan”), is made effective as of April 27, 2023, by Littelfuse, Inc. (the “Corporation”). WITENSSETH WHEREAS, the Corporation established the Plan, which was originally ratified by the Corporation’s stockholders on April 30, 2010, with an effective date of February 3, 2010; WHEREAS, the Plan was further amended on July 27, 2012 and on April 28, 2017; WHEREAS, the Board of Directors of the Corporation (the “Board”) has the power and authority under Section 15.1 of the Plan to amend the Plan, subject to stockholder approval as applicable; WHEREAS, the Board desires to amend the Plan to (i) increase the number of shares of the Corporation’s common stock that are available for issuance as awards under the Plan; and (ii) conform the performance-based compensation provisions of the Plan to the provisions of Section 162(m) of the Internal Revenue Code of 1986, as amended by the Tax Cuts and Jobs Act; and WHEREAS, the Plan remains otherwise without change; NOW, THEREFORE, the Plan is hereby amended as follows: 1. Section 4.1(a) of the Plan is restated in its entirety to provide as follows:
2. Section 18.2 of the Plan is restated in its entirety to provide as follows:
Code Section 162(m), unless otherwise determined by the Committee at the time of allocation of an Award. Accordingly, the terms of Sections 3, 4.2, 6, 7, 8.5, 8.6, 9 and 10, including the definitions of Named Executive Officer and other terms used therein, shall once again be interpreted in a manner consistent with Code Section 162(m).
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